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

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Updated, Friday, March 24, 2023, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: VIRTUAL VISIT TO ILTCI 2023

LTC Comment: Last week’s ILTCI conference in Denver had a hopeful theme and a promising new focus. Read on for a virtual visit to the program for those of you who were not there, but may wish to consider attending next year.

*** TODAY'S LTC BULLET is sponsored by Claude Thau with BackNine Insurance. Back9 gives you a free personalized website at no cost. Your clients (& family & friends) can, with as little or as much of your involvement as you or they want, buy life insurance and LTCi, and schedule parameds and upload their medical records to speed the process. We quote stand-alone LTCi, linked-benefit and life with a LTC rider side-by-side and provide a sales track with video support. Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. Contact him at 913-707-8863 or claude@back9ins.com discuss how he might help you. ***

LTC BULLET: VIRTUAL VISIT TO ILTCI 2023

LTC Comment: Steve Schoonveld chaired the 2023 ILTCI conference in Denver. He opened the program with a brief retrospective of its past iterations. The first was January 2001 in Miami with 500 attendees. Florida, Texas and Nevada accounted for 13 of the 21 total locations. The latest Denver conference had over 950 in attendance; 270 unique companies were represented including 66 exhibitors, 34 sponsors, and over 200 presenters and moderators. If you’re interested in the history of these meetings, have a look at our History of LTC Insurance Conferences (2021). It covers all of the major LTCI meetings for the previous two decades and contains pictures of LTCI’s leading lights over the years. (They’ve aged, but most are still going strong.)

This year’s planning and education committee focused on bringing in new speakers and topics and it showed. The meeting’s theme “Take the Lead” was evident throughout with a constant focus on innovation. Most evident was a special emphasis on wellness and finding ways to meet the needs of prospects and clients, especially people at risk or already in claim. It’s not just about selling policies and managing books of business anymore. It is more than ever about helping people age well and stay healthy. More on that as we describe some of the sessions below.

As usual, this ILTCI conference was ideal for networking. The exhibit hall offered free drinks and excellent food. Special thanks are due to the sponsors. Exhibitors included many who represented the meeting’s “Take the Lead” theme and its special focus on wellness and healthy aging. Check out lists of the exhibitors and sponsors so you can thank them. With this year’s conference in the rear view mirror, it’s not too soon to begin planning for next year’s ILTCI program in San Diego, CA – March 17-20, 2024 – at the newly renovated Town & Country resort.

Tracks

Here is the distribution of this year’s attendees based on their self-reported tracks:

Track Title	101%
Actuarial & Finance	25%
Advisors, Agents, & Agencies	19%
Aging in Place Solutions	7%
Claims & Underwriting	12%
Legal, Compliance, & Regulatory	9%
Management & Operations	17%
Marketing & Research	7%
Technology & Eldercare Services	5%

Behaviorist and humorist Jeff Kreisler delivered this year’s opening keynote address focusing on “why we do what we do.” He describes himself as just another typical Princeton educated lawyer turned award-winning comedian, best-selling author and champion for behavioral science. Kreisler is author of Dollars and Sense: How We Misthink Money and How To Spend Smarter and Head of Behavioral Science for JP Morgan Chase. The presentation was interesting, humorous and thought provoking. Margie Barrie, who covered the conference for ThinkAdvisor, reviewed the keynote in “What Can Help Clients See the Long-Term Care Cost Threat? Science.”

The App

This year’s conference smart phone app was excellent, the best so far. One could find all the attendees, plan a schedule based on searching all available sessions in each block, and review the handouts. The downside was that this detailed information was not included in the online version of the program. That makes it much more difficult to share session details as we were unable to cut and paste. Another problem was that the sound system in several of the meeting rooms was very poor making it impossible to capture some of the content. What follows nevertheless is a little information on each of several sessions. Hopefully, this will give you a good idea of what the conference was like and what you might expect if you come next year.

Some sessions:

3/13/23 10:30am
Title: “The Impact of State Legislative Activity on our Industry - Friend or Foe?”
Producer: Melissa Bova
Speakers: Moench, Stephanie; Veghte, Ben; Bova, Melissa; Gugig, Mike; Simonson, Dawn
Topic: “How can public sector activity targeted at LTC services and supports help or hurt activity in the private sector?”

Much is happening in this realm in several states including California and Minnesota, but of course the biggest development is WA Cares in Washington State. Ben Veghte, WA Cares’ Director made the case for that program, about to start withholding payroll taxes in the Evergreen State July 1. He is an articulate advocate for a program that, at the least, has had its ups and downs. Claude Thau brought some balance to the conversation by pointing out that WA Cares’ website claims people no longer have to worry about LTC risk. Claude observed that such a statement is false and should be removed. Veghte said he’d look into it.

3/13/23 2pm
Title: “How are consumer needs influencing product development?”
Producer: Josh Falco
Speakers: Nisenson, Larry; Tell, Eileen; Falco, Josh; Walbrun, Dave; Haas, Mike
Topic: Discuss the new and innovative ways consumers are getting help with long-term care.

This was the first of several sessions I attended focused on the mission to serve prospects and clients better, to understand their needs, and meet them. Eileen Tell offered examples of what consumers think they know about LTC that is wrong. When researchers ask what people want in a product and what they would be willing to pay, they get untenable answers. There’s a disconnect between reality and expectations. Larry Nisenson spoke about Assured Allies’ quantitative approach to discern what people really want, healthy aging in place, and to help them achieve it with NeverStop.

3/13/23 3:45pm
Title: “The New Trend in Integrating Caregiving Benefits with LTCI Benefits”
Producer: Larry Nisenson
Speakers: Nisenson, Larry; McInerney, Thomas; Sikorski, Cathy; Martin, Todd
Topic: How are caregiving and LTCI linked and how can we leverage relationships with HR representatives to tighten the connection further?

This was another session aimed at better integrating long-term care insurance benefits with caregiving needs. Genworth CEO Thomas McInerney mentioned his company’s largest claim ($1.3 million) on an original premium of $1,500. Todd Martin asked how many in the audience have caregiving experience. Answer, 90%. He observed there is involuntary employee turnover due to LTC with serious ramifications for the organizations affecting their ability to acquire and retain top talent. Cathy Sikorski emphasized the importance of bringing LTCI into the workplace.

3/14/23 9am
Title: “Leveraging Public & Private Insurances & Resources to Improve Health Outcomes”
Producer: Colleen Dennis
Speakers: O'Leary, John; Plaskon, Todd; Lillis, Maureen; Ludden, Beth; Dennis, Colleen
Topic: Join this session to learn how to leverage public and private insurances and companies like Medicare, Medicare Advantage, non-profits, and AAA’s to improve health outcomes and lower costs. We’ll specifically talk about what we can learn/utilize from Medicare (equipment coverage, use of the OASIS data for homecare claimants, use of the MDS data for facility claimants) and Medicare Advantage (meal delivered programs, transportation). Panelists will also discuss how to find resources in the area (e.g. life alerts, Meals on Wheels) to complement wellness programs and/or to reduce reliance on caregivers.

This was a fascinating session with its focus on integrating services, less so on financing. Beth Ludden of Genworth observed there are many critical organizations that elders who need them do not know about, including the Area Agencies on Aging. She observed we work in our insurance bubbles too much, unaware of services that are out there. Medicare and Medicaid are ahead of the LTC insurance industry in focusing on hands-on or supervisory care. Other panelists shared many examples of organizations that can help and ideas to enhance the cooperation and mutual effectiveness of public and private insurance sources.

3/14/23 10:45am
Title: “Teamwork Makes the (LTC) Dream Work: Public/Private Collaboration”
Producer: Stephanie Moench
Speakers: Cain, Steve; Moench, Stephanie; Arland, Jamala; Mueller, Jamie
Topic: This session explores opportunities for the private LTC market to collaborate with state programs, e.g., through the development of supplemental insurance products, to meet consumers' evolving LTC needs. During this interactive discussion, panelists will delve into key considerations related to public/private collaboration with the goal of expanding industry awareness and sparking product innovation, such as:

• What challenges are impeding public/private collaboration?

• How will publicly funded LTC programs impact private LTC market dynamics and product designs?

• How can we proactively promote public/private collaboration while mitigating consumer confusion?

• What are some of the key supplemental (and substitutive) LTC product opportunities for insurers given the range public programs designs being discussed? What are the primary actuarial considerations that could impact the consumer’s decision? Providing consumers with a range of options (public and private) should better enable them to holistically plan for their future LTC needs--teamwork makes the (LTC) dream work!

This was yet another session aimed at making the collaboration between public and private insurance work better. Stephanie Moench, for Oliver Wyman, spoke of the landscape of public LTC programs, showing a map with 14 or 15 states highlighted that are in creative phases. Steve Cain observed the need to meet people where they are, the workplace.

3/14/23, 2pm
Title: “The Results Are In: Aging in Place/Wellness Programs Seem Promising for the LTCI Industry”
Producer: Jodi Anatole and Vince Bodnar
Speakers: Jacobs, Dave; Anatole, Jodi; Moore, Nate; Gal, Afik; Hu, Char; Henderson, James
Topic: One of the greatest reasons LTCI carriers hesitate to implement an Aging in Place/Wellness program is lack of actual results. While these programs are still new, results are beginning to emerge that seem very promising. After a rigorous selection process, we have assembled a panel of vendors who will share their strategies and results - with a focus on the bottom line. This session should give you a deeper understanding on why these programs are worth the investment and how they can help you manage your block.

Each speaker had 10 minutes to share their company’s approach and results. All were impressive. Afik Gal of Assured Allies went first reporting that they work with people before they become claimants with an evidence based approach. They help people get their confidence back. Return on investment of 167%. Other speakers discussed their unique approaches and report similarly impressive results.

Bonus session reviews prepared by Damon Moses:

Session: “Modernizing The LTC Customer Experience Using Technology”
Track: Management & Operations
Moderator/Producer: Jennifer Jones
Speakers: Jim DuEst, Duane Anderson, Kim Poulopoulos, Jennifer Jones
Description: “Please join this panel to hear more about how companies are leveraging technology to modernize the long term care customer experience throughout the policy lifecycle from underwriting to rate increases to claims. Hear from carriers, reinsurers, and administrators on their strategies, success stories, and challenges, as well as learn about emerging trends in technology in our industry.”

Key messages:

Investment in technology to increase efficiency and automation is necessary for improving the LTC Customer experience.
Improve customer experience by employing technology such as Chat GPT.
Improve health outcomes by collecting personalized data through wearables such as Fitbit.
Some of the biggest challenges preventing technological progression are: resources, organizational issues and overcoming legacy systems.

Session: ”The LTC Renaissance: New Product and Market Opportunities”
Track: Actuarial & Finance
Moderator/Producer: Erik Wenzel
Speakers: Brian Vestergaard, MacKenzie Madsen, Erik Wenzel, Tom Riekse
Description: “This is an exciting time for the LTC industry—the confluence of rising interest rates, proposed public financing solutions, demographic shifts, post-pandemic focus on health and wellness, and technological advancement gives the industry an opportunity for an "LTC Renaissance”. This session is presented by those on the frontlines of the imminent renaissance and will cover:

New market opportunities presented by state-sponsored LTC programs
The growth of group and worksite distribution channels
Middle-market solutions
New market entrants and innovative features
Wellness programs on new business”

Key messages:

LTC is currently in a period of renaissance of renewed interest and product innovation.
State-sponsored programs are increasing interest in LTCi as a tax avoidance measure.
Accessibility, affordability and ease of premium payments are important to LTCi consumers.
Hybrid products linked to the market and products with variable benefits will be important.
Consumers should look at an LTCi policy as a valid component of a holistic financial portfolio and should be able to view the value of their policy easily online.

Session: “Caregivers need help too!”
Track: Aging in Place Solutions
Moderator/Producer: Robin Devine
Speakers: Ali Ahmadi, Karen Brown, Tracey Gendron, Timothy Peck, Robin Devine
Description: “Caregivers take care of us, we need to take care of them. A Discussion on raising the level of awareness of the needs and wants of older adult and their caregivers.

“Caregiver burnout doesn’t need to be inevitable. So, why do we so often associate caregiving with burnout? The caring relationship is one that has both joy and frustration - just like all other relationships. Join our panel discussion where leaders in Caregiving, Gerontology, and Innovation share methods, ideas and best practices to support care partners by breaking through their misconceptions and helping them increase choice, control, and independence. We will have a conversation around preventative vs reactive caregiver support concepts.”

Key messages:

Women tend to be default primary caregivers, often as a spouse or eldest daughter.
24% of caregivers provide care for 5 years or more.
$470 billion is the economic value provided by informal caregivers.
LTC as ecosystem of care. Caregiving is a natural and normal part of everyone’s lifecycle and should be destigmatized. People fall into two categories: current caregivers or future caregivers.
Further support caregivers by improving care infrastructure and examining the health consequences of ageism.

3/14/23, 3:30 Closing General Session
Title: “Taking the Lead: Building Towards 2030”

The closing session was comprised of three panels and a poll.

The first panel, titled “The Future of Caregiving and Care Management,” engaged Karen Brown of the Colorado Commission on Aging; Noreen Guanci, co-founder CEO of Long-Term Solutions in Massachusetts; Maureen Lillis, COO of Independent Living Systems; and Robert Eaton, principal at Milliman in Tampa. They discussed caregiver shortages, poor caregiver compensation, and the importance of valuing caregivers. One idea: Train high school students to do caregiving so they have jobs when they graduate. The ILTCI conference has come a long way toward understanding and supporting caregiving since its Aging in Place track 10 years ago.

The second panel, titled “The Future of Care Financing,” engaged moderator Vince Bodnar of FTI Consulting; John O’Leary, president of O’Leary Marketing; Anna Frankowska, CEO of Graceful Finance; Shannen Logue, Deputy Insurance Commissioner in Pennsylvania; and Liz Christopher, COO of Home Care Genie. They discussed the public and private realms of LTC financing, how both involve many different aspects, and often do not understand each other. But all are trying to do the same thing, which is to find adequate financing to support the country’s caregiving needs. Shannen asked, “why are so many people qualified for Medicaid?” Vince asked “what is the best way to reach the middle market?” Both good questions the answers to which would wisely begin with a careful study of how Medicaid LTC eligibility determination actually works, enabling potential middle market prospects to access Medicaid when they need LTC late in life without significant spend down. A sense of optimism is growing as the profession is starting to focus on our customers and policy holders.

The third panel, engaged industry veterans Ron Hagelman, author of the long-running monthly column “The Last Word on LTCI” in Broker World and his long-time business partner Barry Fisher of Blaze ‘n Bear Insurance Services, Inc., in amusing, and informational back and forth banter about their perspectives on long-term care services and financing. Barry observed “people who need to be here aren’t” and that Medicaid crowds out private products due to the “elder law industrial complex.” He compared the moral hazard of letting Medicaid co-opt private insurance with the current travail in the banking system where government bailouts ensure even more irresponsible banking behavior in the future. He said “private insurance should be the first line of defense; public, second.” I’ll have more to say along those lines in my closing LTC Comment. Ron observed LTC is “all about control,” what can I do to assure best quality of care for loved ones and clients. As a fellow old-timer, this session was my favorite of the conference.”

Director’s Pitch: Conference director Steve Schoonveld closed the meeting with his “Pitch.” He said “So we have health insurance that protects or maintains your health. It’s called dental insurance and not tooth decay insurance. Vision insurance and not blindness insurance. Auto insurance and not crash insurance. Life Insurance covers the value of your life in case of death.

So, does LTC insurance and extended care insurance cover your care or should it insure your wellness? I offer that this conference will be called the Intercompany Wellness Insurance Conference, or the IWIC by 2030.” Finally, he posed these questions to the audience:

In 23 years of ILTCI conference, what has surprised you the most?
What are the likely trends you expect in the next 7 years?
Predict the theme of the 2030 conference and explain why.
Rename Long-Term Care Insurance.
“Punt the pitch” and make the case for your preferred 2030 conference location.

Several audience members approached the microphone to share their answers.

A final electronic poll asked “How many ILTCI conferences audience members had attended.”

1. First, 34%
2. 2-5 times, 38%
3. 10 times, 14%
4. 11-15 times, 7%
5. 16-20 times, 5%
6. All 21 times, 1%

Supplemental content before and after the conference

CLTC delivered two classes the weekend before the conference - a Master Class and a pilot for their new Product Insider class. “Both were a hit!”

SOA Section Council Meeting (Open to All), Sunday, March 12

SOA Professionalism Course, Wednesday, March 15th

Alzheimer's Association Session, Wednesday, March 15th

Closing LTC Comment: I was moved and heartened by this ILTCI conference’s “Take the Lead” theme and its overwhelming focus on wellness and serving clients’ needs. Both were encouraging and inspiring. But as an attendee of nearly all of the meeting’s earlier iterations, I missed some of the former sessions’ broader content and fiery interactions. To my mind the biggest missing pieces are the absence of policy and provider tracks. It’s as though the LTCI industry has given up the battle, succumbing to Medicaid’s crowd out effect without further effort. It’s stuck in its silo lacking the former invitation to nursing homes, home health agencies, assisted living facilities to come, share, argue, and conceive together. I remember debates and challenging questions, that are less evident now. Harley Gordon and George Sherman, where are you when we need you? I hope the LTCI business does not subside into a go-along-to-get-along truce with government, ironically just as LTCI’s prospects are looking up and government’s, especially its entitlement programs, are going down.

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Updated, Monday, March 20, 2023, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #23-004 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 Steve at 425-891-3640 or smoses@centerltc.com. Read testimonials by satisfied subscribers here. To subscribe online, please click here.

LTC E-Alerts: Once a week, we compile our daily LTC Clippings into a summary, email it to Center for Long-Term Care Reform members, and archive it in The Zone, our password-protected members-only website. Center members also receive our weekly LTC Bullet op-ed. To join the Center and receive all these benefits and more, contact Steve at 425-891-3640 or smoses@centerltc.com.

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

Some State Regulators Frown on Life-Long-Term Care Combo Products
High concentration of dually eligible older adults in assisted living warrants study of care quality, researchers say
OIG: Personal care providers accounted for most Medicaid fraud convictions again in 2022
Costs for linked-benefit long-term care insurance policies drop up to 15 percent from last year
Medicare costs could soar with availability of new obesity drugs, experts say
What Can Help Clients See the Long-Term Care Cost Threat? Science
Denied by AI: How Medicare Advantage plans use algorithms to cut off care for seniors in need
How Life and Annuity Issuers Could Get Silicon Valley Bank Flu
The Role Of Medicaid In Addressing Climate Change And Climate-Related Inequity
Exclusive: Biden administration warns states to minimize coverage loss as they restart Medicaid eligibility reviews
Biden pledges $150B for HCBS in new budget
Long term care insurance in the UK: What's going on?
New evidence of four distinct pain trajectories in nursing home residents
Family caregivers’ unpaid work valued at $600 billion: report
AARP: Paid caregivers are key to relieving family caregiver burden
Assured Allies secures $42.5M Series B to help Americans ‘successfully age’
A tax-advantaged solution for long-term care needs
GoldenCare Long-Term Care Insurance
7 Long-Term Care Program Ideas for Taxphobic Times
Aggressive Medicare Advantage marketing floods TV and mailboxes with misleading ads. The Biden administration is cracking down
Argentum’s Workforce Projections for Senior Care Report Sees a Need to Fill 20 Million Job Openings Through 2040

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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, March 6, 2023, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #23-003 LTC NEWS AND COMMENT

Terry Savage and Brian Gordon on long-term care insurance
Social Security Checks Got a Historic Boost This Year. Retirees Say It’s Not Enough
The High Cost of Waiting to Plan for Long Care
As States Prepare to Resume Disenrollments, Medicaid/CHIP Enrollment Will Reach Nearly 95 million in March, and the Pandemic-Era Enrollment Growth of 23 million Accounts for 1 in 4 Enrollees
They could lose the house — to Medicaid
As Debate Heats Up in Washington Over Possible Entitlement Cuts, A New KFF Analysis Details the 30% of Federal Spending That Goes to Health Care Programs
A Hidden Source of Wealth Many Retirees Overlook
The problematic politics of Japan’s ageing electorate
Long-term care insurance costs in Germany to increase from July
Better cardiovascular health may explain declining dementia rates: study
Older adults fearful they could outlive savings: survey
Skilled Nursing Operators Protest ‘Insane Amount’ of Administration Needed as Medicare Advantage Expands
The Real Federal Deficit: Social Security And Medicare
New Life Policy Can Protect Against Disability and Long-Term Care Risk
Brian Blase and Frederick Isasi on Medicare and Medicaid
7.7% Increase in Long-Term Care Benefits Payouts
CMS Officials Confirm End of PHE Nursing Home Waivers, Barring Congressional Action,
What Long-Term Care Insurance Policyholders Need to Know
They offer to help nursing home residents get Medicaid. Too often, say legislators, they cheat them
States, other countries offer insights into making long-term care more affordable: report

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Updated, Friday, March 3, 2023, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: LTCI AND INNOVATIVE FINANCIAL PLANNING

LTC Comment: “Adapt or die,” capitalism demands. Consider how long-term care insurance evolves and survives after the ***news.***

*** ILTCI CONFERENCE themed “Take the Lead” convenes in Denver March 12-15, only days away. Register here. Find lodging here. Click here for the conference app and how to reach the hotel from the airport. This is the big one, folks. Be there if you can. If you can’t, watch for our virtual visit to the conference, summarizing its highlights, shortly after it ends. In the meantime, check out our “History of LTC Insurance Conferences (2021). It has narrative and pictures covering twenty years of LTCI professional meetings. What a gauntlet we’ve run! ***

*** CERTIFICATION FOR LONG TERM CARE will be in Denver for the ILTCIconf offering a new Product Insider class that provides “an impartial deep dive” into all the LTCi product types on the market, who offers them, their pros and cons and client applications. CLTC reports: “Because we are excited about our new class and want your participation in our roll out event in Denver on March 12^th, 8:00 – 2:00, we have a very special (and limited) offer. ILTCI Price: Only $500 (current street rate: $899); CLTC Training Pre-Requisite: Waived.” Register here. ***

*** CLTCR APPEAL. Every so often, we need to appeal for your support of the Center for Long-Term Care Reform. This is one of those times. Please review our “Membership Levels and Benefits Schedule.” It explains all the ways individuals, companies and organizations can work together with us to improve long-term care financing policy. We are on the verge of an opportunity for statutory LTC policy reform the likes of which we have not seen in decades. I know because I’ve been in the thick of the fight for 40 years, as my bio recounts. The Paragon Health Institute recently published my assessment of what’s wrong with long-term care in America: “Long-Term Care: The Problem.” Watch for our radical proposal to fix LTC policy coming in the fall titled Long-Term Care: The Solution. Center members can follow our progress and contribute their own ideas and recommendations by reading our biweekly LTC Bullets, our weekly LTC E-Alerts, and our daily LTC Clippings (for premium members). Join our campaign! ***

LTC BULLET: LTCI AND FINANCIAL PLANNING INNOVATION

LTC Comment: Financing long-term care is a critical part of ensuring that all Americans have access to quality extended care when they need it. But so is preventing and delaying the need for paid long-term care by promoting wellness and well-being. Assured Allies is a company dedicated to combining data science, personalized technology, and human touch to unlock the benefits of healthy aging for individuals, families, and insurers. It should come as no surprise that when they succeed in that mission it benefits the people they help and their LTC insurers. The Center for Long-Term Care Reform is proud to count Assured Allies among our corporate members.

I was so impressed with Assured Allies’ creative strategy to integrate wellness, retirement planning, and long-term care financing that I asked the company to prepare a “Guest Bullet” sharing their approach. The result follows in a piece authored by the company’s Chief Growth Officer, Larry Nisenson. He has committed to share more about Assured Allies’ mission and approach in the future. In the meantime, he suggests this video. But for now, here’s …

“The Role of Long-Term Care Insurance and Innovation in Financial Planning”
by
Larry Nisenson

Retirement financing in America was revolutionized when Congress passed the Revenue Act of 1978, which allowed employees to set aside a portion of their salary in a tax-deferred retirement account or 401K. As the defined benefit plans of our parents’ generation shrank, the modern world of retirement investing flourished. Today, almost 50 years later, Americans have socked away over five trillion dollars in these retirement juggernauts. In reaction to this sea change, a new retirement planning industry boomed to help individuals save and invest enough for their futures. The industry focused on three main areas of retirement planning: accumulation of assets, income generation and wealth transfer.

While these phases are critical to retirement planning, there is a key risk that is often overlooked by even the most astute financial planners: the impact of a long-term care event. According to an ASPE Research Brief presented to the HHS in August of 2020, over 50 percent of people over age 65 will require long-term care at some point, making this a huge oversight for half the population. Long-term care may be brief for some, but the average statistics—a length of three years, and a cost of over $120,000—are sobering indeed.

Despite the urgent need for long-term care insurance (LTCI) to cover this potential liability, the industry has sold only about 7 million LTCI policies in the last 40+ years, an incredible decline from the 2003 peak, when sales exceeded $2 billion in premium. In 2020, according to Milliman, the industry only sold $150 million of stand-alone LTCI, over a 90 percent drop from its high two decades ago. Hybrid products have picked up some of that slack, but consumers are hardly rushing to purchase any of those choices in droves. Why not?

There are several reasons for the gap in coverage, including fewer carriers who write LTCI, lack of consumer awareness of the risk, and negative agent and consumer sentiments due to rising premiums and a general misunderstanding of health care insurance. Many consumers believe that Medicare will cover long-term services and support (LTSS), but in most cases, that isn’t accurate. Since the vast majority of LTC claims are non-medical in nature, Medicare isn’t the answer.

The aging demographics of the U.S. today render this problem even more dire. According to the U.S. Census Bureau, there will be over 80 million Americans over the age of 65 by 2030 as the last of the Baby Boomers head into retirement. With so many of them financially unprepared, it becomes even more critical that the retirement industry steps up to provide products that meet people’s needs and show them a workable path toward financial security in retirement.
To accomplish this, the industry must continue to embrace change and innovation from every angle. The participants need to include incumbent carriers, agents and distributors and, of course, regulators. Innovation can happen on many fronts, but I’d like to focus on three areas: annuities, underwriting and wellness incentives.

First, let’s look at annuities. The fixed index annuity space is a familiar one for many agents and consumers and, according to LIMRA, is experiencing a recent boom—2022 was a record sales year with almost $80 billion in sales. Deferred annuities have been used by consumers during all three phases of their retirement planning, but to date have not been considered as a long-term care solution, as evidenced by the somewhat anemic sales of less than $500 million in 2021. In addition to the overlooked potential of deferred annuities, the Pension Protection Act (PPA) has opened the door to incredibly powerful new annuity hybrid product opportunities in the LTCI space.

The PPA was enacted by Congress in 2006 and generally allows consumers to enjoy both tax-deferred growth of their annuity contract and tax-free distributions for qualified long-term care expenses. This only applies to non-qualified annuities with true LTC benefits, not acceleration riders attached to the policy. There are other rules of course, but this incredibly efficient tax policy should be on every consumer's mind and in every advisor’s playbook. Even so, demand for hybrid LTC annuities probably won’t accelerate without innovations on the consumer front. Underwriting continues to be a friction point for consumers. Given the advancements in electronic medical records (EMRs), data science and clinical understanding of morbidity drivers, there's no reason we can’t offer a more streamlined experience.

At my company, Assured Allies, we’ve developed and brought to market an all-digital underwriting experience that takes less than 30 minutes and provides objective underwriting decisions that achieve as good if not better risk assessment than traditional morbidity underwriting. A single 30-minute video assessment allows us to assess the physical and cognitive abilities of the applicant and then feed the scores into an algorithm that determines which class is appropriate for the applicant. Our approach is much more in line with the immediacy that consumers expect and reflects the trend lines of other companies in today’s underwriting space as well.

The final innovation I’d like to address is wellness incentives. Wellness programs offer opportunities to enhance LTC products for both the consumer and the carrier. John Hancock’s Vitality program has done a wonderful job of incentivizing policyholders to participate in healthy living, but to date, this type of innovation has been missing on the annuity side. Assured Allies introduced the NeverStop wellness program on Bridge, our first annuity product, launched in partnership with EquiTrust in Q4 of 2022. Policyholders who participate in NeverStop wellness take an active role in their aging journey and can earn additional long-term care dollars if they need to access their benefits.

There are many other examples of innovation that are surfacing for consumers in the caregiving space, the voluntary benefit world and the insurance product world. Assured Allies is proud to be part of this wave of innovation; we must continue to push these efforts forward to make successful aging accessible to all. An important consideration for all these enhancements is the regulatory front and the push by the NAIC for more innovation. The task force has done a great job of advancing their thinking and being open to new ideas, and we need to see more states embracing these innovations. This is key to private enterprises’ ability to meet consumers where they are with modern solutions that answer their needs.

Larry Nisenson is Chief Growth Officer for Assured Allies. Reach him at 908-500-0770 or larry.nisenson@assuredallies.com

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Updated, Monday, February 20, 2023, 10:40 AM (Pacific)

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LTC E-ALERT #23-002 LTC NEWS AND COMMENT

Are Payments To Medicare Advantage Plans Inflated?
More than 1 in 6 Americans now 65 or older as U.S. continues graying
Bridging the Gap: A Discussion of Short-Term and Long-Term Care
Is Applying for Medicaid for Do-It-Yourselfers?
Researchers ID 8 social factors that lead to early death in seniors
Medicare Recipients Face Significantly Higher Projected Costs: EBRI
Death, Finances and How Many of Us Get Our Money Needs Wrong
Genworth to Launch Senior Care Provider Network Business
FACTSHEET: State of the Nursing Home Sector
Study: Prevalence of disabilities among older Americans is much lower than a decade earlier

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Updated, Monday, February 17, 2023, 10:40 AM (Pacific)

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LTC BULLET: LTCI EDUCATION

LTC Comment: CLTC exemplifies certified excellence in LTC education. More on what that means after the ***news.***

*** 2022 LTCI PAID CLAIMS: Jesse Slome, Director, American Association for Long-Term Care Insurance reports “Long-term care insurance companies paid out a record $13.25 billion in 2022. Claim benefit payouts for policyholders with traditional long-term care insurance coverage grew from $12.3 billion in 2021. The increase in benefit payouts is expected as policyholders age and start to require care. For calendar year 2018 the Association reported that long-term care insurers paid out $10.3 billion. Link to the reported info here. ***

*** CLTC, the subject of today’s Guest LTC Bullet is sponsoring some special programs. One, titled “The Rise of LTC-Annuities: What’s New? Why Now? What Lies Ahead?, is scheduled for February 22, 2023 (Wednesday) at 2:00 P.M. EST. Another, called the CLTC Product Insider class will be offered March 12 at the ILTCI conference in Denver. Check out these programs here. ***

*** THE 2023 ILTCI CONFERENCE is less than a month away. Check out the Denver March 12-15 program here. Register here. The 2023 ILTCI Mobile App, sponsored by Nationwide, is already available to registrants. Themed “Take the Lead,” the conference will convene at the Sheraton Downtown Denver. Comedian lawyer (evidently not an oxymoron) Jeff Kreisler, is slated to keynote the program. Organizers say “Last year’s conference was a huge success! Over 750 attendees from across the US attended. We look forward to bringing you another amazing conference in 2023.” For a history of this and other LTC insurance conferences over the years, check out our History of LTC Insurance Conferences (2021). You’ll find summaries of each conference and many pictures of much younger LTCI luminaries, who are older and wiser now. Don’t miss this opportunity to get the latest industry news, scuttlebutt and networking. ***

LTC BULLET: LTCI EDUCATION

LTC Comment: The Certification for Long-Term Care company and training have been around for a long time. They are highly regarded and deeply appreciated by people who care about LTC insurance excellence. That includes myself and the Center for Long-Term Care Reform, which is proud to have CLTC as a corporate member.

Our appreciation for CLTC got an extra boost when I saw the latest issue of their CLTC Digest. It contains serious articles by thoughtful experts bearing on issues of concern to anyone serious about improving the delivery and financing of long-term care. In fact, the Digest’s “new year and fresh look” spurred me to email this to CLTC’s Executive Director Amber Pate: “I’m so impressed with CLTC’s program and development, especially the CLTC Digest. The industry has had nothing like that since George Sherman published LTC News & Comment in the 1990s.” Old timers like me remember how that monthly newsletter kept us all at the forefront of LTCI news and analysis at a time when anything and everything still seemed possible, in fact more than likely, to happen. If the CLTC Digest can help rekindle that sense of mission and hope, it will be a valuable part of our common objective, to improve long-term care for all Americans. So I added “I’d very much like to publish a guest LTC Bullet about CLTC and the Digest.”

Steve Moses

LTC Comment: Now here’s today’s Guest Bullet column by CLTC’s Director of Education.

The Value of Education in the Long-Term Care Insurance Industry
by
Celeste Cobb

The impact of an unexpected need for extended care has serious, if not irreversible consequences for families and for their ability to keep future financial commitments. Long-term care planning is a critical component of risk management and retirement planning and is considered the most overlooked aspect of insurance and financial planning in our country. A long-term care event and associated expenses pose the greatest threat to an aging client’s financial security.

Long-term care insurance is a complex product. Long term care planning is a complex process. Back in 1997 elder law attorney Harley Gordon, Esq. created the Certification for Long-Term Care (CLTC®) because he believed long-term care planning was an essential component of comprehensive financial, retirement and estate planning. He also did not support the common practice of educating a client about the risk of needing care for the purpose of purchasing an insurance product. Such tactics serve only to create an adversarial environment because most people believe that the worst will happen to someone else. Attempting to convince the client otherwise will only provoke an argument that leads to frustration for the advisor and the client.

As a result, Harley developed a program built on the concept of “consultative engagement.” Its goal is to educate a client about the consequences, emotionally, physically and financially, to those he or she loves, if an unexpected extended care event happens. When it is done correctly, the individual is persuaded to decide to plan for such an event, and to fund it.

The 16-hour CLTC Master Class is the hallmark of Harley’s vision and awards the CLTC designation to those who pass the 100-question exam. Over the past 26 years, tens of thousands of planning professionals have completed this training, and carry the CLTC (Certified in Long-Term Care) designation.

CLTC has many industry thought leaders among its alumni. Becoming a CLTC graduate grants instant access to this elite group of long-term care planning specialists. It also provides objective credibility for the advisor about his or her intent, commitment, and skills in extended care planning. With the advance of technology and the changing work environment, advisors have a choice of how they complete the Master Class today. There is the traditional live classroom option, or a student can join a virtual classroom, or pursue a self-study program via eCLTC.

CLTC leaders recognize the need to adapt and continually increase the value of CLTC because much has changed since 1997. New training programs have been introduced including a shortened, 4-hour continuing-education-approved “Foundations” class developed for advisors who want to know the basics, but don’t wish to specialize.

Most recently, a new “Product Insider” class was developed to answer the ever present questions about LTC insurance products. There are many ways to fund an extended care plan today, and this new class provides in depth and impartial training on the features, client applicability, pros and cons of each.

CLTC recognizes that education extends well beyond the class room. Therefore, it provides tools and “news” members can use to advance their knowledge and practice. Industry experts join our monthly webinars and contribute to our quarterly CLTC Digest. Monthly newsletters give quick updates on CLTC and industry happenings. A variety of planning and education tools are developed, updated and shared regularly, some targeted for use with a client, and others for advisors only. All materials are impartial, carrying only the CLTC logo. While it is true that all of the leading insurance carriers and distributors endorse CLTC, it is not aligned with any one organization.

CLTC’s mission is to educate financial, legal, accounting and other professionals about the need to discuss proactively with their clients the consequences of not having a plan will have on them and their families during retirement. As a former First Lady said, “There are only four types of people in the world: those who have been caregivers, those who are currently caregivers, those who will be caregivers, and those who will need caregivers.”

Celeste Cobb is CLTC’s Director of Education. Reach her at celeste@ltc-cltc.com or 203-770-2438.

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Updated, Monday, February 6, 2023, 10:40 AM (Pacific)

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LTC E-ALERT #23-001 LTC NEWS AND COMMENT

Fight to Rename 'Medicare Advantage' Gets New Push
Report: Medicaid Falls Short on Costs of Care in Nursing Homes
Most long-term care doesn’t qualify for insurance benefit
Feds to Cut Medicare Advantage Plan Pay Over Health Score Creep
Two KFF Analyses Explore the Demographics of People Jointly Enrolled in Medicare and Medicaid As Well As Program Enrollment and Spending for This Population
Debate: Will Secure 2.0 Act Help Americans Pay for Long-Term Care?
Can I Apply for Medicaid Home Care If I Left Long-Term Care?
Human Freedom Index: 2022
Look To The States, Not Congress, For Long-Term Care Financing Reform
CMS Proposal Marks Shift After Years of Skilled Nursing Frustration with Medicare Advantage Diversions
Small-town nursing homes closing amid staffing crunch
Millions of Medicaid beneficiaries may lose coverage as disenrollments resume in April
Older adults’ housing wealth hits new record at $11.81 trillion
Can My Mom Pay Me Rent If She Will Be Applying for Medicaid?
Top 5 States for Long-Term Care Planning Increases
Medicaid HCBS study shows ‘we still know very little’ about COVID in senior living
Impact of Secure Act and Long-Term Care Insurance Provisions Discussed
10 Things to Know About the Unwinding of the Medicaid Continuous Enrollment Provision
Will Secure 2.0 Increase Long-Term Care Insurance Sales?
Congratulations to the McKnight’s Pinnacle Career Achievement Award winner
Public, private partnerships key to New York state Master Plan for Aging
Nursing home staff shortage a ‘crisis’ in Clark County, Washington
81 percent of nursing homes receive less than cost of care for Medicaid patients: analysis
CMS releases new Medicaid guidance for states to tackle unmet social needs
California to Reality-Check $144K Public Long-Term Care Benefits Package
Nursing Homes Need $11.3b Annually To Meet Proposed Staffing Minimum
Spiraling costs threaten growing optimism for skilled nursing in 2023 Outlook Survey
2023: The Year Medicare Advantage Begins To Dominate Traditional Medicare
CVD Benefits of Activity Seen Below Widely Quoted Step Goal in Older Adults
US life expectancy falls to lowest levels since 1996 due to COVID, drug overdoses: CDC
House Passes Secure 2.0 Act in $1.7T Spending Bill

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Updated, Friday, December 30, 2022, 10:40 AM (Pacific)

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LTC BULLET: MAKE LTC SIMPLE AGAIN

LTC Comment: There must be a better way to do LTC. There is. Read on after the ***news.***

*** HAPPY NEW YEAR ***

*** RON HAGELMAN deserves our special thanks and a shout out. Here’s how we covered his latest column for Broker World in a recent LTC Clipping. ***

12/1/2022, “Enemies,” by Ronald R. Hagelman, Broker World

Quote: “In my humble opinion no one has been a more consistent hard headed advocate of exposing the corrosive relationship between the public response to custodial care for the aged and the lack of success in private responses to reduce and return control of individual claims destiny than Stephen Moses. His most recent manifesto ‘Long-Term Care: The Problem’ recently released from the Paragon Health Institute once again provides conclusive irrefutable evidence that the still mushrooming consequence of current market conditions is the fault of existing misguided public response to the problem. The truth is we have always been fighting ourselves. It is the incestuous relationship between the holy trinity of Social Security, Medicaid and Medicare that has made it virtually impossible for us to adequately blunt this risk from the private sector. Private funding solutions including insurance, reverse mortgages and life settlements have had no room to breathe free when all the oxygen has already been sucked out of the room by State and Federal mandated, frequently capped and therefore underfunded, politically loose footballs. This exceptional white paper provides more than a sufficient arsenal of hard statistic ammunition to defeat any spurious attempt to defend the expansion of public taxpayer funded strategies. More of the same will not help. It will however most certainly exacerbate the problem.”

LTC Comment: Ron Hagelman’s monthly column for Broker World is a mainstay of thoughtful analysis and hopeful optimism in a struggling market. Ron is a friend and ally in our common mission to improve long-term care for all. I thank him for this recognition and urge his readers to take his advice: read Long-Term Care: The Problem and look forward to Long-Term Care: The Solution, forthcoming next year from Paragon Health Institute. To borrow Mr. Hagelman’s well-known tagline: “Other than that I have no opinion on the subject.”

*** OFF TO COLOMBIA. Honestly, I can’t remember a time in its almost 25 years that the Center for Long-Term Care Reform fully closed down for a holiday from our 24/7 mission to improve LTC public policy. But now we’re going to do just that. January 2 Damon joins Steve on a flight to Panama, followed by speedboats through the San Blas Islands to Colombia, with more boats and busses to Cartagena, and finally on through the Andes, to Bogota, Medellin and other points of interest. So please enjoy a respite from LTC Bullets and LTC E-Alerts until Steve returns February 8. He’ll keep the LTC Clippings coming to premium members though perhaps with a little less frequency. Hasta luego. ***

LTC BULLET: MAKE LTC SIMPLE AGAIN

America’s long-term care system is complicated, confusing and counterproductive. People want to receive care at home, but the system shunts them into nursing homes. They want qualified caregivers they choose for themselves, but they get whatever Medicaid offers at minimum wages. They don’t want to burden their families, but the financial and emotional strain of LTC on friends and families is worse today than ever. What happened?

This part is not complicated. Since Medicaid began in 1965, government has paid the cost of catastrophic LTC. No matter how often analysts, politicians or the media told them they could lose their life’s savings to LTC, consumers would not save, invest or insure against that risk. They didn’t believe the scary warnings, but most importantly, the warnings were untrue. Most people never ended up needing prohibitively expensive extended care and those who did got it paid for by Medicaid without catastrophic spend down.

Never mind for now all the complicating details such as “doesn’t Medicaid require impoverishment?” Why do people ignore the risk and cost of LTC? Are they stupid? Or just “in denial?” Don’t we have to take care of them if they can’t or won’t take care of themselves? Isn’t government the only solution? If not Medicaid, then what? Don’t we need a new compulsory, payroll-funded, social insurance entitlement for LTC? That’s the course most analysts’ reasoning and their argument usually takes.

Don’t go down that rabbit hole. I can refute that argument and I have done many times. For now, keep it simple, just consider the basic fact. That is, few people worry about or do anything to prepare for LTC until they need it. Then when the costs mount, they slip onto Medicaid. We’ll make no progress solving the LTC challenge until we confront that reality and change it. How can we get people to deal with LTC risk and cost while they are still young, healthy and affluent enough to prepare and avoid public assistance in the future?

We saw one way to do it when Washington State confronted its citizens with the threat of a .58 percent payroll tax for a lifetime benefit of $36,500, but gave them a way out by purchasing private LTC insurance. Almost half a million Washingtonians jumped at that chance overwhelming the insurance carriers with demand for minimal policies the industry feared would be quickly dropped. Clearly people don’t want more government compulsion or taxes and they’re willing to buy private insurance to avoid them.

There’s no denying that confronting people with the need to deal with LTC risk now, not later, worked. So, how could we get people to plan for LTC now without forcing them into a big new government entitlement program? Here’s a way.

Establish by law the responsibility to fund a certain limited amount of LTC by age 50. Let a private organization or agency determine the amount, which should be somewhere between a person’s actuarial probability of needing paid care someday and the higher amount that would be required if the worst happens, such as high cost need for an extended time.

People could meet their personal responsibility in any of many ways. They could buy private LTC insurance. They could tap their home equity, $11.1 trillion for people 62 or older. They could use life insurance, over $20 trillion in effect. They could apply a portion of current or newly created retirement accounts to prefund for LTC. They could pledge some of their future estate toward LTC, legally secured to avoid the failure of Medicaid’s estate recovery program.

Clearly, there is plenty of money available in the U.S. economy to fund top quality LTC for all Americans. All we need to do is get people to plan for LTC before it’s too late for them to avoid anything but Medicaid. Government’s role should be limited to establishing the individual LTC responsibility in general which the private sector would then price out actuarially for each citizen.

Most people would act responsibly as they do when they protect themselves against other risks such as early death, fire, accident, or health risk. For those who don’t, let the usual measures when people don’t meet their legal responsibilities suffice, such as tax collection, grant reductions, or LTC avoidance fees. In other words, government would enforce LTC responsibility only in cases where people have not fulfilled their responsibility voluntarily. Not in all cases against everyone as in the WA Cares program.

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Updated, Monday, December 19, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-037 LTC NEWS AND COMMENT

Maine Has A Plan To Help Family Caregivers. Other States Should Follow
Parkinson’s disease strikes many more older adults than previously estimated: research
Regulators End Effort to Develop Long-Term Care Hybrid Rules
Enemies
The 10 Fastest Rising Costs for Seniors
Caring for Aging Relatives is Draining, Both Financially and Emotionally
Viagra Lowers the Risk of Alzheimer’s by Almost 70%, Study Says
Welcome to the December e-Brief
How to Talk to Your Parents About Long-Term Care
How Medicare Advantage plans dodged auditors and overcharged taxpayers by millions
Entering the Winter Season, How Many Nursing Facility Residents and Staff Were Up-To-Date With Their COVID-19 Vaccines?
Growing Older with Enthusiasm
Defiant Sloan to nursing home critics: Address funding to tackle staffing challenge
Lawmakers can help workers with this WA Cares repeal bill
Am I Allowed to Have Two Cheap Cars With Medicaid?

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Updated, Friday, December 16, 2022, 10:40 AM (Pacific)

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2021 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, 2021 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 2021 statistics on its website at NHE Tables (ZIP). Click on that link to download the tables, unzip them, then click on the data tables of interest, Tables 14 and 15 for our purposes.

Health Affairs has published a summary and analysis of the new data titled “National Health Care Spending In 2021: Decline In Federal Spending Outweighs Greater Use Of Health Care." Health Affairs subscribers can access the full text of that article here. Others can purchase it. The “Abstract” is available free. Unfortunately, the Health Affairs summary has little to say about long-term care, so read on to get that story.

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

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

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"So What If the Government Pays for Most LTC, 2021 Data Update"
by
Stephen A. Moses

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

Nursing Homes

America spent $181.3 billion on nursing facilities and continuing care retirement communities in 2021, a 7.9% decrease compared to 2020 due to pandemic disruptions. The percentage of these costs paid by Medicaid and Medicare has gone up over the past half century (from 26.8% in 1970 to 52.3% in 2021, up 25.5 % of the total) while out-of-pocket costs have declined in the same period (from 49.2% in 1970 to 24.5% in 2021, down 24.7% 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 1970-2021.

So What? Consumers' liability for nursing home and CCRC costs has declined by over half, down 50.2% in the past five decades while the share paid by Medicaid and Medicare has nearly doubled, up 95.1%.

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 $688,000 and in some states up to $1,033,000 of home equity (as of 1/1/23). No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program. Thus, although Medicaid pays less than one-third of the cost of nursing home (and CCRC) care (29.9% of the dollars in 2021), it covers nearly two-thirds (65.1%) of all nursing home patient days.

So What? Medicaid pays in full or subsidizes nearly two-thirds of all nursing home patient days. Even if Medicaid pays nothing with the entire amount due contributed from the recipient's income, the nursing home receives Medicaid's dismally low reimbursement rate.

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care. No wonder nursing homes risk insolvency when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care. “Medicaid, the primary payer for nursing homes, covers more than 60 percent of all nursing home residents and approximately 50 percent of costs for long term care services. Medicaid reimbursements, on the other hand, only cover 70 to 80 percent of the actual cost of care.” (Source: AHCA/NCAL, “Financial Challenges Continue To Affect Nursing Homes, Emphasizing Need For Higher Medicaid Reimbursement Rates,” October 14, 2020)

Private Health Insurance

Don't be fooled by the 9.0% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2021. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because many LTCI policies pay beneficiaries who then pay the providers. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments. This fact further inflates the out-of-pocket figure artificially.

Assisted Living

How does all this affect assisted living facilities? According to the Genworth Cost of Care Survey for 2021, ALFs cost an average of $54,000 per year, up 4.7% from 2020. Although assisted living facilities remain mostly private pay, “48% of ALFs are Medicaid certified” and only “a small minority of state Medicaid programs do not cover services in assisted living.” (Find these quotes under the source’s “Finance” tab.) Over time assisted living facilities have followed nursing homes down the primrose path of accepting more and more revenue from Medicaid.

Many people who could afford assisted living by spending down their illiquid wealth, especially home equity, choose instead to take advantage of Medicaid nursing home benefits. Medicaid exempts one home and all contiguous property (up to $688,000 or $1,033,000 depending on the state), plus—in unlimited dollar amounts—one business, one automobile, prepaid burials, term life insurance, personal belongings and Individual Retirement Accounts not to mention wealth protected by sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care.

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

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

Home Health Care

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $125.2 billion on home health care in 2021, nearly the same as in 2020 ($125.0). Medicare (37.2%) and Medicaid (34.2%) paid 71.4% of this total and private health insurance (not LTC insurance) paid 12.7%. Only 10.3% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source: Table 14: Home Health Care Services Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2021.

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

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

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

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

Note especially:

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

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

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

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

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

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

"The LTC Graduate Seminar Transcript" at http://www.centerltc.com/members/LTCGraduateSeminarTranscription112712.pdf (requires password, contact smoses@centerltc.com);

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

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

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

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

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

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Updated, Monday, December 5, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-036 LTC NEWS AND COMMENT

How Medicaid mission creep undermines real health care
Medicare Advantage Coverage is Rising for the Declining Share of Medicare Beneficiaries with Retiree Health Benefits
Study: 70% Want To Age At Home, But Only 10% Have Long-Term Insurance
COVID mortality trending older, with 9 in 10 deaths in adults aged 65 and older
More Families Depend on Medicaid to Pay for Long-Term Care
Ongoing Impacts of the Pandemic on Medicaid Home & Community-Based Services (HCBS) Programs: Findings from a 50-State Survey
A Look at Waiting lists for Home and Community-Based Services from 2016 to 2021
Congressional Research Service Issues In Focus White Paper on Overview of Long-Term Care Insurance
People are still getting out of a coming payroll tax for long-term-care program
Federal Government Suspends Sale Of Long-Term Care Insurance To Its Employees
Magic Johnson's Firm Powers New Long-Term Care Effort
Private Equity Trying Harder to Keep People Out of Nursing Homes, Not Invest in Them
Hidden audits reveal millions in overcharges by Medicare Advantage plans
Notice of Federal Long Term Care Insurance Program (FLTCIP)–Suspension of Applications for FLTCIP Coverage

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Updated, Friday, December 2, 2022, 10:40 AM (Pacific)

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LTC BULLET: LAST UNTIL LTC

LTC Comment: The question of how to obtain and pay for LTC is moot unless you survive long enough to need it. A guide follows the ***news.***

*** STEVE MOSES FEATURED IN HEALTH CARE NEWS:

11/18/2022, “More Families Depend on Medicaid to Pay for Long-Term Care,” by AnneMarie Schieber, Health Care News

Quote: “Medicaid is the government’s health care safety net, but for LTC, it has become a hammock, says Stephen Moses, president of the Center for Long-Term Care Reform and author of the Paragon report, titled ‘Long-Term Care: The Problem.’ ‘The common wisdom is you have to become impoverished before the government helps you with long-term care, but the truth is very different,’ Moses told The Heartland Daily Podcast on November 1. ‘I call it “the fallacy of impoverishment.’” The 40-page report shows how liberal enrollment policies disincentivize families from saving for LTC and how dependence on Medicaid and Medicare has compromised care and driven out more innovative, cost-efficient options. … It is critical for Congress to start pushing for private options now, says Brian Blase, president of the Paragon Health Institute. … Moses is working on a second report on solutions.”

LTC Comment: Check out the article and the podcast. Then keep an eye out for “Long-Term Care: The Solution,” forthcoming from the Paragon Health Institute. ***

LTC BULLET: LAST UNTIL LTC

LTC Comment: Hospitals and long-term care are joined at the hip. One of the reasons America has a big nursing home industry is that policy makers sought to moderate Medicare expenditures at the outset in 1965. Paying for sub-acute and rehabilitation in skilled nursing facilities through Medicaid reduced higher Medicare hospitalization costs. But making the transition from acute to long-term care has always been a challenge. Often families are left with an urgent, high-pressure need to find a suitable nursing home placement when Medicare coverage runs out, private funding is unavailable, Medicaid beds are scarce and eligibility uncertain. But before you even get to cope with those issues, you must survive the hospital.

So, when I read the following essay by LTCI author, trainer, producer and all around industry maven Margie Barrie, I thought it’s something all LTC Bullets readers should see. Margie’s story is all the more poignant given her and her husband-patient Bernie’s long active involvement in the LTC insurance business. Too much of what she says and warns is familiar to me as one who has managed hospitalizations for late parents and wife. In today’s government funded and regulated health care system, the funder (Medicare or Medicaid) becomes the providers’ customer, getting most of their attention, instead of the patient who needs care. Lesson learned. Don’t surrender to medical or bureaucratic authority. Demand clarity, reason and respect.

A much abbreviated version of the following piece was published by ThinkAdvisor. We offer this unabridged account with the author’s permission.

“8 Steps to Maneuver Through a Medical Crisis with a Loved One”
by
Margie Barrie

I started writing this article while sitting by my husband’s bedside in the hospital. The last few weeks have been a medical nightmare.

My purpose is to share what I have learned the hard way – strategies needed to successfully maneuver through a medical crisis with a loved one.

Here’s what happened:

Week 1 - My husband Bernie had emergency gall bladder surgery. It was very badly infected, and he had sepsis. With the hospitalist system now in place in many hospitals, you’re assigned a surgeon in the emergency room. I will call him Dr. S.

Week 3 - We had a 9 a.m. follow-up appointment with Dr. S. Bernie was still having pain and very weak.

LESSON 1 – Be assertive. If you think there is a problem that is not being addressed by the doctor, don’t take no for an answer. Speak up and listen to your gut feelings.

Dr. S. found that the incision was badly infected. He drained it and said Bernie should return home and a home health care nurse would visit daily to check it.

I replied: “There is something really wrong here. Please do additional tests.”

Dr. S. disagreed. I insisted. And finally he replied – in a very aggravated tone - that I should take him to the emergency room if I was worried.

That’s what I did. After numerous tests, we were informed that the sepsis was worse, and that Dr. S. would do emergency surgery the next morning.

If I had taken him home - like originally advised – my husband probably would have died.

LESSON 2 – Take copious notes. If possible, record the conversation.

The following morning, a surgery that was supposed to take one hour lasted three. When Dr. S. found me in the waiting room to discuss the surgery results, I was anticipating good news. I was shocked to hear what he had to say . . . that he had to do another emergency surgery in two days.

I did take some notes but was so horrified that I missed a lot of what he was explaining. After Dr. S. left, the woman who had been sitting nearby came over and hugged me. She had overheard the conversation. Then I asked her to help me recall what Dr. S had said so I could take more notes.

Keep a notebook. Write down the name of every person providing medical updates and what they said and when. If they know you have their name, they immediately feel accountable and will be more likely to provide the attention you want and need to stay on top of the medical crisis.

LESSON 3 – Doctors and other medical personnel seem to sugarcoat the patient’s condition.

Probe to get the hard facts. The following day, I called ICU for an update and was told he was doing fantastically. Meanwhile, he was on a breathing tube and heavily sedated.

I wanted to know the truth. I finally drove to my primary care doctor’s office to ask him in person for more details. I then asked: “Could my husband die from this and should I have my sons fly in.” He hesitated and then said yes.

Also, I learned that there were a number of small blood clots in his left leg. That could result in a stroke. Ask why various medications and IVs are being used.

LESSON 4 – Be aware of the limitations of the hospitalist system.

Many hospitals are now using the hospitalist system – where every doctor seeing a patient is a specialist in a certain area. From a management perspective, it is touted as providing continuity of care for an in-patient.

However, from a spouse’s vantage point, it’s frustrating. I never could get in touch with any doctor who could provide a comprehensive picture of all the problems. My primary care doctor is not allowed to see inpatients, because he is with an outside group practice. But he was able to access the hospital records and keep me updated.

LESSON 5 – Take control when needed.

When Bernie was improving and moved to a regular hospital room, I quickly realized that the doctors were only talking to him. He was also sugarcoating the facts so I wouldn’t worry. I needed to know all the facts. I have continually reminded my husband of that – and have now been calling the Case Manager and other key people to make sure I’m in the loop. That is very important.

LESSON 6 – Memorize these two magic words - Unsafe Discharge.

Even if a hospital wants to discharge a patient – primarily because of the revised Medicare payment system - you can protest and insist that the patient stay longer. The words to use are “Unsafe Discharge.” And then the hospital needs to keep the person for the longer period of time while the appeal is underway.

It was important that my husband be admitted to the hospital’s rehab area rather than going to an outside facility. First, the care is excellent; and two, Dr. S. wanted to continue to monitor his progress. A friend advised me to protest a discharge until my husband was strong enough to get three hours of physical therapy a day, which is the admission requirement. I called the Case Manager to introduce myself and told her upfront that I would appeal any discharge plans until my husband was approved to go to their rehab facility. And it worked - he has now been moved there.

LESSON 7 – Use the CaringBridge website to provide updates.

It’s wonderful to have family and friends concerned about my husband’s progress, but it’s overwhelming to be fielding numerous calls, emails and texts in addition to working and going to the hospital every day. This free website enables you to provide a journal entry and people can then comment. I read it every morning – all this support and love are so appreciated.

LESSON 8 – Take time for yourself.

You will need it to survive this. Many days when I leave the hospital I am exhausted and stressed. My solution right now – gourmet chocolate ice cream. It does help.

Margie Barrie, an agent with ACSIA Partners, has been writing the ThinkAdvisor LTCI Insider column since 2000. She is the author of two books and a frequent conference speaker.

LTC Comment: Get well soon, Bernie!

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

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LTC E-ALERT #22-035 LTC NEWS AND COMMENT

Changes In The LTC Industry Call For Advance Planning By Seniors Who Intend To Age In Place
Long-term-care law might be changing again, and solvency is sought
Long-Term Crisis: The Case for Reforming Medicaid ‘Personal Care’ in New York
Can Returning Assets Eliminate a Medicaid Transfer Penalty?
Millennials Are Asking About Long-Term Care
VA Nursing Home Care: Opportunities Exist to Enhance Oversight of State Veterans Homes
Nursing Home Operators Brace For the Threat of a Tripledemic
White House to extend PHE designation through April, reports say
Medicare Advantage 2023 Spotlight: First Look
Turkey, Pumpkin Pie and the Long-Term Care Conversation: LTCI Insider
Report backs immigration as a way to improve long-term care
Pandemic Drives Federal Share of State Revenue to Record High
‘Substantial’ decline in dementia rates due in part to higher education levels: study
States’ use of LTSS varies widely for dual-eligible adults with dementia
A SCOTUS nursing home case could limit the rights of millions of patients

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Updated, Friday, November 11, 2022, 10:40 AM (Pacific)

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LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment: The Center for Long-Term Care Reform is a membership organization. Thank you for your support. Here’s an update on our recent LTC research and advocacy on your behalf, after the ***news.***

*** HONOR VETERANS TODAY ***

*** TODAY'S LTC BULLET is sponsored by Claude Thau with BackNine Insurance. In addition to many unique services to advisors relative to individual, worksite and affinity LTCi (including his revolutionary “Range of Exposure” tool that protects FPs from risks most don’t recognize). New service: your own free insurance website allowing clients to buy insurance with as little or as much of your involvement as you or they want. Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. Contact him at 913-707-8863 or claude@back9ins.com to kick his tires & discuss how he might help you. ***

*** REGISTRATION IS NOW OPEN for the 2023 Intercompany Long Term Care Insurance Conference! Organizers report “Our in-person conference will be March 12 - 15th at the Sheraton Downtown Denver in Denver, CO. Our agenda includes over 45 educational sessions with ample time for networking and reconnecting with colleagues. We still have room for exhibitors and sponsors! Please contact us at info@iltciconf.org if you are interested in either opportunity to showcase your products and services to our attendees.” Click through here to register and book your hotel. ***

LTC BULLET: WHAT HAVE YOU DONE FOR ME LATELY?

LTC Comment: Step one to solve a problem is to recognize you have one. For long-term care services and financing, we’re long past step one. Everyone recognizes America’s LTC system is broken.

Step two is to define the problem. We have lots of published content on that as well. The Center for Long-Term Care Reform recently collaborated with the Paragon Health Institute to offer our definition: Long-Term Care: The Problem.

Step three is to explain what caused the problem. It’s step three where we part company with most analysts. In the face of LTC’s many challenges, they throw up their analytical hands in despair and turn immediately to recommend more government spending, central planning and regulation to save the day. We argue that those “solutions” are actually what caused the problems in the first place. Doing more of what you’ve been doing and expecting a different result defines insanity.

So, what caused LTC’s many dysfunctions? Here’s how we explained it in Long-Term Care: The Problem:

Providing and funding long-term care (LTC) for the elderly is a large and growing challenge. Baby boomers start turning 85—the age at which health and LTC costs spike—in 2031, as Social Security and Medicare face insolvency. The government, mostly through Medicare and Medicaid, finances almost three-fourths of LTC expenditures (72.3 percent in 2020). Central planning, public funding, heavy regulation, and easy access to welfare benefits have caused most of LTC’s problems, such as nursing home bias, poor access and quality, inadequate revenue for care providers, caregiver shortages, and the terrible emotional and financial distress for caregiving families. Medicaid especially is responsible because, despite the conventional wisdom that it requires impoverishment, the program’s LTC benefits are routinely available not only to the poor but to the middle class and affluent as well. …

Access to publicly financed LTC [late in life] creates a moral hazard that discourages responsible LTC planning when people are still young, healthy, and affluent enough to save, invest, or insure for the risk. Policymakers should consider how public financing created and worsened LTC’s problems before proposing more of the same to address those problems.

Step four to solve a problem is to eliminate its cause. For long-term care, that means removing the perverse incentives in Medicaid that have (1) discouraged early and responsible LTC planning and (2) rewarded ignorance and complacency about LTC risk and cost with windfall welfare benefits for patients and their families if and when catastrophic care costs occur.

How to achieve the objective of retargeting Medicaid to the genuinely needy and persuading everyone else to plan early to save, invest or insure for LTC is the subject of our forthcoming paper, again with the Paragon Health Institute, titled “Long-Term Care: The Solution.” Watch for it in the new year.

What else have we been up to at the Center for Long-Term Care Reform? Today’s LTC Bullet is our 1,346^th. They’re all archived chronologically and by topic here. Check them out. So far this year, we’ve published 34 LTC E-Alerts, our weekly collection (for all members) of our daily LTC Clippings (for premium members). In the Clippings and the LTC E-Alerts, Steve Moses scans the news and research to keep members apprised of what they need to know to stay on the professional forefront.

On November 1, AnneMarie Schieber of the Heartland Daily Podcast interviewed Center president Stephen Moses about “How Medicaid Compromised Long-Term Care”. She summarized: “In the interview, Moses discusses:

1. How easy is it to get Medicaid to pay for long-term care?

2. How has this compromised the quality of long-term care over the decades?

3. Who will need long term care? Can any of us live independently until we die?

4. Baby boomers…most are now 65…what kind of pressure will that put on long-term care and Medicaid in 10, 20, and 30 years from now?

5. What about counting on family members to care for you? How about covering your care with your own wealth and investments?”

Click here to listen to this 20-minute podcast.

On November 2, RealClearPolicy published Steve’s article “What’s Wrong With Long-Term Care.” He concluded:

The only solution to this compendium of complications is to eliminate the moral hazard created when people can ignore the risk and cost of LTC until they need it and transfer the liability to taxpayers. To do that, we must: change Medicaid financial eligibility rules so they no longer desensitize the public to LTC risk and cost; front load the need to plan, save, invest or insure for LTC so most people deal with it when they’re still young, healthy and affluent enough to manage such financial decisions; and remove Medicaid as an eventual LTC safety net for people who fail to plan but retain wealth.

Here are a few more of our published contributions to the long-term care conversation in the past year.

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

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

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

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

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

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

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

“LTC insurance sales suddenly surge,” by Stephen A. Moses, McKnight’s LTC News, August 10, 2022

Won’t you join us in the Center for Long-Term Care Reform’s noble mission to “ensure quality long-term care for all Americans?” To join, contact Damon at 206-283-7036 or damon@centerltc.com. Sign up online at http://www.centerltc.com/support/index.htm. With your help, we can do this!

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

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LTC E-ALERT #22-034 LTC NEWS AND COMMENT

OneAmerica® Long-Term Care Survey Shares Consumers' Perspectives
Genworth Executives Review Long-Term Care Rate Hike Settlements
Medi-Cal’s long-term care services reach only a small portion of seniors, disabled adults
WA Cares suddenly solvent? Hopefully, but it depends — and the long-term-care law still isn’t good
What’s Wrong With Long-Term Care?
How Medicaid Compromised Long-Term Care (Guest: Stephen Moses), with AnneMarie Schieber
54% of Consumers Have Cut Retirement Savings Due to Inflation: Allianz Life
Soaring dementia treatment costs leave care providers with task of finding solutions: report
Team Biden’s latest welfare expansion: Medicaid payments for housing, food, even furniture
California study holds lessons for middle-market providers nationwide: NIC

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

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LTC E-ALERT #22-033 LTC NEWS AND COMMENT

Another Facility Shuttered as Montana Nursing Home Closures Continue
Don't Miss LTC Impact Day This Monday!
WA Cares Fund projected to be solvent through 2098 in new analysis
GE to End $2.5B Long-Term Care Insurance Reinsurance Arrangement
Home health spending outpacing rate of national healthcare spending
In the U.S., Income and Wealth are Concentrated at the Top. Where Does This Leave Older Americans?
Annual nursing home, home healthcare spending more than double the recent rate of healthcare overall
One in 10 older U.S. adults has dementia, new national data show
Nursing homes becoming ‘loss leaders’ as they struggle with funds, staffing, sector leaders say
Pandemic-delayed move-ins mean residents come to senior living with greater needs: NIC
Millions at risk of losing health insurance if U.S. ends Covid public health emergency in January
Why long-term care advocates are holding their breath over likely Congress power shift
Older Households: Comparison of Income, Wealth, and Survival in the United States with Selected Countries
Inside the Social Security COLA Calculations
U.S. extends public health emergency, buying LTC a bit more time

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Updated, Friday, October 28, 2022, 10:40 AM (Pacific)

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LTC BULLET: WA CARES REPERCUSSIONS

LTC Comment: Washington State politicians and bureaucrats think they can do LTC insurance better than private sector professionals. What could possibly go wrong?, after the ***news.***

*** SUBSCRIBE to LTC Clippings and Steve Moses (2019 ILTCI Recognition Award Honoree) will become your research assistant. Steve will tip you twice a day (on average) with news and views on things you need to know to stay at the forefront of professional expertise. You’ll see the latest articles, reports, data, and op-eds before your clients confront you with them sight unseen. You’ll get trenchant analysis and valuable ideas on how to address objections and complaints. Contact Damon at 206-283-7036 or damon@centerltc.com for details or subscribe directly here: http://www.centerltc.com/newonlinepaymentspage.htm. Choose “Premium Membership” to receive our LTC Clippings. For example, here are some recent LTC Clippings:

10/24/2022, “WA Cares Fund projected to be solvent through 2098 in new analysis,” by King 5 Staff, King5 News
Quote: “Washington state’s long-term care program - known as the WA Cares Fund - is projected to be solvent through June 2098, according to a new study published by the Office of the State Actuary. … Click here to read the full report.”
LTC Comment: Milliman is the actuarial gold standard and it produced this report. But didn’t other actuaries give us similar assurances in 1935 (Social Security) and 1965 (Medicare)? Now look at their prognoses: insolvency by 2035 and 2028, respectively. What will WA Cares look like after a few years of high inflation, rising interest rates, and increasing government budget deficits? Can actuaries factor in those considerations?

10/26/2022, “Home health spending outpacing rate of national healthcare spending,” by Diane Eastabrook, McKnight’s Home Care
Quote: “Spending on home healthcare rose by 10.5% in August, more than double the 4.9% increase in healthcare spending overall, according to a new report by research and consulting firm Altarum. Spending on skilled nursing care wasn’t far behind, expanding by 10.2%. … Demand for home health services have outpaced those for skilled nursing over the past two years. A report last spring found discharges to home health between the second quarter of 2020 and the third quarter of 2021 increased by 2.5% to 24.1% of total inpatient discharges, while the number of patients released to SNFs declined by 2.4% to 18.6% of total discharges.”
LTC Comment: Experts thought rebalancing from nursing homes to home care would save money. That prospect isn’t panning out as I’ve always predicted. Research shows that home care delays, but doesn’t necessarily replace institutional care over a lifetime or across society. People want home care and they should have it, but when government pays for most of it, shortages and quality problems predominate. They’re worsening as inflation from excessive public spending and money printing increases.

10/26/2022, “Don't Miss LTC Impact Day This Monday!” by NAIFA’s Limited & Extended Care Planning Center
Quote: “Long-Term Care Awareness Month starts in November, and NAIFA's Limited & Extended Care Planning Center is kicking it off one day early with ‘Don't Be Scared of Long-Term Care’ this Monday, October 31 from 9 am to 5 pm. Join industry experts at the top of each hour to hear the latest insights on long-term care! Each session will last 30 minutes, with 15 minutes left for questions and answers so you can get the information that's most beneficial to you. Registration is free and you are welcome to hop in and out of the sessions throughout the day. All you need to do is register and one link gets you full access.”
LTC Comment: Click through to check out the sessions on offer.

LTC BULLET: WA CARES REPERCUSSIONS

LTC Comment: In my estimation, no one knows more about private long-term care insurance than Claude Thau. He’s run a carrier, been a broker/dealer, and guided hundreds of producers up the steep ladder of success in LTCi sales. Claude is the lead author of Milliman’s annual Broker World LTCi Survey and a past Chair of the Center for Long-Term Care Financing (1998-2005). He knows whereof he speaks.

In the current month’s issue of Broker World, he addressed future prospects for the WA Cares Fund (WCF), Washington State’s foray into compulsory, payroll-funded, social insurance for long-term care. Following are some key points from Claude’s article, but definitely go to the source itself for all the interesting context and details. (If you don’t yet subscribe to Broker World, you can correct that oversight here.)

“What May Be The Repercussions of The Washington Cares Fund?,” by Claude Thau, Broker World, October 1, 2022

Thau: “When working to get the law passed, proponents expressed confidence that WCF would stimulate a significantly increased future market for private LTCI because WCF would educate consumers regarding their need for LTCI.”

He points out several reasons why such a positive outcome is doubtful:

Confusion: “WCF uses different triggers than the HIPAA-defined triggers used by private LTCI and pays different providers. To the degree that it is hard to remember trigger definitions and provider qualifications, it becomes much more difficult when faced with conflicting definitions.”

Dried-Up Stream of Sales: “Because Washingtonians wanted to be exempt from the WCF tax, the industry sold more than 90 times as many WA policies with LTCI features in 2021 than in 2020. Because of the avalanche of 2021 sales, demand is likely to be greatly muted for the next several years. … Rather than devoting disproportionate attention to WA’s small, unattractive LTCI market, insurers, brokers, employers, and others might sit on the sidelines for an extended period.”

Lack of Perceived Need: “Many Washingtonians seem likely to think they need no additional coverage. Unfortunately, rather than educate Washingtonians regarding the value of supplemental coverage, the state promotes WCF with messages such as ‘We no longer have to worry about how we will afford long term care as we age.’”

Denigration of the Private LTCI industry: “In addition to suggesting that WCF is all the coverage Washingtonians need, WA officials spread inaccurate and misleading comments denigrating private LTCI.”

Financial advisor hesitance: “Because of the complications introduced by WCF, financial advisors seem more likely to be hesitant to raise the issue of LTCI with their clients. The reduced likelihood of a sale also discourages what may be fruitless discussion, and more work for less compensation is not very motivating. … Employers and employee benefit managers also seem less likely to be interested. Thus, much of the private LTCI industry might sit on the sidelines for at least several years.”

Increased Total Cost: “The combined cost for LTCI (WCF plus private insurance) will increase significantly compared to prior to WCF for two reasons:

Buyers are forced to have a zero-day elimination period which increases the price (but provides additional value).
People who can afford private LTCI tend to be healthy high-earners, who are overcharged for WCF coverage to subsidize less affluent and less healthy Washingtonians.

“The market is not likely to respond favorably to the high combined cost.”

Future Impact: “For the above reasons, WCF seems likely to shrink future LTCI sales significantly, particularly stand-alone LTCI sales. Future sales may migrate heavily toward life insurance or annuities with LTCI features. The life insurance or annuity side of the contract is less confusing and guarantees a pay-out.”

“The 2021 private LTCI sales in WA were less likely to include automatic compound benefit increases. In addition to providing less coverage up-front, the shortfall is likely to increase over time.”

“In addition to its impact on future LTCI sales in WA, WCF has encouraged other states to consider state-run LTCI programs. In California, a task force is exploring creation of a state LTCI program. Most observers think a CA-run program is nearly certain.”

LTC Comment: Next Claude opines about how this shotgun spread of state LTC programs might differ in terms of exemptions and “triggers, total coverage, compounding, benefits, vesting, etc.” He asks:

“Will insurers be interested in complementing state programs if those programs vary by jurisdiction? Will financial advisors consider such complexity worth their effort? Will employers and employee benefit advisors consider LTCI programs if they must vary by employee resident state? What will happen to individuals who move from one state to another? Will inconsistencies increase pressure for a uniform national program? Will consumers, employers, advisors and insurers sit on the sidelines in what they might view as a turbulent market with a questionable future?”

In sum: “Hopefully, other jurisdictions will involve the insurance industry in discussions about all aspects of a state-run LTCI program throughout the development process. Such involvement should include front-end salespeople as well as insurance company home office personnel. It should include careful consideration of the insurance industry’s comments, not just token participation.”

LTC Comment: Left unsaid is the fact that the WA Cares Fund designers did not consult the insurance industry in any meaningful way which may account for many of that plan’s problems.

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

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LTC E-ALERT #22-032 LTC NEWS AND COMMENT

Washington State Issues New Rules for Long-Term Care Fund
Slowing home sales could delay recovery for independent living, CCRCs: Fitch
Social Security COLA for 2023 Set at 8.7%
The US Needs To Help Seniors And Their Families Navigate Long-Term Care
Research Centers Post Long-Term Care Policy Papers
Fiscal Policy Report Card on America’s Governors 2022
Parkinson: Nursing home sector pinning hopes on ‘Medicaid adequacy’ rule
One quarter of clinicians say they want to switch careers, survey finds
Providers demand tax credit to help New Yorkers fund home care
Paper analyzes government policy’s role in creating LTC problems
Study: Most Pre-Retirees Unprepared to Retire by Age 65

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Updated, Friday, October 14, 2022, 10:40 AM (Pacific)

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LTC BULLET: LTC REFLECTIONS

LTC Comment: America made great strides toward fixing long-term care until 2006. Then, nothing since. What happened? When will progress resume? We explain after the ***news.***

*** THE PARAGON HEALTH INSTITUTE published my new study last week titled “Long-Term Care: The Problem.” PHI president Brian Blase summarized the paper and stated: “You can find ‘Long-Term Care: The Problem’ and an executive summary here.” He also announced: “The next paper, ‘Long-Term Care: The Solution,’ will be published early next year and will provide a set of reforms to address the problems caused by misguided government policies.” McKnight’s Senior Living covered the study in “Paper analyzes government policy’s role in creating LTC problems” by Kathleen Steele Galvin. ***

LTC BULLET: LTC REFLECTIONS

LTC Comment: Long-term care in the USA is fraught with problems. To name a few: dubious access and quality, institutional bias, excessive dependency on inadequate government financing, caregiver shortages, and worn out, financially distressed families struggling to support loved ones in need of help. What went wrong?

I argue in a new paper titled “Long-Term Care: The Problem,” that Medicaid is the primary cause of those dysfunctions. Specifically, availability of Medicaid LTC benefits when care is needed late in life created a moral hazard that discouraged responsible LTC planning while consumers were still young, health and affluent enough save, invest or insure for the risk. Easy access to Medicaid late in life enabled consumers’ denial of LTC risk and cost leaving them nowhere to turn when catastrophic LTC costs ensued except to Medicaid. Too many people dependent on inadequate Medicaid funding led directly to all the other problems cited above. Enough here about that; see the paper for details.

What I want to cover today is a certain mystery. Congresses and presidents from both political parties worked for decades to fix what’s wrong with long-term care and Medicaid. When Medicaid LTC expenditures vastly exceeded original expectations, they set about controlling costs. They imposed financial eligibility restrictions. They required penalties to discourage artificially self-impoverishing asset transfers. They made estate recoveries mandatory. They encouraged private LTC insurance with limited tax deductibility; offered the LTC Partnership program to forgive estate recoveries; and urged the public to “Own Your Future” by preparing for the likely eventuality of needing long-term care one day. All this was done to wean the public off Medicaid and prepare them to pay privately for top quality long-term care in the most appropriate venue if and when they needed it.

Nothing worked fully, but progress was being made until 2006. After that, nothing. What happened? That’s the mystery. Here’s my explanation.

From Medicaid’s early days legislative efforts to control its spending on long-term care and to focus the public on early LTC planning coincided with economic recessions. The economy would tank; politicians couldn’t make budget ends meet; deficits and the national debt grew; pressure mounted to curb spending; and statutory changes were passed to control costs by ensuring Medicaid LTC benefits went only to the truly needy. Consider these examples of recessions that led directly to legislative reforms:

Recessions	Legislation
January to July 1980	Omnibus Reconciliation Act of 1980 imposed the first ever restriction on asset transfers to qualify for Medicaid.
July 1981 to November 1982	Tax Equity and Fiscal Responsibility Act of 1982 authorized state Medicaid programs to penalize asset transfers, place liens on real property, and recover benefits from the estates of deceased recipients Consolidated Omnibus Budget Reconciliation Act of 1985 attempted unsuccessfully to prohibit "Medicaid qualifying trusts." Medicare Catastrophic Coverage Act of 1988 required Medicaid asset transfer penalties, mandated a 30-month look back, and capped maximum asset transfer penalties at 30 months.
July 1990 to March 1991	Omnibus Budget Reconciliation Act of 1993 made estate recovery mandatory, expanded the look back period to five years, eliminated the cap on asset transfer penalties, and prohibited “pyramid divestment.” Health Insurance Portability Act of 1996 made it a crime to transfer assets to qualify for Medicaid (Throw Granny in Jail Act) and Balanced Budget Act of 1997 repealed Throw Granny in Jail and replaced it with Throw Granny’s Lawyer in Jail.
March 2001 to November 2001	Deficit Reduction Act of 2005 placed the first cap on Medicaid’s home equity exemption, limited the half-a-loaf loophole, amended the annuity rules, and unencumbered the Long-Term Care Partnership Program.
After 2000, the linkage between recessions and legislative reform was broken.	A sea change in economic policy around the turn of the century unleashed Medicaid spending. The Federal Reserve forced interest rates down artificially. The U.S. Treasury spent beyond its means. The Federal Reserve monetized the resulting debt. Inflation occurred but it was disguised by rising real estate, stock and bond values. Consumers didn’t feel the pinch. The rest of the world bought our debt, sending the USA valuable goods in exchange for bonds we sold and they bought relying on our promises to repay them. Modern Monetary Theory prevailed.
December 2007 to June 2009 (The Great Recession) and February 2020 to April 2020 (Covid 19 Recession)	These recessions spurred no legislation to control Medicaid LTC spending by targeting benefits away from the middle class and toward the truly needy. In fact, they led to ever more generous funding of all Medicaid programs including long-term care. The Covid 19 recession created a tsunami of spending. The federal government prevented state Medicaid programs from culling even ineligible people from the rolls. Enhanced federal matching funds were conditioned upon keeping everyone on Medicaid until the national health emergency (NHE) ended. The pandemic subsided but the NHE has been extended out of fear that millions would be forced off Medicaid when it ends.

What is going on? As long as politicians were under budgetary pressure to control expenditures, they responded with legislation intended to target scarce Medicaid resources to people most in need. Eligibility controls, rules against asset divestiture, and mandatory estate recoveries sent the message that people should plan early and responsibly to save, invest or insure against their personal LTC risk. But after 2006, with the government money spigots wide open and the Federal Reserve liberally monetizing whatever debt the federal government created while forcing interest rates to near zero, pressure to control costs disappeared. Consequently, no further progress was made to ensure Medicaid LTC benefits went only to the genuinely needy. More and more Medicaid became the primary LTC payer for catastrophic costs not only of the poor but of the middle class and affluent as well.

What is changing? We are now experiencing a regression to the mean of economic and political policy making. Excessive government spending during the pandemic created an economic bubble. Too low interest rates caused excessive optimism, malinvestment, booming stock markets, and engorged real estate values. Too much money chased too few goods as the government channeled unearned funds to non-working people and non-producing businesses. The bill for that and for earlier decades of careless spending and irresponsible monetary policy is finally coming due. The price of payment is consumer inflation. All the “generous” government spending over the years that created a national debt currently exceeding $31 trillion is now in collection status. Consumers make the payments for their government’s profligacy at the grocery store, at the gas station, in their monthly rent or mortgage payments, in literally everything they buy.

What does this mean going forward? Careless fiscal and monetary policies unleashed debt and inflation. High inflation makes servicing the huge national debt unsustainable. All of a sudden, politicians at both the state and federal levels are being forced to deal again with budget shortfalls. It’s harder than ever for them to raise taxes, because the pressure of inflation has tapped out tax payers. The pols can no longer get away with printing money and monetizing the debt, because that only increases inflation and tightens the fiscal vise. A long-delayed rendezvous with economic reality is underway.

So here is what I predict. This new economic and political reality will once again force politicians to control Medicaid LTC expenditures. They will need either to revisit the kinds of interventions tried before and reinstate them with stronger enforcement. Or they will have to try something different. I think we’ve learned what does not work. Telling people they could lose their life savings to catastrophic LTC costs when it wasn’t true, did not work. Because the federal and state governments did not adequately enforce income and asset eligibility rules, including asset transfer restrictions, and mandatory estate recoveries, the public was desensitized to LTC risk and remains so.

What are the odds that will change in the future? Nil. When the current recession finally ends and the economy improves, the politicians will return to their usual ways. As soon as the budget pressure is off, they’ll lose interest in controlling Medicaid LTC expenditure. Benefits will continue to flow to the middle class and affluent. States won’t enforce strict eligibility rules or estate recoveries. Moral hazard will reign as before with few people worrying about LTC risk and cost until they need high cost care. Then they’ll turn as they always have to Medicaid and around we’ll go again in this endless negative cycle.

No, we have to do something different. What to do and how to do it is the subject of my next paper for the Paragon Health Institute titled “Long-Term Care: The Solution.” Watch for it early in the next year, but expect clues to its direction in these LTC Bullets, both past and future.

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Updated, Monday, October 10, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-031 LTC NEWS AND COMMENT

Legal Ease: Medicaid Asset Protection Planning — what is it?
Elder Care: Nursing homes, Medicaid and the middle class
Exercise caution with zero-premium Medicare Advantage plans
As seniors’ presence in nursing homes drops, young people with disabilities stuck with few alternatives: study
Medicaid Long-Term Care’s Real Problem Is Insufficient Resources, Not Abuse By Wealthy Seniors
Pick Up the Phone: Older Clients Want to Hear From You
After a Dementia Diagnosis: Preparing for the Future
Nursing Home Surprise: Advantage Plans May Shorten Stays to Less Time Than Medicare Covers
‘Tens of thousands’ of nursing home caregivers could lose their jobs this week: AHCA
Dementia Diagnosis Linked to Suicide
10 Things to Know About the Unwinding of the Medicaid Continuous Enrollment Requirement
‘They’ve been an afterthought’: millions of elderly Americans still vulnerable as pandemic caution wanes
Beer is GOOD for you! Scientists claim two pints a day may slash your risk of dementia
The Walmart, UnitedHealth Group deal: Another big retail, health care partnership
Sages of Aging hosted by Ken Dychtwald, PhD
Census finds more than 3 million older adults on the move each year
‘The Forgotten Middle’: Seniors Facing Housing, Care Crisis
Seniors are stuck home alone as health aides flee for higher-paying jobs

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Updated, Friday, September 30, 2022, 10:40 AM (Pacific)

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LTC BULLET: LTC STRAWMAN

LTC Comment: Disproving a claim no one has ever made contributes nothing to a crucial conversation about who should qualify for Medicaid LTC benefits, when and under what circumstances. What this means and why it matters after the ***news.***

*** 9/14/2022, “Family Caregivers Confront Considerable Challenges,” by The Certification for Long-Term Care, Cision PR Newswire

Quote: “Nearly all family caregivers say they are ‘always’ or ‘often’ providing emotional support (80%) to a loved one needing long-term care. That can levy a heavy toll on caregivers' well-being and relationships in their lives. In our survey, burn out, lack of expertise and concerns about their ability to focus on their jobs were cited as the most important reasons why family caregivers sought paid home care. … Among the survey's other findings:

33% of family caregivers find getting the emotional support they need one of their biggest challenges
32% of family caregivers worry about juggling caregiving and their job
27% of those who decided not to bring in paid home care did so because they felt it was their duty to provide care
44% felt using paid home care could have helped reduce the emotional and physical strain of being a caregiver”

LTC Comment: Everyone knows long-term caregiving is demanding, stressful, and expensive. But this study puts some empirical flesh on those observational bones. Despite a small sample (200 who used paid care and 200 who didn’t), the reported numbers are credible and do comport, I think, with many of our personal caregiving experiences. Eileen J. Tell, CEO of ET Consulting, LLC, conducted the study and presented findings this week at the CLTC Leadership Summit in Minneapolis. For a pdf copy of the full report, contact Celeste Cobb at celeste@ltc-cltc.com. Kudos to CLTC for supporting this research. ***

LTC BULLET: LTC STRAWMAN

LTC Comment: Marc Cohen, a distinguished LTC scholar I consider my friend, insists Medicaid forces people to spend down into impoverishment before they qualify for Medicaid LTC benefits. I maintain that accessing Medicaid LTC benefits without spending down significantly is easy, commonplace and recommended by thousands of lawyers and financial advisors. Who’s right?

Marc has published a new article he says supports his point of view. Does it? Let’s see. Definitely consider what he and co-author Jane Tavares have to say. Then read on for my response. Here’s their article:

Marc A. Cohen & Jane Tavares (2022): Are Wealthy Older Adults who use Medicaid Opportunistically Accessing the Program?, Journal of Aging & Social Policy, DOI: 10.1080/08959420.2022.2127597

To link to this article: https://doi.org/10.1080/08959420.2022.2127597

The article’s “Abstract” says it all:

There has been longstanding concern that wealthy older adults may be accessing the program by opportunistically divesting assets in order to qualify for coverage rather than by having high medical or LTSS expenses on which they spend down their resources to eligibility levels. … Our findings demonstrate that this may occur among a relatively small proportion of wealthy people, and that tightening Medicaid eligibility criteria would likely have only a very modest impact on program expenditures.

What are we to make of that problem statement and those findings? Is it true there has been a “longstanding concern that wealthy older adults may be accessing” Medicaid “by opportunistically divesting assets”? Maybe, but I’m not aware of anyone having claimed such behavior is widespread. Certainly I have not and I am the only author cited in the article as having made the claim. My 1990 piece in The Gerontologist titled “The Fallacy of Impoverishment,” the one Cohen and Tavares reference, says nothing about asset divestiture by the wealthy.

My position is much more modest and nuanced. It is that qualifying for Medicaid long-term care benefits does not require impoverishment, that Medicaid’s income and asset limits allow middle class and moderately affluent people to qualify without spending down their savings significantly, and that in some cases even more wealthy people can qualify without spending down appreciably, with the help of lawyers who specialize in “artificial impoverishment.” In fact, when I searched my dozens of national and state-level reports about Medicaid planning I found not a single use of the term “opportunistic.” When I used the term “wealthy” it was either to quote a state Medicaid eligibility official complaining about the abuse or to point out that rich people can qualify for Medicaid LTC benefits, which Cohen and Tavares acknowledge is true, not that they do so in large numbers.

So why all the hyperventilating about wealthy people accessing Medicaid by opportunistically divesting assets? It is to divert attention from the real problem which is that Medicaid has become the dominant long-term care funding source for most Americans and that it is available without significant asset spend down after care is needed and long after it is too late for people to plan early and responsibly to handle the high risk and cost of long-term care privately. It is that reality that has caused most of the long-term care system’s problems including excessive dependency on welfare-financed nursing home care, insufficient supply of home and community-based services, meager public funding resulting in serious access and quality problems, as well as severe caregiver shortages, and the lack of demand for private insurance to spread the risk.

Why do scholars like Cohen and Tavares, and nearly all of their “peers” choose to focus exclusively on minor problems like the wealthy capturing Medicaid instead of the big problem, that Medicaid crowds out personal LTC responsibility and planning? Why do they fail to mention, much less explain, the many Medicaid planning techniques that are far more common and costly to Medicaid than asset divestiture? Why is there no mention of the National Academy of Elder Law Attorneys, the Medicaid planners’ professional association nor the vast formal legal literature on Medicaid planning? How do they manage such intellectual sleight of hand when the real problem is so much more obvious and compelling?

The answer is that the real problem violates the dominant ideological narrative to which most academics subscribe. That narrative is that Medicaid requires impoverishment and that aging Americans in the millions are being wiped out financially by high and rising long-term care costs. It isn’t true. There is no empirical evidence that it is true and these authors provide none. In fact, Medicaid does pay for most catastrophic LTC expenses and its financial eligibility rules are very generous and elastic. But the impoverishment narrative is necessary to garner support for these experts’ preferred “solution,” a new, compulsory, payroll-tax-funded social insurance program to fund long-term care. Why is it that we only hear this narrative and almost nothing about how Medicaid actually works? Because very little information to the contrary can penetrate the “peer review” wall that protects the dominant narrative from critical scrutiny.

In a 2017 report titled “How to Fix Long-Term Care Financing” for the Foundation for Government Accountability I answered the question “Why Do Analysts Wrongly Claim Medicaid Long-Term Care Eligibility Requires Impoverishment?” Here’s my answer in a nutshell, but do go to the source for the full six-page explanation.

First, analysts wrongly claim Medicaid requires impoverishment because they equivocate on the meaning of “impoverishment.” … Second, … they equivocate on the meaning of “spend down.” … Third, … they equivocate on the meaning of “Medicaid planning.” … Fourth, … they equivocate on the meaning of “out-of-pocket” expenditures for long-term care by claiming they are higher than they really are. … Fifth, … they rely on data, much of it faulty, from HRS and AHEAD surveys. Sixth, … they do not ask the people who know the truth.

Until analysts come to grips with the real reasons long-term care service delivery and financing are so dysfunctional by confronting each of those issues honestly, there will be little hope for improvement. Focusing instead on asset divestiture by the wealthy is a Strawman argument: “an intentionally misrepresented proposition that is set up because it is easier to defeat than an opponent's real argument.”

Marc, I challenge you, as I have done before, to debate the real issue in a public forum. To wit: What is Medicaid’s role in the long-term care system and how can we repair the damage it has caused? You can pitch socializing the LTC risk by partnering with government and I’ll defend a freer market relying more on individual initiative and responsibility.

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Updated, Monday, September 26, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-030 LTC NEWS AND COMMENT

What Are Medicaid Asset Protection Trusts?
Information campaign on aging and long-term care is wise; taking more earnings from workers isn’t
Industry Leaders Split on Whether Skilled Nursing’s Future Should Include Separate Short, Long-Term Care
U.S. Retirement Income Imbalance
Alzheimer’s might not be primarily a brain disease. A new theory suggests it’s an autoimmune condition
America’s age tipping point is approaching — we’re totally unprepared
BREAKING: Congressional study eviscerates for-profit nursing homes
Over 7 Million U.S. Seniors Have Mental Declines That Threaten Financial Skills
A Review of 62 Studies Finds Few Big Differences Between Traditional Medicare and Medicare Advantage on a Variety of Measures
4 tips for selling long-term-care insurance
10 Things About Long-Term Services and Supports (LTSS)
Risk of Alzheimer’s nearly doubles in seniors with COVID, analysis shows
Northwestern Mutual Adds a Long-Term Care Hybrid
Family Caregivers Confront Considerable Challenges
Medicare Advantage Is A Diamond In The Government Healthcare Rough
‘It’s Becoming Too Expensive to Live’: Anxious Older Adults Try to Cope With Limited Budgets
Support for greater government role in health care for older adults
While Inflation Takes a Toll on Seniors, Billions of Dollars in Benefits Go Unused
Nursing homes fire back after CMS warning about ‘exploitative’ debt-collection practices

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Updated, Friday, September 16, 2022, 10:40 AM (Pacific)

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LTC BULLET: LTC STUDIES SHARE FLAWS

LTC Comment: Three new LTC studies don’t ask “what went wrong?” before prescribing more of what caused LTC’s problems in the first place. We explain after the ***news.***

*** ROMEO RAABE, LUTCF, LTCP is The Long-Term Care Guy of Wisconsin, a proactive advocate for better LTC financing policy, and a long-time Regional Representative of the Center for LTC Reform. Contact him at (920) 884-3030 or rraabe@thelongtermcareguy.com. He offers this comment:

“Are We Selling Appropriate LTCi?”
by
Romeo Raabe

There are a multitude of different products sold to help pay for the cost of LTC. There are also many choices as to how much money is needed, for how long, with or without inflation, various deductibles, and choices of facility coverage, home care coverage or both. Everyone has an opinion on these options but the important part is for our clients to have sufficient cash flow to pay for the care they need - when they need it. That is the point, isn't it?

One type of comment I often hear is “This can turn $100,000 into $300,000 for LTC.” Sounds pretty good to many, but let’s ask how much the client can get out each month and is that enough along with other cash flow to pay the bills? If not, and they spend down to Medicaid, have we done any good other than earn a commission? If the plan, which the client understands, is just to have enough to cover some home care, then it’s fine. But if the client expects to be able to afford a nursing home, it’s not.

Something is not always better than nothing if it does not do what the client expects. First, do no harm. ***

LTC BULLET: LTC STUDIES SHARE FLAWS

LTC Comment: America has an abundance of dedicated, well-intentioned analysts who lament the state of long-term care and want to fix it. I could list (and have listed) dozens of studies these scholars conducted which share two fatal flaws. First, none of them ask—much less answer— what caused the long-term care system’s current dysfunctional state before recommending more government funding and regulation to fix it. Second, they all founder on the shoals of inadequate financing.

Add these three recently released studies to that list:

Study # One: “Improving Care for Older Adults: Convergence Dialogue on Reimagining Care for Older Adults Project Staff and Consultants: Final Report” tells us what’s wrong with long-term care and prescribes:

1. “Establish a broad constellation of financially sound and adaptable care settings that reflect the desires and needs of older adults.

2. “Ensure There Are Enough Caregivers

3. “Finance the Future Care System”

Why are these measures necessary? What caused the problems they’re supposedly needed to resolve? Why is it government’s job to fix a broken system already dominated by government spending and regulation? Blank out.

Study # Two: “The National Imperative to Improve Nursing Home Quality: Honoring Our Commitment to Residents, Families, and Staff (2022)” devotes 600 pages to lamenting the sorry state of nursing home care in the USA …

“First, the way in which the United States finances, delivers, and regulates care in nursing home settings is ineffective, inefficient, fragmented, and unsustainable. …

“Second, immediate action to initiate fundamental change is necessary. …

“Third, federal and state governments, nursing homes, health care and social care providers, payers, regulators, researchers, and others need to make clear a shared commitment to the care of nursing home residents. …

“Fourth, extreme care needs to be taken to ensure that quality-improvement initiatives are implemented using strategies that do not exacerbate disparities in resource allocation, quality of care, or resident outcomes (including racial and ethnic disparities), which are all too common in nursing home settings.

“Fifth, high-quality research is needed to advance the quality of care in nursing homes.

“Sixth, the nursing home sector has suffered for many decades from both underinvestment in ensuring the quality of care and a lack of accountability for how resources are allocated. …

“Finally, key partners, such as the Centers for Medicare & Medicaid Services (CMS) and other federal agencies, may not currently have the full authority or resources to carry out the actions recommended.”

So, what’s the bottom line?

“Therefore, as a final overarching conclusion, the committee notes that all relevant federal agencies need to be granted the authority and resources from the U.S. Congress to implement the recommendations of this report.”

In other words, everything wrong with nursing home care in the United States is directly related to public financing and regulation, but the National Academies of Sciences, Engineering, and Medicine can think of nothing better to do about it than to pile on more of the same.

Study # Three: “Where Am I, Where Do I Go: The Missing Entry Point to Long-Term Care Solutions for Older Adults and Their Caregivers” explains how America’s LTC system leaves people in crisis floundering, under extreme financial pressure, lacking guidance, not knowing what to do, but having to do something fast. It paints a beautiful picture of an improved system that points everyone in need of long-term care to the best possible solution.

But here again: “Although this paper does not specifically recommend a funding model for the hubs, we recognize that funding will be a barrier to achieving our vision. Historically, policy options for long-term care have focused on creating a financing system to fund services, which is critically important for supporting families and funding a long-term care workforce. However, policy must also focus on the navigational needs of older adults and their families.”

In other words, the need is so great we just have to find a way to do this and pay for it. Can’t somebody do something?!

LTC Comment: The only way we’ll ever confront long-term care’s problems successfully and actually solve them is to begin by asking: what caused the problems in the first place? I’ve answered that question already in two reports—Medicaid_and_Long-Term_Care and How to Fix Long-Term Care Financing—with two more forthcoming: “The Long-Term Care Problem” and “The Long-Term Care Solution.” Bottom line, government financing and regulation caused LTC’s problems. Medicaid paid for expensive LTC after care is needed resulting in a moral hazard that prevented most people from planning ahead for the LTC risk and left them dependent on public assistance when the need arose later. To solve LTC’s problems, Frontload LTC so most people save, invest, or insure for the risk and cost while they’re still young, healthy and affluent enough to do so and thus dramatically reduce the number of people who end up dependent on Medicaid. The free market will do the rest, directing creative entrepreneurial energy toward finding the best ways to meet consumers’ LTC preferences and needs.

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Updated, Monday, September 12, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-029 LTC NEWS AND COMMENT

Cracks in the foundation: The experience of care aides in long-term care homes during the COVID-19 pandemic
Study: 72% of middle-class seniors may not be able to afford assisted living by 2033
Helping prospects navigate long-term care system an ‘enormous opportunity’ for senior living: report
A Valuable New Framework For Improving The Care Of Older Adults
‘Red-hot inflation’ drives senior living asking rates to record high
Envisioning new financing models to mitigate the crisis in long-term care
Why Medicare Advantage is the basis for Medicare reform
What Is Community Medicaid?
A 2022 Introduction to Ken Dychtwald, PhD
Almost half of eligible Medicare beneficiaries use Medicare Advantage, analysis shows
‘Death spiral’ for SNFs as Medicare Advantage pay decreases

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Updated, Tuesday, September 6, 2022, 10:40 AM (Pacific)

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LTC E-ALERT #22-027 LTC NEWS AND COMMENT

Other states have proposed long-term-care laws that could sneak up on workers
Rising Interest Rates Will Crush the Federal Budget
MedPAC Members Concerned About Medicare's Finances
Simple musical test predicts cognitive decline in older adults, study shows
Study: More middle-income seniors to tax home care, housing resources in coming years
Birth of LTCi: Fatal miscalculations spur decades of angst
Inflation drives long-term care costs even higher. Here’s how planning ahead can help families afford it
5 Reasons Affluent Clients Might Need Long-Term Care Insurance
Single Seniors Are Struggling to Retire
Life Settlement Firm Plans to Go Public Through $619M SPAC Deal
Watch Out! RMDs Can Trigger Massive Medicare Means Testing Surcharges
The rich are using long-term care funds meant for the poor
9 Lessons From John Hancock's $26M LTCI Settlement

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Updated, Friday, September 2, 2022, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: BIASED LTC SCHOLARSHIP MISINFORMS POLICYMAKERS

LTC Comment: Government-funded, ideologically biased research causes bad policy decisions, as we explain after the ***news.***

*** *** SUBSCRIBE to LTC Clippings and Steve Moses (2019 ILTCI Recognition Award Honoree) will become your research assistant. Steve will tip you twice a day (on average) with news and views on things you need to know to stay at the forefront of professional expertise. You’ll see the latest articles, reports, data, and op-eds before your clients confront you with them sight unseen. You’ll get trenchant analysis and valuable ideas on how to address objections and complaints. Contact Damon at 206-283-7036 or damon@centerltc.com for details or subscribe directly here: http://www.centerltc.com/newonlinepaymentspage.htm. Choose “Premium Membership” to receive our LTC Clippings. For example, here are some recent LTC Clippings:

8/31/2022, “Birth of LTCi: Fatal miscalculations spur decades of angst,” by John Hilton, InsuranceNewsNet
Quote: “In fact, the assumptions stood on a quite reasonable foundation, Slome explained. But two things did not play out as insurance executives and actuaries expected: the changing dynamics of long-term care, and the lapse rates. Fast forward a few decades, and LTCi is a perplexing product landscape. The need for the product is overwhelming, yet, insurers are busier trying to maintain old blocks of business that are actuarially unsound. That means repeated rate requests in states across the country. It means reduced benefits. It means denying coverage to nearly half of applicants who most need it. Finally, it means some insurers have gone insolvent. Many others have left the LTCi business entirely. Meanwhile, state insurance regulators struggle to weigh the needs of policyholders against the needs of insurers. It has pitted state against state in some instances.”
LTC Comment: “The best laid schemes o’ mice an’ men. Gang aft a-gley”--Robert Burns. But there’s even more to it than my friend Jesse Slome points out. The Federal Reserve forced interest rates to near zero which made obtaining reasonably expected returns on reserves impossible. That forced carriers to raise premiums which alienated prospects and angered insureds. Those same artificially low interest rates enticed politicians to spend with abandon resulting in the inflation we’re experiencing now. Likewise Medicare and Social Security face insolvency in a decade or so. When will those government programs acknowledge they cannot pay promised benefits and take action as LTCI carriers already have? If rate increases upset LTCI insureds, what do you think the reaction will be from voters when Medicare and Social Security cut benefits or raise payroll taxes?

8/30/2022, “5 Reasons Affluent Clients Might Need Long-Term Care Insurance,” by Margie Barrie, ThinkAdvisor
Quote: “Here’s a common question from financial planners: Should they be recommending long-term care insurance to high-net-worth clients, or should their clients self-fund long-term care risk?
The decision to consider long-term care protection is often based on the value of the client’s assets. However, there are other risk factors that need to be considered, because those factors will affect the client’s portfolio and may have tax implications. In many situations, long-term care protection may provide a solution for portfolio risk management and legacy planning issues in the most cost-effective and efficient manner currently available.”
LTC Comment: These are five of the best, but least recognized, reasons to own LTCI protection.

8/29/2022, “The rich are using long-term care funds meant for the poor,” by Mark Warshawsky, The Hill
Quote: “Unfortunately, several studies show that many older people with significant real estate and financial asset holdings get long-term care from Medicaid for free or at subsidized rates. These findings should not be surprising because, in many states, the rules and administration of the program are loose and porous, and little effort is made to recover assets from the estates of deceased Medicaid users, despite this being required by federal law. By my estimate every year almost $6 billion of Medicaid funds are inappropriately used for the long-term care of individuals with significant asset holdings. Breaking this amount down, almost $3 billion could be recuperated from enhanced estate recoveries and more than $3 billion from retirement assets.”
LTC Comment: It’s good to see someone else pointing out this problem as we have done frequently since 1988 in many national and state level studies. Unfortunately, the author’s solution has proved inadequate and unenforceable. That’s why we’re proposing a better approach: LTC Bullet: Frontload LTC.

*** READ STEVE MOSES’s latest published articles:

“LTC insurance sales suddenly surge,” by Stephen A. Moses, McKnight’s LTC News, August 10, 2022

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

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

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

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

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

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

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

“Long-term care’s problems are bad and getting worse — but fixable,” by Stephen A Moses, McKnight’s LTC News, October 4, 2021 ***

LTC BULLET: BIASED LTC SCHOLARSHIP MISINFORMS POLICYMAKERS

LTC Comment: It’s no wonder so many policymakers want a new, compulsory, centrally planned, taxpayer-funded, budget-busting, LTC entitlement program when the researchers they pay for advice blank out or misrepresent information critical to good decision making. When policymakers believe falsely that Medicaid requires impoverishment and that wide swaths of the American public are being wiped out financially by private LTC expenditures, of course they’re tempted to impose a government solution from on high.

I explained what I mean by that and gave examples in How to Fix Long-Term Care Financing (pages 13-18). In a nutshell, many “progressive” analysts equivocate on terms like “impoverishment,” “spend down,” “Medicaid planning,” and “out of pocket.” They do not interview the right people to learn how individuals qualify for Medicaid without spending down personal wealth and they rely on widely accepted data sources that are actually highly dubious in this regard (HRS and AHEAD). Such analysts ignore or misrepresent important facts and emphasize only information that confirms their biases.

In “LTC Bullet: LTC Center Standing Guard,” I listed and linked to 100 LTC Bullets in which we analyzed and critiqued biased scholarship tending to promote public LTC funding and to discourage private financing alternatives. Today we add another example to that list. To wit:

Richard W. Johnson and Melissa M. Favreault, “Economic Hardship and Medicaid Enrollment in Later Life: Assessing the Impact of Disability, Health, and Marital Status Shocks,” published by the U.S. Department of Health and Human Services Office of the Assistant Secretary for Planning and Evaluation, January 31, 2021, https://aspe.hhs.gov/reports/economic-hardship-medicaid-enrollment-later-life#results.

What follows are quotes from that study Johnson & Favreault and our LTC Comments in reply:

Johnson & Favreault: “This report assesses the financial security of older adults and examines the role that disability, health, and marital shocks play in economic hardship in later life. … We also focus on enrollment in Medicaid, which is available only to people with very limited financial resources.” (p. 2)

LTC Comment: J&F have a lot of interesting things to say about “economic hardship in later life,” but we’ll focus on their comments regarding Medicaid LTC eligibility, especially the idea that it is “available only to people with very limited financial resources.”

Johnson & Favreault: “Many older adults have amassed significant wealth over their working years that can supplement their income. Wealth holdings at older ages are becoming increasingly common as employers replace traditional defined-benefit pensions, which provide retirees with a steady income stream that lasts until death, with retirement plans that provide workers with retirement savings accounts to which both employees and employers contribute.” (p. 4)

LTC Comment: Good point. There’s a lot of wealth held by aging Americans in IRAs and 401Ks, and far more residing in home equity. But how much of this financial wherewithal finds its way into paying for long-term care?

Johnson & Favreault: “About 70 percent of adults develop serious LTSS needs after age 65 (Johnson 2019). …The onset of nursing home care and cognitive impairment has the largest impacts on household wealth.” (p. 6)

LTC Comment: OK, now we know that aging people possess huge amounts of liquid and illiquid financial resources and they have a high risk of very expensive long-term care. Again, are they actually spending that money on long-term care? Is there any evidence?

Johnson & Favreault: “Relatively few older adults with significant wealth deplete their holdings before they die, and those who spend their savings usually experience significant health shocks (Table 3).” (p. 6)

LTC Comment: Interesting, but more of the same. Most older adults don’t deplete their wealth but those who do experience health shocks. So does that latter group spend their money on health and LTC? Are we supposed to presume so? Apparently, but empirical evidence that such spend down is actually happening would be very helpful. But none is offered.

Johnson & Favreault: “Another indicator of economic hardship is Medicaid enrollment. Because people qualify for Medicaid only if they have virtually no assets, except for a home, and very little income, receipt of Medicaid benefits is a strong indicator of financial vulnerability.” (p. 7)

“Medicaid enrollment is a reliable indicator of economic hardship because people qualify only if they have very low income (after covering health care costs) and few assets.” (p. 10)

LTC Comment: Wait a minute. Eligibility for Medicaid proves economic hardship? That’s a circular argument as I explained in “LTC Bullet: Begging the LTC Question.” Turn it around and you have: there’s no hardship if people can qualify for Medicaid while preserving wealth. Is that what these analysts really believe? Evidently so as it follows logically. Read on.

Johnson & Favreault: “Adults ages 65 and older may qualify for Medicaid if they have virtually no assets, except for a home, and very little income. The program’s asset test limits Medicaid eligibility to people with no more than $2,000 in countable assets if single and no more than $3,000 in countable assets if married. Countable assets exclude the value of the home and such things as automobiles, household goods, the surrender value of life insurance, and burial funds.” (p. 7)

LTC Comment: What’s wrong with this picture of Medicaid LTC eligibility? J&F want us to believe that Medicaid LTC financial eligibility rules force people to spend down their wealth even though they provide no evidence that actually happens and they acknowledge “countable assets exclude” practically all wealth seniors hold. Those excluded assets include up to between $635,000 and $955,000 of home equity depending on the state and, with no dollar limit at all, one business, individual retirement accounts, term life insurance, burial funds for the immediate family, household goods and personal effects including heirlooms. Does Medicaid require people to spend any remaining countable assets for LTC as J&F imply? No. People can spend their countable assets on anything they want, including non-countable assets. So anyone with too much countable wealth can qualify quickly and easily by purchasing exempt assets such a house, car, or diamond ring (represented to be a family heirloom). Converting countable into non-countable assets in this way is the easiest and single most common technique of Medicaid planning.

Johnson & Favreault: “A single SSI beneficiary without earnings who does not receive Social Security or other income, like a state supplement could receive no more than $771 in monthly income in 2019 (equivalent to $9,252 per year), well below the FPL. Many states extend Medicaid eligibility to people with income up to 138 percent of the FPL.” (p. 7)

LTC Comment: Oh, so you must be desperately income-poor to qualify for Medicaid LTC benefits? Not so fast. They admit there’s more to it.

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

LTC Comment: Oh, Medicaid income eligibility rules are not so draconian after all. In fact, in the real world, unconfused by academic obfuscation, the rule of thumb is that anyone with income below the cost of a nursing home—easily $8,000 per month—qualifies based on income assuming their private health and LTC expenditures are high enough, as they usually are for aged people in need of expensive health and long-term care. Bottom line, neither the possession of substantial assets nor high income interferes with Medicaid LTC eligibility for people who know and take advantage of the rules or seek professional legal assistance to help them qualify.

Johnson & Favreault: “Despite concern that some older adults game the system by transferring wealth to their children to qualify for Medicaid, there is little evidence that this practice is widespread, especially after the 2005 Deficit Reduction Act tightened Medicaid eligibility rules (Baird, Hurd and Rohwedder 2016).” (p. 8)

LTC Comment: Here J&F give lip service to the possibility that people can qualify for Medicaid LTC benefits without spending down. But lip service is all it is. Asset transfers are only a minor form of Medicaid planning, the tip of the iceberg. J&F focus on asset transfers to divert attention from far more common methods. Purchase of exempt assets is by far the most frequently used and costly (to taxpayers) technique. But there are dozens of ways to shelter wealth. See this list for example: https://www.medicaidplanningassistance.org/medicaid-planning-techniques/. What exposes these researchers’ intellectual dishonesty is their total failure to acknowledge the widespread practice and methods of Medicaid planning as well as the vast professional legal literature on how to do it. For a history and bibliography of Medicaid planning over the past four decades see pages 34-65 in How to Fix Long-Term Care Financing.

Johnson & Favreault: “Older adults who develop serious LTSS needs account for 77 percent of Medicaid enrollees in the bottom lifetime earnings quintile, 79 percent in the second quintile, 87 percent in the middle quintile, 91 percent in the fourth quintile, and 90 percent in the top quintile (numbers not shown in the table). Serious LTSS need is a relatively weak predictor of Medicaid enrollment for older adults with limited lifetime earnings because their limited financial resources often qualifies them for benefits even without receiving paid LTSS and spending down some of their wealth.” (p. 18)

LTC Comment: So, poor people qualify for Medicaid? Not exactly news. But people who need LTC account for 91% of Medicaid enrollees in the fourth income quintile and 90% in the top quintile? That’s more believable. But how can it be so if Medicaid financial eligibility restrictions are as severely limiting as these analysts insist? Simple. It isn’t true and the researchers are wrong about Medicaid LTC eligibility.

Johnson & Favreault: “Although many middle-income older adults have savings they can use to supplement their incomes and help make ends meet, they run the risk of depleting their wealth if out-of-pocket health care costs persist, which could force them to turn to Medicaid. We project that 25 percent of older adults in the middle lifetime earnings quintile enroll in Medicaid after age 65. Nearly nine in ten of these older middle-class Medicaid enrollees have serious LTSS needs.” (p. 20)

LTC Comment: Thus, Johnson & Favreault conclude their paper. They say middle class people run the risk of depleting their wealth due to high health and LTC expenses. But they provide no empirical evidence whatsoever that this actually happens. They fail to recognize the simple reality that Medicaid financial eligibility rules are generous and elastic allowing people who choose that course to qualify for Medicaid without spending down assets significantly for care and despite having substantial incomes. There’s little wonder remaining why government, in this case USDHHS-ASPE, finances such research. To gain power and control, to promote more public financing and regulation of the LTC market, it helps to have research reports that say the public is devastated by catastrophic costs and existing programs like Medicaid aren’t doing enough. The opposite is true. Medicaid does too much and does it after care is needed when it is too late for people to save, invest or insure responsibly against the LTC risk. The only true solution to this real problem is to move LTC risk and cost forward in time so responsible people can prepare. See Frontload LTC for details.

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Updated, Monday, August 29, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-027 LTC NEWS AND COMMENT

3 Reasons Not to Tap Your Home Equity Right Now
Fears grow over controversial long-term care bill
Inflation replaces staffing as top concern for many operators: survey
Congress Considers Strategies To Improve Medicare And Medicaid Integration For Dual-Eligible Individuals
World Insurance: Inflation Risks Front And Center
Long-term care accounts for 54 percent of healthcare bankruptcies this year
U.S. life expectancy dropped by average of 2 years in 2020, new data reveal
What older adults do while they sit affects dementia risk, study indicates
7 Reasons New York’s $26M John Hancock LTCI Action Matters for Advisors
BREAKING: CMS bulletin presses states on Medicaid nursing home spending

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Updated, Monday, August 22, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-026 LTC NEWS AND COMMENT

Opting out of the long-term-care payroll tax is more complicated than necessary, suggesting it’s just a nice gesture
Updated numbers on people exempted from state’s long-term-care program and payroll tax
Long Term Care Insurance — The Latest
Value-Based Care Series: Anne Tumlinson, CEO, ATI Advisory
Consumer Reps Say Advisors Need Clients' LTC Insurance Rate-Hike Info
40 states now cover around-the-clock Medicaid HCBS as provided in assisted living
Over 50% Of Generation X Can't Afford To Help Their Senior Parents
With new acquisition, Humana carves out larger slice of Medicaid pie
Federal Staffing Minimums Won’t Solve Labor Woes For Nursing Homes in Disadvantaged Neighborhoods
Law in the Marketplace: Do you need Medicaid planning?

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Updated, Monday, August 15, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-025 LTC NEWS AND COMMENT

Miller Trusts Can Help You Qualify for Medicaid
Problems persist at Washington hospitals due to lack of long-term care options
LTC insurance sales suddenly surge
Will a Medicaid Recipient Lose His Benefits If He Sends His Incarcerated Son Money Every Month?
What You Need to Know About Medicaid’s Personal Needs Allowance
Social Security: 3 Reasons Why Record COLA Increase in 2023 Could Backfire on Seniors
59 percent of adult children cannot afford assisted living, home care for parents: survey
Major nursing home association urges COVID emergency extension, revised guidance
Amazon Could Roll Into Home Care
We Have a Short Time to Fix Long-Term Care
Socioeconomic deprivation associated with increased dementia risk and faster memory decline
Filling The Gaps: The Role And Value Of Supplemental Benefits In Medicare Advantage·

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Updated, Friday, August 12, 2022, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: LTC ALMANAC UPDATE

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

*** SUBSCRIBE to LTC Clippings and Steve Moses (2019 ILTCI Recognition Award Honoree) will become your research assistant. Steve will tip you twice a day (on average) with news and views on things you need to know to stay at the forefront of professional expertise. You’ll see the latest articles, reports, data, and op-eds before your clients confront you with them. You’ll get trenchant analysis and valuable ideas on how to address objections and complaints. Contact Damon at 206-283-7036 or damon@centerltc.com for details or subscribe directly here: http://www.centerltc.com/newonlinepaymentspage.htm. Choose “Premium Membership” to receive our LTC Clippings. For example, here are some recent LTC Clippings.

8/4/2022, “Facing stagnant Medicaid rates, this state has lost 10 percent of SNF beds in 2022,” by John Hall, McKnight’s LTC News
Quote: “The loss of seven nursing homes and hundreds of beds in a short period of time has set healthcare officials in Montana reeling, even as the state is trying to regain its footing following the brunt of the COVID pandemic. It’s part of a trend that has seen more than 1,000 nursing homes close since 2015, industry officials said. In just the past six months, Montana has lost approximately 10% of its nursing home beds. Operators of the closed facilities said they could no longer absorb losses in excess of $100 per resident per day.”
LTC Comment: If only Montana had listened when we explained what was wrong with long-term care and what to do about it: LONG-TERM CARE IN MONTANA: A Blueprint for Cost-Effective Reform (1993).

8/2/2022, “As new Alzheimer’s drugs have failed, scientists are shifting focus to other potential causes,” by Berkeley Lovelace, Jr., NBC News
Quote: “As yet another Alzheimer's drug targeting plaque buildup in the brain fails to improve cognition in patients, leading scientists said a significant shift is underway in the search for effective treatments for the disease. The new direction in Alzheimer’s research — away from focusing solely on beta-amyloid plaques to other potential causes, including brain inflammation and conditions related to diabetes — comes from growing evidence that multiple factors contribute to the development of the disease.”
LTC Comment: “If at first you don’t succeed, try, try again” but doing the same thing over and over again is the definition of insanity. So, it’s about time science looks more closely at the idea of Alzheimer’s as “Type 3 Diabetes,” the result of unhealthy lifestyles.

7/28/2022, “Funding, unionization needed to improve wages, working conditions in long-term care: report,” by Kimberly Bonvissuto, McKnight’s Senior Living
Quote: “Expanding public funding, increasing the minimum wage and unionizing workers are the first steps toward improving wages and working conditions in the residential long-term care industry, according to the authors of a new report. 'The state of the residential long-term care industry,' from Washington, DC-based think tank Economic Policy Institute, covers employment trends in the industry and suggests interventions to try to ensure that long-term care services are accessible, affordable, safe and enriching for those who need them.”
LTC Comment: Public financing and government control dominate long-term care now. Instead of recommending more of the same, shouldn’t we first ask why the system is such a mess already? That is the more promising analytical approach in Medicaid_and_Long-Term_Care (2020) and How to Fix Long-Term Care Financing (2017). ***

LTC BULLET: LTC ALMANAC UPDATE

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

*** SPECIAL: We are making access to The Zone, including the "Almanac of Long-Term Care," free for two weeks—today through Friday, August 26, 2022. 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. ***

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.

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.

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Chapter 1: Aging Demographics

United States

General Stats

2020 Older Americans, Key Indicators of Wellbeing URL: https://agingstats.gov/docs/LatestReport/OA20_508_10142020.pdf

10/29/2020, “Older Americans 2020: Key Indicators of Well-Being,” AgingStats.gov
Quote: “This report provides the latest data on the 40 key indicators selected by the Forum to portray aspects of the lives of older Americans and their families. It is divided into six subject areas: population, economics, health status, health risks and behaviors, health care, and environment. Download the Full 2020 Report (PDF)”
LTC Comment: Generally a good source for aging stats, but this quote from page 52 is false: “In 2017, about 44 percent of long-term care facility costs for Medicare beneficiaries age 65 and over were covered by Medicaid; another 51 percent of these costs were paid out of pocket.” Private out-of-pocket LTC facility costs are much lower than half, closer to 10%. See “LTC Bullet: So What If the Government Pays for Most LTC, 2018 Data Update” and Medicaid and Long-Term Care, p.49ff.

2019 Profile of Older Americans: LINK

7/21/2020, “Now Available: 2019 Profile of Older Americans,” Administration for Community Living
Quote: “The Profile of Older Americans is an annual summary of the available statistics related to the older population in the United States. Principal sources of data are the U.S. Census Bureau, the National Center for Health Statistics, and the Bureau of Labor Statistics. The Profile illustrates the shifting demographics of Americans age 65 and older. It includes key topic areas such as income, living arrangements, education, health, and caregiving. This year's report includes special sections on obesity as well as aerobic activity and muscle-strengthening activities.”
LTC Comment: This is your annual go-to source for demographic data on the aging.

Chapter 2: International

General

Weiner, Coe, Hoffman and Werner, 0420: LINK

POLICY OPTIONS FOR FINANCING LONG-TERM CARE IN THE U.S. Janet Weiner, Norma B. Coe, Allison K. Hoffman, and Rachel M. Werner

Abstract: Unlike many other developed nations, the U.S. has no system that protects its residents against the high costs of long-term care, which many people will need as they age. Medicaid coverage kicks in only after families have exhausted their resources. Until then, families bear the financial and caregiving burden of LTC themselves. In the absence of a national system, several states have considered or passed programs that offer some support for LTC. Many peer nations have more comprehensive systems to spread the risk for LTC costs across their population, through social insurance or other mechanisms. This Issue Brief reviews international models of financing LTC, as well as recent state efforts, to help U.S. policymakers design a program that can meet the LTC challenges of an aging population.

LTC Comment: This papers makes the false assumption that “Medicaid coverage kicks in only after families have exhausted their resources” and concludes that “the U.S. has no system that protects its residents against the high costs of long-term care.” It is exactly the U.S. system that prevents early and responsible personal long-term care planning by indemnifying elders and their heirs with public LTC financing after care is needed and with generous financial eligibility rules riven with loopholes that allow families to retain substantial assets. This “moral hazard” is what ails U.S. long-term care, not the lack of government imposed regulations and funding.

Chapter 4: Long-Term Care

Covid

COVID-19 and the Future of Long-Term Care: The Urgency of Enhanced Federal Financing
Feder, Judy.
J Aging Soc Policy ; 32(4-5): 350-357, 2020.
Article in English | MEDLINE | ID: covidwho-343189
https://search.bvsalud.org/global-literature-on-novel-coronavirus-2019-ncov/resource/en/covidwho-343189

ABSTRACT The economic threat posed by responses to COVID 19 endangers financing for long-term care across the states that is already inadequate and inequitable. Increasing the federal share of Medicaid spending as unemployment rises would mitigate fiscal pressure on states and preserve public services. But unlike the demand for Medicaid’s health care protections, which rises when economic activity declines, the demand for long-term care protections will grow even in a healthy economy as the population ages. Enhanced federal support is urgent not only to cope with the virus today but also to meet the long-term care needs of the nation’s aging population in the years to come. Long-term care financing policy should be modified to either adjust federal matching funds by the age of each state’s population, or fully federalize the funding of LTC expenses of Medicaid beneficiaries who are also eligible for Medicare.

Chapter 6: Long-Term Care Financing

LTC Approaches and Studies

New Approaches to Long-Term Care Access for Middle-Income Households by the Milken Institute

LTC Bullet: Milken Groupthink Fumbles LTC Financing
Friday, April 16, 2021
Seattle—

LTC Comment: You might expect innovative ideas from the Milken Institute, but when it comes to long-term care financing, all you get is ideological retreads. We explain below.

LTC BULLET: MILKEN GROUPTHINK FUMBLES LTC FINANCING

LTC Comment: The Milken Institute, chaired by former junk-bond king, now philanthropist Michael Milken, modestly bills itself as a “catalyst for practical, scalable solutions to global challenges.” Toward that end they “conduct research and analysis and convene top experts, innovators, and influencers from different backgrounds and competing viewpoints.” Lately, the Milken Institute tackled the problem of providing and financing long-term care for the broad American middle class. Last week it published “New Approaches to Long-Term Care Access for Middle-Income Households,” a timely look at a critical topic that begs for fresh analysis and ideas.

Did the Milken Institute deliver? Yes and no. The report does a yeoman’s job of describing the problem. It offers creative ideas to address service delivery problems, proposing for example a “Medicare Advantage Demonstration Project” and that the country should “Scale Up Integrated Care Programs.” But when it comes to how to pay for long-term care, the report founders as its many predecessors have done. It makes no attempt to understand why long-term care financing is so inadequate in the United States. It parrots the prevailing academic shibboleths, ignores critical facts, and proposes nothing new or promising. We get no original analysis or ideas. We’re asked to hang our hopes on a fatally flawed exercise in political futility, the LTC Trust Act in Washington State.

What went wrong? Following are quotes from the Milken Institute’s “New Approaches to Long-Term Care Access for Middle-Income Households” followed by our comments.
Read the rest of this LTC Bullet here.

Nursing Home and Home Care Expenditure Data from CMS and Health Affairs

National Health Expenditure Projections, 2021–30: Growth To Moderate As COVID-19 Impacts Wane: https://www.healthaffairs.org/doi/10.1377/hlthaff.2022.00113

ABSTRACT Although considerable uncertainty remains, the COVID-19 pandemic and public health emergency are expected to continue to influence the near-term outlook for national health spending and enrollment. National health spending growth is expected to have decelerated from 9.7 percent in 2020 to 4.2 percent in 2021 as federal supplemental funding was expected to decline substantially relative to 2020. Through 2024 health care use is expected to normalize after the declines observed in 2020, health insurance enrollments are assumed to evolve toward their prepandemic distributions, and the remaining federal supplemental funding is expected to wane. Economic growth is expected to outpace health spending growth for much of this period, leading the projected health share of gross domestic product (GDP) to decline from 19.7 percent in 2020 to just over 18 percent over the course of 2022–24. For 2025–30, factors that typically drive changes in health spending and enrollment, such as economic, demographic, and health-specific factors, are again expected to primarily influence trends in the health sector. By 2030 the health spending share of GDP is projected to reach 19.6 percent.

National Health Care Spending In 2018: Growth Driven By Accelerations In Medicare And Private Insurance Spending: https://www.healthaffairs.org/doi/10.1377/hlthaff.2019.01451

ABSTRACT US health care spending increased 4.6 percent to reach $3.6 trillion in 2018, a faster growth rate than the rate of 4.2 percent in 2017 but the same rate as in 2016. The share of the economy devoted to health care spending declined to 17.7 percent in 2018, compared to 17.9 percent in 2017. The 0.4-percentage-point acceleration in overall growth in 2018 was driven by faster growth in both private health insurance and Medicare, which were influenced by the reinstatement of the health insurance tax. For personal health care spending (which accounted for 84 percent of national health care spending), growth in 2018 remained unchanged from 2017 at 4.1 percent. The total number of uninsured people increased by 1.0 million for the second year in a row, to reach 30.7 million in 2018.

Who Will Pay for LTC? (includes "Not the VA")

“The middle ground for fixing long-term care costs: the WISH act”
https://www.healthaffairs.org/do/10.1377/forefront.20210729.585743/
Marc A. Cohen, Stuart M. Butler
August 9, 2021
Health Affairs article with details on the WISH Act

Roughly one week before Americans celebrated the July 4 holiday, Representative Thomas Suozzi (D-NY) introduced a revolutionary bill (H.R. 4289) designed to repair our broken system for financing long-term services and supports (LTSS). The “WISH Act”—Well-Being Insurance for Seniors to be at Home—is based on an idea first put forward by a group of long-term care experts known as the Long-Term Care Financing Collaborative, which was convened in 2012 by the Convergence Center for Policy Resolution and included the authors of this blog post. The idea was developed further in a 2018 paper presented at the Bipartisan Policy Center. If enacted, the WISH Act could significantly transform our LTSS financing system by harnessing the best of what the public and private sectors can jointly do to solve a problem that neither sector seems able to solve on its own. And it does this in a fiscally responsible way.

LTC Comment: This dream come true for advocates of government funding petered out when Thomas Suozzi (D-NY) decided to run for New York Governor.

State LTC Initiatives

Cohen, Tell on State Initiatives 0720: https://www.ltsscenter.org/wp-content/uploads/2020/07/State-LTSS-Financing-Executive-Summary-July-2020.pdf

7/27/2020, “New Report: Exploring LTSS Social Insurance Strategies in 6 States,” by Marc Cohen, et al., LeadingAge LTSS Center @UMass Boston and the Center for Consumer Engagement in Health Innovation

Quote: “A new analysis from the LeadingAge LTSS Center @UMass Boston and the Center for Consumer Engagement in Health Innovation examines activity across 6 states that are exploring social insurance initiatives to help finance long-term services and supports (LTSS). The Robert Wood Johnson Foundation supported the study. Learning from New State Initiatives in Financing Long-Term Services and Supports, a 48-page report detailing findings from the analysis, was developed in partnership with Community Catalyst’s Center for Consumer Engagement in Health Innovation. A 12-page Executive Summary is also available. The study was led by Marc Cohen, LTSS Center co-director; Ann Hwang, director of the Center for Consumer Engagement in Health Innovation; and Michael Miller, director of strategy policy at Community Catalyst.”

LTC Comment: Can more government regulation and compulsion improve a long-term care system ruined by excessive government interference and financing? How will the epidemiological, monetary and fiscal consequences of the pandemic affect the answer? Are bankrupt states reliant on overextended federal largesse and driven by anti-market ideology part of the solution or much of the problem? Hopefully, this report, written by two distinguished LTC insurance scholars (Cohen, Tell plus others) will give us some answers. I’m eager to dig into it and will share my perspective in a future LTC Bullet. [LTC Bullet: Umpteenth Long-Term Care Study Disappoints. Friday, August 14, 2020]

Chapter 7: Long-Term Care Insurance

Criticism

Esworthy, Tumlinson and Cohen on LTC insurance, 0620: https://atiadvisory.com/wp-content/uploads/2020/06/Protecting-Consumers-and-Medicaid-from-Catastrophic-Long-Term-Care-Costs_June-2020.pdf

“Protecting Consumers and Medicaid from Catastrophic Long-Term Care Costs:
How financial challenges in the long-term care insurance industry may shift costs to policyholders and Medicaid.”

“The long-term care insurance (LTCi) market has been on a twenty year downward spiral, driven by an unfavorable (i.e., declining) interest rate environment, higher than expected benefit costs, and lower than expected voluntary lapse rates.1 Some carriers have exited the industry entirely, whether voluntarily or via insolvency. Those carriers who have remained in the market have turned to premium increases in order to remain viable.2 LTCi is a financial product that promises over 7 million policyholders.”

LTC Comment: Kicking LTC insurance when it’s down.

Chapter 9: Long-Term Care Providers

Assisted Living

Suggested citation:
Sengupta M, Lendon JP, Caffrey C, Melekin A, Singh P. Post-acute and long-term care providers and services users in the United States, 2017–2018. National Center for Health Statistics. Vital Health Stat 3(47). 2022. DOI: https://dx.doi.org/10.15620/cdc:115346.

6/13/2022, “Assisted living’s place in the long-term care continuum,” by Lois A. Bowers, McKnight’s Senior Living
Quote: “According to the report, assisted living is the long-term and post-acute care service provider with the most settings in the United States, with 31,400 assisted living and similar residential care communities providing such services. By comparison, 15,600 nursing homes, 11,500 home health agencies, 4,700 hospices, 4,200 adult day centers, 1,200 inpatient rehabilitation facilities and 400 long-term care hospitals provide long-term and post-acute care services. Home care agencies, however, had approximately 4,940,300 discharges in 2017, and 1,562,500 patients received services from hospices that year. By comparison, in 2018, 1,321,200 people were current residents in nursing homes and 918,700 current residents were living in assisted living communities; also in 2018, 251,100 current participants were enrolled in adult day services center, and in 2017, 380,400 patients received services from inpatient rehabilitation facilities and 115,800 patients received services from long-term care hospitals. … Want to take a deeper dive into the information? The report is available on the CDC website.”
LTC Comment: Fascinating facts about the LTC continuum very hard to find anywhere else.

Chapter 10: Medicaid

Medicaid Financing and Burwell Data

Medicaid Long Term Services and Supports Annual Expenditures Report
Federal Fiscal Year 2019
December 9, 2021
Burwell Data

Executive Summary
Long-term services and supports (LTSS) encompass a wide range of medical and nonmedical services and supports for people with physical, intellectual, mental, or other disabilities or conditions. These can include institutional care, such as that provided in nursing facilities, intermediate care facilities for individuals with intellectual or developmental disabilities (ICF/IDD), and mental health facilities,1 and home and community-based services (HCBS), such as personal care and home health, among other services. Medicaid is the primary payer of LTSS, covering slightly more than half of all spending for such services and supports in the United States (Centers for Medicare & Medicaid Services n.d.; O’Malley Watts et al. 2020). Over the past several decades, federal and state initiatives and consumer preferences have led to shifts in Medicaid LTSS expenditure patterns across settings and service types, including increases in HCBS expenditures.
This report is the latest in a series of reports, sponsored by Centers for Medicare & Medicaid Services (CMS), on Medicaid LTSS expenditures.

Medicaid Eligibility

KFF on Medicaid Financial Eligibility
https://www.kff.org/report-section/medicaid-financial-eligibility-in-pathways-based-on-old-age-or-disability-in-2022-findings-from-a-50-state-survey-issue-brief/
7/11/2022, “Medicaid Financial Eligibility in Pathways Based on Old Age or Disability in 2022: Findings from a 50-State Survey,” by MaryBeth Musumeci, Molly O'Malley Watts, and Meghana Ammula, KFF
Quote: “This issue brief presents state-level data on Medicaid financial eligibility criteria and adoption of the major non-MAGI pathways as of January 2022. It includes mandatory and optional pathways to full Medicaid eligibility as well as state options to expand Medicaid financial eligibility for people who need long-term services and supports (LTSS) in nursing homes or other institutions or in the community.”
LTC Comment: I’m often asked about state-level Medicaid financial eligibility rules. Today I have good news and bad news. The good news is that this publication by the Kaiser Family Foundation has tons of that information. The bad news is that Medicaid eligibility is so complicated—a Serbonian bog according to one jurist—that you may not be able to make much sense out of it. Still, this is a very valuable resource for those of us who can’t just shake our heads in dismay and ignore the subject. For the rest of you, here’s a useful, and much simpler, rule of thumb. Anyone with income less than the cost of a nursing home can qualify for Medicaid LTC benefits. Assets don’t matter because the big ones are exempt and the rest can easily be converted to exempt status. Is it any wonder people don’t worry about paying for LTC until they need it?

Hest, Alarcon and Blewitt on Modeling Financial Eligibility for Medicaid Longterm
Services and Supports
Robert Hest, Giovaan Alarcon & Lynn A. Blewett
To cite this article: Robert Hest, Giovaan Alarcon & Lynn A. Blewett (2020): Modeling Financial
Eligibility for Medicaid Long-term Services and Supports, Journal of Aging & Social Policy, DOI:
10.1080/08959420.2020.1740638
To link to this article: https://doi.org/10.1080/08959420.2020.1740638

ABSTRACT Medicaid plays a significant role in financing long-term services and supports (LTSS) for low-income elderly (65+) in the United States. We modeled the impact of changing income, home equity, and asset limitations on Medicaid eligibility across states. We found that one in five elderly adults (10 million individuals) meet all three tests and would be financially eligible for Medicaid LTSS. Imposing additional restrictions on income allowances and eligibility thresholds had greatest impact on financial eligibility for Medicaid LTSS. Few states have opted to restrict financial eligibility and are instead looking for ways to keep people living independently in the community.

LTC Comment: I analyzed this article in LTC Bullet: Rethink LTC Financing. Friday, February 19, 2021

Blewitt and Hest, 0520
https://doi.org/10.1080/08959420.2020.1774312

“Emergency Flexibility for States to Increase and Maintain Medicaid Eligibility for LTSS under COVID-19”b Lynn A. Blewett & Robert Hest To cite this article: Lynn A. Blewett & Robert Hest (2020) Emergency Flexibility for States to Increase and Maintain Medicaid Eligibility for LTSS under COVID-19, Journal of Aging & Social Policy, 32:4-5, 343-349, DOI: 10.1080/08959420.2020.1774312 To link to this article: https://doi.org/10.1080/08959420.2020.1774312

Medicaid Managed LTSS

GAO on Medicaid Managed Care 1220 URL: https://www.gao.gov/assets/720/710680.pdf

12/16/2020, “Medicaid Long-Term Services and Supports: Access and Quality Problems in Managed Care Demand Improved Oversight,” Government Accountability Office, GAO-21-49

Quote: “Medicaid spends about a third of its budget on long-term services and supports for adults and children with disabilities and chronic conditions. Over half of states contract with managed care organizations to provide those services. We examined 6 states, each of which reported finding significant problems with the quality of care provided through these contracts. In some cases, the problems led to patient injury or neglect. This suggests that problems may be widespread, raising concerns given gaps we found in monitoring and oversight. Our recommendations include drafting a national oversight strategy.”

LTC Comment: This was never going to end well as we observed in this “LTC Bullet: How the Government Ruined LTC (and We’ll Fix It)” on June 10, 2016:
What about long-term care specifically? The big change there is that Medicaid, the dominant LTC payer, has shirked its responsibility for providing and paying for quality community and institutional care. How so? Instead of paying home care and nursing facility providers directly (however inadequately), state Medicaid programs all across the country are shifting to “managed long-term care.” That means they contract with private companies to (1) find and sign up providers, (2) direct Medicaid recipients to this limited range of locked in providers, and (3) pay the providers after taking a cut for themselves--all for less than it would have cost Medicaid to pay the providers itself. Traditional direct-care LTC providers wonder how adding an extra payee and a new level of bureaucracy will lower costs and improve quality. But for now, that’s the Holy Grail of managed long-term care.

Medicaid Estate Recovery (and Liens)

MACPAC, “Medicaid and CHIP Payment and Access Commission” recommended curtailing Medicaid estate recoveries in its
March 2021 Report to Congress on Medicaid and CHIP

We analyzed and critiqued their proposal in two LTC Bullets:

040221 LTC Bullet #1302--MACPAC Captured
030521 LTC Bullet #1300--MACPAC Misfires

Little has been heard of this misguided proposal since.

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Updated, Monday, August 8, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-024 LTC NEWS AND COMMENT

Webinars aim to gather more support for long-term-care law and tax
Facing stagnant Medicaid rates, this state has lost 10 percent of SNF beds in 2022
As new Alzheimer’s drugs have failed, scientists are shifting focus to other potential causes
Want to improve Medicare Advantage? Deliver some real advantages
American Caregivers: The Time To Plan Is Now
Funding, unionization needed to improve wages, working conditions in long-term care: report
Mega Millions sales boost senior citizen programs
Asset Limit Changes for Non-MAGI Medi-Cal
Low pay, poor working conditions common for long-term care workers: report
Older adults’ home equity exceeds $11.12 trillion in first quarter: report
Unique New Mexico program turns immigrants into caregivers
True Cost of Aging’ Index Shows Many Seniors Can’t Afford Basic Necessities
CMS offering new tool to transition more people away from SNFs

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

Seattle—

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LTC BULLET: LTCI SALES SURGE

LTC Comment: All of a sudden LTCI sales exploded to the upside last year. What happened? Could it happen again? How? Some thoughts after the ***news.***

*** LTC CLIPPINGS are notifications we send to Center Premium Members daily with news, data, reports, and information they need to know to stay at the professional forefront. Steve Moses scans the popular and scholarly media, condenses vital information, and forwards to you a message with the title, author, a link, a representative quote and his “LTC Comment” analyzing the significance. Don’t miss any more LTC Clippings. To subscribe contact Damon at 206-283-7036 or damon@centerltc.com. Here are two examples of need-to-know LTC clippings we sent recently:

7/27/2022, “Older adults’ home equity exceeds $11.12 trillion in first quarter: report,” by Kathleen Steele Galvin, McKnight’s Senior Living

Quote: “Homeowners aged 62 or more years increased their home equity by the first quarter of 2022 by 4.9%, to a record $11.12 trillion, from the fourth quarter of 2021, according to the latest quarterly release from the National Reverse Mortgage Lenders Association, published Tuesday. That’s a difference of $520 billion. … Some older adults are using reverse mortgages to finance their moves to senior living communities.”

LTC Comment: Expect senior home equity to decline as the housing recession continues but to remain a critical source of LTC financing when the broader economic recession takes its toll on public LTC funding programs.

7/28/2022, “Low pay, poor working conditions common for long-term care workers: report,” by Kathleen Steele Galvin, McKnight’s Senior Living

Quote: “Low pay and poor working conditions are the norm for workers in long-term care, according to a report published Wednesday by the think tank Economic Policy Institute. … Their key findings:

80.9% of long-term care workers are women.
22.4% are Black women, and 12.8% are immigrant women.
$15.22 is the median hourly pay rate, below the US median hourly wage of $20.07.
7.2% live in poverty, a higher percentage than the poverty rate for all workers (5.3%).
6.9% are covered by a union contract, a lower rate than the overall workforce (11.9%). …

Increased public funding is an answer to ensuring higher pay, better staffing levels and improved working conditions for workers, according to the researchers. They also called upon policymakers to raise the minimum wage and strengthen protections for workers seeking to organize a union.”

LTC Comment: The kneejerk answer is always to throw more money at the problems. But shouldn’t the first step be to ask why LTC has these problems? The market is dominated by public funding and government regulation. If it is such a mess, do we really believe more public funding and regulation will make it better? To understand what’s wrong and what can fix it, try these studies: Medicaid_and_Long-Term_Care (2020) and How to Fix Long-Term Care Financing (2017). ***

LTC BULLET: LTCI SALES SURGE

LTC Comment: In the 1980s and ‘90s long-term care insurance sales moved gradually upwards. We had every reason to believe that trend would continue. After all, the undesirable alternative was to pay out of pocket for long-term care if needed or to rely on public welfare. But by the early 2000s, LTCI sales took a downward turn. Analysts and policy makers wrote the product off as a way to offset public funding from Medicaid. The private long-term care insurance market languished. Until now!

What happened? To find out, read the “2022 Milliman Long Term Care Insurance Survey” in Broker World’s July 2022 issue. (Subscribe here.) This is the magazine’s 24th consecutive annual review of stand-alone long-term care insurance (LTCI). Kudos to authors Claude Thau, Allen Schmitz, and Chris Giese. Here are some pull quotes (footnotes omitted, but emphasis added) from the article followed by our comments.

We estimate total stand-alone LTCI annualized new premium sales of nearly $200 million in 2021 … , almost 1/3 more than our 2020 estimate of $150 million. However, premium outside the state of Washington decreased 6.0 percent, based on the insurers that reported sales.

We estimate that 140,000 to 150,000 people purchased stand-alone LTCI coverage in 2021, more than triple the 2020 numbers. Outside of WA, the number of new insureds dropped 9.4 percent based on the insurers that reported sales.

Worksite sales soared. We estimate that new annualized premium from worksite sales tripled in 2021, while non-work-site premium increased by 6.0 percent. We estimate that there were about 9.3 times as many worksite sales in 2021 compared to 2020, while non-worksite sales increased 47 percent.

For the first time ever in our survey, more males purchased LTCI than females, which appears to have been driven by the WCF exemption.

Reflecting nine companies’ data, the inforce number of cases increased for the first time since 2014, by 3.6 percent, because of WA sales.

MARKET PERSPECTIVE … Washington State’s “Washington Cares Fund” (WCF) stimulated a tremendous demand for private LTCI from individuals and businesses within WA. WCF imposes a 0.58 percent payroll tax to fund a $36,500 lifetime pool (intended to inflate according to the Washington consumer price index) for care received in WA as defined in the Revised Code of Washington 50B.04. However, people who purchased qualifying private stand-alone or combination LTCI by November 1, 2021 could file to be exempt from the tax. … WA accounted for 60 percent of reported stand-alone LTCI policies sold and 60 percent of combination life/LTCI on-going premium (i.e., excluding single premium) policies sold in 2021 after having accounted for 3.0 percent of stand-alone LTCI sales in 2020 and only 1.6 percent of combination life/LTCI sales in 2020. Including estimated sales, we think more than 70 percent of the stand-alone policies sold in 2021 were sold in WA. (Note: WA had received 470,000 applications for exemption as of March 2022.)

[I]nsurers reported 44 times as many stand-alone policies sold in WA in 2021 as in 2020 but only 12 times as much new annualized premium. …

[I]nsurers reported 92 times as many combination on-going premium policies sold in WA in 2021 as in 2020 but only 9.8 times as much new annualized premium. Outside WA, insurers reported 0.6 percent more policies and 18 percent more premium in 2021 than in 2020. As a result, our national data for such combination policies shows 2.5 times as many new policies and 1.4 times as much annualized new premium. …

WA sales distorted the characteristics of sales significantly, as will be explained throughout this report. Given the observed sales in WA, it appears likely consumers generally sought the least expensive way to opt out of WCF.

The national placement rate increased from 57.8 percent in 2020 to 61.7 percent in 2021 … driven by WA sales. WA had a 72.7 percent placement rate, which appears to be influenced by healthy and young applicants. Outside WA, the placement rate was 54.1 percent. Only 13.3 percent of WA business was declined (27.4 percent elsewhere) and declines were lower in WA for all age bands. Only 14.1 percent of WA business was incomplete, suspended, not taken out or returned during the free look period (18.5 percent elsewhere). Our surveys have never found placement rates parallel to 2021 WA experience. …

Current premiums are much more stable than past premiums, partly because today’s premiums reflect much more conservative assumptions based on far more credible data and lower assumed investment yields.

LTC Comment: Wow! That’s amazing. All of a sudden, national sales tripled, though premiums only increased one-third. Worksite sales jumped over nine fold, but worksite premiums only tripled. More men than women bought policies for the first time ever. National placement rates jumped from 57.8 percent in 2020 to 61.7 percent in 2021. Most amazing of all, one state—Washington—accounted for 60 percent of national sales after generating only three percent the year before. But it’s not all good news. Outside of Washington, new insureds dropped 9.4 percent and premiums declined 6.0 percent.

What’s going on? It’s pretty obvious. Faced with a real and immediate risk and cost of long-term care—that is, Washington’s payroll tax threat—people grabbed the only way available to avoid it—to buy LTCI by a date certain. Nearly half a million workers sought the exemption. Overrun by demand the LTCI market froze and most seeking the coverage were unable to close the deal by actually purchasing a policy. No problem. That and other issues of poor design caused the state to send WA Cares back to the drawing board, delaying implementation until July 2023. But the key point was made.

Lesson learned: while consumers won’t buy private long-term care insurance to offset a risk and cost that may or may not occur decades in the future, they will snap up the product to escape an immediate cost imposed by the government in the form of a compulsory payroll tax.

Hmmm. What should we make of that new insight? Should every state, or even the federal government itself, impose a WA Cares-like payroll tax to fund meager LTC benefits and give everyone a chance to opt out in the hope they’ll insure privately to escape the trap? Even if others did a better job than WA Cares of planning and designing such a program, it would be a very unfortunate development indeed. It would follow the social insurance programs we already have, such as Medicare and Social Security, currently unfunded to the tune of $56 trillion, down the fiscal sinkhole.

There is a better way. Instead of imposing a politically unpopular and economically ill-advised new tax to fund an inadequate LTC “trust fund” with a private LTC insurance escape hatch, why not simply establish and publicize a new personal long-term care responsibility. Let a private organization or agency actuarially determine each individual’s personal contribution and responsibility to the LTC risk pool. Then allow people to meet their responsibility as they see fit as long as they satisfy agreed upon measures of accountability. How?

The possibilities are endless. One could purchase private LTC insurance in a sufficient amount. Or earmark a portion of home equity--now $11.12 trillion just among older homeowners--to long-term care. Or tap life insurance--$19.6 trillion. Or draw from IRAs ($13.2 trillion)/401Ks ($7.3 trillion). Or contribute to a new kind of IRA for LTC. Or formally encumber part of one’s estate. Given a reason to do so, consumers and entrepreneurs would find creative, economically beneficial ways to meet each person’s LTC responsibility.

Research shows that the LTC responsibility is not as onerous as previously thought. 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” (Favreault and Dey, 2016, p. 1). That does not sound so daunting. If we could get most Americans to satisfy that level of risk now, we would be left with a far tinier share of the overall cost of LTC for public financing to pick up later.

But what about those who do not or cannot cover their personal LTC responsibility up front? If they can but will not, then let government enforce the responsibility, but not with a universal, compulsory, payroll tax punishing everyone and damaging the economy. Rather more conventional methods should suffice such as withholding other public benefits or imposing a new, narrowly focused tax clearly defined to cover the individual’s LTC responsibility.

For those who don’t satisfy their individual LTC responsibility because they can’t, well, at least there will be many fewer of them when the time eventually comes that they need long-term care and less depleted public coffers will be better able to provide access to and quality of care for them.

It turns out financing long-term care for an aging population isn’t the overwhelming problem all the studies make it out to be. Reconceptualized as an immediate cost, long-term care planning is manageable. There’s more than enough wealth in the American economy to ensure every person receives quality care in the most appropriate setting when they need it.

We tried getting people to plan responsibly for long-term care by threatening them with the loss of their life’s savings if they have catastrophic LTC costs. But in the end, when the time came, Medicaid stepped in and paid for most high-cost long-term care. So generation after generation never came to grips with the real risk and cost of LTC. That was the real problem all along. Now that we understand it, we know what to do about it. All that remains is to summon the political will and act.

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

Seattle—

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LTC E-ALERT #22-023 LTC NEWS AND COMMENT

Accessing Long Term Care Through Medicaid
CMS releases first-ever quality measures for home- and community-based services
The Perfect Storm: Nursing Home Industry Outlook is ‘Not Pretty’ Amid Rising Inflation, Labor Costs
Adults poorly planning for long-term care needs, surveys find
Record Social Security bump could push seniors into higher tax bracket, experts say
Congress’ Epic Fail In Caring For Frail Older Adults
Almost half of all long-term care insurance applications declined for those over 70
AHCA calls for action as 60 percent of SNFs limit new admissions
COVID-19 public health emergency extended again

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

Seattle—

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LTC E-ALERT #22-022 LTC NEWS AND COMMENT

LTSS reform needed to ensure access to quality care, doctors’ group says
Medicaid Financial Eligibility in Pathways Based on Old Age or Disability in 2022: Findings from a 50-State Survey
Could a hybrid model be the solution to serving millions more older adults?
Long Term Care State Payroll Tax Update
Many Baby Boomers Will Soon Need Adult Supervision
Democrats Propose Raising Taxes on Some High Earners to Bolster Medicare
Bonuses, 5.49% salary jump part of soaring costs for CCRC nurse leaders: report
Jobs Aplenty, but a Shortage of Care Keeps Many Women From Benefiting
As interest rates climb, life-LTC combined insurance premiums decline, expert says
Making Difficult Decisions: Long-term care or keep farming assets?
9 Emerging Senior Living Technologies That Will Power the Future of Assisted Living
Home health patients experience higher rehospitalization rates in study
The Supreme Court just put regulatory oversight on notice

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

Seattle—

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LTC Comment: If you want consumers to take the risk and cost of long-term care seriously enough to prepare for them, make the responsibility real and move it forward to now. We explain after the ***news.***

*** LTC CLIPPINGS are news items we send to Center Premium Members daily with news, data, studies, and information they need to know to stay at the professional forefront. Steve Moses scans the popular and scholarly media, condenses vital information, and forwards to you a message with the title, author, a link, a representative quote and his “LTC Comment” analyzing the significance. Don’t miss any more LTC Clippings. To subscribe contact Damon at 206-283-7036 or damon@centerltc.com. Here are three examples of need-to-know LTC clippings we sent recently:

7/11/2022, “Medicaid Financial Eligibility in Pathways Based on Old Age or Disability in 2022: Findings from a 50-State Survey,” by MaryBeth Musumeci, Molly O'Malley Watts, and Meghana Ammula, KFF
Quote: “This issue brief presents state-level data on Medicaid financial eligibility criteria and adoption of the major non-MAGI pathways as of January 2022. It includes mandatory and optional pathways to full Medicaid eligibility as well as state options to expand Medicaid financial eligibility for people who need long-term services and supports (LTSS) in nursing homes or other institutions or in the community.”
LTC Comment: I’m often asked about state-level Medicaid financial eligibility rules. Today I have good news and bad news. The good news is that this publication by the Kaiser Family Foundation has tons of that information. The bad news is that Medicaid eligibility is so complicated—a Serbonian bog according to one jurist—that you may not be able to make much sense out of it. Still, this is a very valuable resource for those of us who can’t just shake our heads in dismay and ignore the subject. For the rest of you, here’s a useful, and much simpler, rule of thumb. Anyone with income less than the cost of a nursing home can qualify for Medicaid LTC benefits. Assets don’t matter because the big ones are exempt and the rest can easily be converted to exempt status. Is it any wonder people don’t worry about paying for LTC until they need it?

6/2022, “Long Term Care State Payroll Tax Update,” BuddyIns
Quote: “This update is intended for our community of LTC planning advocates and insurance practitioners to stay up-to-date on the latest legislative news that we are following at BuddyIns. This is not a comprehensive assessment, so please email us with any news from your neck of the woods.”
LTC Comment: Thanks to BuddyIns for this update on a question I’m probably asked more than any other: which states are doing what about LTC financing? What all the state initiatives have in common is to rely on the threat of government force to impose compulsory participation in social insurance plans on the model of existing, failed federal entitlement programs. Watch for this coming Friday’s [now today’s] “LTC Bullet: Frontload LTC” for a better solution grounded in personal responsibility and individual freedom.

7/4/2022, “The Supreme Court just put regulatory oversight on notice,” by John O’Connor, McKnight’s LTC News
Quote: “By any measure, the Supreme Court just wrapped up one of its more memorable sessions. … But the decision that may most directly affect long-term care providers was actually directed at the Environmental Protection Agency. And its potential impact on skilled care might be hard to overestimate. … The majority opinion, written by Chief Justice John Roberts, claimed the agency’s heightened emissions rules were a ‘fundamental revision’ of existing law. He added that it’s up to Congress, not the EPA, to make ‘a decision of such magnitude.’”
LTC Comment: What’s that got to do with long-term care? O’Connor explains: “Talk about the importance of timing: Just one day earlier, the Centers for Medicare & Medicaid Services proposed regulations that would allow surveyors to use payroll data to investigate staffing rules violations, force facilities to hire infection preventionists, and revamp arbitration requirements, among other provisions. … And it’s not just these latest rules for nursing homes that could come under fire. Any regulation that arguably steps over the line would appear to be fair game. So how big is the Supreme Court’s EPA ruling? Let’s put it this way: Regulatory oversight might never be the same.” Let’s hope the ongoing, long growing tyranny by bureaucrats is finally curtailed. ***

LTC BULLET: FRONTLOAD LTC

LTC Comment: The fundamental problem with long-term care is that people don’t worry about it until they’re too old, frail, demented, infirm or broke to plan responsibly for it. That’s why most people who need expensive care for a long time end up relying on public financing, usually from Medicaid. But Medicaid is welfare and “programs for the poor are poor programs.” So too many people needing long-term care are stuck in underfunded nursing homes or waiting in long lines (665,000 deep) for scarce, waivered home care slots. What’s to be done?

Governments, federal and state, think they have a solution. If people won’t take responsibility to plan for long-term care before it’s too late, then force them to do it. Require companies to charge employees payroll deductions to create trust funds that can pay benefits when covered individuals qualify. Whether federal (WISH Act) or state (WA Cares) the principle is the same in such proposals: use the government’s monopoly on the legal use of force to compel people to prefund their long-term care. But we’ve seen that principle at work already in Social Security and Medicare, two entitlements on the brink of insolvency with unfunded liabilities totaling $56 trillion. Do we really want to go there again?

What else might work? We know what didn’t work. The federal government tried telling people that if they don’t prepare for long-term care but need it later they could lose their life’s savings. That might have worked if it had been true. But giant Medicaid asset exemptions and financial eligibility loopholes along with non-enforcement of mandatory estate recoveries defeated that plan. People who ignored the warnings and ended up needing expensive long-term care got Medicaid, often while protecting most of their wealth. So, unsurprisingly, the next generation followed suit, ignoring long-term care until they needed it, then relying on Medicaid. The long-term care system spiraled downward into its current dismal state.

What have we learned? A couple things. Threatening people with impoverishment doesn’t work if you don’t enforce it. Forcing people to pay extra taxes, premiums, or payroll deductions (whatever you want to call them), under threat of fines or imprisonment, for a promise of minimal benefits from another government program likely to become insolvent is repugnant. Voters twice rejected WA Cares and every attempt to impose a federal LTC social insurance program has proved a non-starter.

Still, we have learned something important from the government’s clumsy attempts to force people to comply with a long-term care imperative. I refer to what happened when the WA Cares program offered citizens an option to escape its mandatory payroll deductions by purchasing private long-term care insurance. Nearly half a million Washingtonians clutched that parachute and jumped. New LTC insured lives nearly tripled from 57,200 in 2020 to 153,687 in 2021 … nationwide! Who knew? People won’t buy insurance for an unknowable risk off in the distant future, but they will leap at the chance to avoid a mandatory government program right now!

Well, now we know. So is there a way to have the good result (widespread early LTC planning) without the bad outcome (compulsory government interference)? Of course. Treat the public like grownups. Explain LTC risk including each person’s responsibility to prepare for it. To wit: long-term care can and probably will happen to them some day. They have a personal responsibility to plan for it and prepare. If they do, the government will leave them alone. If they don’t, they may lose government benefits that would otherwise accrue to them or have to answer to a public or private agency entrusted with the task to establish and enforce each individual’s LTC responsibility.

How can you meet your LTC responsibility and avoid loss of your government benefits or garnishment of other income? Many ways. Buy private LTC insurance in an amount satisfactory to meet your actuarially determined risk. Carve out a portion of your home equity and earmark it to meet that responsibility. Tap your life insurance value. Set aside sufficient funds in a new IRA-like fund to be created. Obligate part of your estate, secured and recorded (unlike Medicaid estate recoveries) to fund your long-term care if needed. The possibilities are endless. All that is needed is a private entity to calculate each individual’s LTC responsibility, track it, and ensure it is met. Government could follow up with those who don’t participate voluntarily, hopefully very few, but otherwise stay out of the LTC market.

Why would people cooperate with this plan when they ignore LTC risk and cost now? Two reasons. First, they confront this risk and cost immediately, not as a maybe in the distant future. Second, they are only responsible for the risk they bring into the risk pool. Researchers found that the average individual’s LTC cost risk is $138,000 and that it could be met by setting aside and investing $70,000 now. Obviously some people will incur more costs and some less, but removing the average risk from the risk pool will leave any remaining public responsibility, such as a vastly reduced Medicaid program, greatly relieved.

The only solution to what ails long-term care in the USA is to engage citizens to plan and prefund their risk and cost as early as possible. To do that without using government force to compel compliance, establish a legal obligation to a minimum level of individual LTC preparation and offer creative ways to meet the responsibility voluntarily. Only enforce the obligation to plan on those who do not act. Frontload long-term care!

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Updated, Tuesday, July 5, 2022, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #22-021 LTC NEWS AND COMMENT

US long-term care insurers see large spike in new customers in 2021
Staffing Shortages Have U.S. Nursing Homes in Crisis
LeadingAge chastises HHS for ‘devastating’ home health rule
AARP Poll Reveals Strong Support for Family Caregiver Tax Credit
Cocktail lounge attendant? Eclectic mix of people filling heretofore unheard-of senior living positions
Long-term inflation threatens life plan community margins
Flu vax cuts seniors’ dementia odds by 40 percent over 4 years, large study finds
Post-acute and Long-term Care Providers and Services Users in the United States, 2017–2018, Analytical and Epidemiological Studies
Many Retirees Wish They'd Planned, Saved Earlier: EBRI Survey
Average Annual Assisted Living Rates Surpass $51K, New Jersey Most Expensive State
Senate Retirement Bill Could Include LTCI Premium Provision
WA Cares 'relatively higher risk' investment policy approved
Nursing home COVID-19 infections quadruple as booster rate slows

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

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LTC BULLET: MEDICAID’S PLAN TO FAIL

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

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

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

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

LTC BULLET: MEDICAID’S PLAN TO FAIL

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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LTC E-ALERT #22-020 LTC NEWS AND COMMENT

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

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

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

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

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

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LTC BULLET: THE ENTITLEMENT PUT

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

*** STEVE MOSES’S latest published articles:

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

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

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

LTC BULLET: THE ENTITLEMENT PUT

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

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

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

“The Entitlement Put”
by
Stephen A. Moses

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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LTC BULLET: BEGGING THE LTC QUESTION

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

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

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

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

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

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

LTC BULLET: BEGGING THE LTC QUESTION

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

“Begging the LTC Question”
by
Stephen A. Moses

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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LTC BULLET: LTC EPIPHANY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC BULLET: LTC EPIPHANY

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

“LTC Epiphany”
by
Stephen A. Moses

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: THE MYTH OF UNAFFORDABILITY, REDUX

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

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

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

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

LTC BULLET: THE MYTH OF UNAFFORDABILITY, REDUX

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

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

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

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

Executive Summary

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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LTC BULLET: LTC CHOICE, STILL THE BEST SOLUTION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC BULLET: LTC CHOICE, STILL THE BEST SOLUTION

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

Executive Summary

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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LTC BULLET: GO FUND WHAT?

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

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

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

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

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

LTC BULLET: GO FUND WHAT?

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

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

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

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

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

Medicaid and Quality

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

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

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

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

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

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

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

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

Medicaid and Income Eligibility

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

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

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

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

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

Selfishness

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

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

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

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

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

Medicaid Planning

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

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

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

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

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

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

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

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

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

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

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

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

Medicaid as Last Resort

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC BULLET: LTC GOOD NEWS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

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LTC Bullet: LTC Bankruptcy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC BULLET: LTC BANKRUPTCY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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LTC BULLET: LONG-TERM CARE’S FUNDAMENTAL FALLACY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC BULLET: LONG-TERM CARE’S FUNDAMENTAL FALLACY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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

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

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

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

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

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

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

1980	46.2	2.0	40.5	1.2	7.7

1990	36.7	3.8	40.1	6.0	11.1

2000	37.5	12.8	31.6	8.5	7.4

2010	33.0	23.0	26.4	7.6	7.2

2020	27.0	20.1	23.0	8.5	18.0

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

1980	11.7	26.8	15.2	14.7	31.1

1990	17.1	26.1	17.8	22.8	15.9

2000	20.9	26.8	19.1	23.9	9.0

2010	36.0	45.0	8.2	7.2	3.1

2020	32.5	33.6	10.2	12.7	10.5

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

Nursing Home and CCRC

Early Years

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

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

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

Confusing Numbers

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

Furthermore, CMS changed the definition of National Health Expenditure Accounts (NHEA) categories in 2011, adding Continuing Care Retirement Communities (CCRCs) to Nursing Care Facilities. This change had the effect of reducing Medicaid's reported contribution to the cost of nursing home care from over 40 percent in 2008 to under one-third (32.8 percent) in 2009 (as reported originally in those years by CMS). That is because CCRCs include independent and assisted living. Combining CCRCs, which are mostly private pay, with nursing homes, which provide most of the Medicaid-financed long-term custodial care for the elderly, had the effect of making Medicaid appear less a factor and out-of-pocket costs a much bigger factor in nursing home financing.

Medicare

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

Public vs. Private Long-Term Care Financing

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

What is “Private Health Insurance?”

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

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

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

Why Pump OOP and Minimize Medicaid?

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

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

Home Care

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

Conclusion

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

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

Seattle—

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: LONG-TERM CARE IRONY

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

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

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

LTC BULLET: LONG-TERM CARE IRONY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stephen A. Moses

425-891-3640 smoses@centerltc.com

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

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

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

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

Seattle—

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

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

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

Seattle—

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LTC Bullet: Long-Term Care Financing Update

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

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

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

LTC BULLET: LONG-TERM CARE FINANCING UPDATE

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

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

Good morning,

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

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

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

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

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

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

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

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

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

These are my six topics for today:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A few of those states are …

(a) California

(b) Minnesota

(d) Maine

(e) Michigan

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2020 DATA UPDATE

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

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

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

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2020 DATA UPDATE

LTC Comment: Once a year around this time the Centers for Medicare and Medicaid Services (CMS) report health care expenditure data for the latest year of record. Recently, CMS posted 2020 statistics on its website at NHE Tables (ZIP). Click on that link to download the tables, unzip them, then click on the data tables of interest, Tables 14 and 15 for our purposes.

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

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

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

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"So What If the Government Pays for Most LTC, 2020 Data Update"
by
Stephen A. Moses

Nursing Homes

America spent $196.8 billion on nursing facilities and continuing care retirement communities in 2020, a 14.0% increase over 2019. The percentage of these costs paid by Medicaid and Medicare has gone up over the past half century (from 26.8% in 1970 to 47.1% in 2020, up 20.3 % of the total) while out-of-pocket costs have declined in the same period (from 49.2% in 1970 to 23.0% in 2020, down 26.2% of the total). Source: Table 15: Nursing Care Facilities and Continuing Care Retirement Communities Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2020.

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

No wonder people are not as eager to buy LTC insurance as they would be if they were more at risk for the cost of their care! No wonder they don't use home equity for LTC when Medicaid exempts at least $636,000 and in some states up to $955,000 of home equity (as of 1/1/22). No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program. Thus, although Medicaid pays less than one-third of the cost of nursing home (and CCRC) care (27.0% of the dollars in 2020), it covers two-thirds (66.3%) of all nursing home patient days.

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care. No wonder nursing homes risk insolvency when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care. “With states setting the Medicaid rates paid to nursing centers, there is a wide variation in the percentage of costs covered by the rates. In 2015, the coverage ranged from a low of 73.5 percent to a high of 100 percent. A similar range exists with the 2017 projected shortfall across the states.” (Latest available data) Source: A Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Private Health Insurance

Don't be fooled by the 8.5% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2020. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because many LTCI policies pay beneficiaries who then pay the providers. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments. This fact further inflates the out-of-pocket figure artificially.

Assisted Living

How does all this affect assisted living facilities? According to the Genworth Cost of Care Survey for 2020, ALFs cost an average of $51,600 per year, up 6.15% from 2019. Although assisted living facilities remain mostly private pay, “48% of ALFs are Medicaid certified” and only “a small minority of state Medicaid programs do not cover services in assisted living.” Over time assisted living facilities have followed nursing homes down the primrose path of accepting more and more revenue from Medicaid.

Many people who could afford assisted living by spending down their illiquid wealth, especially home equity, choose instead to take advantage of Medicaid nursing home benefits. Medicaid exempts one home and all contiguous property (up to $636,000 or $955,000 depending on the state), plus—in unlimited amounts—one business, one automobile, prepaid burials, term life insurance, personal belongings and Individual Retirement Accounts not to mention wealth protected by sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care.

Home Health Care

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $123.7 billion on home health care in 2020, up 9.5% since 2019. Medicare (33.6%) and Medicaid (32.5%) paid 66.1% of this total and private health insurance (not LTC insurance) paid 12.7%. Only 10.2% of home health care costs were paid out of pocket. The remainder came from several small public and private financing sources. Data source: Table 14: Home Health Care Services Expenditures; Levels, Percent Change, and Percent Distribution, by Source of Funds: Selected Calendar Years 1970-2020.

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

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

Note especially:

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

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

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

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

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

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

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

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

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

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

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

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

Seattle—

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LTC BULLET: SQUARE THE LTC CIRCLE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC BULLET: SQUARE THE LTC CIRCLE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LTC circle squared!

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

Seattle—

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Their concerns include:

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

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

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

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

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

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

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

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

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

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

Contact ACSIA Partners to begin the process.

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

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

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

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

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

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

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

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

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LTC BULLET: AMADA KEYNOTE

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

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

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

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

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

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

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

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

LTC BULLET: AMADA KEYNOTE

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

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

Amada Keynote Address
by
Stephen A. Moses

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

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

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

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

My Background

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Puzzling Questions

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

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

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

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

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

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

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

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

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

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

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

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

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

My Story

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

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

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

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

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

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

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

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

Does that about sum it up?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Answer the Questions

Let’s answer the questions we posed earlier:

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

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

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

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

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

What Can We Do?

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

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

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

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

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

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

What’s Standing in Our Way?

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

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

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

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

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

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

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

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

Want to Learn More?

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

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

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

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

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

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

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

Seattle—

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

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

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

Seattle—

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

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

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

Seattle—

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LTC BULLET: THREE NEW ARTICLES

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

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

*** RECENTLY PUBLISHED ARTICLES by Steve Moses.

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

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

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

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

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

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

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

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

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

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

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

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.) ***

LTC BULLET: THREE NEW ARTICLES

LTC Comment: Magazines want exclusives on everything they publish. So I can’t share my three latest columns with you in full. But I do have permission to convey the essence of the articles and some short quotes. Please read the articles in their entirety at the sources.

McKnight’s Long-Term Care News published “Long-term care’s problems are bad, getting worse, but fixable” on October 1, 2021. In it I explained what ails long-term care service delivery. I asked: “What do all of the analysts’, politicians’, and bureaucrats’ proposed solutions have in common?” I answered: “They propose more government funding and regulation, usually in the form of a new compulsory, social insurance program for long-term care.” I pointed to the WA Cares Fund and the WISH Act as examples of these dangerous approaches seeking to build on the shaky fiscal foundation of Social Security and Medicare. I explained how and why government funding and regulation caused long-term care’s problems by making Medicaid easy to get after care is needed. I concluded with these questions: “Who dares raise the call to close Medicaid LTC eligibility loopholes, make home equity a giant new source of private LTC financing, strengthen estate recovery rules to recapture wealth lost to Medicaid exemptions and persuade more people to plan early to save, invest or insure so they can pay privately for long-term care when they need it? Will you?”

Broker World has scheduled “LTC Irony” for publication in its November issue. In it I point out the irony that decades of warning us “If you don’t buy long-term care insurance you could lose your life’s savings” had little impact on expanding the market. But let Washington State government impose a compulsory payroll tax on personal income unless citizens have private LTC coverage by November 1, and voila. A sudden fire sale ensued that shut down the market with excess demand. I conclude: “The lesson for state and federal central planners is this: if you must force people into mandatory payroll-funded LTC programs of dubious solvency, at least give them a way out by purchasing private insurance so we have some consumers able to pay their own way if and when the bottom falls out of the country’s many fiscally challenged entitlement programs.” Finally we’ve found the secret to selling private long-term care insurance: make it the only way to escape more government taxes, rules, regulations, and interference.

McKnight’s Senior Living published “What’s better for senior living? The market or government?” on October 25, 2021. In it I compare and contrast the basic principles underlying markets on the one hand and government on the other. For example: “In markets, millions of transactions between willing buyers and sellers create spontaneous economic order, set interest rates (the price of money) through supply and demand, and generate price data which tell investors and businesses how much of which products and services to produce. In government, the Federal Reserve sets interest rates based on balancing political powers and influence resulting in asset bubbles, mal-investment, and economic inequality.” In the article, I ask and answer “How has government impacted senior living?” and “How could a more market-oriented approach improve senior living?” I conclude “Applying the general principles of markets and government identified above to the practical challenges of senior living and long-term care points to only one conclusion. We need to rely more on markets and less on government to improve both.”

Happy reading!

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Updated, Monday, October 25, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-037: LTC NEWS AND COMMENT

So far, more than 200,000 apply for exemption from the state’s long-term-care fund
Milliman Report Shows $32.5B Value in Medicare Advantage
New federal funds spur expansion of home care services for the elderly and disabled
Are You Ready to Move Your Aging Parent Into Your Home?
My Perfect World
For most seniors, there’s no place like home
The Troubling Trend of ‘Gray Sheeting’ Life Insurance Policies
Covid-19 breakthrough deaths most common among older Americans, data shows
‘Fairly large contingent’ of National Guard will alleviate ‘healthcare backups’ at long-term care facilities
How a long-term care operator used immigrant program to overcome chronic staff shortages

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Updated, Monday, October 18, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-036: LTC NEWS AND COMMENT

Long-term care planning, retirement savings suffered during pandemic: study
My incredible shrinking lifespan
Most post-acute Medicare recipients with dementia sent to SNFs despite payment changes: study
Nursing home residents may have better CPR outcomes than their community-dwelling peers: study
Alzheimer’s villages could be the answer to the rising cases—and cost—of dementia
Poorly controlled diabetes — not diabetes itself — triples dementia risk, study finds
Washington state receives 95,000 exemption applications to new long-term care benefit in first week
Parkinson: COVID-19 May Be An ‘Endemic Problem’ For Nursing Homes Moving Forward
Nursing Facilities Need to Weather the ‘Reimbursement Storm’ of Medicare Advantage
Medicaid's safety net for pregnant women
State Senator: Only Gov. Inslee ‘has the power’ to pause Washington’s long-term care tax

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Updated, Friday, October 15, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: A FRAMEWORK FOR THINKING ABOUT MEDICAID AND LONG-TERM CARE

LTC Comment: What would a bare-bones outline of the long-term care problem and its solution look like? Read on after the ***news.***

*** LTC DISCUSSION GROUP has launched their new and improved website. Browse it, find presentation materials from prior sessions, get added to their mailing list, submit questions or topic ideas for future sessions, or heaven forfend, even unsubscribe from future “Save the Date” notifications. Check the Group’s new You Tube channel for presentation videos starting with the September 2021 meeting that we highlighted in LTC Bullet: LTC Prevention is Better than Cure. Save the date for the LTC Discussion Group’s October 19^th meeting on “Direct Care Workforce.” ***

*** AMADA SENIOR CARE has retained Stephen Moses to deliver the keynote address at their annual franchise conference in Dana Point, CA on October 27. Amada is a home care provider that specializes in helping people get everything they’re entitled to from their long-term care insurance policies. The company also joins the Center for Long-Term Care Reform as a Bronze Member for the coming year. ***

*** RECENTLY PUBLISHED ARTICLES by Steve Moses:

In addition to the columns listed below, Steve has another article accepted for publication soon and a second out for query. Watch for them.

“LTC Irony” scheduled for the November issue of Broker World.

“What’s better for senior living? The market or government?”

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” by Stephen A. Moses, McKnight’s LTC News, October 1, 2021.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: A FRAMEWORK FOR THINKING ABOUT MEDICAID AND LONG-TERM CARE

LTC Comment: Long-term care financing is complicated. Most analysts bewail long-term care’s problems—excessive dependency on family caregiving, institutional bias, caregiver shortages, inadequate funding, etc.—and then, without analyzing or explaining why these problems exist, they reflexively prescribe more government financing and regulation. Ironically, they recommend more of what arguably caused the problems in the first place.

The explanation of why long-term care is so dysfunctional requires complex research, analysis, evidence, and reasoning. Our monographs, Medicaid and Long-Term Care and How to Fix Long-Term Care Financing, provide that. But they contain too much data and analysis to absorb all at once. So below, for brevity and clarity, I present only the basic argument. It leads in a very different direction than the anti-democratic, compulsory, payroll-funded social insurance plans (like WA Cares Fund and the federal WISH Act) on which so many analysts and advocates have come to agree.

A Framework for Thinking about Medicaid and Long-Term Care
by
Stephen A. Moses

The big picture: About 70% of people will require assistance with activities of daily living due to age. But only 25% are likely to experience expenses that are potentially catastrophic.

The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. A one in four chance of a catastrophic loss is an insurable risk.

So private insurance against long-term care risk should be a promising market. That is why over 100 companies sold the product at one time. But only a dozen still do. Why?

People only buy insurance against real risk from which they can see the dire consequences of being unprotected. That condition does not exist with long-term care. Why?

Most catastrophic long-term care costs are paid for by Medicaid, Medicare, the VA, and other smaller public programs.

Add “spend-through” of Social Security and other income Medicaid recipients must contribute toward their care and we account for 90% of total LTC costs without touching any savings.

But don’t people have to spend down their wealth before they become eligible for Medicaid? That is the conventional wisdom in most academic and popular articles but it is untrue.

To qualify for Medicaid people do need to meet ostensibly low income ($723/month) and asset ($2,000) limits. But those limits are misleading because …

Medicaid subtracts private medical and long-term care costs from income before determining eligibility. Rule of thumb: income below the cost of a nursing home, say $7K/month, qualifies.

Most large assets are exempt including $603K to $906K of home equity plus without a $ limit one vehicle, burial expenses, personal belongings, a business, term life insurance, IRAs, etc.

Non-exempt assets are easily converted to exempt status. Medicaid eligibility workers routinely advise applicants how to use countable assets to purchase exempt resources in order to qualify.

Beyond these already generous financial criteria, Medicaid planning attorneys qualify much wealthier people for Medicaid LTC using special trusts, annuities, and half-a-loaf strategies.

If most people aren’t at risk for catastrophic long-term care expenses, it makes sense that they are not sufficiently concerned about them to plan ahead, much less buy expensive insurance.

Yet, even experts still believe that all we need to do is educate the public about long-term care and they’ll take it seriously. But telling people they’re at risk when they’re not doesn’t work.

Consumers have been barraged for decades with warnings from government and the media about potentially catastrophic long-term care spend down. They still ignore the risk. Why?

Most people don’t know and don’t care who pays for long-term care. Many think incorrectly that Medicare pays. It doesn’t, but as explained above Medicaid does.

Medicaid enables denial about long-term care risk by paying for most expensive long-term care after the care is needed and long after the risk has become privately uninsurable.

It works like this. The public does not see large numbers of people being wiped out financially by long-term care. Why?

There is no empirical evidence that this actually occurs. That’s why the academic literature on this topic never cites hard evidence. There is none.

How can that be? As previously explained, the vast majority of catastrophic long-term care expenses are paid by sources other than personal wealth, mostly government programs.

So here’s the anomaly and the explanation. People don’t know who pays for long-term care, but they ignore the strident warnings about catastrophic spend down anyway, because …

They are not confronted with evidence that it actually happens, so they casually ignore the risk until they need expensive long-term care and when they do they slide easily onto Medicaid.

But don’t middle class and affluent people want to avoid Medicaid, which has such a poor reputation for nursing home bias and deficient quality? Two points:

Once care is needed the senior is usually out of the picture due to physical or mental incapacity. So, adult children, who are heirs with a financial conflict of interest, are making the decisions.

Second, Medicaid planners advise affluent clients not to worry about Medicaid’s poor reputation. They promise access to the best facilities that have only a few Medicaid beds. How?

The trick is to hold back enough “key money” to get those facilities to roll out the red carpet. Nursing facilities receive half again as much from private payers as from Medicaid.

So anyone who can pay privately for a while is welcomed into the nicest places. The tragedy is that poor people dependent on Medicaid end up in the nastier nursing homes.

What should be done?

They key to fixing what ails long-term care in the USA is to wake up consumers to the real risk and cost while they are still young, healthy and affluent enough to plan, save, invest or insure.

To do that, Medicaid must stop exempting seniors’ biggest asset, the home, so that aging Americans and their heirs know long-term care is a real risk for which they need to prepare.

With home equity finally at risk for the first time, more people will worry about long-term care and insure against the risk.

But those who don’t insure will have to tap home equity by means of a reverse mortgage or some other form of commercial or intra-family home equity conversion.

As more people have to use home equity, more will want to avoid that result by insuring, thus creating a positive incentive to insure and replacing the current perverse incentive to go without.

Over a very few years huge new private revenues from home equity conversion and private long-term care insurance will flow into home care, assisted living and nursing home providers.

The new private revenue at much higher market rates than Medicaid or Medicare pay will improve access and quality across the whole continuum of care for rich and poor alike.

What prevents this solution from being implemented? The main obstacle is political sensitivity. People have a visceral attachment to their homes.

Politicians benefit by providing “free” goods and services in exchange for votes. Removing or vastly limiting Medicaid’s home equity exemption is not politically feasible … yet

What is important now is to be ready with the right analysis and proposals when the political calculation changes as the result of a major economic collapse coming in the 2030s. Why then?

Social Security’s “trust fund” runs dry in 2034; Medicare’s, in 2026; Medicaid has no phony savings. Boomers start to turn 85 in 2031, the critical age for rising health and LTC expenditures.

This perfect fiscal and demographic storm will make the solution to long-term care financing possible. But what must be our focus in the meantime? Defense.

We need to defend what remains of Medicaid’s integrity as a means-tested public assistance program. That means opposing MACPAC’s proposal to make estate recoveries voluntary.

It also means opposing the increasingly popular proposals by academics, advocates and politicians to impose new, compulsory, payroll-funded social insurance programs for LTC.

Job one now is “do no harm.” Oppose bad programs like the WA Cares Fund and the federal WISH Act while we defend and strengthen Medicaid eligibility limits and estate recovery.

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Updated, Monday, October 11, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-035: LTC NEWS AND COMMENT

Tallying the Cost of Growing Older
How Making Public Long-Term Care Insurance (Sort Of) Voluntary Created A Mess In Washington State
Better Than No Loaf: Medicaid Planning Using “Half a Loaf” Strategies
10 Fastest-Rising Costs for Older Americans Since 2000
From transportation to housekeeping, MA plans moving further into the home in 2022
Limiting Medicare benefits deepens rift among Hill Democrats
Social Security Debt up $6.8T
The Delta variant caused a spike in deaths among nursing home residents, study finds
Long-term care’s problems are bad and getting worse — but fixable
Website to opt out of Washington state’s long-term care tax crashes on first day

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Updated, Monday, October 4, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-034: LTC NEWS AND COMMENT

The Risk of Coverage Loss for Medicaid Beneficiaries as the COVID-19 Public Health Emergency Ends
Opt-out option for Washington's long-term care tax begins Oct. 1
Medicare Advantage premiums to decline slightly in 2022, Part D to rise by nearly 5%
AP-NORC poll: Virus fears linger for vaccinated older adults
Assured Allies Makes Key Hires and Expands Advisory Board With Increasing Market Acceptance for Its Innovative ‘Successful Aging’ Platform
Biden’s $400 billion push for LTC faces severe cuts
Long-Term Care Planning: What Advisors Should Know
Strengthening Long-Term Services and Supports: The Difference Federal Investment Can Make
The Build Back Better Plan Remains Popular
New podcast offers latest insights about dementia

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Updated, Friday, October 1, 2021, 10:40 AM (Pacific)

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LTC BULLET: LTC PREVENTION IS BETTER THAN CURE

LTC Comment: The old saying “an ounce of prevention is worth a pound of cure” applies equally well in long-term care according to three experts in this promising field. Much more after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many unique services to advisors as National Brokerage Director for USA-BGA in the individual, worksite and affinity LTCi markets. Advisors like his unique, simple and effective LTCi presentation and his revolutionary “Range of Exposure” tool which, among other things, projects a client’s (joint for a couple) mean age of LTC, likely annual cost and length of need based on age, gender, marital status, success goal (% chance of not outliving their assets), etc. Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. Contact him at 913-707-8863 or claude.thau@gmail.com to discuss how he might help you. ***

*** ILTCI CONFERENCE live and in person returns March 21-23, 2022 in Raleigh, NC. The organizers are planning the program and want your help. They say “Our Programs & Education Committee would like to know what YOU want to learn about next year.” Submit your session ideas and topic requests here. Additional information on the 2022 ILTCI Conference will be available soon. Check the website for details. Registration will launch in November. Exhibitor & Sponsor applications will be accepted beginning Oct 1st. As the program develops, we’ll keep you posted here as well. ***

*** WHAT’S NEXT AFTER THE WA CARES FUND? We thank Center corporate member CLTC and its Executive Director Amber Pate for inviting us to attend Wednesday’s webinar of that title. CLTC® Certification for Long-Term Care educates and certifies professionals in the fields of insurance, financial services, law and accounting in the discipline of extended care planning. Steve Cain emceed this 30-minute webinar for CLTC graduates with Melissa Steiner and Courtney Crenshaw commenting. Highlights follow.

The WA Cares Fund in Washington State unleashed an unprecedented demand for private LTC insurance.
Both traditional and hybrid policies went “bananas” in Washington. “3 years of business in 3 months.” “3 to 10 times normal volume.”
Advisers should build on the rising awareness of LTC planning caused by the Covid crisis and supercharged by new state-level efforts to develop public funding programs.
Carriers had to adapt by leveraging technology and maneuvering underwriting procedures to process more applications faster.
Lesson learned: important to track state program development earlier and closer and work directly with developers to influence design and implementation. Avoid surprises.
49 more states could potentially follow Washington with similar programs. They may not offer an opt out in which case there would be no incentive to buy private coverage.
Encourage states to include renewal monitoring in their opt-outs so new insureds cannot quickly drop the policies they just purchased in order to avoid the public program.
The LTCI industry did a good job of mobilizing in Washington, so was able to affect some beneficial amendments. Kudos especially to LTCA’s Stephen D. Forman.
Washington is unlikely to delay their program despite its many flaws. A proposal to “pause” at a recent Trust Commission meeting was quickly shot down.
What else is going on? WISH Act at the federal level. Caregiver tax credit under consideration. Biden wants $400 billion for HCBS, but probably won’t get it. Senator Pat Toomey proposes allowing withdrawals from IRAs for LTCI.
CLTC training, certification, and webinars like this one ensure a knowledgeable and highly professional work force of long-term care planning advisers. ***

*** RECENT MOSES COLUMNS:

In addition to the published columns listed below, Steve has two more articles accepted for publication soon and a third out for query. Watch for them.

“LTC Irony” in the November issue of Broker World.

“Long-Term Care’s Problems Are Bad, Getting Worse, but Fixable,” expected October 1, 2021 in McKnight’s LTC News.

“What’s better for senior living? The market or government?”

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: LTC PREVENTION IS BETTER THAN CURE

LTC Comment: The Long Term Care Discussion Group is a “voluntary independent group that meets solely for the purpose of educating the policy community on all facets of long term care.” The group’s September 28, 2021 meeting discussed “How Wellness Programs Can Enhance Care for Long-Term Care (LTC) Insurance Policyholders.” The speakers were:

Vince Bodnar, Chief Actuary, Bain Capital Insurance
Peter Goldstein, CEO, LTCG
Afik Gal, Co-Founder and CPO, Assured Allies

What follows is a paraphrased summary of the program in case you missed it followed by the presenters’ professional bios.

Vince Bodnar opened the program asking “What is a wellness program?” It is foremost about getting people into optimal care settings and not only about saving claims dollars. To keep people well is good for everybody involved. There are two areas of focus: pre-claim and in-claim. Pre-claim is about interacting with policy holders before they need care, usually before age 75. Interventions increase as the covered population becomes more frail. The goal is to maximize “disability-free lifetime.” The claim is a critical event taking place over a week or so. Once on claim, the focus becomes initiating, prolonging and improving services at home in order to avoid nursing home intake by default.

The LTC insurance industry asks “does this stuff work?” about two common wellness models. CCRCs without walls (Continuing Care Retirement Communities) is one model. People contract with an organization, pay a monthly fee while still healthy, and receive care as needed. There are annual physicals; prior authorization required to enter a facility; annual visits by a care coordinator to monitor progress and ensure quality. The care coordinators often become almost like family members. Over 90% of people in these programs receive services at home as compared to 40% on average for the LTCI industry in general.

The other wellness model is Medicaid Long-Term Services and Supports programs. The MLTSS model involves commercial managed care companies receiving capitation fees from state Medicaid programs to manage care recipients’ long-term care. They require prescreening before institutionalization; mandate referrals; attempt to “repatriate” people from facility to home care. They may help people find a home who no longer have one. One-on-one caseworkers coordinate care as with the CCRC w/o walls model. The more advanced programs use data for sophisticated risk scoring. MLTSS programs keep 80% in home care compared to 40% for LTCI.

If home care claims are half of facility claims, a carrier can reduce claims costs by 12%. That’s a big number. Carriers save money while policy holders get better care and stay in their homes longer.

A long list of the kinds of interventions used to achieve these outcomes is included in the presentation materials. (The LTC Discussion Group usually archives program materials here. I don’t find them there yet, but it’s worth checking again when you read this.) For a tongue-in-cheek example of technology helping seniors, see the Saturday Night Live skit Alexa for Seniors.

How do companies collect and use data to guide caregiving? Big data collection; wearables; monitoring devices; data from assessments; risk scoring for people needing care. Learn what the early warning signs are that transfer to facility is imminent. Intervention scoring: what’s working?

Companies talked about wellness programs in the 1990s, but high cost and low results led the programs to be dropped. Carriers were afraid such programs would stimulate claims. We’re getting beyond that now. Instead of being limited only to rate increases or benefit reduction to confront the industry’s challenges, this is an honest attempt to save money while delivering better services. Interest in wellness programs is expanding geometrically, especially in the past year and a half. Some carriers have entire teams working on this. They’re beginning to see promising results.

But there are challenges. Vendor contracting processes with carriers can be frustrating. Is there rebating? Who should provide services? Can be viewed as discriminatory if not providing same services to all. Liability might attach to referring a policy holder to a certain provider. The regulatory community is quite interested in these programs. Mostly positive. Seen as beneficial if done right. NAIC working group concerns: data privacy, rebating, unfair trade practices model regulations, discrimination.

The LTC insurance business needs good news. The wellness approach is very positive. Deliver better care more efficiently. No more “grim reaper of LTC.”

Peter Goldstein

The wellness focus is not just a funding issue. There is always the idea that a LTC insurance policy can provide a helpful service, not just dollars. We’re thinking about wellness, pre-claim, at-claim and on-claim.

LTCG is the largest claims payer. $4 billion last year. The business is all about claims now. After 25 years of adding policy holders, they’re now going into claim status. Previously, there was not enough interest. Now claims are growing rapidly and so are costs. We ask: what can we do besides raise rates and reduce benefits? Pursuing wellness is win/win because it benefits all stakeholders, carriers, policy holders and care providers.

Getting grounded in the claims process is challenging. We needed to make decisions, prioritize. We know we can’t be all things for all people. Three phases: pre-claim, the claim event, post-claim. The process usually lasts 2 to 3 years. LTCG made the decision to focus on at-claim and post-claim. Once someone makes a claim, what else can we offer to be sure the claim managed effectively?

The presentation material diagrams and explains the claim process. An interview is conducted at the point of claim so the process begins with more than just a claim form. We get them on phone, find out what has been done so far, what care received, face-to-face interview. Every time a claim is opened it creates a $250,000 cost (on average) for the carrier. We ask what are the needs? How can we manage those needs and arrange payments efficiently. Then loop around, reassess as needs change. Active management.

Make the right decision; use training; keep rules the same for all; same outcomes; collaborate with policy holders; the customer experience is important. Aim for recovery. About 33% recover, which is surprising; with right support, they get off claim. A lot of depression in this population, people spiral down. So we need to lean into recovery.

Pay benefits according to the approval. You need systems to vet claims. Don’t pay claims not covered by the policy. Catch any questionable activity; incredible what we see in fraud from seniors and providers. People are smart, savvy, if money is involved, people find a way to get it whether or not they’re entitled. Expanded programs and capabilities to address risk management, customer experience and administrative efficiency. This is a high touch business, but it needs to be efficient.

Best practices are important. You need an electronic way to view what providers are doing, including downloadable information on location, time in, time out. LTCG is launching a clearing house to take paper out of the process. Fraud detection using analytics. Interact electronically through a portal. 40% of the calls we receive are “where’s my check?” That information is available online so should not require taking phone calls. Care concierge service.

Post claim things we’re doing. There is a huge correlation with fraud when an agent is involved. We need to know and monitor the claim start date. High volume of unverified visits. Data tells more than a paper file. Important to stratify fraud risk.

LTCG partnered with Afik Gal and Assured Allies to expand our capabilities.

Afik Gal

Pre-claim issues are important. Tighter integration of the value proposition. Go a step beyond. That is what Assured Allies does.

We have multi-disciplinary teams, with actuaries, medical staff and others. We bring together professionals not often brought together. Assured Allies was developed because of our long-term care experience with our own parents.

We’re looking at LTC insurance as one determinant for successful aging as a whole. Make sure people don’t decline prematurely. But recognize they will decline and need support. Families must fund it themselves or find a solution, such as LTCI. That’s what attracted us to this topic.

To summarize, we are about employing multi-disciplinary teams to achieve successful aging Make health care work from the lens of insurance and finances. For policy holders, live healthier in homes whenever possible. We’re bringing a win/win value proposition to this market. It is a rare opportunity to do the right thing for the policy holder, the provider, and the payer.

Pre-claim the focus is wellness, risk management. All financially positive if done right.

It is easy to help a lot of people by spending a lot of money. The bigger issue is efficiency. It is important to understand trade-offs. The system must be sustainable financially, not only socially good. Reduce costs of claims while improving care.

Real case study from policy holder standpoint. Reach out to engage people. See what their needs are. Do they want help? Do they want to change how they’re aging? That information translates into how much to spend on people. There is much on the Assured Allies website about how it works. Check out the videos there.

We use data to estimate how likely people are to claim and when. We must decide how much to invest to change or delay that. Depends on their desire to get help. Intervention, feedback loop, compare experience with others. Careful measurement mechanism. Is it working or not? 25,000 lives by end of this year. This market is notorious for poor data. We’re spending a lot of energy improving that to get well-validated data.

Interventions are various. Stratify policy holders by proximity to claim. Ask what is the right thing to do? Self-efficacy. How much effort? How much money? Careful monitoring. Predictive modeling. We don’t focus just on caregiving. Multiple of tools based on risk factors. For example: is the caregiver far away? Different discussion for the very sick. Are the caregivers fighting?, etc. We try to coach them into a solution. We only do things proven to be effective.

We’re not going to actually provide home care assistance. That would be a disservice to the carrier because not proven to deliver a positive ROI (return on investment). We find the right approach for the policy holder.

The goal is successful aging. At age 80 plus, the focus may be urinary continence and caregiver issues. Better to get an earlier start because we can do more at age 60. Build good relationship between all parties so that all parties have better outcomes.

Speakers’ Bios

Vince Bodnar is an actuary with Bain Capital Insurance. He has 37 years of experience with a broad array of insurance products. Mr. Bodnar has led projects related to product and distribution strategy, in-force management, capital optimization, reinsurance strategy, operational reviews and diligence, company rehabilitations and liquidations, and mergers and acquisitions. Prior to joining the firm, Mr. Bodnar had senior leadership roles at Genworth and GE Capital and led actuarial consulting practices at Milliman, Willis Towers Watson, Oliver Wyman and KPMG.

Peter Goldstein is CEO of LTCG, a leading provider of administrative and clinical services within the LTC insurance industry. His 25 years of leadership have helped LTCG adapt to a changing industry environment and have transformed the organization into a premier partner for LTC insurers. LTCG serves all of the top LTC carriers and is the largest third-party claims payer in this space. Peter’s strategic vision for the company has transformed LTCG from a TPA focused on processing capabilities into an organization dedicated to proactive, holistic risk management for its customers. Peter is a recognized thought leader on topics ranging from next-generation claims management to the public policy changes needed to ensure a sustainable future for this industry. He has been featured in a variety of wide-reaching business publications including the Wall Street Journal, Bloomberg, Mergermarket, Think Advisor, Business Week and many others.

Afik Gal is a physician and a co-founder of Assured Allies, an insur-tech company dedicated to making longevity sustainable. Afik has spent over 15 years bringing innovative technological care management solutions to life across healthcare and financial insurance industries. Prior to founding Assured Allies, Afik served as VP of Product Innovation at EviCore healthcare where he revolutionized prior authorization as a benefit to payers, providers, and patients. He also led the innovation lab at PwC’s healthcare advisory practice helping clients design and implement advanced analytics solutions with great impact on their business models. Afik has also served as a partner and advisor to numerous hospitals and startup companies developing technologies to improve patient care.

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Updated, Monday, September 27, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-033: LTC NEWS AND COMMENT

The nursing care insurance fund is apparently threatened with insolvency
Bipartisan group of state lawmakers ask Gov. Inslee to pause long-term care insurance tax
Why the Cost of Long-Term Care Is Out of Reach for the Middle Class
Opt-out direction, updates, and good and bad news concerning long-term-care law
Consumers Use Up Washington State's Private LTCI Capacity
Medicare and Medicaid recipients, minorities receive more low-value, aggressive cancer care at end of life, study finds
The Next Medicaid Blowout
Recognize, Assist, Include, Support, & Engage (RAISE) Family Caregivers Act Initial Report to Congress
State of the Long Term Care Industry: Survey of nursing home and assisted living providers show industry facing significant workforce crisis
Annexus to Offer Social Security Uncertainty Protection
COVID-19 Claims More Than 675,000 US Lives, Surpassing the 1918 Flu
Survey finds family caregiver burden is worsening
Bipartisan Solutions to Improve the Availability of Long-term Care
Steep BMI Increase for Kids, Teens During the Pandemic

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Updated, Monday, September 20, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-032: LTC NEWS AND COMMENT

Retirees’ Need for Caregivers Varies Widely
Letter to Gov. Inslee Objecting to the WA Cares Fund
U.S. poverty declined overall last year due to pandemic relief, Census says
Facing Medicare’s fiscal challenges: The 2021 Medicare trustees’ report
Two Healthcare Insiders at Aegis Living Blow Whistle on Alleged Elder Abuse and Medical Fraud
Changes to WA Cares Fund likely next session
Will Medicaid take life insurance proceeds after I die?
Long-term care tax is the wrong answer to a good question
The $3.5T Spending Mistake
Study: Medicare reduces older adults' risk for catastrophic health expenses
‘We’ve Been Too Reactive’: Argentum Pivots to Invest More in Public Policy Efforts,”
Older adults with dementia half as likely to move to a nursing home if they live with adult children: study
UK lawmakers back tax hike to pay for health, long-term care
Workers at home health agencies receiving Medicare, Medicaid must get vaccinated: CMS
BREAKING: 16,000 COVID deaths missed in nursing homes
Social Security predicts pandemic birth blip, not birth dearth
Washington is taking the worry out of long term care
New poll: Seniors want to age at home with caregiver support
Nursing home leaders unraveling after months of pandemic dangers, workloads, McKnight’s survey shows

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Updated, Friday, September 17, 2021, 10:40 AM (Pacific)

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LTC BULLET: THE LTC ANOINTED

LTC Comment: Thomas Sowell’s books, A Conflict of Visions, The Vision of the Anointed and Intellectuals and Society, offer insights into why the long-term care intelligentsia think and act the way they do. We explain after the ***news.***

*** LTC CLIPPINGS are daily emails the Center for LTC Reform sends to premium members ($250 per year or $21 per month) apprising them of critical information they need to know before they’re blindsided by clients or prospects. They average two per day and include the date, title, author, a representative quote, a link to the source and Steve Moses’s brief interpretation. The Clippings cover popular and scholarly articles, studies and reports, newly published data, etc. Our goal is to free others from time-consuming research that takes them away from their normal sales or administrative work. The LTC Clippings are compiled each Monday in an LTC E-Alert sent to all Center regular members ($150 per year or $12.50 per month). Check out all the membership levels and benefits here and join the Center here. These are two LTC Clippings from earlier this week:

9/16/2021, “Facing Medicare’s fiscal challenges: The 2021 Medicare trustees’ report,” American Enterprise Institute
Quote: “For the fourth consecutive year, Medicare trustees report that the program will be unable to pay the full cost of health benefits by 2026. The COVID-19 pandemic harmed Medicare’s finances, but the mismatch between program spending and revenue has been a long-standing concern. If it continues unabated, the consequences for millions of beneficiaries will be dire. Please join AEI as Medicare’s chief actuary summarizes the results of the 2021 trustees’ report. A panel of experts will discuss the need for reform and policy options that could improve the program’s fiscal condition.”
LTC Comment: If you missed it live this morning, catch this video of the program now. What’s more disconcerting? That politicians continue to ignore the oncoming insolvency of Medicare and Social Security? Or that the academics and advocates they listen to keep pushing for more of the same financially irresponsible programs?

9/13/2021, “Will Medicaid take life insurance proceeds after I die?,” by Karin Price Mueller, NJ.com
Quote: “Q. If I have an insurance policy that has no cash value and my son is the beneficiary, when I die and he receives the money, will Medicaid file a lien on that money? Would my son have to pay it?
— Uncertain
A. Many families are surprised that Medicaid will go after funds if it pays for your care before you die. …
New Jersey Medicaid considers proceeds from term life insurance policies with no cash benefit to belong to the named beneficiaries and are not subject to estate recovery, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.”
LTC Comment: Medicaid exempts term life insurance in unlimited amounts. So to get rid of a million dollars and qualify immediately for Medicaid LTC benefits, all the applicant needs to do is buy a term policy in that amount. Wait, you say. Wouldn’t the premium for such a policy be almost as much as the benefit? Why do it? This article explains the key to this Medicaid planning gimmick. As long as the beneficiary is someone other than the Medicaid recipient’s estate, such as an adult child heir, the family dodges the estate recovery requirement and the millionaire achieves immediate Medicaid eligibility. ***

LTC BULLET: THE LTC ANOINTED

LTC Comment: In A Conflict of Visions, Thomas Sowell identifies and distinguishes two principal ways of viewing the world and human potential. He calls them the unconstrained and the constrained visions. The “unconstrained vision” is The Vision of The Anointed. People with that view of the world imagine that anything is possible, human nature is improvable, and the better sort, especially intellectuals, should guide and direct the rest of humanity. Those with Sowell’s “constrained” or “tragic” vision, in contrast, see human potential as delimited by unavoidable obstacles that must be systematically confronted and overcome. For them, human nature is already mostly established and must be worked around with ingenuity and effort. Intellectuals, according to the constrained vision, are self-satisfied prima donnas who arrogate authority to themselves while ignoring or demeaning the public’s cumulative knowledge and preferences, often called “common sense,” gained from centuries of experience and tradition. Which of these two visions of the world would you associate with the academics and advocates who tell us so confidently what’s wrong with and what to do about long-term care?

To my mind, Sowell’s unconstrained vision clearly prevails among “The InLTCgentsia.” These experts, the “LTC anointed,” believe they know best what ails America’s long-term care system and how to fix it. They ignore the long history of government interference in the long-term care market. They persist in promoting government “solutions” for problems created by government funding and regulation. They brush off arguments to the contrary while refusing to engage on specific objections to their collectivist dogmas. They insist on addressing only symptoms, never identifying or analyzing the causes of long-term care’s dysfunctions. They seduce politicians with ideas and proposals based on the fantasy that government, following their advice, can provide better long-term care than a free market in which people vote with their own money for the kind, amount and quality of care they prefer. The LTC anointed persist in offering the same analysis and proposals rejected by voters decade after decade while expecting a different result.

To expand and elucidate, here are some quotes from Thomas Sowell about the unconstrained vision of the anointed followed by our examples based on observation of the “LTC anointed.”

Sowell: “The question for the anointed is not knowledge but compassion, commitment, and other such subjective factors which supposedly differentiate themselves from other people. The refrain of the anointed is we already know the answers, there’s no need for more studies, and the kinds of questions raised by those with other views are just stalling and obstructing progress. ‘Solutions’ are out there waiting to be found, like eggs at an Easter egg hunt. Intractable problems with painful trade-offs are simply not part of the vision of the anointed. Problems exist only because other people are not as wise or as caring, or not as imaginative and bold, as the anointed.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed have dreamed up “solutions” for long-term care in studies, commissions and legislative proposals over many decades. Somehow they can never figure out how to force the public, who are more self-interested, and supposedly less wise and caring, to pay for their illusive dreams.

Sowell: “While those with the vision of the anointed emphasize the knowledge and resources available to promote the various policy programs they favor, those with the tragic vision of the human condition emphasize that these resources are taken from other uses (‘there is no free lunch’) and that the knowledge and wisdom required to run ambitious social programs far exceed what any human being has ever possessed, as the unintended negative consequences of such programs repeatedly demonstrate.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: All we need to do is raise the marginal tax rate, bump up the Social Security tax, or nail the rich. Never mind that every dollar removed from the supply of private capital to fund social welfare schemes is a dollar that will not go to invest in producing products and services people actually want, as proved by the fact they’re willing to pay for them and do not have to be compelled by the threat of government force to spend for them.

Sowell: “To suggest that ‘society’ can simply ‘arrange’ better outcomes somehow, without specifying the processes, the costs or the risks, is to ignore the tragic history of the twentieth century, written in the blood of millions, killed in peacetime by their own governments that were given extraordinary powers in the name of lofty goals.”
― Thomas Sowell, Intellectuals and Society

LTC Comment: The LTC anointed insist, without specifying the “processes, the costs or the risks,” that if we would just turn over to government the power to compel everyone to pay more taxes to support their recommendations, we could somehow get a better long-term care result than the dysfunctional system we have now that is grounded in many decades of government funding and control.

Sowell: “The vision of the anointed is one in which ills as poverty, irresponsible sex, and crime derive primarily from ‘society,’ rather than from individual choices and behavior. To believe in personal responsibility would be to destroy the whole special role of the anointed, whose vision casts them in the role of rescuers of people treated unfairly by ‘society.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed assume it is society’s responsibility to fix long-term care as other followers of the anointed vision “fixed” retirement security and elderly health care with Social Security and Medicare. It feels good to proclaim solutions from on high. But greater and greater dependency on government has depleted individuals’ sense of personal responsibility leaving real life people unprotected if and when government lets them down.

Sowell: “Systemic processes tend to reward people for making decisions that turn out to be right—creating great resentment among the anointed, who feel themselves entitled to rewards for being articulate, politically active, and morally fervent.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: That shoe fits the LTC anointed like a glove. They bask in the warm, unchallenged shibboleths of the “unconstrained” vision while evading the market’s school of hard knocks. Entrepreneurs, on the other hand, risk their own capital in search of profits earned by giving consumers what they actually need and want. Which should we appreciate more?

Sowell: “The hallmark of the vision of the anointed is that what the anointed consider lacking for the kind of social progress they envision is will and power, not knowledge. But to those with the tragic vision, what is dangerous are will and power without knowledge—and for many expansive purposes, knowledge is inherently insufficient”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed seek to force people into one-size-fits-all compulsory social programs that eliminate the power of personal agency leaving people dependent on politicians and bureaucrats. What has our increasing dependency on politicians and bureaucrats given us so far?

Sowell: “One of the first things taught in introductory statistics textbooks is that correlation is not causation. It is also one of the first things forgotten.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed often confuse correlation and causation. Two examples: (1) They assume elderly asset decumulation late in life must have been caused by catastrophic long-term care spend down. They never consider the possibility that older people and their families may learn of Medicaid’s generous and elastic income and asset eligibility rules and hide, jettison or reconfigure their wealth to qualify, with or without the assistance of omnipresent lawyers eager to help them artificially self-impoverish in exchange for a generous fee. (2) Trying to make their case for catastrophic Medicaid spend down, the LTC anointed over-estimate its incidence by pretending that every transition to Medicaid LTC eligibility occurs because of spending on long-term care. People can and often do transition to Medicaid eligibility without spending down significantly. The correlation between spending and transition often hides the true causation, i.e., that Medicaid rules allow people with substantial income and assets to qualify for LTC benefits. Even greater wealth than the basic eligibility rules allow is protected by means of techniques explained in the formal legal literature on Medicaid planning which the LTC anointed almost entirely ignore.

Sowell: “What is seldom part of the vision of the anointed is a concept of ordinary people as autonomous decision makers free to reject any vision and to seek their own well-being through whatever social processes they choose. Thus, when those with the prevailing vision speak of the family—if only to defuse their adversaries’ emphasis on family values—they tend to conceive of the family as a recipient institution for government largess or guidance, rather than as a decision-making institution determining for itself how children shall be raised and with what values.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed treat ordinary people like chess pieces to be moved around on political and economic game boards. They seek to replace personal responsibility and planning with government compulsion through mandatory social insurance for long-term care. They know best; the rest of us are too ignorant or irresponsible to do the right thing. But do they ever ask why the public has become so ignorant and irresponsible when it comes to retirement, health care and long-term care planning? Do they question whether government promises from Social Security, Medicare and Medicaid may have undercut private concern for economic risks? Does the concept of moral hazard, so fundamental to private insurance theory, ever enter their minds? The answers are no, no and no.

Sowell: “Among the many other questions raised by the nebulous concept of ‘greed’ is why it is a term applied almost exclusively to those who want to earn more money or to keep what they have already earned—never to those wanting to take other people’s money in taxes or to those wishing to live on the largesse dispensed from such taxation. No amount of taxation is ever described as ‘greed’ on the part of government or the clientele of government.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

“[W]hen people choose their occupations according to what the public wants and is willing to pay for, that is ‘greed,’ but when the public is forced to pay for what the anointed want done, that is ‘public service’.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed routinely ask hard-working people to pay just a little more in taxes to fund their elaborate schemes. Two examples are the WA Cares Fund and the WISH Act. These programs and their ilk add long-term care to the mountain of moral hazard already inflicted on the economy by Social Security and Medicare. Yet the LTC anointed will characterize the opponents of their programs as uncaring and stingy.

Sowell: “Another way of verbally masking elite preemption of other people’s decisions is to use the word ‘ask’—as in ‘We are just asking everyone to pay their fair share.’ But of course governments do not ask, they tell. The Internal Revenue Service does not ‘ask’ for contributions. It takes.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

LTC Comment: Usually the LTC anointed don’t even bother to ask nicely. They presume they’re right and the rest of us should fall into step with their mandates.

Sowell: “…the very commonness of common sense makes it unlikely to have any appeal to the anointed. How can they be wiser and nobler than everyone else while agreeing with everyone else?”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

LTC Comment: The LTC anointed bristle at arguments grounded in common sense. They display contempt for people who just want to keep what they’ve earned, take responsibility for themselves and their families, and give charity as and when they can afford it and deem it justified.

Sowell: “In short, numbers are accepted as evidence when they agree with preconceptions, but not when they don’t.”
― Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy

“Today, despite free speech and the mass media, the prevailing social vision is dangerously close to sealing itself off from any discordant feedback from reality.”
― Thomas Sowell, The Vision of the Anointed: Self-congratulation as a Basis for Social Policy

“Reality does not go away when it is ignored.”
― Thomas Sowell, Intellectuals and Society

LTC Comment: Confirmation bias is commonplace among the LTC anointed. They do not consider, much less attempt to refute, evidence that conflicts with their predispositions. Examples are rife. The LTC anointed cling to the myth that Medicaid requires impoverishment while they ignore the ubiquitous popular and scholarly published evidence to the contrary. They insist wide swaths of the American public are being wiped out financially by long-term care expenditures, when there is no evidence this is so and they cite none. They rely slavishly on Health and Retirement Study (HRS) longitudinal data on asset decumulation assuming it’s proof of LTC spenddown without acknowledging or addressing the data’s many flaws. Moreover, nothing in that data demonstrates that spend down occurs because of long-term care expenses.

Sowell: “Many intellectuals are so preoccupied with the notion that their own special knowledge exceeds the average special knowledge of millions of other people that they overlook the often far more consequential fact that their mundane knowledge is not even one-tenth of the total mundane knowledge of those millions. However, to many among the intelligentsia, transferring decisions from the masses to people like themselves is transferring decisions from where there is less knowledge to where there is more knowledge. That is the fatal fallacy behind much that is said and done by intellectuals, including the repeated failures of central planning and other forms of social engineering which concentrate power in the hands of people with less total knowledge but more presumptions, based on their greater average knowledge of a special kind.”
― Thomas Sowell, Intellectuals and Society

LTC Comment: That quote pretty much sums it up.

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Updated, Tuesday, September 7, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-031: LTC NEWS AND COMMENT

Number of people with dementia set to jump 40% to 78 million by 2030 -WHO
COVID vaccine protection drops by 80 percent in 6 months among nursing home residents: study
Do some cognitive functions improve with age?
Long-Term Care Needs Reform, Not More Money
Medicare Advantage slowing COVID discharges to SNFs: report
Why some plan to opt out of new WA long-term care insurance
Senator’s Report Provides Alternative Long-Term Care Policy
Covid could trigger a spike in dementia cases, say Alzheimer’s experts
A New Report Says The COVID Recession Has Pushed Social Security Insolvency Up A Year
Want to opt-out of Washington’s new long-term care tax? Good luck getting a private policy in time
Social Security Fund on Track to Go Bust by 2033: Trustees Report
Could active adult housing be a solution to the middle-market affordability challenge?

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Updated, Friday, September 3, 2021, 10:40 AM (Pacific)

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LTC BULLET: THE INLTCGENTSIA

LTC Comment: Should LTC intellectuals, politicians and bureaucrats who pay no price for being wrong direct long-term care financing reform? Considerations after the ***news.***

*** ANNUAL LTCI SURVEYS available now in Broker World. Check them out for the latest on the status of private long-term care insurance.

“2021 Milliman Long Term Care Insurance Survey,” by Claude Thau, Allen Schmitz, FSA, MAAA and Chris Giese, FSA, MAAA, Broker World, July 1, 2021

“2021 Analysis Of Worksite LTCI,” by Claude Thau, Allen Schmitz, FSA, MAAA and Chris Giese, FSA, MAAA, Broker World, August 1, 2021 ***

*** LTC CLIPPINGS are a feature that Center for LTC Reform Premium Members ($250 per year) receive to keep them up to date on the articles, reports and data they need to know to stay at the forefront of professional expertise. Steve Moses scans the popular and scholarly literature constantly and sends subscribers daily emails (2 per day on average) with the date, title, author, source, and his brief analysis of every important new publication. Regular members ($150 per year) receive a weekly compendium of the LTC Clippings each Monday in an LTC E-Alert. Subscribe now here or contact smoses@centerltc.com with your questions or comments. Two examples follow:

8/2021, “Senator’s Report Provides Alternative Long-Term Care Policy,” by Ashley Herzog, Health Care News

Quote: “First, Congress would eliminate Medicaid loopholes that allow affluent seniors to qualify, ending the ‘perverse incentives’ that discourage consumers from planning early and responsibly for long-term care, Moses writes. ‘Step two is to put the Medicaid estate planning bar out of business,’ Moses writes. ‘Systematically identify, analyze and prohibit the methods and financial products elder law attorneys use to qualify their affluent clients for Medicaid LTC benefits. Stop their discriminatory practice of using ‘key money’ to buy well-heeled clients access to the best long-term care facilities at the exclusion of poor people who lack the funds to pay privately.’ The third step is to warn the public that long-term care is a ‘pay now or pay later’ proposition, Moses writes”

LTC Comment: We thank Ms. Herzog and Health Care News for citing the Center’s LTC policy proposals at length. “Health Care News is available on the internet. Point your browser to HeartlandDailyNews.com.” To be clear, the Moses proposals are not a part of Senator Tim Scott’s alternative LTC policy referenced in the article’s title … yet. We’ll work on that.

9/2/2021, “Long-Term Care Needs Reform, Not More Money,” by Chris Pope, National Review

Quote: “The reconciliation bill being prepared by congressional Democrats is so substantial that specific provisions as large as $400 billion in proposed extra funds for Medicaid’s long-term-care benefit have attracted little attention. … However, the shortcomings of Medicaid’s long-term-care benefit owe much to the program’s resources being improperly targeted. Instead of being a safety net of last resort, the program has loose and inconsistent eligibility requirements, disincentivizing the purchase of private long-term-care insurance — which ought to bear the bulk of long-term-care costs. Policymakers should use the provision of additional funds to facilitate reforms that fix these deeper structural problems.”

LTC Comment: Well said. Much of this article we might have written ourselves. Actually, we have and many times. Other parts of the article are less coherent and there is no explanation of what should be done except a reference to Senator Casey’s bill, a step in the wrong direction. For a full picture of the problem and the solution, read Medicaid and Long-Term Care. Special thanks to long-time Center friend and supporter Brad Winnekins (President of Legacy Services, bradw@legacyltci.com) for tipping us to this article. ***

*** RECENT MOSES COLUMNS:

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: THE INltcGENTSIA

LTC Comment: The following article was originally published in Broker World magazine’s August 2021 issue. We thank the editor and publisher Stephen Howard for permission to republish the column here. Subscribe to Broker World here: https://brokerworldmag.com/orders/. We strongly recommend this publication for anyone working in the financing or provider sides of the long-term care profession.

“The InLTCgentsia”
By
Stephen A. Moses

“What is called ‘social’ planning are in fact government orders over-riding the plans and mutual accommodations of millions of people subject to those orders.”
—Thomas Sowell, Intellectuals and Society

“Why the transfer of…decisions from the individuals and organizations directly involved–often depicted collectively and impersonally as ‘the market’–to third parties who pay no price for being wrong should be expected to produce better results for society at large is a question seldom asked, much less answered.”
—Thomas Sowell, Intellectuals and Society¹

The LTC intelligentsia agrees on long-term care’s problems and solutions. To wit, more and more people need long term care. Current public programs are inadequate. Private LTCI failed. Providing “free” care stresses families financially and emotionally. So, obviously, we need government to take a bigger role in long term care, preferably with a new, compulsory, payroll-funded, social insurance entitlement program. Or, to keep it simple, just shoehorn long term care into Medicare. That’s the InLTCgentsia’s diagnosis and prescription in a nutshell.

Their remedy relies on government central planners, guided by their own sophisticated expert advice, to design, introduce, pass, implement and defend legislation impacting every individual and family in the country. How do these planners and their advisors know what millions of individuals and families who comprise the market for long term care need and want? In the absence of price data reflecting actual preferences, “polls” must suffice. People say they want more home care, fewer nursing homes, higher quality, lower costs, more control and choices. Will a big new government program deliver those benefits? At what cost? With what unintended consequences?

To answer those questions, don’t we first need to ask and answer why America’s long term care system doesn’t deliver those desired benefits already? Is it for lack of government funding? No. Medicaid, Medicare, the VA and other smaller government programs pay for most long-term care in the United States.² Is it for lack of government regulation? No. Long term care is the second most regulated industry in the nation, after nuclear power.³ So what does explain the dysfunctionality of our long term care services and financing?

Could the answer possibly be—the same government funding and regulation that dominate long term care already? Medicaid is by far the biggest source of funding for long term care and a huge drain on state and federal budgets. Its coverage rules cause institutional bias. Its eligibility rules crowd out private financing sources.⁴ Its low reimbursements hamper quality. Its availability after people need care creates a moral hazard that discourages early planning and traps many on public assistance late in life. If the public funding program we already have is the principal cause of what ails long term care, why should we expect a bigger, more expensive and intrusive program to improve the situation?

Try this thought experiment instead. What if there were no Medicaid program to pay for catastrophic long term care costs? How would consumers behave? Odds are people would worry about the 25 percent probability of having a severe need for long term care in the future.⁵ They would save, invest, or search for private insurance to spread the risk. Unprepared people who were stricken would use their home equity to fund care as most elderly own homes.⁶ Spending their own money for long term care, patients and families would seek home- and community-based care instead of nursing homes. With private asset spenddown, including potentially $8 trillion of home equity,⁷ flowing through the long term care services industry, access and quality of care would improve for everyone. Potential profits would supercharge entrepreneurs to discover and offer new and better care options.

What I’ve just described would solve the middle market problem.⁸ We don’t need to worry about the wealthy; they can take care of themselves. But, what about the poor? Having removed the perverse incentives that discourage responsible long term care planning, many fewer people will end up needing long term care but unable to pay. There will be no more incentive to hire attorneys to manipulate government eligibility rules in order to self-impoverish artificially. The relatively small numbers of genuinely needy people who remain could be served by private charity and/or a vastly scaled down public assistance program funded by a fraction of the savings from ending the Medicaid LTC program.

So let’s pose Thomas Sowell’s “seldom asked, much less answered” question from the quotation above. Whom should we entrust? The InLTCgentsia “who pay no price for being wrong” or the millions of consumers, providers, and insurers who comprise the market for long term care? Why should we be subject to “government orders over-riding the plans and mutual accommodations of millions of people?” When those millions vote with their own money for the kind of long term care they prefer, we will all receive better services in preferred settings. That is the answer.

References:

Stephen A. Moses

425-891-3640 smoses@centerltc.com

Moses can be reached at the Center for Long-Term Care Reform, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109

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Updated, Monday August 30, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-030: LTC NEWS AND COMMENT

The staggering, exhausting, invisible costs of caring for America’s elderly
New Research Signals Mass Employee Exodus From Long Term Care Due to Vaccination Mandate
Related: 10 Life Insurance Tax Facts to Know
How Taxes, Medicare Premiums Erode Social Security Benefits Despite COLAs
A Massive Elder Corps Is Just Waiting to Be Helpful
PLANNING AHEAD: Are inheritances protected and other Medicaid myths [Column]
Medicare nursing home residents more likely to be diagnosed, hospitalized and die from COVID-19 than beneficiaries not in facilities
Study: Pandemic increased the number of homebound, isolated seniors
How COVID-19 Has Changed Americans' Views on Health Insurance
What Can YOU Do to Resolve the LTSS Workforce Crisis?
CalPERS long-term care insurance settlement: how to avoid missing out on $35,000 checks

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Updated, Monday August 23, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-029: LTC NEWS AND COMMENT

AHCA, NCAL Urge Administration to Consider Implications of Vaccination Policy
Medicare Advantage Healthcare Spending Exceeds Original Medicare: Policymakers may soon have to address inequities between Medicare Advantage healthcare spending and Medicare spending
5 Ways to Keep People With LTC Insurance Healthy
BREAKING: It’s official: Nursing homes must vaccinate employees or lose Medicaid, Medicare funding
Yogurt every day keeps Alzheimer’s away? Probiotics, strong gut health may be key to avoiding dementia
The gig economy finally catches up with long-term care
Washington’s New Long-term Care Benefit Program: Important Deadlines Loom!
It’s Getting Late to Opt Out of Washington’s Long-Term Care Program
The Rising Toll of Autoimmune Diseases in Older People
Boosters to be expanded to most vaccinated Americans: reports
State Regulators Eye Long-Term Care Insurers' Wellness Programs
Retirement Income Policy Needs a Facelift
Commentary: New long-term care tax will affect Washington workers

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Updated, Friday, August 20, 2021, 10:40 AM (Pacific)

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LTC BULLET: WISHful THINKING

LTC Comment: Hope springs eternal among the LTC anointed that one more government program forced on the public at the expense of the productive economy can reduce the damage done by its many failed predecessors. Analysis of the WISH Act follows.

LTC BULLET: WISHful THINKING

LTC Comment: Thomas Sowell’s A Conflict of Visions contrasts people with “constrained” vs. “unconstrained” visions of the world. Those with the constrained or “tragic” vision see human limitations and focus on systemic analysis and marginal improvements. There are no solutions, only tradeoffs, for those with the tragic vision. Those with the unconstrained vision, The Vision of the Anointed, believe everything is possible. All it takes is for the best and the brightest to apply their superior intelligence and understanding to a problem and, voila, solutions emerge. But so do unintended, often disastrous, consequences.

We’ll have more to say about the LTC anointed in a future LTC Bullet, but suffice it here to say there’s no question which vision of the world the authors of the article we’ll review today share. Instead of focusing on the historical failure of government to solve the long-term care financing problem after decades of trying, they think one more attempt with the same approach applied by smart people with the best of intentions will have a better result. They’re unconstrained by any analysis or understanding of how the long-term care service delivery and financing system in the United States became so dysfunctional. So, anything seems possible to them.

Marc A. Cohen and Stuart M. Butler published “The Middle Ground For Fixing Long-Term Care Costs: The WISH Act," in the Health Affairs Blog on August 9, 2021. Their article reviews and strongly recommends a new, compulsory social insurance program for long-term care recently introduced in Congress. Quotes from their article and our comments in reply follow.

Cohen/Butler: “Roughly one week before Americans celebrated the July 4 holiday, Representative Thomas Suozzi (D-NY) introduced a revolutionary bill (H.R. 4289) designed to repair our broken system for financing long-term services and supports (LTSS). The ‘WISH Act’—Well-Being Insurance for Seniors to be at Home—is based on an idea first put forward by a group of long-term care experts known as the Long-Term Care Financing Collaborative, which was convened in 2012 by the Convergence Center for Policy Resolution and included the authors of this blog post. The [LTC Collaborative] idea was developed further in a 2018 paper presented at the Bipartisan Policy Center. If enacted, the WISH Act could significantly transform our LTSS financing system by harnessing the best of what the public and private sectors can jointly do to solve a problem that neither sector seems able to solve on its own. And it does this in a fiscally responsible way.”

LTC Comment: If public policy proposals are only as good as the research on which they’re based, the WISH Act is handicapped from the start. We have critiqued and rejected both of the studies cited in the article as foundational for the WISH Act. “LTC at a Crossroads” (June 3, 2016) addressed the “LTC Cooperative’s” proposal and “Feder Fantasy Fatally Flawed (Cohen Contribution Notwithstanding)” (May 4, 2018) analyzed the 2018 Bipartisan Policy Center paper. Both studies share these shortcomings: (1) They begin by describing long-term care’s problems without asking or answering why and how the problems came to exist in the first place. Thus they run the risk, and do in fact, recommend more of the same government policies that caused the problems. (2) Both mistakenly assume wide swaths of the public are spending down their life’s savings for long-term care based on the “Fallacy of Impoverishment.” (3) Both ignore the vast legal and popular literature on qualifying for Medicaid LTC without spending down, so they assume incorrectly that “big data” from the HRS/AHEAD/Rand studies on asset decumulation prove LTC spend down is widespread. (4) Both equivocate on Medicaid planning by suggesting it means only “asset transfers,” which are a relatively small part of the wide range of techniques to qualify without spending down assets. (5) They equivocate on “spend down” and “transitions” by assuming that any transition to Medicaid means someone had to spend down savings before becoming eligible. (6) They equivocate on “out of pocket” expenses, making them seem larger than they really are by including residential care and excluding Medicare post-acute care expenses from LTC costs. These points are fully explained in “LTC at a Crossroads” and developed further in Medicaid and Long-Term Care. For our review and critique of 100 similar studies and proposals, see “LTC Center Standing Guard,” May 14, 2021. How these points and principles undercut the WISH Act’s approach is explained below.

Cohen/Butler: “The legislation seeks to address the growing problem that needing LTSS for a long spell and, particularly, receiving them in a nursing home, can be financially devastating even for middle-class Americans with significant savings. A year in a two-bed nursing-home room can cost upwards of $93,000, causing many to exhaust their funds and become reliant on Medicaid.”

LTC Comment: The assertion that large numbers of people exhaust their wealth paying for nursing home care before qualifying for Medicaid is often made even in peer-reviewed journal articles. But you will never find a citation to evidence supporting the claim. That is because there is none. According to the National Investment Center’s “NIC Skilled Nursing Data Report” covering data through May 2021, private-pay nursing home revenue mix has plummeted to 7.0%, compared to 49.5%, 20.4%, and 10.8% for Medicaid, Medicare and Managed Medicare, respectively. Most of the small remaining private payments to nursing homes are for short-term sub-acute and rehabilitative care not for the kind of long-term custodial care that Cohen/Butler claim is wiping out the savings of so many. This is a prime example of scholars using the “fallacy of impoverishment” to justify big new government programs. Furthermore,

There is more good news. In June 2019, Johnson and Wang “simulated the financial burden of paid home care for a nationally representative sample of non-Medicaid community-dwelling adults ages sixty-five and older.” They “found that 74 percent could fund at least two years of a moderate amount of paid home care if they liquidated all of their assets, and 58 percent could fund at least two years of an extensive amount of paid home care” (Johnson and Wang, 2019, p. 994). Furthermore: “Nearly nine in ten older adults have enough resources, including income and wealth, to cover assisted living expenses for two years” (Ibid., p. 1000). So, the problem is much more manageable than we thought. All we have to do is persuade people to liquidate all their assets. (Medicaid and Long-Term Care, p. 65)

Obviously, most people aren’t liquidating their assets to fund long-term care or those expenditures would show up in the data for out-of-pocket spending. Nor are people going to start liquidating assets to purchase long-term care as long as Medicaid is so easy to get after extended care is needed. How to remove this obstacle to private financing and responsible long-term care planning is explained below.

Cohen/Butler: “In theory, private insurance is the appropriate tool for protection against such a risk. But the private long-term care insurance market has been declining over the past two decades, with fewer than 10 percent of Americans having policies. … There are multiple reasons for the condition of the insurance market. One is the widespread but erroneous belief that Medicare will pay for LTSS, combined with confusion about what private long-term care policies cover, and an aversion among consumers to the policy’s upfront cost.”

LTC Comment: People don’t buy LTC insurance because they think Medicare pays for long-term care? Maybe, but there is some justification for the public’s seeming misapprehension when Medicare and Managed Medicare contribute 31.2% of nursing home revenues as referenced immediately above. Still, let’s stipulate that Medicare doesn’t pay a large share of the long-term care expenses that Cohen/Butler claim are catastrophically impoverishing so many. No matter; Medicaid does. So if you reconfigure the statement to read “People don’t buy LTC insurance because they think Medicaid pays for long-term care” you’d be much closer to the truth. But there is still a nuance of difference. In truth, most people don’t know who pays for long-term care. It doesn’t matter to them. They can ignore LTC risk, wait to see if they ever need care, and if they do, Medicaid usually pays and its financial eligibility rules are so generous and elastic that most people qualify without spending down assets significantly. Fifty-six years of that being true has essentially anesthetized the public to LTC risk, virtually eliminated potential demand for private LTC insurance, and left most of the middle class unprotected and dependent on Medicaid when they need expensive extended care.

Cohen/Butler: “Agreement on a policy solution has long been stymied by a fundamental philosophical conflict between those who would limit public policy to the promotion of private insurance as the only appropriate policy for protecting private resources and those who regard public insurance as essential to the assurance of adequate, affordable protection for all.”

LTC Comment: That statement is personally galling. I know of no one among academic or popular writers who has ever advocated limiting “public policy to the promotion of private insurance as the only appropriate policy for protecting private resources.” Yet that position has been attributed falsely to me. To be very clear, my position is that America has a social contract for long-term care that includes both public and private contributions. It was established in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) which made Medicaid estate recovery mandatory. This was the plan Congress and President Clinton had in mind at that time: when people need long-term care they can’t afford, Medicaid will provide the care as long as the applicant’s income is below the cost of a nursing home and most retained assets, allowed to be virtually unlimited, are held in exempt form. The only quid pro quo was that after the Medicaid recipient dies, the estate must reimburse Medicaid for the cost of the care provided. That contract still exists although it is under attack by the Medicaid and CHIP Payment and Access Commission (MACPAC).

The social contract for long-term care created in 1993 failed to solve long-term care’s problems because states did not implement its estate recovery provisions aggressively; the federal government did not enforce the requirements; the media did not report the new estate recovery liability; and so the public remained unaware of the need to save, invest or insure for long-term care in order to avoid Medicaid dependency and estate recovery risk. The Medicaid estate planning bar flourishes by helping their affluent clients evade estate recovery at the same time and in the same manner as they qualify those clients for Medicaid by means of artificial impoverishment. We should enforce estate recovery, prohibit Medicaid planning, stop exempting home equity from LTC responsibility, and publicize the fact that long-term care planning is a personal responsibility. In other words, we should fully implement the long-term care social contract as should have been done, but wasn’t, in the 1990s. That would change the incentives for long-term care planning so that they encourage personal savings, investment and insurance instead of desensitizing the public to LTC risk resulting in their dependency on public assistance in the end.

Cohen/Butler: “The WISH Act, however, steers a careful middle course. It combines public and private roles in ways that would promote comprehensive insurance protection while strengthening the private insurance industry. It does so by creating a modest ‘catastrophic’ public program to limit exposure for LTSS costs that modest- and middle-income people can reasonably be expected to manage, either through reliance on family caregivers, personal resources, or on private insurance. In this way, the WISH Act gives private insurers the opportunity and greater actuarial certainty to design insurance as a gap-filler (much like private Medigap insurance does for health costs).”

LTC Comment: Here wishful thinking borders on full-fledged fantasy. Even a “modest catastrophic” benefit sends the worst possible message to consumers: “don’t worry about long-term care; the government has you covered.” Private insurers won’t want to fill the public program’s gaps for reasons I’ll explain below. Middle income people won’t buy more private policies for the same reasons they don’t buy them now; Medicaid picks up catastrophic costs already and the WISH Act does nothing to change that.

Cohen/Butler: “The likely result: Many more middle-income people would buy private policies that, combined with the new public insurance, would provide nearly comprehensive insurance protection against LTSS costs. This fundamental idea is key to the WISH Act: using limited public insurance in part to help stabilize private insurance.”

LTC Comment: It is not necessary to create a new economy-debilitating compulsory payroll-funded catastrophic LTC financing program to solve the problems long-term care faces. All that’s needed is to recognize that Medicaid is America’s catastrophic LTC financing system and restore it to its original purpose. Retarget Medicaid’s benefits to people most in need. Eliminate or radically reduce its home equity exemption. Close its many other egregious eligibility loopholes; and enforce estate recovery. When long-term care really is a potential financial catastrophe that threatens even home equity, people will save, invest and insure against that risk. Furthermore, it does not require a new government program to make adequate private LTC insurance affordable to middle-income people.

The National Investment Center (NIC) recently reported that reducing the annual cost of seniors housing by $15,000, from $60,000 to $45,000 per year, would expand the middle market for seniors housing by 3.6 million individuals enabling 71 percent of middle-income seniors to afford the product (NIC, 2019, April). Where could consumers find that extra $15,000 to bring the cost of seniors housing into reach? The premium for an annual long-term care insurance benefit of $15,000 would only cost a small fraction of the premium required for the full coverage that consumers find so financially daunting now. Unfortunately, insurance regulations forbid carriers from offering coverage with a benefit of less than $18,000 per year. Once again, well-intentioned regulation stands in the way of sensible long-term care policy and planning. (Medicaid and Long-Term Care, pps. 65-66)

That is how to make adequate private LTC insurance affordable to middle-income people when they’ve come to want the coverage after Medicaid no longer obviates the need for it. The best solution is to reduce dependency on government not expand it with a big new program.

Cohen/Butler: “Under the legislation, the public program would begin paying a benefit only after an individual has a LTSS need that lasts for at least one to five years—depending on income. … Thus, the amount of time a family would wait to receive the public insurance benefit would be directly related to their income history so that those with lower incomes have to wait less time to receive benefits. This scaled, income-based waiting period is designed to target benefits to middle-income households and protect them from financial ruin.”

LTC Comment: Actually “this scaled, income-based waiting period” is a means test. In other words, the WISH Act would create another welfare program. It is not social insurance as its authors intend it to appear. Ironically, the welfare programs we already have—Medicaid and Supplemental Security Income (SSI)—have gradually become entitlements accessible to people of substantial means as a result of eligibility bracket creep and lack of financial eligibility enforcement. On the other hand, the programs billed as social insurance—Social Security and Medicare—have been welfarized with the addition of extra costs for higher income people. America already has too many middle-class people dependent on government social insurance and welfare programs. We should go in the opposite direction, not add more of the same.

Cohen/Butler: “The WISH Act would also strengthen private insurance by using public insurance to address a part of the risk that is hard for the private insurance market to predict: the costs associated with long-duration LTSS need. Historically, the unpredictability of these costs has discouraged insurers from offering policies in this market. But having a well-defined public insurance program in place would stabilize the market and make it more appealing to new entrants.”

LTC Comment: That statement displays a fundamental misunderstanding of the role of private insurance. The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. The private insurance industry is uniquely qualified to perform that role responsibly in actuarially sound ways that the government has shown it is incapable of doing. Filling gaps with private coverage as the WISH Act proposes and Medi-Gap policies do is not insurance. It is dollar cost averaging which lacks the leverage against risk that real insurance provides. By taking over the catastrophic health risk, Medicare ruined genuine private health insurance for the elderly and placed an insupportable burden on the U.S. economy which has no hope of covering that program’s unfunded liabilities, currently $33.2 trillion according to the US Debt Clock. To add more to government’s catastrophic promises at this stage is unwise and irresponsible.

Cohen/Butler: “The largest public payer of LTSS is the Medicaid program. While it pays for more than half of all LTSS, however, it covers support services only after people expend most, if not all, of their personal resources. … The WISH Act would have a dramatic impact on state Medicaid programs, helping to stem expenditure growth and in a manner that also advances health equity. Indeed, by covering long-duration LTSS needs, which are the primary driver of LTSS costs, the WISH program would reduce Medicaid expenditures by at least 23 percent, based on an analysis of a similar approach.”

LTC Comment: The WISH Act would not reduce Medicaid LTC expenditures at all, much less by 23 percent. That’s because the proposed legislation does nothing to change Medicaid’s hemorrhaging financial eligibility system. The idea that Medicaid LTC benefits are only available “after people expend most, if not all, of their personal resources” insults the intelligence of anyone who knows how Medicaid actually works. Income only obstructs eligibility if it exceeds the cost of a nursing home, $7,750 per month on average, hardly low income. Virtually all large assets are exempt including $603,000 or $906,000 of home equity depending on the state and, with no limit on the amount, one vehicle, prepaid burial expenses, term life insurance, one business including the capital and cash flow, IRAs in payout status as most are for older people due to required minimum distributions, household goods and personal belongings, including expensive “heirlooms.” Elder law attorneys expand these already generous rules to qualify their affluent clients by means of special trusts, annuities, and spend down gambits.

Absent estate recovery, which most states do not pursue aggressively, Medicaid operates to preserve substantial assets for heirs at the expense of taxpayers. Heirs who receive large bequests because their parents’ long-term care costs were paid by Medicaid are not likely to purchase long-term care insurance for themselves. If Medicaid operated as it should, as a safety net for the poor, there would be no credible need for a program like the WISH Act proposes. People would know LTC is a personal risk and cost. They would use personal savings and home equity conversion to purchase their preferred kind of high quality care in the private market. In time, more would buy private LTCI to protect their savings and home equity. Fewer people would need Medicaid leaving the program with more resources to provide better care to truly needy recipients. Everyone can benefit by reducing government interference and funding instead of expanding both.

Cohen/Butler: “One of the shortfalls of the CLASS Act was that its design made it fiscally unsustainable, leading to its repeal in 2013. In contrast, the WISH Act is financed much like a typical insurance program, with a payroll premium offsetting program costs. In this case, 0.6 percent of wages would be collected from all participants (half from employees and half from employers). Like Social Security, full benefits would be available after 40 quarters of work. Pro-rated benefits would be available after six quarters. This structure would fund projected benefits and administrative expenses without general revenue.

“What does this mean for a typical worker? In early 2020, median weekly earnings for full-time wage and salary employees were $936. Thus, for such full-time employees, a total of $5.62 per week ($292 per year) would be set aside into a trust fund to pay for future catastrophic LTSS needs.”

LTC Comment: This is so much verbal slight-of-hand. CLASS failed because it was voluntary. It didn’t force people to participate under penalty of law as the WISH Act would. Structuring another quasi-welfare program on the model of Social Security, whose current unfunded liabilities are $21.4 trillion, is folly. Putting a median-income worker’s payroll tax into another “trust fund” that government will spend immediately and replace with IOUs it can never satisfy will be no consolation. Furthermore, what the “InLTCgentsia” never seem to grasp is that pulling $5.62 per week out of workers’ income and the same amount from their employers, which might otherwise have increased workers’ income, is a drag on the productive economy. We see the “benefits” they allege, but the opportunity cost—all the things productive people might have done with the wealth expropriated by government—goes unseen.

Closing LTC Comment: The essence of the Cohen/Butler case for the WISH Act is that

(1) Catastrophic spend down for nursing home care is wiping out the savings of large numbers of Americans. That is false. All but 7% of nursing home revenue comes from government programs. Is it long-term home health care, instead of nursing homes, that is wiping out so much wealth? No, only 11% of home health care expenditures are out-of-pocket. Most (85.3%) come from Medicare, Medicaid, and private health insurance with the remainder deriving from several small public and private financing sources.

(2) Private LTC insurance failed because insurers are afraid of catastrophic risks. That is false. Insuring catastrophic risk is the appropriate role for private insurance, one which government has proven fiscally incompetent to manage.

(3) People don’t buy private LTC insurance because it is too expensive. That is false. The main reasons private LTC insurance has languished are that (a) government forced interest rates artificially low making returns on reserves inadequate to avoid premium increases that alienated potential customers, and (b) after the insurable event occurs, Medicaid gives away the protection insurers were trying to sell when the need for expensive long-term care was still an insurable risk. If Medicaid did not crowd out private LTC insurance, people could purchase smaller amounts of it at much lower cost to close the remaining $15,000 gap identified (above) by NIC.

(4) We can’t possibly meet the long-term care needs of middle-income Americans without forcing them into another mandatory payroll-funded government Ponzi scheme like the ones that are already impossibly over extended financially. That is false. Long-term cares problems were created by decades of government financing that incentivized the public to ignore LTC risk, remain financially unprepared, and rely on public welfare if and when the need arose. Remove those perverse incentives and most people will do the right and responsible thing.

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Updated, Monday August 16, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-028: LTC NEWS AND COMMENT

Is The WISH Act A Real Fix For Long-Term Care Costs?
Who Will Take Care of America’s Caregivers?
Guest Opinion: Stop, rethink Washington state’s long term care law
Kaiser study finds severe workforce shortages challenging HCBS providers
Advisors, Take Fear Out of Long-Term Care Planning
Which long-term-care insurance plans qualify for a payroll tax exemption?
Social Security COLA Estimate for 2022 Raised to 6.2%
The Middle Ground For Fixing Long-Term Care Costs: The WISH Act
Life-LTC Combo Product Sales Fell in 2020: LIMRA
Getting Old Is a Crisis More and More Americans Can’t Afford
Democrats Hope To Beef Up Medicare With Dental, Vision And Hearing Benefits
Should Medicaid protect $8 trillion from private senior living costs?

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Updated, Monday August 9, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-027: LTC NEWS AND COMMENT

Schweitzer urges Inslee to end long-term care insurance benefit
A Woman’s Guide to Long-Term Care
Money For Nothing: The Biden Administration Seeks To Overturn Section 1115 Demonstration Safeguards
Genworth Hopes to Return to Long-Term Care Market Next Year
2021 Poverty Projections: Assessing the Impact of Benefits and Stimulus Measures
SNF-at-Home Model Becoming ‘Critical Player’ For Success
How a Medicaid Trust Protects Your Assets
The Evolution Of Long Term Care: What we might learn from Germany and other countries about managing the care for our aged
Advising non Washington State Employers about the Collection & Remittance process for their Washington State Employees for Wash. Cares
Deaths From Alzheimer's Far More Common in Rural America
The InLTCgentsia
Low vaccination rates, rise in variants preventing end to COVID-19 crisis in long-term care
COVID-19 Cases and Deaths in Long-Term Care Facilities through June 2021
3 Reasons Dementia Cases Could Triple by 2050
Ageism remains last accepted prejudice in ‘egalitarian’ workplace, according to research

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Updated, Friday, August 6, 2021, 10:40 AM (Pacific)

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LTC BULLET: GREAT MOMENTS IN UNINTENDED LTC CONSEQUENCES

LTC Comment: The best-laid plans of mice and men often go awry and especially in long-term care financing policy, after the ***news.***

*** JOIN THE LTC RESISTANCE: Unite to prevent government taking over what remains of the private long-term care market. Join the “LTC Resistance” by reading Medicaid and Long-Term Care, browsing the articles linked below, and merging your efforts with ours at the Center for Long-Term Care Reform here. Find our “Membership Levels and Benefits” schedule here. Momentum is building for policies that would make the ones critiqued in today’s LTC Bullet look benign by comparison. Act now before it’s too late.

In addition to today’s featured column and the recent articles linked below, Steve has the following piece accepted for publication in August:

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: GREAT MOMENTS IN UNINTENDED LTC CONSEQUENCES

LTC Comment: We thank McKnight’s Long-Term Care News for publishing the following article on July 26, 2021. Long-term care providers and insurers share a common interest in improving public policy that governs LTC services and financing. Equally important, however, is that these two components of the long-term care business collaborate to prevent bad public policy from taking effect. Please read this article and, if you have something to say about it or the topic, avail yourself of the opportunity to comment, which McKnight’s provides readers at the end of the piece. Or just drop me a note at smoses@centerltc.com. Thanks for your time and attention to this important subject.

“Great moments in unintended LTC consequences”
by
Stephen A. Moses

Reason.com publishes a video feature called “Great Moments in Unintended Consequences.” Each episode features three problems, three “solutions,” and comical coverage of the unanticipated results.

For example, “The Luxury Yacht Tax.” The year: 1990. The problem: the national debt is exploding. The solution: a 10% luxury tax on expensive boats.

Narrator: “Sounds like a great idea with the best of intentions. What could possibly go wrong?”

It turns out that while wealthy people buy yachts, it’s usually middle-income people who make them. This tax plan cut sales of luxury boats by 70%, destroyed hundreds of thousands of middle-class jobs, and resulted in a net loss of tax revenue to the government.

Many episodes of this feature are equally amusing and thought-provoking. They got me thinking about “Great Moments in Unintended Long-Term Care Consequences.”

The year: 1965.

The problem: People are living longer, dying slower and in desperate need of more long-term care.

The solution: Provide Medicaid-financed nursing home care covering room and board as well as custodial and skilled care for anyone who can’t afford it otherwise and with no limit, for the first 15 years, on transferring assets to qualify.

“Sounds like a great idea with the best of intentions. What could possibly go wrong?”

With free long-term care available after they need it, people didn’t bother to save, invest or insure for that big risk and cost when they were young and healthy enough to prepare.

Once they needed care, most discovered they could get Medicaid to pay as long as their incomes were below the cost of a nursing home and they held their assets in easily convertible exempt form, such as a home, car, business, IRAs, prepaid burial funds, term life insurance, household goods or personal belongings.

Demand surged. Medicaid nursing homes filled to 95% capacity in the 1980s. Private pay census at market rates plummeted while Medicaid residents, reimbursed at less than the cost of care, surged. Care quality suffered. You can’t expect Ritz Carlton care for Motel 6 rates.

Medicaid costs exploded, so the government tried to clamp down on eligibility by penalizing asset transfers to qualify, requiring estate recoveries and capping the home equity exemption. But Medicaid planning lawyers dodged these restrictions, and expenditures continued to skyrocket.

Easy access to free or subsidized nursing home care stunted a private-pay market for home care and assisted living for decades until welfare-financed institutional care got such a dubious reputation that people were willing to spend their own money to stay out of a nursing home.

Potential private sources of long-term care financing, such as home equity conversion and private LTC insurance, dried up. Why spend your own money when Uncle Sam is so eager to pay for long-term care, room and board if you ever need them?

So, today we approach the second third of the 21^st century, when boomers start turning 85 and blow the lid off medical and LTC costs just as the Social Security and Medicare trust funds run out, forcing those programs to cut their payments.

We find ourselves overly dependent on welfare-financed institutional long-term care with untrained, unpaid family and friends struggling to care for loved ones and little hope the system will do anything but deteriorate further.

It’s all because well-intentioned academics, policymakers and politicians wanted to help by providing more long-term care back in 1965, then kept on “fixing” it until it became the Rube Goldberg mess it is today, and never asked, much less answered the key question: “What could possibly go wrong?”

But at least they’ve learned their lesson and no longer want to turn long-term care over to more government financing and regulation. Right? Alas, no.

Most of the recommendations coming from analysts and think tanks these days call for even more government involvement, including billions of dollars for Medicaid home-and-community based care and new, compulsory, payroll-funded, government-regulated entitlement programs with “trust funds” bound to be diverted to current spending like the ones we have already.

That sounds like doubling down on the same policies that caused long-term care’s problems in the first place. What could possibly go wrong?

There is a better way. For a fuller explanation of what did go wrong with long-term care and how to fix it, read Medicaid and Long-Term Care.

Steve Moses is president of the Center for Long-Term Care Reform and author of Medicaid and Long-Term Care. Reach him at smoses@centerltc.com.

The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.

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Updated, Monday August 2, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-026: LTC NEWS AND COMMENT

Long-Term Insurance, Short Term Confusion
Researchers are concerned about the possibility that COVID-19 might lead to dementia
Analyzing Long Term Care Insurance Prices
BREAKING: AHCA backs mandatory COVID-19 vaccinations for healthcare workers
Medicare and Dental Coverage: A Closer Look
Financial Groups, Firms Press Biden to Address Retirement Security
Country Singer Writes Song for Mother in Long Term Care
COVID-19 connected to dementia-like disability, multiple studies find
Great moments in unintended LTC consequences
New study finds drinking too much coffee can shrink your brain, increase dementia risk significantly

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Updated, Monday July 26, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-025: LTC NEWS AND COMMENT

A new payroll tax is still on the way, but Washingtonians are letting state agencies know they’re not happy about it
Thousands of CalPERS members could get $30,000 or more in long-term care lawsuit settlement
How much of a cut to social security benefits can you expect based on your age?
Toomey Re-Introduces Measure to Make Long-Term Care Insurance More Affordable
Michael Gorzynski Now Controls a Long-Term Care Insurer
Gen Xers, millennials have less saved for retirement than previous generations: survey
LeadingAge: Survey finds majority of Americans support more services for seniors
U.S. life expectancy falls to lowest level in almost 20 years due to COVID-19 -CDC
California Makes It Easier for Low-Income Residents to Get and Keep Free Health Coverage
Nearly 4 million worldwide likely have young-onset dementia
LTC worker vaccine hesitancy goes under the microscope in national studies
Delta COVID variant now dominant strain worldwide, U.S. deaths surge -officials

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Updated, Friday, July 23, 2021, 10:40 AM (Pacific)

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LTC BULLET: GOVERNMENT VIOLATES THE LONG TERM CARE SOCIAL CONTRACT TO YOUR DETRIMENT

LTC Comment: What is the long term care social contract? How does government violate it? And why should you care? Answers follow the ***news.***

*** LTC CLIPPINGS are a feature that Center for LTC Reform Premium Members receive to keep them up to date on the articles, reports and data they need to know to stay at the forefront of professional expertise. Steve Moses scans the popular and scholarly literature constantly and sends subscribers daily emails (2 per day) with the date, title, author, source, and his brief analysis of every important new publication. Regular members receive a weekly compendium of the LTC Clippings each Monday in an LTC E-Alert. Subscribe now at wwwb.centerltc.com or contact smoses@centerltc.com with your questions or comments. Here’s a sample LTC Clipping sent last Wednesday:

7/20/2021, “California Makes It Easier for Low-Income Residents to Get and Keep Free Health Coverage,” by Rachel Bluth, Kaiser Health News

Quote: “A provision in California’s newly approved state budget will eliminate the asset test for the 2 million Californians enrolled in both Medi-Cal and Medicare, the federal health insurance program for people 65 and older and people under 65 with certain disabilities. Instead, their financial eligibility will be based solely on income, as it is for the millions of other people in Medi-Cal. … The 2021-22 state budget deal includes several provisions that will make it easier to get on and stay on Medi-Cal, including the elimination of the asset test. Everyone 50 and over will be eligible, regardless of immigration status. And new mothers will be allowed to remain on Medi-Cal for one year after giving birth, up from 60 days.”

LTC Comment: The “Medicaid trap” snaps shut in California ensnaring more and more people in public welfare dependency. As federal taxpayers you get to pay half this cost because of the Golden State’s 50 percent Federal Medical Assistance Percentage (FMAP). Do you think the federal government will intervene? Forget it. California has thumbed its nose at the Feds with impunity for decades by failing to implement key long-term care eligibility restrictions imposed on all states in OBRA ’93 and DRA ’05. See, for example, our 2011 study Medi-Cal LTC: Safety Net or Hammock?. Now the People’s Republic of California is eliminating all pretense of personal responsibility and totally embracing this moral hazard. ***

*** JOIN THE LTC RESISTANCE: Unite to prevent government taking over what remains of the private long-term care market. Join the “LTC Resistance” by reading Medicaid and Long-Term Care, browsing the articles linked below, and merging your efforts with ours at the Center for Long-Term Care Reform here. Find our “Membership Levels and Benefits” schedule here. Momentum is building for policies like those critiqued in today’s LTC Bullet. Act now before it’s too late.

In addition to the recent articles linked below, Steve has three more columns accepted for publication:

“Great Moments in Unintended LTC Consequences” for McKnight’s LTC News, scheduled for July 26, 2021.

“The InLTCgentsia” for Broker World’s August 2021 issue.

“Should Medicaid Protect $8 Trillion from Private Senior Living Costs?” for McKnight’s Senior Living, August 9, 2021

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: GOVERNMENT VIOLATES THE LONG TERM CARE SOCIAL CONTRACT TO YOUR DETRIMENT

LTC Comment: The following article was originally published in Broker World magazine’s June 2021 issue. We thank the editor and publisher Stephen Howard for permission to republish the column here. Subscribe to Broker World here: https://brokerworldmag.com/orders/. We strongly recommend this publication for anyone working in the financing or provider sides of the long-term care profession. Watch for Steve’s next column, titled “The InLTCgentsia” in Broker World’s August 2021 issue.

“Government Violates the Long Term Care Social Contract to Your Detriment”
By
Stephen A. Moses

What is the long term care social contract? How does government violate it? And why should you care?

Congress established the long term care social contract when President Clinton signed the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). That law set up Medicaid long term care benefits to work like this. If you need more long term care than you can afford, Medicaid will pay. You can have substantial income and virtually unlimited assets and still get this deal. But if you take it the only care you’ll receive is whatever Medicaid covers (mostly nursing home care) and you have to reimburse every dollar Medicaid pays from your estate.

Wait a minute. Doesn’t getting help from Medicaid mean you have to be low income and have minimal assets? That’s what everyone says. True, that’s the common myth…or lie…depending on whether the person saying it knows how Medicaid financial eligibility actually works.

The truth is people can have virtually unlimited income and assets and still get Medicaid to pay for their long term care. Medicaid deducts private medical and long term care expenditures from applicants’ income before assessing eligibility. So if your private health care costs are high enough, as they invariably are if you’re receiving expensive long term care services, you qualify for Medicaid based on income. An easy rule of thumb to remember is that as long as your income is less than the monthly cost of a semi-private nursing home bed ($7,756, not exactly low income), you’re in.

Assets are even less of an obstacle, because most large resources seniors own are exempt, including up to $603,000 in home equity ($906,000 in nine states) plus, with no limit on their value, one automobile, prepaid burial plans, a business including the capital and cash flow, term life insurance, household goods and personal belongings, even an Individual Retirement Account if it’s in payout status as most must be by age 72 according to the latest Required Minimum Distribution rules. Those are the basic exemptions that Medicaid eligibility specialists explain when they take your application. Of course, Medicaid planning lawyers can expand financial eligibility much further for people with higher income and assets using sophisticated trusts, annuities, and qualified transfers.

If Medicaid long term care eligibility is easy to achieve, it’s no wonder so many people end up on Medicaid, in nursing homes, and vulnerable to deadly viruses. But what about the downsides of relying on Medicaid? Why would people fail to plan for long term care, neglect to save, invest or insure against the cost as soon as possible, and thus assume the risk of ending up in a Medicaid nursing home receiving publicly financed care of dubious quality which they have to pay back in the end anyway?

Excellent question and the answer explains why private long term care insurance and home equity are so little used to pay for long term care. After Congress and President Clinton set up the long term care social contract, the government dropped the ball. State Medicaid programs did not implement estate recovery aggressively; the federal government did not enforce the law; the media didn’t publicize the new estate recovery liability; so the public continued to ignore long term care until they needed it, turning to Medicaid by default when they did. To add insult to injury, the Medicaid and CHIP Payment and Access Commission (MACPAC) recently recommended that Congress make estate recovery voluntary and implement rules that would substantially reduce its potential nontax revenue for Medicaid.

That would be a terrible mistake. Without estate recovery, an enormous potential source of private long term care financing (home equity) is lost forever and Medicaid becomes a tax-payer financed windfall for heirs at the expense of program resources that should go to the poor. Unfortunately, MACPAC relied heavily on advice from Medicaid planning attorneys who make their living helping upper middle class people qualify for Medicaid and avoid estate recovery, an obvious conflict of interest. See “MACPAC Captured” (http://www.centerltc.com/bullets/latest/1302.htm).

So the questions we asked at the top are answered. OBRA ’93 set up Medicaid long term care benefits to work like a government loan. If you don’t prepare to pay privately for long term care, Medicaid will pay, but you only get what Medicaid provides and you’ll pay it all back in the end anyhow. Smart people understanding that deal would have avoided it by preparing to pay privately for long term care if the need should arise. But government reneged, delivering all the easy long term care benefits, but without enforcing the estate recovery pay back. So if you’re trying to sell private long term care insurance, that’s a major reason why so few people show interest and most of the remainder don’t buy.

What can you do about this? For one, contact your members of Congress and urge them to oppose MACPAC’s recommendation to cripple estate recoveries. For another, join us at the Center for Long-Term Care Reform fighting for long term care financing policy that properly enforces the long term care social contract and supports you.

Stephen A. Moses

425-891-3640 smoses@centerltc.com

Moses can be reached at the Center for Long-Term Care Reform, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109

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Updated, Monday July 19, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-024: LTC NEWS AND COMMENT

Senate Democrats’ Plan Boosts Spending on Medicare, ACA Subsidies, Long-Term Care
Dementia Comes 5 Years Later for Some
Larger Nursing Home Staff Size Linked To Higher Number Of COVID-19 Cases In 2020
Aging population to hit U.S. economy like a 'ton of bricks' -U.S. commerce secretary
How Might the FDA’s Approval of a New Alzheimer’s Drug Impact Medicaid?
CalPERS settles long-term care insurance lawsuit, agreeing to pay up to $2.7 billion
Social Security COLA Estimate for 2022 Raised to 6.1%
Employers Must Collect Employee Premiums under the New “Washington Cares” Program Starting 1/2022; Employee Window to Obtain Alternate Coverage Closes on 11/2021
The Haddits have left the building
Home care workers to march in 20 cities on behalf of $400B care economy proposal
Tooth loss may up risk for cognitive decline, dementia
'It's bad': Washington long-term care facilities face staffing shortage crisis
Lawmaker Proposes Federal Catastrophic Long-Term Care Insurance Program
Some Hope Is Better Than Having No Hope'
Calculator predicts elders’ life expectancy, needs for palliative care

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Updated, Friday, July 9, 2021, 10:40 AM (Pacific)

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LTC BULLET: BE CAREFUL WHAT YOU WISH FOR

LTC Comment: Senior living providers and insurers face a common public policy threat which they should unite to resist. Details after the ***news.***

*** LTC RESISTANCE? Unite to prevent government taking over what remains of the private long-term care market. Join the “LTC Resistance” by reading Medicaid and Long-Term Care, browsing the articles linked below, and merging your efforts with ours at the Center for Long-Term Care Reform here. Find our “Membership Levels and Benefits” schedule here. Momentum is building for policies like those critiqued in today’s LTC Bullet. Act now before it’s too late.

“Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care,” by Stephen A. Moses, Health Care News, July 2021 (PDF version.)

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021. (PDF version.)

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 23, 2021 (PDF version.)

“Using Medicaid to protect inheritances,” by Steve Moses and Brian Blase, TheHill, June 10, 2021. (PDF version.)

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021. (PDF version.)

“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021. (PDF version.)

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021. (PDF version.)

Find many more articles like these, plus scores of speeches and reports covering 35 years of long-term care policy analysis at www.centerltc.com. ***

LTC BULLET: BE CAREFUL WHAT YOU WISH FOR

LTC Comment: The following article was first published June 7, 2021 by McKnight’s Senior Living. We thank McKnight’s for this opportunity to reach out to our colleagues on the provider side of the long-term care financing issue. LTC providers and insurers share a common danger from potentially toxic public policy changes currently under consideration. They should work together toward their mutual protection and improvement. We envision future articles capitalizing on that opportunity.

“LTC financing: Be careful what you wish for”
by
Stephen A. Moss

There’s an old saying: “Be careful what you wish for, because you may get it.” That admonition applies to long-term care public policy options under serious consideration today.

The COVID crisis devastated senior living and care facilities of all kinds, but it focused operators, policymakers, analysts and the public on the need to fix what ails long-term care. Both the problem and the most popular proposed solutions have come into stark focus and widespread agreement.

The problems, experts say, are that more people are getting older; they need help with activities of daily living; families are overwhelmed trying to provide such care; Medicare is no help, and Medicaid requires impoverishment; and private long-term care insurance failed because it’s too expensive and complicated. These problems are getting worse with every passing day.

So, many experts agree, what we need to do is fix these problems with the same approach we brought to senior poverty (Social Security) and healthcare (Medicare). That is, we should introduce a payroll-funded, mandatory social insurance program for long-term care. Scholars have proposed many variations on that theme, but two are in the news right now.

Two approaches in the news

One “front-end” approach, already underway in Washington state, is to impose a 0.58% tax on employee wages and pay vested beneficiaries a maximum lifetime benefit of $36,500 when they need assistance with three or more ADLs. Another “back-end” or catastrophic approach, the WISH (Well-Being Insurance for Seniors to Be at Home) Act, would impose a federal payroll tax of 0.5% (half from employees, and half from employers) and give qualified, vested beneficiaries $3,600 per month after a waiting period in which they pay their own costs.

Both of these approaches are complicated and extremely difficult to administer, requiring new, large bureaucracies to collect taxes, invest reserves, determine eligibility, manage care and maintain quality. But put aside those practical challenges for now and consider the proposals’ deficiencies in principle.

Both approaches are compulsory. As with Social Security and Medicare, citizens have no choice but to participate. The Washington Cares Fund allows a time-limited opt out for private long-term care insurance owners but no option to skip the program altogether. Both plans move another step toward government dependency and away from personal freedom and responsibility.

Both approaches tax payrolls, leaving less private capital in the economy to fund productive measures and enterprises aimed at improving long-term care. Is there any evidence that government spends money more wisely than the private sector?

Both approaches assume that private long-term care insurers will rush in with products to “wrap around” the new programs’ front-end or back-end benefits. But this will not happen because neither approach addresses Medicaid’s loose and elastic long-term care eligibility rules, which will continue to crowd out private insurance. Both assume Medicaid expenditures will decline as the new programs’ expenditures increase. But this will not happen. The public will continue to ignore private long-term care insurance options and rely on Medicaid by default, leaving private insurers no commercial leverage.

No serious consideration until now

Advocates for neither approach have explained why long-term care has all the problems they agree it has. By ignoring the history of government financing and regulation that created the existing system, they turn automatically to more government financing and regulation for a “solution” that really is just more of what caused the problems in the first place.

Until recently, there was little reason to worry that approaches to long-term care reform such as those would garner any traction. Their progenitors, Social Security and Medicare, are operating in the red already, with insolvent “trust funds.” Baby boomers start turning 85 when they’ll need the most health and long-term care, in 2031, just about the same time the compulsory social insurance programs we already have are required to cut benefits. No one seriously would consider adding more such programs … until now.

What’s changed? Nowadays, neither the public nor their politicians worry about throwing money at harebrained schemes. According to the National Debt Clock, federal spending this year is $7.1 trillion, but tax collections are less than half that, $3.5 trillion. The rest of the federal budget comes from Treasury borrowing and the Federal Reserve printing the difference. Whether you justify such policy with Modern Monetary Theory or just like the idea of getting something for nothing, such policy could lead inexorably to passage of risky front-end or back-bend plans to “fix” long-term care.

What this means for senior living

What does this mean for senior living operators? If social insurance plans such as those actually were to pass and take effect, you may find yourselves with even fewer private payers and more residents dependent either on Medicaid or one of these new, equally poorly funded government programs.

You’ll be tempted to follow nursing homes down the primrose path of accepting inadequate government reimbursements as better than having an empty unit. Because the federal government operates at such a huge deficit and the Fed has driven the money supply into the stratosphere, too much money chasing too few goods will ignite inflation. Neither the public nor its new funding programs will be able to afford quality senior care and services, and you’ll be unable to afford to provide them.

Long-term care in America is on a slippery slope. It is unwise to assume it can’t get worse or that doing more of the same will fix it. We need to explain why long-term care is such a mess now and use that insight to plot a better course. That’s what I’ve done in “Medicaid and Long-Term Care.” Read it and let me know what you think.

Stephen A. Moses is president of the Center for Long-Term Care Reform (www.centerltc.com) and the author of Medicaid and Long-Term Care. Reach him at smoses@centerltc.com.

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Updated, Tuesday, July 6, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-023: LTC NEWS AND COMMENT

Covid raises awareness, concerns about Social Security
Jumpstarting the Debate Over Public Long-Term Care Insurance
Where Long-Term Care Reform Goes Now
49 percent of assisted living providers operating at a loss: survey
Only 25 percent of operators believe they’ll survive financially through 2021
Panel Gives States Pass in Collecting Assets for Medicaid Long-Term Care – Commentary
Medicaid and the Goldilocks Test
58% of Medicare drug spending goes toward highly advertised meds, GAO finds
Tax Changes and Key Amounts for the 2021 Tax Year
Home Care Providers Are Becoming Less Dependent on Private Pay
A quarter of 65-year-old Americans will have ‘severe need’ for long-term care

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Updated, Monday, June 28, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-022: LTC NEWS AND COMMENT

Washington State Forces Nearly Everyone to Buy Long-Term Health Care
President Biden, tear down this wall
If You Notice This When Talking, It Could Be an Early Dementia Sign, Study Says
Most senior couples will need LTC for at least one partner: report
Older Americans are on the front line of the student debt crisis
Home care agencies are losing a third of their business to the ‘gray market,’ new study finds
Unpaid Caregivers Were Already Struggling. It's Only Gotten Worse During The Pandemic
Although Their Share of the Market Varies By State, Enrollment in Medicare Advantage Plans Has More Than Doubled Over the Past Decade, with More than 4 in 10 Medicare Beneficiaries Now Enrolled in the Private Plans
Insurers Try to Avoid Collision With State LTCI Program

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Updated, Friday, June 25, 2021, 10:40 AM (Pacific)

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LTC BULLET: USING MEDICAID TO PROTECT INHERITANCES

LTC Comment: As long as Medicaid diverts over $7 trillion from private long-term care responsibility, how can we expect consumers to plan responsibly for that huge risk and cost? Details follow the ***news.***

*** PUBLICATIONS: Long-term care has reached a crucial crossroads. Will it follow the current course into increased dependency on government deficit spending and eventual collapse? Or will consumers take back responsibility and redirect long-term care toward the kind and venues of care they prefer? It all depends on public policy decisions about to be made in 50 state capitols and in Washington, DC. We need to raise our voices in opposition to compulsory, payroll-funded entitlement approaches that will doom long-term care consumers to outcomes even worse than under Medicaid. We should explore, propose, and support solutions that avoid relying on government and engage the public to save, invest, insure and pay privately for the long-term care they prefer in the settings they desire. Steve Moses and the Center for Long-Term Care reform are doing our part with articles aimed at a wide audience, including the column featured today in The Hill and these:

“President Biden, tear down this wall,” by Stephen A. Moses, McKnight’s LTC News, June 24, 2021

“LTC financing: Be careful what you WISH for,” by Stephen A. Moses, McKnight’s Senior Living, June 7, 2021.

“Government Violates the Long Term Care Social Contract to Your Detriment, by Stephen A. Moses, Broker World, June 2021

“The social contract for long-term care,” by Stephen Moses, McKnight’s Long-Term Care News, May 17, 2021.

“Why LTCI Fails,” by Stephen A. Moses, Broker World, March 2021.

“Nursing Homes, Coronavirus and Medicaid,” by Stephen A. Moses and Brian C. Blase, Wall Street Journal, June 1, 2020

We urge you to read these articles and forward them to your friends, family and colleagues. Add your comments whenever the publisher invites readers to “Join the Discussion.” ***

*** JOIN THE CENTER: Want to be part of our “LTC Resistance?” Review the Center’s “Membership Benefits and Levels,” choose a plan that’s best for you, and join the Center for Long-Term Care Reform. We’ll fight together for rational long-term care public policy that rewards responsible planning and discourages the Medicaid-induced complacency that results in public welfare dependency. Receive our LTC Bullets, LTC E-Alerts, and at the premium membership level, our LTC Clippings. Get and remain on the cutting edge of professional expertise by taking full advantage of the Center’s Members-Only website and our wide-open public website, www.centerltc.com. ***

LTC BULLET: USING MEDICAID TO PROTECT INHERITANCES

LTC Comment: The following column was first published by The Hill on June 10, 2021.

“Using Medicaid to Protect Inheritances”
by
Steve Moses and Brian Blase

The number of Americans over 65 increases by about 4,000 each day, causing the finances of many government programs to become more precarious. While Social Security and Medicare receive the most attention, a growing concern is the reliance on Medicaid to pay the nation’s long-term care needs.

Medicaid pays nearly half the nation’s long-term care bills, and improper payments in the program exceed $100 billion a year. Conventional wisdom is wrong that seniors need to spend down to gain Medicaid eligibility for long-term care. Seniors can make a sizable income (medical and long-term care costs are deducted before determining eligibility) and hold large assets and still qualify for Medicaid. These assets include home equity of $603,000 in most states ($906,000 in nine states) and generally unlimited amounts in retirement accounts.

With minimal prior planning, child heirs can preserve their inheritance by arranging their parents’ finances and assets so that Medicaid picks up the tab in the event long-term care services are necessary. A cottage legal industry has emerged to assist heirs in creating such wealth management schemes.

The ease with which people can gain Medicaid eligibility for long-term care creates a major moral hazard problem. Since the government is paying, people don’t need to properly plan. A prominent economic study found that Medicaid largely crowds out the market for private long-term care insurance. While gaining access to Medicaid long-term care is too easy, one aspect of law in this area that makes sense is now under threat.

The Omnibus Budget Reconciliation Act of 1993 required states to recover long-term care costs borne by the Medicaid program from the estates of deceased recipients. The primary asset in most estates is the home, and U.S. seniors hold $7 trillion of home equity. This law sends the message that Medicaid would pay long-term care bills, but the tab, or at least a portion of it, would be paid out of the deceased person’s estate. It was essentially a government-backed loan for people who failed to prepare to pay privately for long-term care. It isn’t welfare if it’s paid back.

For many reasons, it would be better to limit eligibility to Medicaid long-term care on the front end, but the existence of Medicaid estate recovery efforts avoids some amount of moral hazard. Unfortunately, a powerful Medicaid advisory board is recommending that Congress eliminate the requirement for states to pursue estate recoveries.

This board, the Medicaid and CHIP Payment and Access Commission (MACPAC), says the fear of estate recovery discourages people from applying for Medicaid, and recovery efforts tend to keep poor people poor. But MACPAC’s rationale makes no sense. States cannot recover funds expended on behalf of people who lack assets. Estate recoveries only affect people who have resources left over and generally died without a spouse.

MACPAC also claims that estate recoveries do not produce a lot of revenue. That’s true, but fixable. After the 1993 federal requirement for estate recoveries, states did not implement robust recovery programs, the federal government did not enforce the law and the media didn’t publicize the new estate recovery liability. As a result, the public continued to ignore long-term care until they need it, turning to Medicaid by default if they do.

Here’s our advice. First, don’t make the problem worse by eliminating estate recovery requirements. Doing so will further reduce incentives to prepare properly for long-term care expenses. It also would permit more heirs to shift costs that their parents’ estate should bear onto taxpayers. Government should provide Medicaid for the truly indigent but allowing middle and upper-income Americans to preserve a greater inheritance weakens the safety net for those who most need it and is unfair to taxpayers and those who prepare properly.

Second, the government should enforce and publicize Medicaid estate recoveries. This would reduce dependency on Medicaid, preserve Medicaid for the truly needy and encourage responsible private behavior. As federal deficits and debt explode, it has never made more sense to limit welfare programs to those who are poor.

Steve Moses is president of the Center for Long-Term Care Reform and author of “Medicaid and Long-Term Care” (2020). Brian Blase served as a special assistant to President Trump at the National Economic Council, 2017-19. He is president of Blase Policy Strategies LLC.

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Updated, Monday, June 21, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-021: LTC NEWS AND COMMENT

Going, Going, Gone
Mutual of Omaha is among a handful changing long-term care sales
Common cold starts to spread fast as COVID restrictions are lifted
LTC use expected to double: report
Florida home to more than 9 percent of U.S. Alzheimer’s patients, data shows
Report to the Congress: Medicare and the Health Care Delivery System
Comment on Clare Ansberry’s ‘One Family’s Lessons Learned From a Decade of Caregiving
Why Long-Term Care Cost Reports Are Often Misleading
LTCG’s Annual Cost of Care Report Reveals How the Global Pandemic and Other Industry Trends Impacted Long Term Care Costs
Did you receive a ‘long-term care’ email from your employer? Here’s what it means to opt-in or opt-out
Lessons from a family learned from 10 years of long-term care
Meetings, rules and deadlines push long-term care law along
Healthcare infrastructure missing ‘centralized access point’ to long-term care: experts
One Family’s Lessons Learned From a Decade of Caregiving
3 Experts Have Resigned From An FDA Committee Over Alzheimer's Drug Approval
ACOs don’t reduce burden of care for nursing home dementia patients: study

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Updated, Friday, June 18, 2021, 10:40 AM (Pacific)

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LTC BULLET: THE WA CARES FUND GETS A BAD WRAP

LTC Comment: Is Washington State’s new compulsory payroll-funded social insurance entitlement program a “wrap trap”? Find out after the ***news.***

*** LATE BREAKING: Two major private long-term care insurance carriers, Mutual of Omaha and Thrivent, have suspended sales in Washington State effective June 17, 2021. These measures appear to have been taken to avoid allowing the purchase of the companies’ products to be used to dodge the State of Washington’s WA Cares Fund mandatory payroll deduction. To avoid that payroll tax, employees must prove they have qualifying private LTC insurance in place by November 1, 2021. That will now be harder to do. ***

*** LTC COMMENT: Architects of the WA Cares Fund should go back to the drawing board before they ruin the LTC insurance market in Washington State entirely and join the government LTC insurance Hall of Shame along with CalPERS and the CLASS Act, not to mention Medicaid. Let’s hope the InLTCgentsia promoting the WA Cares Fund as a model program for the rest of the country is paying attention. ***

LTC BULLET: THE WA CARES FUND GETS A BAD WRAP

LTC Comment: Referring to a program that now calls itself the WA Cares Fund I asked last October “What happens when the Keystone Kops design a long-term care insurance plan?”

Thanks to a series of articles by the Washington Policy Center’s Elizabeth Hovde, we have some more-recent answers to that question here, here, here, here, and here. See also “Did you receive a ‘long-term care’ email from your employer? Here’s what it means to opt-in or opt-out,” by Mike Lewis for Geekwire. He adds “If you need more help or want additional details, here are some explainers:

Gig Harbor financial advisor Gary Brooks in the Tacoma News Tribune;
Another Davis Wright Tremaine analysis;
Long-term care plan advice from Investopedia;
The Washington Technology Industry Association analysis.”

I conclude: Oh what a tangled web they weave when politicians practice to conceive careless, compulsory, complicated new programs. So I disagree with Otto von Bismarck, who said: “Laws are like sausages, it is better not to see them being made.” Distasteful as the process is we’d better watch it closely or we’ll have to live with the dismal consequences indefinitely.

So watch it we will in today’s Guest Bullet article by LTC Associates’ Stephen D. Forman, exclusively for LTC Bullets. We thank the author and the company for their support of the Center for Long-Term Care Reform and for this insightful column.

“The WA Cares Fund Gets a Bad Wrap”
by
Stephen D. Forman

From the start, WA Cares Fund advocates promised that the public program would supercharge the development and purchase of so-called “wraparound” products by the private market. It was a selling point: “The private LTC insurance market is currently failing, but a new LTC Trust could spur [a] new LTC wrap market, similar to what happened with Medicare and gap plans.” By design, a new “LTC Supplement” product would have to be more affordable than today’s comprehensive offerings, making it more attractive to Washington consumers. Unfortunately, by barreling ahead without consulting with insurance carriers, distributors, consumers, or the Washington Insurance Department before making this pronouncement, proponents got out over their skis.

The WA Cares Fund is practically unwrappable.

Not all of the issues below are equally serious, but each should have been considered before—not after—the Fund was drafted into law. Wrapping the WA Cares Fund well takes more than just an “off-the-shelf” product sold with a long elimination period.

Portability
1. Although the wage tax is owed by anyone who earns income “localized” in Washington, the $36,500 nominal WA Cares Fund benefit is payable only to state residents. (Private LTC insurance pays anywhere in the US, almost always Canada, and usually globally.) From a wraparound standpoint, a carrier would have to price a product with a $36,500 deductible that exists only for care incurred in one state, but not in the other 49… or a universal deductible of $36,500 in all states that a resident clearly understood would be met by the WA Cares Fund at home, but would be their responsibility for care received outside the Evergreen State.

Inflation
1. We say “nominal” because the Fund’s $36,500 benefit will change unpredictably over time. What will it be in 15 or 30 years, when beneficiaries need care? No one can say, which makes inflating a wrap product in synch a challenge. The Fund’s benefit units may rise or fall each year depending on the vote of an 8-person Trust Council. Wrapping this deductible will be like riding a bucking bronco—and for its inflation rate the State didn’t even select the correct CPI standard required for Washington LTC Partnership Qualification (not that they had to, but c’mon, it was right there).
2. If pressure were to be put on the tax rate in the future, it was suggested during a presentation on public LTC design that the first “cut” would be to lower the inflation rate.

Partnership
1. Speaking of the Partnership Program, the WA Cares Fund may spell its end (about 6 in 10 policies sold in Washington qualify now). By protecting assets from Medicaid spenddown and estate recovery, Partnership Qualified policies are ideally-suited for broad-market Washingtonians. But the WA Cares Fund was billed first and foremost as a Medicaid replacement, with Fund beneficiaries receiving no protection from asset spenddown and estate recovery.
2. To be Partnership Qualified, your policy must first meet the requirements for Tax Qualification: if “LTC Supplements” can’t thread this needle, they’ll be less appealing to their target market.

Benefit Triggers
1. Speaking of tax qualification, the WA Cares Fund doesn’t use Tax-Qualified triggers. Instead of the nearly 25-year old federal standard, Washington is going with its own Medicaid standard (3 or more ADLs), and no 90-day chronic illness certification.
2. A beneficiary risks qualifying for benefits under the Fund, but not under their private policy (or vice-versa). Or, they may find a benefit or service covered under one program, but not the other (as has happened with assisted living under Medicaid). These risks exist so long as programs like the Cares Fund can be amended twice a year through legislative action: neither the premiums nor benefits nor eligibility triggers are predictable or certain. Wrap that.

Co-Insurance
1. The analogy to Medicare Supplements is built on the idea of co-insurance. The general principle is that Medicare foots 80% of the cost, and an optional private policy picks up the 20% “gap” left over. An LTC Supplement built to cover these small “gaps” should be more affordable, right? We’ve hit our first snag: the analogy misfires. MedSupp is for care used soon and regularly; LTC is for care often used later and claimed infrequently.
2. The WA Cares Fund doesn’t work like an 80/20 co-insurance plan; instead, it’s a “first payor” plan, and its $36,500 is a deductible. Your LTC insurance “gap” policy would step in at the $36,501^st dollar and cover everything catastrophically to follow. How stimulated would the market have been for Medicare Supplements if the original cost-sharing had been reversed from 80/20 to 20/80?

Elimination Period
1. Advocates of the Cares Fund emphasized that many residents lack even a modest emergency account for healthcare expenses—the Fund has even been called a “structured savings account” by its primary sponsor—and for this reason, benefits must be payable from the first day. They got their wish. When the LTC Trust Act was passed, it included “no elimination period in either Title 50B RCW or the administrative rules,” as the Employment Security Department put it.
2. There’s just one problem: the 0.58% payroll tax pays for only a 45-day elimination period.
3. The Fund will have to raise its payroll tax by 0.12%, to 0.70%, to support its existing no-elimination period structure (all else being equal).
4. This discrepancy—one of the greatest threats to Fund solvency, greater than the private insurance opt-out—is well-known to the Trust Commission (“the cost of the program will go up significantly if there is a 0-day elimination period, compared to the baseline assumption of 45 days.”)
5. When a Constitutional Amendment is re-introduced this fall in an attempt to remedy the ($14.7 billion) projected actuarial deficit—a number that does not include the elimination period problem—would the public continue to support the Fund if they learned about this omission? It’s not clear voters support it now, having rejected Advisory Vote 20 and SJR 8212.

Demand
1. During public testimony in favor of the WA Cares Fund, our Insurance Department declared the private LTC market “broken.” Adding injury to insult, for decades consumers around the country have been able to purchase short-term care coverage (“STC”) akin to the WA Cares Fund—but ironically, our Insurance Department frowns on it.
2. LTC insurance has been rate-stabilized in Washington since 2009, then in 2016 the Society of Actuaries reported on the significantly reduced risk of rate increases on newly-issued plans. No one listening to WA Cares Fund proponents would know this—the rate increases in the articles they cited were on twenty-year old policies, the conclusion of a gloomy market they described as “imploded” as though we’d brought it on ourselves.
3. What’s “broken” might be Medicaid, itself a driver of higher insurance rates (private payers subsidize Medicaid’s below-cost reimbursements to providers).
4. If “affordability” were the obstacle some say has prevented LTC insurance sales from flourishing, then 100 carriers would be selling short-term coverage today to take advantage of the insatiable demand. Let’s suggest “crowd-out” plays a larger role than you’d like to admit. Award-winning research suggests Medicaid replaces 80% of the market for LTC insurance because consumers don’t wish to pay for something the government gives them already (even if they’re only aware of it unconsciously). The WA Cares Fund risks exacerbating crowd-out, and—rather than invigorating sales—could further desensitize the public to the risk of needing to pay for care.

Insurance or Not
1. The program is “damned if it is, and damned if it isn’t,” and the Washington Insurance Department may have painted itself into a corner. (We always found it strange how the Cares Fund describes itself as being overseen by three state agencies, but never mentions the fourth agency it is regulated by: the Insurance Department.)
2. The Fund borrows from the insurance world (“premium allowance”) when it wishes to avoid the politically perilous term “payroll tax.” It has advertised itself to the public as “long-term care insurance” in nearly all of its consumer-facing materials, though it is not permitted to do so without following the RCWs and WACs that adhere to the term.
3. I’d admit to compiling a list of RCWs and WACs the WA Cares Fund has been violating, but the fact is: the Washington Insurance Department has been compiling this list—it’s their job. Further, the Department has made it a point of emphasis the past two years to crack down on any entity that acts like insurance, no matter the label. Semantics has been no defense.
4. The Department’s advice to consumers who need help determining if their policy qualifies as LTC insurance is to “contact your insurance company.” Since the WA Cares Fund—in the text of the law—calls itself “long-term care insurance”— which company should consumers call? Is it AM Best Rated “A+” (Superior)?
5. Questions like these make me wonder whether the WA Cares Fund will exist a few years from now, and questions like that make me wonder whether insurers will feel motivated to invest time, energy, and expense, developing, filing, and marketing “wrap products” here after the traumatic experience we’ve just all just shared.

When Fund proponents began their makeover of the state’s private LTC insurance market, they included no one from the private LTC insurance market in their discussions, and this lack of outreach is reflected in the morass described above. Their resistance was so entrenched, it took the State Legislature passing a law to literally compel WA Cares Fund commission to “work with insurers.”

The ACLI expressed concerns about the viability of wrap products to the Trust Commission as well—perhaps their diplomatic influence will advance the success of this market. Had the insurance community been included earlier, we’d have been more optimistic. One thing’s for sure: if private LTC insurance is indeed broken in Washington State, we’ve got a good idea who broke it.

Stephen D. Forman, CLTC of Long Term Care Associates, Inc. is co-author of “The Advisor’s Guide to Long-Term Care” (2^nd Ed.), published by National Underwriter. Reach him at steve@ltc-associates.com.

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Updated, Monday, June 14, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-019: LTC NEWS AND COMMENT

Trouble Falling Asleep Predicts Later Cognitive Impairment
How Might Lowering the Medicare Age Affect Medicaid Enrollees?
Taxpayers Protecting Inheritances
Most Americans Remain Unprepared For The Possibility Of Extended Care
Details about the state’s mandated long-term care law and payroll tax are slowly emerging
Baby Boomers’ Biggest Financial Risk: Cognitive Decline
Comparing Medicare Advantage And Traditional Medicare: A Systematic Review
Time for government – not nursing homes – to shoulder collective COVID-19 blame
Controversial Alzheimer's Drug Wins FDA Approval
Planning For The Peak-65 Generation
Senior housing market likely to rebound from pandemic recession: NIC analysis
LTC financing: Be careful what you WISH for

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Updated, Friday, June 11, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: THE SOCIAL CONTRACT FOR LONG-TERM CARE

LTC Comment: America has a social contract for long-term care and it’s under attack. Learn how after the ***news.***

*** THE HILL last night published “Using Medicaid to Protect Inheritances,” Steve Moses’s latest op-ed co-authored with Brian Blase, former special assistant to the president at the National Economic Council, 2017-19 and current president of Blase Policy Strategies LLC. Moses and Blase earlier collaborated on Nursing Homes, Coronavirus and Medicaid, published June 1, 2020 by the Wall Street Journal. ***

*** THE CENTER FOR LONG-TERM CARE REFORM believes LTC public policy is at a precarious inflection point. It behooves everyone who cares about long-term care to face facts and work together toward viable solutions. We’ve embarked on an effort to reach and mobilize LTC insurers and providers. Won’t you join the Center and help us pursue that objective? Here are a few of our latest efforts to reach out with analysis and recommendations:

“Why LTCI Fails,” Broker World, March 2021
“The social contract for long-term care,” McKnight’s LTC News, May 17, 2021
“Government Violates The Long Term Care Social Contract To Your Detriment,” Broker World, June 2021
“LTC financing: Be careful what you WISH for,” McKnight’s Senior Living, June 7, 2021. ***

*** LTC CLIPPINGS are the best way to stay abreast of news and analysis affecting long-term care insurers and providers. Know the latest data and reporting before you’re blindsided by clients or prospects. Get the title, source, a link, a representative quote, and Steve Moses’s interpretation for the most important articles, studies, and reports as they appear in real time. Steve sends one or two LTC Clippings per day to your email inbox and follows up each Monday with a compendium of the previous week’s Clippings. Subscribe to LTC Clippings by becoming a premium member of the Center for Long-Term Care Reform ($250 per year or $21 per month). Help us keep the fight for rational and responsible LTC financing policy alive. ***

LTC BULLET: THE SOCIAL CONTRACT FOR LONG-TERM CARE

LTC Comment: We thank McKnight’s Long-Term Care News for publishing the following article on May 17, 2021. Long-term care providers and insurers share a common interest in improving public policy that governs LTC services and financing. Equally important, however, is that these two components of the long-term care business collaborate to prevent bad public policy from taking effect. Please read this article and, if you have something to say about it or the topic, avail yourself of the opportunity to comment, which McKnight’s provides readers at the end of the piece. Or just drop me a note at smoses@centerltc.com. Thanks for your time and attention to this important subject.

“The social contract for long-term care”
by
Stephen A. Moses

America has a social contract for long-term care. It’s rarely acknowledged, but here it is.

If you are stricken by a need for long-term care that you cannot afford, we help you even if you are not poor. Assuming you’re eligible medically, you’ll qualify for Medicaid as long as your income is (1) less than the cost of a semi-private nursing home bed, about $93,072 per year, and (2) insufficient to cover your private uncompensated medical and long-term care expenses.

You can retain virtually unlimited assets and still qualify for Medicaid LTC, including up to $603,000 in home equity ($906,000 in nine states), plus, with no limit on their value, one automobile, prepaid burial plans, a business including the capital and cash flow, term life insurance, household goods and personal belongings, even an Individual Retirement Account if it’s in payout status as most must be by age 72, according to the latest Required Minimum Distribution rules.

Those are the basic rules that Medicaid eligibility specialists explain when they take your application. Of course, Medicaid planning lawyers can expand financial eligibility much further for people with higher income and assets using sophisticated trusts, annuities and qualified transfers.

Clearly, Medicaid’s financial eligibility rules for long-term care coverage are generous and elastic. But they do require a quid pro quo.

Ever since the Omnibus Budget Reconciliation Act of 1993, state Medicaid programs have been required to recover benefits correctly paid from the estates of deceased Medicaid recipients. The idea behind this requirement was to make sure the public understood there is no free lunch for long-term care.

There are two choices. You can save, invest or insure for the risk and cost of long-term care, and if you ever need it, pay privately and command access to any venue and quality of care you can afford. Or you can “go bare,” hope you never need long-term care, but if you do, qualify for whatever Medicaid provides, mostly nursing home care, contribute nearly all your income as a kind of co-insurance, benefit from Medicaid’s discounted reimbursement rate, but pay it all back after you die.

Policy makers who established this arrangement in 1993 hoped the public would take the risk and cost of long-term care more seriously and plan early to be able to pay privately if and when the need arose. They wanted to send the message to heirs that their inheritances were still at risk for long-term care even if their parents received Medicaid-financed care. The goal was to end the moral hazard inherent in a program that provided easy access to expensive long-term care after the care was needed.

Mandatory estate recovery also reduced the moral stigma of Medicaid dependency, because “it isn’t welfare if you pay it back.” The hope was that everyone would behave more responsibly, Medicaid LTC expenditures could be significantly reduced, more private financing at market rates would buoy long-term care providers financially, and Medicaid could become a better safety net for its originally intended clientele, the genuinely needy.

Unfortunately, it didn’t turn out quite like that. States did not implement estate recovery aggressively; the federal government did not enforce the law; and the media didn’t publicize the new estate recovery liability. So the public continued to ignore long-term care until they need it, turning to Medicaid by default when they do.

To add insult to injury, the Medicaid and CHIP Payment and Access Commission (MACPAC) recently recommended that Congress make estate recovery voluntary and implement rules that would substantially reduce its potential nontax revenue for Medicaid. MACPAC relied heavily on advice from Medicaid planning attorneys who make their livings helping upper middle class people qualify for Medicaid and avoid estate recovery, an obvious conflict of interest. See “MACPAC Captured.”

Without estate recovery, an enormous source of private LTC financing (home equity) is lost forever and Medicaid becomes a tax-payer financed windfall to heirs at the expense of program resources that should go to the poor.

It behooves long-term care providers to stop the MACPAC proposal from passing. We need to strengthen America’s long-term care social contract, not cripple it. To understand the reasoning, evidence and recommendations that led to passage of OBRA ’93 mandating estate recoveries, read Medicaid Estate Recoveries: National Program Inspection, a 1988 report by the Department of Health and Human Services’ Office of Inspector General. (Full disclosure: I conducted that study and wrote that report.)

By enforcing and publicizing Medicaid estate recoveries throughout the country, we can encourage private LTC financing, reduce dependency on Medicaid, improve access and quality of care for people of all income levels, and discourage the imposition of another compulsory payroll-financed government entitlement program.

Stephen Moses is president of the Center for Long-Term Care Reform (www.centerltc.com). He is the author of Medicaid and Long-Term Care. Reach him at smoses@centerltc.com.

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Updated, Monday, June 7, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-019: LTC NEWS AND COMMENT

Will Congress Abandon America’s Seniors?
Nursing homes among ‘safest places’ for seniors following 98% drop in COVID cases: NIC
Semiprivate Nursing Home Room Cost Rises 9.2%: Mutual of Omaha
Overwhelming Bipartisan Majority Oppose Social Security & Medicare Cuts To Reduce Deficit
39 percent of nursing homes had no COVID deaths: report
State Assisted Living Providers Billions Out of Pocket in COVID-19 Pandemic Losses
Senior living association joins real estate industry in fighting White House tax proposals
Yes, You WILL Have To Have Long-Term Care Ins. In Washington
Simple tool can accurately predict Alzheimer’s onset within 4 years
Government Violates The Long Term Care Social Contract To Your Detriment
Answering Covid’s Wake-Up Call

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Updated, Tuesday, June 1, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-018: LTC NEWS AND COMMENT

Caring for an Aging Nation
New payroll tax to hit workers this fall for mandated long-term-care program, but state commission has few answers on how it will work
A Neurologist Faces His Alzheimer's Disease
Profile of Older Americans
Nursing Home COVID Deaths Lead to State Staffing Rules
Medicare Advantage Dual Eligibles Have Better Access to Care
Washington State Cares Fund Update
You Can Keep Some Assets While Qualifying for Medicaid. Here's How
Too much TV may be bad for your long-term brain health
What are the effects of inappropriate prescriptions in older adults?
Anne Tumlinson, CEO, ATI Advisory

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Updated, Friday, May 28, 2021, 10:40 AM (Pacific)

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LTC Comment: If LTC is such a huge risk and cost, why does the public fail to plan and insure for it? What can and should be done about that? Answers after the ***news.***

*** STRIKE while the iron is hot. One silver lining of the pandemic’s black cloud for long-term care is unprecedented interest in fixing LTC services and financing. The Biden administration wants to pump $400 billion into home care. Analysts are in a tizzy thinking their hopes for a new compulsory government LTC program may finally come to pass. The WA Cares Fund is already floundering toward unfunded implementation. MACPAC wants to ruin what’s left of the long-term care social contract. It seems like everyone wants to throw more government money and regulation at long-term care problems—i.e., institutional bias, poor access and quality, inadequate funding, overwhelmed family caregivers—that were caused by too much government money and regulation interfering with the LTC market since at least 1965. We run the risk of making long-term care services and financing even worse by doing more of the same. So, the Center for Long-Term Care Reform is doing our part to steer public policy in a better direction. Here are some examples of our recent efforts to warn about bad ideas and propose better ideas for long-term care reform.

“Why LTCI Fails,” guest column by Stephen Moses for Broker World magazine, March 2021
“LTC Bullet: The Key to LTC,” March 19, 2021, by Stephen Moses
“New guidance could make long term care in the U.S. worse (guest: Stephen Moses),” May 6, 2021 podcast hosted by the Heartland Institute’s Anne-Marie Schieber
“LTC Bullet: LTC Center Standing Guard,” May 14, 2021 by Stephen Moses, links to 100 LTC Bullets critiquing 20 years of misguided long-term care research and advocacy; proposes better analysis and recommendations
“The social contract for long-term care,” guest column by Stephen Moses for McKnight’s Long-Term Care News, May 17, 2021
“Government Violates the Long-Term Care Social Contract to Your Detriment,” by Stephen Moses, forthcoming in the June 2021 issue of Broker World
“Medicaid Pays for Long-Term Health Care, Heirs Get Bigger Inheritance,” by Stephen Moses, forthcoming in the July 2021 issue of Health Care News.

The Center for Long-Term Care Reform is taking the fight for rational and responsible long-term care financing policy to a new level. We’ll be publishing our analysis and recommendations anywhere and everywhere. To follow our media campaign and catch everything we publish, join the Center and subscribe to our biweekly LTC Bullets, our weekly LTC E-Alerts, and our daily LTC Clippings. Get all the membership details in our Membership Levels and Benefits schedule and join/subscribe here. The Center will gradually stop sending our publications to non-subscribers so going forward, it will be necessary to join the Center to stay abreast of everything we are doing to promote long-term care reform. Contact Steve Moses at smoses@centerltc.com or 425-891-3640 with questions and to discuss corporate memberships in the Center. ***

LTC BULLET: WHY LTCI FAILS

The following article was originally published in Broker World magazine’s March 2021 issue. Subscribe to Broker World here: https://brokerworldmag.com/orders/. Strongly recommended. Watch for Steve’s next column in Broker World’s June 2021 issue.

“Why LTCI Fails”
By
Stephen A. Moses

Congratulations to Carroll Golden, the Limited and Extended Care Planning Center, and NAIFA, for presenting LTC Impact Week, nine hours of online training for LTCI producers Zoomed over three days in November, 2020. Well done; keep it coming.

But two shortcomings struck me about this otherwise excellent program. Low attendance—under 200—and parochialism—it never emerged from the LTCI silo to consider the broader economic and public policy context in which private LTCI is marketed and sold.

Why the low attendance? In fact, why do so few people sell LTCI? That’s easy. It’s a hard way to make a living. The business mostly attracts people who are passionate about long term care because of a personal, usually wrenching family experience. I’ve called LTCI producers “AMGs,” altruistic, masochistic geniuses.

But why is LTCI hard to sell? That question takes us immediately out of the LTCI market silo into the larger economic and policy domains. The conventional answer is that the public is in denial about long term care.

But that tells us nothing. If long term care is such a big risk and cost, as all agents are trained to believe and say, why is it so hard to get people to take the risk seriously before it’s too late to insure?

Well, maybe it has something to do with the fact that government has paid for most high-cost long term care since 1965. After all, upwards of 90 percent of the biggest long term care expenditures come from sources other than personal asset spend down—mostly government.

But to this observation, agents object: “No, that can’t be the problem. My prospects and clients don’t want Medicaid. They’ve heard it’s no good and leads straight to a nursing home. They resent the idea they’d ever rely on public assistance.”

All right, let’s analyze that objection. LTCI prospects and clients are a very narrow sample of all potential buyers. In fact, I think LTCI producers only get to see and talk to about one in ten of the people who could, should and would buy the product if they really believed they needed it.

So why don’t consumers believe they need long term care insurance?

Don’t blame LTCI carriers, distributors or producers. They’ve warned everyone for decades that if they don’t buy the product and need long term care they’ll be wiped out financially.

Don’t blame government. It’s been telling the same scary story, implemented tax incentives at the state and federal levels, and widely promoted the Own Your Future campaign.

Don’t blame the media. Articles touting the importance of long term care planning and the risks of going bare are everywhere nowadays.

You might wonder, in light of such widespread publicity and promotion, how stupid can the American public be? They still ignore long term care risk and cost despite this constant drumbeat of warnings.

Whoa. Back up. Before you impugn consumers’ judgment, consider some economic realities that also influence their decision making.

Consumers tend to ignore warnings about long term care risk and cost because they don’t hear many tragic stories of catastrophic long term care expenditures. That’s because Medicaid pays for most expensive long term care.

So, does this mean the problem with low LTCI take up is that people know Medicaid will pay and so they count on it instead of preparing with private insurance?

Assuredly not! What’s going on is much more nuanced. Think of it in two steps, like this:

Step One: When people are still young enough, healthy enough, and prosperous enough to plan for long term care and purchase private insurance, they hear the pervasive buzz that they need protection against long term care risk and cost. But they have other priorities.

They have house and car payments. They’re saving for retirement. They’re putting kids through college, and so on. At this stage their level of concern about health in the distant future does not reach the threshold to impel them to consider, much less buy, LTCI. Long term care is a back-of-the-brain concern.

At this time of their lives, most people don’t know who pays for long term care and they don’t care. They do have a vague sense that someone must pay because you don’t see Alzheimer’s patients dying in the gutter. It’s much easier not to think about this bothersome subject in spite of the constant reminders. But then …

Step Two: Decades go by, health deteriorates, activities of daily living get harder to manage, cognitive impairment imposes. The need for long term care becomes imminent. All of a sudden, finding and paying for long term care is a front-of-the-brain issue.

The same people who evaded the issue earlier (or more likely their adult children because the elders are now impaired) begin to research long term care seriously. They get no help from Social Security or Medicare, but they find lots of information on how to qualify for Medicaid.

Medicaid financial eligibility rules are very generous. Income usually isn’t an obstacle because personal medical and long term care expenses are deducted before eligibility is determined. Most large assets are exempt and other assets are easily converted to exempt status.

Medicaid eligibility rules are also very elastic, expandable to allow even people with higher incomes and net worth to qualify with the help of Medicaid planning attorneys, whose ads are everywhere online.

People learn lots of negative information about Medicaid, such as the fact it’s welfare, pays too little to ensure quality care, and usually means nursing home care. But by the time they learn this, high long term care costs aren’t just a vague risk off in the distant future. They’re now!

When infirm elders, or, again, more likely their adult children, are staring at thousands of dollars per month for long term care, the prospect of dodging those expenses makes Medicaid look far less undesirable. People adapt. If they’re affluent, they employ “key money” to buy their way into the nicest facilities by paying privately for a while, and then, after a few months, they flip the legal switch to get Medicaid.

Such people don’t talk about how they solved the long term care problem. They’re not proud of it. So the word doesn’t get out. But the damage is done. Another generation is desensitized to long term care risk and cost and the crisis of long term care financing continues.

That’s why the public remains in denial about long term care risk and cost despite the omnipresent warnings. That’s why LTCI is hard to sell. That’s why long term care service and financing problems are self-perpetuating.

And that’s why nothing will change until we break the cycle by changing Medicaid eligibility rules either to exclude middle class and affluent people entirely or to require them to pre-pay or repay Medicaid for their care from their home equity. Only then will they perceive sufficient reason to plan early and insure for long term care.

In the meantime, LTCI carriers, distributors and producers should realize there is more to selling this product than getting sales and marketing right. They have to confront the broader economic and public policy context in which sales and marketing take place.

Stephen A. Moses
425-891-3640 smoses@centerltc.com
Stephen A. Moses is president of the Center for Long-Term Care Reform (www.centerltc.com). The Center promotes universal access to top-quality long term care by encouraging private financing as an alternative to Medicaid dependency for most Americans.

Previously, Mr. Moses was president of the Center for Long Term Care Financing (1998-2005), director of research for LTC, Inc., (1989-98), a senior analyst for the Inspector General of the U.S. Department of Health and Human Services (1987-89), a Medicaid state representative for the Health Care Financing Administration (1978-87), a HHS Departmental Management Intern (1975-78), and a Peace Corps Volunteer in Venezuela (1968-1970). He is widely recognized as an expert and innovator in the field of long term care.

Moses can be reached at the Center for Long-Term Care Reform, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109

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Updated, Monday, May 24, 2021, 10:40 AM (Pacific)

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LTC E-ALERT #21-017: LTC NEWS AND COMMENT

Home care providers declare 2021 ‘year of healthcare at home’ while they acknowledge acute workforce shortage
Interest In Life Combination Products Shifts
Drinking any amount of alcohol causes damage to the brain, study finds
COVID-19 in Nursing Homes: Most Homes Had Multiple Outbreaks and Weeks of Sustained Transmission from May 2020 through January 2021
Bracing For The Coming Long-term Care Tsunami
How to opt out of coming payroll tax
Pandemic means 41,000 fewer senior housing units could be needed: analysis
COVID Accelerates Shift to Private Skilled Nursing Rooms, Up 31% in 2020
The social contract for long-term care
Mor: Time to rethink U.S. nursing home landscape
HC2 Moves Closer to Selling Long-Term Care Insurance Unit
CMS issues guidance to states on how to use enhanced Medicaid HCBS funding from stimulus package
Top 11 Fastest-Rising Costs for Older Americans
Are You Prepared for the Staggering Cost of Long-Term Care?
New Guidance Could Make Long Term Care in the U.S. Worse (Guest: Stephen Moses)
New State Payroll Tax Will Provide for Long-Term Care Insurance
Skilled Nursing Facility Surveys Skyrocket During Pandemic
Social Security Sees Slowdown in Retiree Rolls Amid COVID Deaths

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Updated, Friday, May 14, 2021, 10:40 AM (Pacific)

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LTC BULLET: LTC CENTER STANDING GUARD

LTC Comment: Private LTC financing is constantly under attack by scholars representing financially well-endowed think tanks, advocacy organizations, government agencies and by the media that broadcast their message. We’ve fought back on your behalf for 23 years. Here’s how, after the ***news.***

*** CORRECTION: Our last LTC Bullet: 2021 ILTCI Virtual Conference Wrap Up, published Friday, April 30, 2021, contained an error. Vince Bodnar will chair the conference in 2022 with Steve Schoonveld as co-chair. We thank and honor both, and the 2021 Chair Barry Fisher, for their commitment to the profession. ***

*** VIDEO REPLAYS of the 2021 Inter-Company Long-Term Care Insurance Conference sessions are available through June. See LTC Bullet: 2021 ILTCI Virtual Conference Wrap Up for a selection of session reviews to help you pick which ones to watch. In the meantime, check out Anders Sorman-Nilsson’s keynote address here and find the individual session recordings here. ***

LTC BULLET: LTC CENTER STANDING GUARD

LTC Comment: The Center for Long-Term Care Reform celebrated our 23rd year last April. In those two decades, we’ve analyzed, criticized and rebutted just about every study, report, article or commission that attacked private funding or promoted compulsory government financing of long-term care. We’ve identified ideological bias by scholars, think tanks, government agencies, advocacy organizations and the media. We’ve denounced their confirmation bias when they ignore evidence contradicting their preconceptions. We’ve refuted fallacies in their logic. Today’s LTC Bullet includes links to 100 LTC Bullets we’ve published taking these groups and individuals to task:

Media: Consumer Reports, National Public Radio (NPR), Public Broadcasting System (PBS), New York Times, Wall Street Journal, Washington Post, Dow Jones MarketWatch, Health Affairs

Organizations: National Academy of Elder Law Attorneys (NAELA, Medicaid planners’ trade association), AARP, Alzheimer’s Association, Leading Age (formerly American Association of Homes and Services for the Aging, LTC provider trade association)

Thinktanks or companies: Kaiser Family Foundation (KFF), Georgetown Long-Term Care Financing Project, Urban Institute, Avalere, SCAN, Employee Benefit Research Institute (EBRI), Bipartisan Policy Center (BPC), Center for Retirement Research at Boston College, LTC Collaborative, Milken Institute

Government Agencies and Commissions: Government Accountability Office (GAO), the Medicaid Commission, the Long-Term Care Commission, Congressional Research Service (CRS), Congressional Budget Office (CBO), Medicare Trustees, Centers for Medicare and Medicaid Services (CMS), Washington State’s “Long-Term Services and Supports Trust Act (Trust Act),” Medicaid and CHIP Payment and Access Commission (MACPAC)

Scholars: Ellen O'Brien, Peter Kemper, Harriet L. Komisar, Lisa Alecxih, Timothy Waidmann, Korbin Liu, Judith Feder, Richard W. Johnson, Joshua Wiener, Mark Merlis, Lee Shirey Thompson, Anne Tumlinson, Christine Aguiar, Molly O'Malley Watts, Diane Rowland, David G. Stevenson, Marc A. Cohen, Janemarie Mulvey, Sudipto Banerjee, Richard G. Frank, Neale Mahoney, Howard Gleckman, Leora Friedberg, Wenliang Hou, Wei Sun, Anthony Webb, Gretchen Jacobson, Shannon Griffin, Tricia Neuman, Karen Smith, Norma B. Coe, Melissa M. Favreault, David C. Grabowski, and Stephanie Kelton.

Speaking truth to power is a mostly thankless job. Please review the efforts we’ve made to correct attacks on you for supporting responsible long-term care planning. Browse the following LTC Bullets’ titles and teasers. Pick a few to download and read in full. Then, if you find value in our work, please support the Center for Long-Term Care Reform by becoming a member or making a contribution. Contact Steve at smoses@centerltc.com or 425-891-3640 to join our fight for rational long-term care financing policy.

LTC Bullets Standing Guard

(The following Bullets are listed in chronological order beginning with the earliest. If you prefer to start with the most recent issues and controversies, just scroll to the bottom and work your way backwards.)

LTC Bullet: More Bad Advice from Consumer Reports, November 15, 1999
LTC Comment: Individuals and organizations most critical of private long-term care insurance are usually the ones lining their pockets with Medicaid estate planning profits.

LTC Bullet: They're Baaaack . . . Medicaid Planners Rise Again, April 25, 2001
LTC Comment: Ever since Congress and then-President Bill Clinton nailed them with mandatory estate recovery (OBRA '93), "Throw Granny in Jail" (HIPAA '96) and "Throw Granny's Lawyer in Jail" (BBA '97), the Medicaid estate planning attorneys have laid low. No longer.

LTC Bullet: "Nursing Home Care Virtually Free For Life," Tuesday, May 7, 2002
LTC Comment: What follows is a transcription of excerpts from a professionally produced and mass-distributed videotape from a man and his company who promise lifelong free long-term care.

LTC Bullet: Medicaid Planners Confess, October 2, 2003
LTC Comment: A survey intended to exonerate Medicaid planners is actually the strongest indictment of artificial impoverishment yet.

LTC Bullet: Where There's Smoke, There's Fire, May 18, 2005
LTC Comment: Our critique follows of "Medicaid's coverage of nursing home costs: Asset shelter for the wealthy or essential safety net?" by Ellen O'Brien of the Georgetown Long-Term Care Financing Project.

LTC Bullet: LTC Bombshell, June 29, 2005
LTC Comment: Results from a poll of state Medicaid programs by a Congressional office with subpoena power may blow the lid off a carefully orchestrated cover-up of Medicaid planning abuses. Lists, summarizes and analyzes studies that pooh-pooh Medicaid planning.

LTC Bullet: Alzheimer's Association Shortsighted on LTC Financing, July 6, 2005
LTC Comment: The Alzheimer's Association's public position on Medicaid reform and long-term care financing is a classic example of how good intentions invite unintended consequences.

LTC Bullet: GAO on TOA Underwhelms, October 5, 2005
LTC Comment: The Government Accountability Office's new report on Medicaid asset transfers asks the wrong questions, uses the wrong data, and so provides few helpful answers.

LTC Bullet: NPR Defends Medicaid Planning, Attacks Messenger, January 4, 2006
LTC Comment: National Public Radio's "All Things Considered" show took a slanted swipe at responsible Medicaid reform yesterday while defending Medicaid planning abuse. Hear the broadcast version, followed by our side of the story.

LTC Bullet: Georgetown, GAO and Kaiser: The Bermuda Triangle of Good LTC Policy, January 25, 2006
LTC Comment: LTC doubletalk is not the exclusive province of Medicaid planners and AARP lobbyists. Otherwise often reliable analysts get long-term care policy wrong too.

LTC Bullet: LTC Victory, February 2, 2006
LTC Comment: The Deficit Reduction Act of 2005 passed yesterday curbing Medicaid abuse and unleashing LTC Partnerships. Celebrate? Sure. But don't take a victory lap until you consider what can go wrong.

LTC Bullet: Microsimulate This!, March 28, 2006
LTC Comment: The fundamental things apply as time goes by--like "garbage in, garbage out." Take for example a recent Inquiry article that estimates future public and private LTC costs. Our critique follows.

LTC Bullet: Kaiser Cover-Up Continues," April 27, 2006
LTC Comment: Urban Institute "scholars," aided and abetted by the Kaiser Family Foundation, employed an underhanded straw man argument in the foundation's latest unsuccessful attempt to debunk the impact of Medicaid planning abuse.

LTC Bullet: Medicaid Commission Errs by Omission, August 9, 2006
LTC Comment: The national Medicaid Commission, appointed last year to fix Medicaid (including its dysfunctional LTC component) before the welfare program implodes financially, is way off track.

LTC Bullet: The DRA Bullets, January 9, 2007
LTC Comment: Two Medicaid planners lament the DRA we praised and defended in 21 LTC Bullets last year. Their whining, our replies plus links to all the DRA Bullets follow.

LTC Bullet: Take Georgetown's Facts With a Big Grain of Salt, February 15, 2007
LTC Comment: Three new "fact sheets" from the Georgetown LTC Financing Project are spoiled by ideological bias. This Bullet critiques Medicaid's Spousal Impoverishment Protections (February 2007) , Medicare and Long-Term Care (February 2007) and National Spending for Long-Term Care (February 2007)

LTC Bullet: GAO AWOL on LTC TOA, May 2, 2007
LTC Comment: The Government Accountability Office has again displayed stunning miscomprehension of the Medicaid eligibility, Medicaid planning and transfer of assets issues.

LTC Bullet: GAO on LTCI Partnerships, June 20, 2007
LTC Comment: GAO drops the ball again on the issues of Medicaid, long-term care financing and private insurance.

LTC Bullet: Medicaid Estate Recover. . .up, July 5, 2007
LTC Comment: Medicaid estate recovery could be a major source of non-tax revenue for the ailing LTC safety net for the poor, but AARP would tie the program in bureaucratic knots.

LTC Bullet: The NY Compact: Analysis, Conclusions, and Recommendations, July 31, 2007
LTC Comment: Is the New York Compact the future of long-term care financing or the last gasp of an old, failed system?

LTC Bullet: Hillary Clinton on LTC, January 3, 2008
LTC Comment: Presidential candidate Senator Hillary Clinton has promised a cornucopia of LTC benefits if elected. Would our service delivery and financing system be better or worse if she delivered? We comment.

LTC Bullet: WSJ Attacks LTCI, We Respond, February 26, 2008
LTC Comment: Today's front-page Wall Street Journal article criticizing long-term care insurance was as one-sided and misguided as a similar piece published by the New York Times also during a major industry conference. We reply, same day, as follows.

LTC Bullet: NYT Asks Medicaid Planner to Advise on LTCI, July 18, 2008
LTC Comment: The New York Times added insult to injury by inviting a notorious Medicaid planner to advise readers on private long-term care insurance. We respond.

LTC Bullet: We Critique WSJ on Medicaid Planning, January 16, 2009
LTC Comment: Within 24 hours, we replied to a Wall Street Journal column that promoted Medicaid planning for long-term care.

LTC Bullet: New LTC Financing Study Uninterpreted or Misinterpreted, March 24, 2009
LTC Comment: A new report on LTC financing by Avalere Health was reported uncritically by many and mistakenly by one source.

LTC Bullet: LTC Clueless, May 26, 2009
LTC Comment: Consumers' denial of LTC risk and cost is nothing compared to the naiveté of professionals who should know better.

LTC Bullet: KFF Misfires on LTCI, June 9, 2009
LTC Comment: A new study of private long-term care insurance published by the Kaiser Family Foundation fails in the usual, predictable ways. Details follow.

LTC Bullet: How Much More Wrong Can They Get It?!, July 21, 2009
LTC Comment: Another "report" from the usual suspects gets long-term care advice dead wrong.

LTC Bullet: We Reply to Washington Post Blast at Federal LTCI, August 14, 2009
LTC Comment: Read our reply to the Washington Post's "Federal Diary" criticism of Federal LTCI's premium increase.

LTC Bullet: CLASS Consciousness, October 21, 2009
LTC Comment: To hear Kaiser Family Foundation speakers, the CLASS Act is a no-brainer for passage and implementation. We offer a wake-up call.

LTC Bullet: The Enemy of LTC Truth, February 8, 2010
LTC Comment: Albert Einstein said "Unthinking respect for authority is the greatest enemy of truth." See how this principle applies to long-term care.

LTC Bullet: New LTCI Report: Research or Propaganda?, June 8, 2010
LTC Comment: Is a newly updated report on LTC insurance by the Congressional Research Service really research, or CLASS Act propaganda? You decide.

LTC Bullet: CLASSless Journalism, September 21, 2010
LTC Comment: Reporting only the CLASS program's dubious benefits and none of its inevitable detriments is negligent journalism. An example follows.

LTC Bullet: Friendly Fire in the Class War (LTC Embed Report #6), September 22, 2011
LTC Comment: Steve Moses's Congressional testimony on Wednesday was well-received except for an ad hominem attack, "friendly fire" in the class war. An explanation, witness testimonies, and a video of the hearing follow.

LTC Bullet: Moses Replies to Congressman's Questions (LTC Embed Report #11), October 13, 2011
LTC Comment: House Oversight and Government Reform Healthcare Subcommittee ranking member Danny Davis (D, IL) asked me some questions in writing after the 9/21 hearing on "Examining Abuses of Medicaid Eligibility Rules." His questions and my answers follow.

LTC Bullet: Nursing Home Spend Down Misunderstood and Late-Breaking LTCI Industry News, July 20, 2012
LTC Comment: A recent EBRI study that claims nursing home stays are wiping out Americans’ savings is based on a fallacy and mistaken. What’s really happening?

LTC Bullet: SCAN the LTC Possibilities, April 5, 2013
LTC Comment: SCAN is a fountainhead of ideas about long-term care financing, but are those ideas potable? We analyze.

LTC Bullet: What Should the LTC Commission Do?, June 21, 2013
LTC Comment: How should the LTC Commission prioritize its work and recommendations? Some thoughts follow.

LTC Bullet: Medicaid Spend Down that Isn't and Why it Matters," July 19, 2013
LTC Comment: Claiming “transitions” to Medicaid are evidence of catastrophic LTC asset “spend down” misrepresents the truth and should be publicly recanted. We answer who, what, when, where and why.

LTC Bullet: The LTC Blind, October 25, 2013
LTC Comment: “There are none so blind as those who will not see.” That proverb applies perfectly to a recent column about long-term care by the Urban Institute’s Howard Gleckman.

LTC Bullet: PBS’s 6 LTC Tips Miss the Mark, November 8, 2013
LTC Comment: What’s wrong with the conventional wisdom about how to resolve America’s long-term care crisis?

LTC Bullet: WSJ Misfires on LTC Insurance, February 14, 2014
LTC Comment: We dissect and correct a misbegotten column in the Wall Street Journal.

LTC Bullet: Who Gets Medicaid LTC?, March 28, 2014
LTC Comment: Is Medicaid a long-term care safety net for the poor, the middle class, even the affluent, all of the above? Questions remain, but answers abound.

LTC Bullet: Will Bipartisan LTC Policy Be Better?, April 11, 2014
LTC Comment: Heads up! Consensus is coalescing around a bipartisan long-term care financing solution. Let’s be hopeful, but wary.

LTC Bullet: GAO Punts on Medicaid Planning, July 3, 2014
LTC Comment: Another GAO report underplays dramatic findings about the role, methods and extent of Medicaid planning and loose LTC eligibility rules.

LTC Bullet: Entitlement Double Talk, August 1, 2014
LTC Comment: To read the major media coverage of the 2014 Medicare Trustees report, you’d think things are looking up for the 49-year-old mega-program. Think again.

LTC Bullet: CMS Health Expenditure Data Mask LTC Cost Growth, September 5, 2014
LTC Comment: CMS actuaries’ estimates of health expenditures for 2013-2023 downplay the big story, snowballing LTC costs. We explain.

LTC Bullet: Does Medicaid Solvency Matter?," October 31, 2014
LTC Comment: CMS says Medicaid solvency “is not an issue.” We beg to differ.

LTC Bullet: IG Report Reveals Costly Medicaid Enforcement Failures, November 21, 2014 LTC Comment--The USDHHS Inspector General reports that many states failed to implement mandatory provisions in OBRA ’93 and/or DRA ’05 designed to discourage abuse of Medicaid LTC benefits. Details follow.

LTC Bullet: IG Report Reveals Medicaid Estate Recovery Weakness, December 5, 2014
LTC Comment—A newly released USDHHS Inspector General report shows few states do Medicaid estate recoveries well resulting in a potential annual loss, we infer, of $2.5 billion. Details, numbers, and why it matters follow.

LTC Bullet: How Careless Economists Boosted LTC Risk, December 12, 2014
LTC Comment: We explain how Boston College economists generated poor long-term care planning advice that national media unfortunately amplified.

LTC Bullet: When Bad Models Happen to Good People, January 16, 2015, guest Bullet by Stephen D. Forman
LTC Comment: We offer the last word on that Boston College fiasco of poor scholarship and bad economics.

LTC Bullet: Holding CMS’s Feet to the Fire, February 6, 2015
LTC Comment: When a federal agency fails to enforce the law hurting the poor it’s supposed to help and costing tax payers billions of dollars, bureaucratic heads should roll. Background and details follow.

LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources, July 24, 2015 LTC Comment: New numbers, better than the old numbers, but they require further clarification and explanation.

LTC Bullet: Pandora Meets Rosy Scenario in CMS Projections, July 31, 2015
LTC Comment: The aging demographic evils in Pandora’s “box” don’t find their way into CMS actuaries’ health expenditure estimates for the coming decade. Quotes and our comments follow.

LTC Bullet: Another LTCI Hit Job?, October 9, 2015
LTC Comment: What shall we make of this new attack on private long-term care insurance? Answers follow.

LTC Bullet: A New Revolution in Long-Term Care Financing . . . by Government, November 6, 2015
LTC Comment: Radical, disruptive changes in how government pays for long-term care are advancing rapidly. We provide background.

LTC Bullet: The Future of Long-Term Care Seen Through the Prism of History, November 13, 2015
LTC Comment: Big changes are afoot in government financing of post-acute and long-term care--changes that will rattle private LTC financing options as well. We cover the big picture.

LTC Bullet: The Arrogance of LTC Analysts' Elitism," December 4, 2015
LTC Comment: Arrogance, ideological bias and elitism spoil the recent research of abundantly endowed LTC analysts. We explain.

LTC Bullet: Three Cheers (But Two From the Bronx) for New BPC-LTC Recommendations, February 5, 2016
LTC Comment: The Bipartisan Policy Center’s new report on long-term care leads with LTCI (hear, hear!), but makes Medicaid even more tempting (boo!) and adds a new, expensive, mandatory government program (boo!) based on faulty premises. Our analysis and critique follow.

LTC Bullet: LTCI Defeatism, April 1, 2016
LTC Comment: LTC insurance leaders should not surrender to government-financed long-term care based on ideologically biased policy analysis grounded in misleading data and fallacious arguments. We say “Revolt!”

LTC Bullet: Losing Principles, April 29, 2016
LTC Comment: What’s happening to the basic principles of personal responsibility and self-reliance that validate private insurance? We reflect.

LTC Bullet: LTC at a Crossroads, June 3, 2016
LTC Comment: Long-term care financing policy is at a critical crossroads and may take a wrong turn. We explain.

LTC Bullet: How the Government Ruined LTC (and We’ll Fix It), June 10, 2016
LTC Comment: Government interference in the LTC marketplace since 1965 caused harmful unintended consequences that only clear analysis and bold action can fix.

LTC Bullet: Half a Century of Bad Medicaid LTC Policy, August 5, 2016
LTC Comment: Medicaid long-term care policy is a classic story of good intentions leading to unfortunate consequences.

LTC Bullet: Behind AHEAD, September 2, 2016
LTC Comment: The people and organizations advocating a new, compulsory, payroll-financed government program to fund catastrophic LTC expenses base their arguments on dubious sources and reasoning. Details follow.

LTC Bullet: How Fiscal and Monetary Malfeasance Will Ruin Long-Term Care, October 7, 2016
LTC Comment: Fiscal malfeasance ($20 trillion federal debt) enabled by monetary malfeasance (artificially low interest rates) bode ill for the economy and for Medicaid LTC financing. Here’s why and how.

LTC Bullet: Medicaid LTC Data Insights, October 14, 2016
LTC Comment: What’s happening with Medicaid LTC financing and why it matters.

LTC Bullet: What’s Wrong with Bundled and Value-Based LTC Payments? January 20, 2017 LTC Comment: Big changes are afoot in government financing of post-acute and long-term care--changes that will rattle private LTC financing options as well. We present the big picture.

LTC Bullet: Hoist with its Own Petard , April 28, 2017
LTC Comment: This Kaiser Family Foundation “Issue Brief” blows up its own argument. We explain.

LTC Bullet: The Broken Rhythm of Long-Term Care Reform, May 19, 2017
LTC Comment: Why did Medicaid long-term care eligibility reforms quickly follow economic recessions until the year 2000, but no longer? The answer follows.

LTC Bullet: Is it Really Hopeless to Reduce Medicaid LTC Costs?, June 23, 2017
LTC Comment: Kaiser Family Foundation researchers despair of reducing Medicaid LTC expenditures, but their “literature review” is incomplete, misleading and risky.

LTC Bullet: Home Equity and LTCI Demand, June 30, 2017
LTC Comment: We explore the Professor Thomas Davidoff’s thesis that home equity “substitutes” for long-term care insurance demand and suggested instead that Medicaid’s large home equity exemption obviates LTCI demand by eliminating home equity’s liability for long-term care costs.

LTC Bullet: Medicaid, Home Ownership and Long-Term Care Financing, July 7, 2017
LTC Comment: Medicaid’s estate recovery requirement induces aging Americans to reduce home ownership, decrease home equity and set up trusts in order to qualify for Medicaid long-term care benefits.

LTC Bullet: Is it Spend Down or Medicaid Planning?, July 14, 2017
LTC Comment: A lot of what passes for Medicaid “spend down” in the scholarly literature is really Medicaid planning. We explain and give examples.

LTC Bullet: Have Your Cake Until It Eats You, March 23, 2018
LTC Comment: Americans want to have their cake (entitlements) and eat it too, but trends show this cake will eat our economy first. Scary evidence follows.

LTC Bullet: Retirement Confidence and Asset Spend Down, April 27, 2018
LTC Comment: Two new EBRI studies shed light on how workers/retirees’ expectations and behavior differ.

Feder Fantasy Fatally Flawed (Cohen Contribution Notwithstanding), May 4, 2018
LTC Comment: A new Feder/Cohen proposal would take long-term care out of the frying pan into the fire.

LTC Evasion, May 11, 2018
LTC Comment: We explain what LTC scholars evade and why.

Feder/Cohen Proposal Ignores LTC Problems’ Cause, May 18, 2018
LTC Comment: We explain how government intervention caused the dysfunctions in long-term care that Feder/Cohen seek to correct with more government intervention, including institutional bias, poor access and quality, excessive dependency on family caregiving, inadequate financing, and lack of insurance.

LTC Policy Blinders, May 25, 2018
LTC Comment: We explain why and how LTC policy analysts evade facts that contradict their predisposed positions in favor of compulsory government LTC insurance.

LTC Bullet: The New Fallacy of Impoverishment, June 29, 2018
LTC Comment: Government should declare success in the War on Poverty and eliminate policies that discourage personal responsibility and work.

LTC Bullet: How and How Much Medicaid Reduces Lifetime Medical Spending for Affluent Retirees, October 10, 2018
LTC Comment: Medicaid is welfare, so of course it reduces lifetime medical spending of the poor. But here’s evidence Medicaid radically reduces medical spending by the affluent, especially for those savvy enough to maximize “Medicaid planning.”

LTC Bullet: Amplify LTC Sanity, February 13, 2019
LTC Comment: In today’s echo chamber of irresponsible fiscal and monetary advocacy, a voice for responsible LTC planning and policy is more critical than ever. Join us!

LTC Bullet: Remember the Middle, Friday, May 10, 2019
LTC Comment: A recent Health Affairs article accurately assessed the plight of middle-income seniors whose resources will be inadequate to fund their senior living and long-term care. But the article proposed interventions that would exacerbate the problem.

LTC Bullet: Middle Market Mayhem, June 7, 2019
LTC Comment: LTC analysts, advocates, and providers are wringing their hands about the middle market’s future inability to afford senior living. We mitigate the problem and re-offer a 25-year-old solution.

LTC Bullet: Why Too Little Home Care?, June 28, 2019
LTC Comment: Why is home care so unaffordable and hence unavailable to so many? Two views follow: more government money or better directing what we already spend to encourage more private financing.

LTC Bullet: To Fix Long-Term Care, Redefine the Problem, September 27, 2019
LTC Comment: Recent research suggests long-term care is not the gargantuan crisis previously thought. So, private sector solutions, including LTC insurance, may be far more effective than commonly believed.

LTC Bullet: The Battle Lines Are Drawn, October 25, 2019
LTC Comment: Two sides advocate diametrically opposite solutions for the long-term care crisis. Who are they? What do they want? Which will win? Answers follow.

LTC Bullet: Where Long-Term Care Went Wrong and How to Fix It, January 3, 2020
LTC Comment: Officials and analysts attack the symptoms of long-term care dysfunction (exploding costs, nursing home bias, and poor quality) without addressing the cause (easy access to Medicaid for consumers and strong incentives for states to maximize federal Medicaid matching funds). Everything follows from that observation.

LTC Bullet: How Not to Redesign Long-Term Care, June 12, 2020
LTC Comment: Do we really need more government money and regulation for long-term care, as this Forbes columnist insists? Analysis and better choices follow.

LTC Bullet: The Crisis on Top of the Crises, July 17, 2020
LTC Comment: What could be worse than the current cataclysm of nursing-home coronavirus deaths? More of the same if we keep doing what caused them.

LTC Bullet: The Keystone Kops of LTC Insurance, October 9, 2020
LTC Comment: What happens when the Keystone Kops design a long-term care insurance plan? Answer: Washington State’s “Long-Term Services and Supports Trust Act (Trust Act),” enacted in 2019.

LTC Bullet: Modern Monetary Theory and Long-Term Care, October 23, 2020
LTC Comment: Finally, a solution for the long-term care financing crisis. Or not? Explanation follows.

LTC Bullet: Is Medicaid the LTC Solution or the Problem?, December 4, 2020
LTC Comment: Will more Medicaid funding and regulation help (short-term) and harm (long-term) America’s fragile long-term care system? Answers follow.

LTC Bullet: Spousal Impoverishment, Then and Now, January 22, 2021
LTC Comment: The myth that access to Medicaid LTC benefits requires impoverishment is pervasive. A dose of reality concerning spousal impoverishment specifically follows.

LTC Bullet: Social Insurance is an Oxymoron, February 5, 2021
LTC Comment: Insurance is individualistic, so “social insurance” is a contradiction in terms. Meaning and consequences explained.

LTC Bullet: The Key to LTC, March 19, 2021
LTC Comment: Solving the long-term care financing crisis isn’t so hard if you avoid ideology and take human nature into account. A better public/private partnership is an easy and available solution.

LTC Bullet: MACPAC Captured, April 2, 2021
LTC Comment: Signs in the Medicaid and CHIP Payment and Access Commission’s (MACPAC’s) estate recovery report point to its capture by the Medicaid planning bar.

LTC Bullet: Milken Groupthink Fumbles LTC Financing, April 16, 2021
LTC Comment: You might expect innovative ideas from the Milken Institute, but when it comes to long-term care financing, all you get is ideological retreads.

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Updated, Monday, May 10, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-016: LTC NEWS AND COMMENT

Alzheimer’s Pathology Linked to Diet
White House recognizes assisted living’s ‘critical importance’ as aging services provider
Americans Want Government To Help Them Age At Home, Buttressing Biden’s Medicaid Long-Term Care Agenda
Federal Long-Term Care Programs Get $1.4 Billion More
States’ 2020 Personal Income Growth Was Highest in 20 Years
Senior living preferred over nursing homes for long-term care needs, but home still rules: study
Researchers find many nursing home stays far too long, warn providers to become more efficient
Analysis Suggests Health Insurers Remained Profitable Across Markets Amid Pandemic in 2020
Genworth Plans for Return to Long-Term Care Insurance Sales
Bill to Boost RMD Age to 75 Up for First Vote Wednesday

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Updated, Monday, May 3, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-015: LTC NEWS AND COMMENT

As Medicare Advantage drives rate lower, fed-up CEOs embrace strategies that limit carriers’ influence
First they came for skilled care …,
COVID-19 Pushes Up Genworth Life Unit's Capitalization Level
The LTSS Trust has a new name. Meet the WA Cares Fund!
The Benefits of Working Longer
A Majority Of U.S. Consumers Lack Confidence In Stock Investments
Legislature delivers Washingtonians wins, losses and important health-care legislation to unwrap
Investing in private rooms may have prevented nearly a third of COVID-19 long-term care infections, deaths: analysis
How Lowering the Medicare Eligibility Age Might Affect Employer-Sponsored Insurance Costs
Aging services industry takes wait-and-see approach on infrastructure plan
Retirement confidence resilient despite pandemic
In-Home Care Providers Must Break Through Barriers to Handle More Long-Term Care Volume

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Updated, Friday, April 30, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: 2021 ILTCI VIRTUAL CONFERENCE WRAP UP

LTC Comment: This virtual version of the annual Intercompany Long-Term Care Insurance conference was an extraordinary example of electronic legerdemain. Some comments and session reviews follow. This content will be added to our “History of LTC Insurance Conferences.”

LTC BULLET: 2021 ILTCI VIRTUAL CONFERENCE WRAP UP

LTC Comment: The 2021 Intercompany Long-Term Care Insurance (Virtual) Conference is history. Organizers Barry Fisher and Vince Bodnar eased potential participants into the idea of a virtual conference with weeks of advanced notice and guidelines. They recruited sponsors for the overall meeting, for each track and even for each session. Virtual exhibitors were encouraged to sign and pay up. Somehow, Fisher and Bodnar managed to fund the effort, because beginning Tuesday, April 13, 2021, it kicked off successfully.

After an Opening General Session on the 13^th, two different educational sessions began on the hour each Tuesday and Thursday for three weeks from 12pm – 4pm EDT and ran for 50 minutes each, followed by 10-minute breaks. Find the agenda here. Sessions were recorded and are available to any and all through June 2021 using the password ILTCI*2021.

Here’s how to access those recordings: Open the ILTCIConf.org screen. Click “Schedule” on the navigation bar at the top of the page. Click the track name of the session you want to watch. Then find and click the session you’re looking for in the list of track sessions. Find and click the “Access Recording” button at the bottom of the session description. Fill out the information to identify yourself, click “I am not a robot” and you’re in … hopefully.

As might be anticipated with a complicated virtual conference, the outcome was not electronically flawless. The opening session was to be a talk by futurist Anders Sörman-Nilsson, who was actually in Australia speaking at 2am local time the next day. Interruptions and sound difficulties caused that session to be cancelled in the middle, but organizers expect a recording of it, done without the long-distance complications, will be available.

As your humble reporter was preoccupied with other matters during three days of the program, I asked some LTCI experts to help me provide reviews of the sessions they attended. I thank Claude Thau, Stephen D. Forman, and Honey Leveen for sharing their comments on several of the sessions. We decided not to attach names to specific session reviews in order to encourage frank commentary. Those reviews follow.

Session Reviews

Week One

Tuesday, April 13, 2021

Opening General Session

After a slight delay, Conference Chairman Barry Fisher opened the conference with the National Anthem followed by announcements, thank you’s, and sponsor appreciations. He said the meeting had over 1500 unique attendees (which later increased to 1700, then 2000!). He recognized the advisory committee and program/education committee, the professional team, and spoke of other ILTCI initiatives.

Robert Eaton, immediate past Chairman and CEO, thanked sponsors and exhibitors, introduced the conference’s new logo and the new “aging in place track,” concluding that he is more positive about the LTCI industry now than in a long time. We are “fulfilling our responsibility.”

Dennis Martin of One America introduced the opening session speaker, “virtual futurist” Anders Sorman Nilsson. But, as already mentioned, that didn’t go smoothly. We’re assured, however, that “Anders will be back for 2022.”

Speaking of 2022, Steve Schoonveld, next year’s Conference Co-Chair, announced where we’ll meet, hopefully in person: the Raleigh, North Carolina Convention Center. Vince Bodnar will Chair next year’s event.

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Session Title: Care Optimization and Best Practices to Streamline the Claims Process

Track: Management & Operations

Presenters: Adam Warner (UW Modernization for LTCi and DI at NYLIC, ex-Claims, awarner@newyorklife.com), Lucy Beiter (Manager, NYLIC LTCi Claims, lbeiter@newyorklife.com), Rita Bennett (rita.bennett@lfg.com), Char Hu, CEO (char@thehelperbees.com)

Comment: 90% of the audience for whom the question was relevant used nurse assessments and 2/3 used video in 2020 and are definitely likely or somewhat likely to continue to use it.

Recommendation: Treat the 80% expecting recovery differently from the 20% not expecting recovery

BEA = Benefit Eligibility Assessments are becoming more varied and customized.

Recertifications can be simplified if recovery is unexpected.

With facilities, some of the electronic substitutions during the pandemic did not help much because facility staff were overwhelmed.

Recommendation (view recording or not?): Maybe; there were no slides.

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Session Title: Seniors and Technology: A Paradigm Shift Toward Digitalization

Track: Management & Operations

Presenters: Laura Moore, Shannon Perschy, Becky Freeman, Christina Newbrough (Helper Bees; christina@thehelperbees.com)

Comment: Several sessions indicate that elders are embracing technology. John Hancock: authenticated, personalized website that allows a person to log on securely and upload a form which by ID is put directly into the queue. Electronic Visit Verification; electronic claims payments; consistent claims across lines; repatriated services that were done overseas. Start clients interacting digitally as soon as possible (premium, claim initiation). I can attest to JH’s excellent upgrade. A classmate’s wife told me how great it was that she could get on the system on the West Coast and work with an East Coast company so efficiently on her schedule. When I passed the compliment on to JH, they were elated because the system had just been released. Thrivent’s upgraded system sends alerts to staff and FUs to claimants during claim. Smart forms reduce displayed fields to those which are necessary. Thrivent learned (more quickly or wouldn’t have learned at all) about out-of-facility days, days paid by 3^rd parties, deaths, no licensed health care professional on-site (so need to do another assessment), etc. Thrivent initiated some efforts jury-rigging existing resources in order to test viability before seeking IT resource. Very important to test on a subset of claims.

Recommendation (view recording or not?): Definitely yes!

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Session Title: The Good and the Bad of The #1 Trend In The Life Insurance Industry

Track: Marketing

Presenters: Steve Cain (LTCI Partners), Ramona Neal (Living Benefit Review)

Summary: What You Don’t Know Can Hurt You And Your Clients.

Agenda
– #1 Trend Life Insurance Industry: LTC-Life Insurance Solutions
o LTC-Life Insurance Continuum
o LTC Riders
o Chronic Illness Riders
o The Risks with some Riders
o Critical Illness Riders
– How to Fish: Understanding what You’ve Sold and are Selling
– Regulation and Litigation
– Best Practices
– What’s Good and What’s Bad?

Comment: All riders are good, but are we adequately disclosing how they work? We need to talk about the riders; sales applications; client fit. People are selling policies they don’t understand. Need to make a study of what we are selling. Sometimes the ones that illustrate the best don’t have the best benefit. All the riders are good; it’s about managing expectations. Are we adequately explaining how they work? Read the fine print.

Recommendation (view recording or not?): Yes, good session as no one left early.

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Session Title: Existing Managed LTC Programs: What Makes Them Successful?

Track: Aging in Place

Presenters: Ali Ahmadi (Tcare), Sam Espinosa (Mercer), Mary Kaschack (National MLTSS Health Plan Assoc), Sanjit Puri (Moderator, Optum)

Comment: A panel of experts knowledgeable about LTSS programs shared their insights on what makes such programs successful. General overall view of benefits. Big changes in Medicare. What is health related? Benefits don’t have to be uniformly available. Medicare Advantage plans can choose to target benefits. But Medicare is still not LTC. Very limited. 72 hours per year. Title 19 not designed for this; Medicaid through waivers has had to adapt to provide these services. Expanded into categories of services not traditionally LTC. We are offering marriage counseling to a family about to break up. Far beyond traditional services. Pest control. Many MA plans starting to offer these new benefits. Driven by rebate dollars available to Medicare Advantage plans. Can they target these benefits to the people who need them most is critical question. These benefits are not short term, they’re chronic, permanent. Program pretty successful on the Medicaid side as compared to Medicare side. Very positive trend on the LTCI side, but not on the dual eligible side. Misaligned. Just because benefits available doesn’t mean they’re being used.

Recommendation (view recording or not?): Yes, very interesting. The government is moving more and more into providing LTC benefits and supportive benefits. For better or worse.

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Session Title: Modeling a Public Long-Term Care Program

Track: Actuarial

Presenters: Eddie Armentrout (Actuarial Research Corporation) absent, had baby, Chris Giese (Moderator, Milliman), Annie Gunnlaugsson (Milliman), Matt Smith (State of WA)

Comment: This session compared and contrasted actuarial modeling of public LTSS programs to traditional private standalone and hybrid benefits. The panelists used Washington’s LTSS Trust Program as a case study, providing background on the program as a whole, as well as on the methodology and assumptions used in performing feasibility and actuarial studies for the program. Common features of public programs: insurance, premiums, mandatory participation, limited benefit, financing perspective considered a tax on wages, for example; must pay specified number of years to be vested; long time horizons, 75 years typically; not true pay as you go programs; mismatch over time. Methodology and assumptions to model these kinds of programs. Similar to any insurance program. Look at population and analyze income needed to cover costs. Similar to private LTCI. Demography, morbidity and economic assumptions. How differ between private and public. Brand new programs. Demographic: fertility rate, mortality, migration when benefits not portable. Benefit trigger, some states considering more liberal or restrictive triggers. Continuance tables, how long stay on benefit. WA covering first year. Economic assumptions: payroll tax or premiums; payroll tax tied to wages so have to estimate those. Vesting requirement. Interest rate, mismatch between revenue and expenses emerges over time. Prefunding from vesting period, collect revenue but people haven’t vested in program yet. Interest earned on fund balance very important. Social Security Trustees report publishes interest. Treasuries, bonds, equities?

Question: What is public reaction? They rejected advisory and constitutional change to allow investment in equities. But the program goes forward anyway.

Recommendation (view recording or not?): Yes, actuarial science 101. Incredibly complex even at the high level they addressed in this session. Prompts the question: what could possibly go wrong with an actuarially complex government program dreamed up by politicians that the public has rejected twice in referenda.

Same session; different reviewer:

Session Title: Modeling a Public Long-Term Care Program

Track: Actuarial

Presenters: Chris Giese, Milliman; Matt Smith (Department of the Actuary, State of Washington); Annie Gunnlaugsson (Milliman)

Comments: Very interesting session about issues related to pricing a public LTCi program, in particular the WA LTC Trust. Accessing Milliman’s report to the WA LTC Trust provides a lot more detail. Cost varies: CA feasibility range was .3% to 20% payroll taxes

WA average cost =.0058*median = $375/year. $64,655.

Recommendation (view recording or not?): Yes, but accessing the report may be more valuable, depending on your interest.

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Thursday, April 15, 2021

Session Title: Industry Best Practices on Common Terminology

Track: Legal

Presenters: Rita Bennett (Lincoln), Allison Brown (Bankers/CNO), Matt Morton (LTCG), Mike Rafalko (Cozen O’Conner), moderator Josh Falco (Lincoln)

Comment: Thought-provoking presentation focusing on common words and phrases found in LTC contracts, viewed from various points of view (including claims, legal, and risk management). Among the most problematic terms have been “care,” “continual supervision,” and “approved.”

Recommendation (view recording or not?): Yes

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Session Title: Changing Selling Techniques for Changing Times

Track: Advisors and Agents

Presenters: Bridget Collins, Denise Gott, Alecia Barnette, Angie Hughes

Comments: I noticed the following tips:

To protect your Zoom meeting from failure, have wireless back-up in case you lose network connection and be close to your router (if multiple people in the house are on-line, the one closest to the router is most likely to maintain connection).
For client convenience, provide webinars on demand and have an appointment-setting tool (I’d add for your convenience too!)

Recommendation (view recording or not?): Good vibrant speakers. If you want to hear more, sure, listen to the recording.

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Session Title: The COVID-19 Effect: Claims and Underwriting Processes – Part 1

Track: Underwriting and Claims

Presenters: Karen Smyth, Break-Out session leaders: Allison Brown, CNO; Arlene Hendricks, Lincoln Financial Group; Charles Jenkins, CNA; Robyn Narveson, LTCG; Cassandra Prebis, OneAmerica; Natalie Schreiber, CNO; Joan Stear, Wilton Re; Jennifer Vey, LTCG

Comments: LTCi companies stepped up to the pandemic crisis, as 87% of the people answering a poll indicated that their company made claims administrative exceptions and most did so beyond regulatory mandates. Note that this is not the same as saying “87% of the insurers.”

They used Alternate Plan of care, extracontractual letters with Reservation of Rights, and other methods. They used virtual and telephonic assessments and a greater reliance on medical records, instead of on-site assessments

Recommendation (view recording or not?): It was a great session! Exciting that the insurers made such concessions! Definitely worth hearing.

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Session Title: Adverse Decisions: Considerations for Determining Risk Tolerance

Track: Claims and Underwriting

Presenters: Steve Brogan (Moderator, Faegre Drinker), Drinker; Julie Belknap, Continental; Cassandra Prebis, OneAmerica; Jon McElhaney, Northwestern

Comments: Standard advice regarding managing the claims process and inherent risk therein.

The Chronic Illness certification is completed by a HO Licensed HealthCare Professional 50% of the time and by the insured’s physician 37% of the time, but PCPs often document the existence of a chronic condition rather than “chronically ill” as per §7702(b). 87% of the polled people responded that someone could need substantial activity if they needed the care a majority of the time or intermittently.

Recommendation (view recording or not?): Generally standard advice. If that is of value, this session is excellent.

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Week 1 Wrapup (April 13 and 15) as reported by conference organizers

ILTCI attendee registrations are now over 1,700! The Opening Session kicked off with a welcome from the 2021 Conference Chair, Barry Fisher. He expressed appreciation to the 2020 Conference Chair, Robert Eaton, for his mentoring and leadership throughout the year. In case you missed the Opening Session, here are a few other highlights:

As a result of the technical issues during the keynote address, ANDERS SÖRMAN-NILSSON is recording his complete keynote address and it will be posted on the ILTCI website, hopefully next week.
The 2022 ILTCI Conference will be March 20-23, 2022 in Raleigh, NC. The Conference Chair is Vince Bodnar and Co-Chair is Steve Schoonveld.
We hosted 15 individual sessions this week which were recorded and are available at www.iltciconf.org for on-demand viewing until July 1. Check the track pages on the website for recording links.

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Week 2

Tuesday, April 20, 2021

Session Title: Long Term Care Marketing, a 360 View

Track: Marketing

Sponsor: National Peace Officer and Firefighters Benefit Association

Presenters: Claire Akin (Indigo Marketing Agency), Monica Breeding (Fig Marketing), Tom Riekse (Moderator, LTCI Partners)

Comment: Very good, practical info on how to build and develop a LTCi practice – amazing how differently marketing is done today than when I started.

Recommendation (view recording or not?): Yes

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Session Title: The Claims, Compliance and Legal Challenges of CCRCs, Continuing Care Retirement Communities

Track: Legal

Presenters: Gina Besz (Triplus Services), Angie Forsell (Moderator, LTCG), Daniel Lambert, Kenneth Pfaehler (Dentons)

Comment: It was actually “intelligible” and more engaging than I expected. They used interactive polling, which is always more fun. Definitely, some good information. I hope they’ll repeat both of the above sessions at our next in-person ILTCI – hopefully 2022.

Recommendation (view recording or not?): Yes

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Session Title: Fraud: Emerging Trends and Innovative Solutions

Track: Legal

Presenters: Kim Martin, LFG; Kim Dionosio, KRM Legal Group, former environmental attorney who lives in FL; Jeff Ferrand, Attorney, LTCG VP Fraud; Christie Conway, Assuricare

Comments: Disasters create new opportunities for fraud; greater financial pressure makes people more desperate hence likely to commit fraud and justifications people can use to make themselves comfortable committing fraud and also make it harder to expose because of travel limitations, lack of access to medical documents, etc. Accommodations (mandatory or voluntary by insurer) opened up fraud and litigation risks. For example, Alaska required paying for family care; NJ made it easy for people to re-license after extended gap. It is good to have multiple vendors in case some vendors can’t perform.

Recommendation (view recording or not?): Yes.

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Session Title: Tax Advantages of LTC Planning

Track: Marketing

Presenters: Rick Stewart (Crump); David Gresham (OneAmerica), Channing Schmidt (Securian Financial)

Comments: Seemed standard but thorough for me.

Recommendation (view recording or not?): If you are expert, “No”. If you are not expert: “Absolutely.”

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Session Title: Critical Tools for Crisis Planning

Track: Advisors & Agents

Presenters: Elizabeth Moss, Producer’s Choice Network; Cathy Sikorski (NAELA)

Comments: How likely to people think they, their spouse, their parents or people in general are to need LTC in the future?

Recommendation (view recording or not?): Could help you organize your thoughts about this topic. Very good speakers.

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Session Title: The COVID-19 Effect: Claims and Underwriting Processes – Part 2

Track: Claims and Underwriting

Presenters: Karen Smyth; Joan Steer; Arlene Hendricks; Charles Jenkins; John McElhaney (NW); Allison Kusel (GNW, Claims)

Comments: Restoration of Benefits is being requested more now because of temporary discontinuation of service. Fewer visits to doctor during pandemic may mean less medical info available for future applications. What if insurer allowed [a neighbor] to provide care during pandemic and the care recipient is happy, doing well and not wanting to disrupt his/her caregiving situation. But the current care was covered only as a temporary accommodation? Now what?

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Thursday, April 22, 2021

Session Title: LDTI and Regulatory Updates on LTC Standalone and Hybrid Products

Track: Actuarial and Finance

Presenters: Linda Chow, EY, FSA, MAAA, Kevin Healy, New York Life, FSA, MAAA, Doug Reilly, CNA, CFA, CPA

Comment: Broad review of half a dozen regulatory updates (e.g., PBR, 7702 changes), leading into discussion of “long duration targeted improvement” (LDTI) accounting standards, followed by discussion of management reporting with emphasis on “rollforwards” and “remeasurement.” (I can’t say more than that: this was so far over my head as to make me feel dumber after the hour. I’m normally able to keep up, but this was specialty stuff…)

Recommendation (view recording or not?): Honorably recuse myself.

Same presentation; different reviewer:

Session Title: LDTI and Regulatory Updates on LTC Standalone and Hybrid Products

Date and Time: Thursday, April 22, 2 pm

Track: Actuarial

Presenters: Linda Chow; Doug Reilly, CNA: Kevin Healy, NYLIC

Comments: Valuation discount rates are decreasing causing higher required reserves and cash values, hence higher prices (surrender charges higher at young ages, lower at old ages).

Principle-Based Reserving also increases reserves because must hold higher of:

Traditional type of reserves based on prescribed values for variables

Alternative future scenarios, using insurer experience if credible.
The interest rate for MEC and corridor calculations has dropped from greater of (4%, rate guaranteed in contract) to (2%, rate guaranteed in contract). If this lowers the interest rate in the calculation, the MEC premium cap increases and the Death Benefit factors go down, which are both good.

CA AB1209 requires notice of impact of taking ADB, loan or withdrawal.

MT lifted its unisex mandate, Kevin thinks.

Recommendation (view recording or not?): Very good content. Worthwhile.

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Session Title: How to Communicate with Policyholders

Track: Management and Operations

Presenters: Beth Acerbo (MetLife), Jodi Anatole (Moderator, Endeavour Consulting), Andy Freedman (Assured Allies), Jessica Loesing (Faegre Drinker), Sharon Reed (LTCG). I don’t remember Jodi having been there.

Comments: As a result of the pandemic, 62% would rather die than go to a nursing home.

Andy advises insurers to give gifts and wellness advice to policyholders to make their lives more comfortable. 95% still using paper based on poll taken.

Recommendation (view recording or not?): Depends on your needs, interest and knowledge of the subject.

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Session Title: Look What You Made Me Do – The Dilemma with Mortality and Morbidity Trends

Track: Actuarial & Finance

Sponsor: Sutton Actuarial

Presenters: Bob Yee; Andrew Dalton; Laurel Kastrup, PWC

Comments: Many actuaries presume that active life mortality improvement is geometric (it is lumpy based on societal factors), will stop in 10-20 years, that there is no disabled life mortality improvement and that morbidity improvement will stop in 5-20 years. Disabled life mortality improvement or morbidity improvement could lengthen or shorten claims, particularly depending on the cause of claim). Using first principles (multiple decrement assumptions) rather than a cost curve is a superior technique with greater flexibility and imparts more understanding; it reflects that reduced current incidence creates more later incidence. Reserves should be conservative relative to improvements; otherwise booking profits too soon.

Recommendation (view recording or not?): Outstanding!

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Session Title: Litigation Update

Track: Legal, Compliance, & Regulatory

Presenters: Sandy Jones (Moderator, Faegre Drinker), Amy Kline (Saul Ewing LLP), Angela Shire (MedAmerica)

Comments: Reviewed rate increase (Newman, DiRito, Gunn, Skochin, New Hampshire) and claims (Dallal) litigation. Explained types of claims issues and why difficult

Recommendation (view recording or not?): Yes! Super!

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Week 2 Wrapup (April 20 and 22) as reported by conference organizers

We are now up to 2,000 individual people viewing our sessions! This week we had 15 more fantastic sessions, here are a few highlights:

This week's sessions covered Actuarial & Finance, Marketing & Distribution, Legal/Compliance/Regulatory, Advisors & Agents, Claims & Underwriting, and Management & Operations.
Individual sessions were recorded and are available on the track pages under the Schedule tab at www.iltciconf.org for on-demand viewing until July 1.

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Week Three

Tuesday, April 27, 2021

Session Title: Aging in Place – Applications of Remote and Virtual Services

Track: Aging in Place

Sponsor: Active Daily Living

Presenters: Deana Bell (Milliman), Char Hu (The Helper Bees), John Palmer (Moderator, CNA) Kelly Prchal (Allied Virtual Care)

Comments: This panel discussion explored innovative ways companies are providing services to their policyholders and claimants virtually. Topics included pre-claim initiatives and on claim programs that can be conducted remotely to improve the insureds quality of life. Panelists come from different organizations utilizing technology to change the way care is delivered to help insureds sustain their independence and improve their quality of life. Hearing loss; virtual care concierge; adoption rate; engagement; tele-medicine (internet, chat, video, remote patient monitoring, provider to provider). Make expansions permanent? Not clear; fraud risk. Stranger danger. People getting more familiar with virtual option. How do you market this? Glacial pace before pandemic. Post Covid adoption.

Recommendation (view recording or not?): Yes.

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Session Title: Who is Selling What? To Whom, How, and Why? Results of the National Survey

Track: Marketing & Distribution

Sponsor: CLTC – Certification for-Long Term Care

Presenters: Barry Fisher (Ice Floe Consulting), Ronald Hagelman (Ice Floe Consulting), Liz Hoch (Oliver Wyman), Mike Smith (CPS Horizon)

Comments: This survey, “Who is Selling What? To Whom, How & Why?” illuminates the factors most relevant in selling LTC Insurance (Traditional & Hybrid Life + LTC) today. Over 600 Insurance and Financial Advisors shared their opinions and attitudes about the ideal client profile, product perceptions, best practices in starting the LTC planning conversation, what messages resonate with clients and more. Best source of respondents: broker, general agents. 85% over age 50; 80% over 15 years of experience. Majority focus on upscale markets. Most surveys focus on who buys and why, i.e. adverse selection. 2 or 3 key issues: advisors are aging out of the business. How to get younger agents involved? Only 12% called themselves LTCI specialists. Wider range of professionals selling LTCI now. What are they selling? Half, traditional; other half, combo products both suited. Over half said difficult to explain differences in products. Zero premium products were not usually a help to sell product. Need more training and education came through. Agents know what they sell but not necessarily what they don’t know. Who is the customer and why buying? 95% motivated by personal experience. Know cost don’t want to depend on family. Protecting income or leave legacy least important. Premium rate guarantees and inflation protection most important to consumers. Least important: return of premium and non-forfeiture benefits. Risk replacement or partial—partial more than ever. Who provides best training: general agents and insurance companies. High desire to go down market surprised surveyors. Products just not designed for that space. Key is enabling people to stay at home. Most important thing from survey: get in the door by including LTC planning in your retirement planning practice. Should be part of every conversation, individual or corporate. Always address risk mitigation. Go to LTCAuthority.com for copies of the survey results.

Recommendation (view recording or not?): Yes

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Session Title: Rate Increase Innovation: What’s Next in Mitigation, Communication & Implementation

Track: Legal, Compliance, & Regulatory

Presenters: Ralph Donato (LTCG), Afik Gal (Assured Allies), Nolan Tully (Moderator, Faegre Drinker), Amanda Weaver (John Hancock), Kristen Weil (Dentons)

Comments: Rate increases continue to be a necessary component of long term care insurance administration. As the need for rate increases has persisted, however, carriers and regulators have faced the continuing balancing act of servicing a primarily elderly client base while maintaining financial stability for blocks of long term care insurance. Increasingly, companies and regulators have looked at unusual and creative options that will permit rate increases, but allow policyholders mitigation options that might be suitable for them. This session examined the current regulatory environment around rate increases and the options offered by carriers as part of the regulatory approval process. Focus on the future, not the past. Many blocks will need premium relief in the future. Buyouts are an innovative option. Enhanced non-forfeiture. Freeze and drop. NAIC task force. 70% of individuals accept rate increases. Creative options, pushing limit of what accepted: cash buy out increasing interest. Lawyers cringe; actuaries like. Hybrid buy out, none so far. Policy reformation, structural change to the policy to mitigate rate increase. Annual re-rate option; push from some in industry; some regulatory interest, but supplanted by NAIC task force. Many complications. Need clear disclosures. Case study described to identify how a company might come up with a menu of mitigation options.

Recommendation (view recording or not?): Yes.

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Session Title: The WISH Act: Addressing the Financing and Regulatory Needs Within LTC Public/Private Solutions

Track: Legal, Compliance, & Regulatory

Presenters: Peggy Hauser (PwC), Steve Schoonveld (Moderator, Lincoln Financial Group), Tom Suozzi (NY State)

Comments: This session discussed the implications of a proposed federal catastrophic long-term care program, the WISH Act. The session focused on the benefit to consumers, the financial soundness of the proposed program and the regulatory steps necessary to achieve the desired public/private insurance program goals. Average income of 65 year old; guessed $65,000. Median annual income for 65 year old: $55,000. Didn’t give actual until later; could not follow. Confusing what the point was of this query. Pick two ADLs and don’t do them. Can your spouse actually help you? Intense level of need requires personal care. Congressman Suozzi on WISH. Trained as lawyer and CPA; mayor; county position; ran for Governor; Congress, third term. His parents had LTCI but most people can’t afford it. Medicaid cannot support it; just not enough money. Fewer caregivers available: more older people, fewer adult children. Only have access to Medicaid if you are broke; cottage industry to qualify people artificially. Others really spend down. Need better solution. You pay .25% of income from employee and .25% from employer to create a LTC insurance fund, $30B a year for catastrophic insurance plan. You take care of your own needs for 1 to five years depending on your wealth. Fed gov’t provides catastrophic coverage, $3600 per month. Private sector will come in and provide insurance for shorter time up front. Either buy private insurance for first years or have family members take care of you or use your own funds. Willing to listen to others. Good news this is part of the conversation. Biden proposes $400B; he’d like to apply some of that to this program. Need to educate people. Dramatically reduce Medicaid costs. (NB: Be very dubious of that statement.) Heavy lift to create a payroll tax. Lots of demand for more payroll taxes. Nobody wants to pay for anything. Peggy Hauser: what could private sector do within WISH. Fill gaps. Cover costs over $3,600 per month. Could reinvigorate the group LTCI market. WISH Act would be mandatory, so very broad, but there will be people not covered, including those already retired. Suozzi: opt out option?

Recommendation (view recording or not?): Yes, but keep your eyes open and your skepticism sharp. Session offered zero critical perspective, only supportive comments on this important program.

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Thursday, April 29, 2021

Session Title: Tools & Tech to Boost Productivity and Your Bottom Line

Track: Advisors & Agents

Presenters: Matt Essick (The Ensight “Tell A Story” Solution), Ken Leibow (InsurTech Express), Bill Nash (Lincoln Financial Group), Mike Pepe (Proformex)

Comments: Technology is advancing faster than we adapt. The latest apps, software and tech developments that can help you be more efficient, educate your clients, close business and run a more successful practice. Proformex presentation more an ad for company than objective information. Power of visuals through virtual compared to phone calls. Interactive marketing tools. Better experience, more efficiency, bring in new clients. Animated visuals. Tools to deliver LTC information critical now as people are ready to listen. How to reach out to existing clients about new products. All about visual story telling. Everything is online nowadays. Firms are delocalizing; following clients when they move; reaching out geographically. Need tools to tell product stories. Need a hybrid digital model; tools to become more effective; drive better client communication. Covid is changing LTCI distribution forever, hybrid in persona and virtual. Good content in the Q&A part of this session.

Recommendation (view recording or not?): Maybe, especially if you’re interested in the products of the presenters’ companies.

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Session Title: Uninsurable Doesn't Mean the End of the Sale/Relationship

Track: Advisors & Agents

Presenters: Carroll Golden (Moderator, NAIFA), Tafa Jefferson (Amada Senior Care), Shelley Giordano (Mutual of Omaha), Dan Mangus (Senior Marketing Specialists)

Comments: Don’t lose a client, and by extension, the family of a client, who is uninsurable. There are services, products, and tools to use with clients at the point of need. Understand the options available for you to help your client see you as the problem solver and not as part of the problem. What role can Medicare play? Is the home the buffer asset to fund care and/or sustain premium and preserve the retirement portfolio? Is finding a service to help navigate necessary care needs the answer they want to hear? Options related to Medicare supplements and Special Needs Programs. Lots of programs available even up to quite a lot of income. Slimby. Alphabet soup means there’s more Medicare does than you may realize. Lots of noncountable resources allowing Medicaid eligibility. Email Dan Mangus for links to all these sources. Many free publications from Medicare. Hard to tell people “we charge for our home care.” Hate to say “I can’t help you.” So we try to find funding solutions to help people age in place. Huge believers in LTCI. Tools if uninsured and uninsurable. Care coordination. Need holistic approach. Focus during pandemic from institutions to home care. Transitions are challenging. Medicare pays for home health, very limited in scope, but not for assisted living or memory care. Home care not covered by Medicare; that’s a “pay for.” VA Aid and Attendance and homebound benefit. PACE program for dual eligibles. Do you own your own home? MoO does reverse mortgages; home as a LTC funding solution. HELOCs require monthly payment and were cancelled during the Great Recession. Use to buy LTCI. But if coverage denied, other options. HECM line of credit. Bad media, but problems fixed. FHA insured.

Recommendation (view recording or not?): Yes, but expect it will raise many more questions than can be answered without a lot of personal research.

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Session Title: Legal and Regulatory Considerations for Aging in Place Programs

Track: Aging in Place

Presenters: Fred Andersen (Minnesota Department of Commerce), Hugh Barrett (Prudential), Charlie Philbrook (Moderator, John Hancock), Nolan Tully (Faegre Drinker)

Comments: Explored some of the key regulations that influence aging in place services and how regulators are reacting to the emergence of activity in this space. Lots of regulator interest in range of issues. State-specific regulation is complicated. Aging in Place industry changing fast, but measured approach within LTCI. Rebating is a regulatory concern more than any other. Rules recently changed. Insurers permitted to offer services not specified in the insurance contract if related to the coverage and fit into 9 specified categories. Exception to the anti-rebating law. Not meant to prohibit wellness programs. State by state adoption process. Discrimination. If have wellness program dependent on tech ability, is it unfair to less tech savvy beneficiaries. Could Aging in Place services compromise tax status? Many benefits to beneficiaries, but are there claims cost savings? That will decide the future of these benefits. These issues are complications but not show stoppers.

Recommendation (view recording or not?): Yes if you have a need to know and are new to this topic.

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Session Title: Remote Work and Business as Usual

Track: Management and Operations

Presenters: Matt Capell (Moderator, LTCG), Paula Johnson (LTCG), Julie Kirby (sp?), John Hancock

Comments: How do you manage key LTC functions in a COVID environment? Many employees and key functions are now working and taking place in home offices and dining room tables across the world. We are working anywhere but the office. What did we learn in the shift? What will those key functions look like in the coming months or years? Series of polling questions allowing participants to vote. Work situation before pandemic? Full time in office, 60%; hybrid, 26%; all at home, 14%. If hybrid, how often in office each week? 3 to 4 days per week most prevalent answer. Q3: Has your company set a return to office date? If so, when? 54% still undetermined. Q4: How does company accommodate work from home equipment and supply? 72% computer monitor, etc. most common. John Hancock has a comprehensive program to train and support remote workers. Big question how people adapt and perform in remote environment. Need to adjust expectations? How to measure performance. Need consistent way to measure work wherever it is done. New metrics? Phone availability? Communication. Technology, JH provided basic equipment to employees; guidance and guidelines. Step by step instructions on how to set up. 20 megabits connectivity needed. Telephony cloud based. Wireless headsets. Digital transformation. 24 hour access; chat bots. Policies, wild, wild west. Working remotely, managing remotely. Work from home contract? What are working hours? Strict or flexible. Child care. Work force expectations. Privacy, security, avoid kitchen table.

Recommendation (view recording or not?): Yes, very interesting.

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Updated, Monday, April 26, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-014: LTC NEWS AND COMMENT

Why Would A 50-Year-Old Want To Join Medicare?
Biden Should Look Beyond Medicaid to Expand Long-Term Care
Non-covered losses and steep rate increases: New report issues bleak outlook for provider insurance
Moving fast and changing every minute’: COVID-19 brings increased policy attention to long-term care
Sleeping less than 6 hours a night in midlife raises risk of dementia 30%, study finds
How to Get Long-Term Care in Place for Aging Family Members
UPDATE: Not Aware of the Washington State Long-Term Care Program? – Employers Take Notice and Act Quickly
How Could $400 Billion New Federal Dollars Change Medicaid Home and Community-Based Services?
Biden rescinds Medicaid waiver benefiting 300,000 receiving home care
Ransomware ‘bull’s eye’ grows, clouding telehealth’s rise in long-term care
Biden's infrastructure plan reinforces elderly care failings
Insurance State Guaranty Updated Levels Posted by Long-Term Care Insurance Association

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Updated, Monday, April 19, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-013: LTC NEWS AND COMMENT

Diminished capacity creates new investment risk
What Biden’s $400B Plan to Shift Long-Term Care Home Could Mean for Nursing Home Operators
COVID-19 Fogs Long-Term Care Claim Forecasts: ILTCI Virtual Conference
Healthy lifestyle may reduce odds for prostate cancer in men at high risk
Fixing Nursing Homes: A Fleeting Opportunity
The Gifts of Dementia with Author Judy Cornish
Biden Seeks $400 Billion to Buttress Long-Term Care. A Look at What’s at Stake
State Regulators Post LTC Insurance Rate Review Draft
John Oliver Looks Into the Long-Term Care Industry

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Updated, Friday, April 16, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: MILKEN GROUPTHINK FUMBLES LTC FINANCING

LTC Comment: You might expect innovative ideas from the Milken Institute, but when it comes to long-term care financing, all you get is ideological retreads. We explain after the ***news.***

*** TRUST ACT NEWS: We have big news about the state insurance program to fund long-term care that the Milken Institute and a bevy of study groups in recent years have hung their hopeful hats on. Stephen D. Forman of Long Term Care Associates reported yesterday that: “the Washington State House concurred with the amendments passed by the Senate, approving SHB 1323 by a final vote of 58 – 39. Now that it moves to Governor Inslee’s desk for signature, we can safely call it a “done deal”—including the new opt-out deadline of November 1^st, 2021. That’s a big deal because it means Washingtonians have one last chance to escape the Evergreen State’s oncoming long-term care straightjacket by purchasing real LTC insurance protection in the private market. Let the fire sale begin! ***

*** ILTCI CONFERENCE NEWS: The 2021 Intercompany Long-Term Care Insurance Conference kicked off on Tuesday, April 13. Its unique virtual format this year worked well, enabling 1500 participants to track information-rich presentations on a wide range of topics, but not without some electronic glitches. The keynote speaker, who signed in from Australia at 2am the following day, couldn’t complete his talk. I monitored four hours of break-out sessions on which I’ll report in a LTC Bullet after the conference concludes. I’ve also asked some LTCI experts to report on sessions they attend. We’ll bring you their feedback as well. Kudos to organizers Barry Fisher of Ice Floe Consulting and Vince Bodnar of Oliver Wyman and the teams they recruited to design and implement the program. Four more days of the conference remain:

Tuesday, April 20th, 12pm – 4pm ET
Thursday, April 22nd, 12pm – 4pm ET

Tuesday, April 27th, 12pm – 4pm ET
Thursday, April 29th, 12pm – 4pm ET

If you haven’t already, register and attend this extraordinary, free resource here: https://iltciconf.org/sessions-at-a-glance/. Show your appreciation for the program’s sponsors by visiting their online exhibits and considering their products and services. ***

LTC BULLET: MILKEN GROUPTHINK FUMBLES LTC FINANCING

What went wrong? Following are quotes from the Milken Institute’s “New Approaches to Long-Term Care Access for Middle-Income Households” followed by our comments.

Milken: “In November and December 2020, the Milken Institute … brought together a highly engaged group of experts from government and academia, as well as health care, insurance, long-term care delivery, senior housing, technology, and finance. Long-term care is a complicated issue, and many experts, organizations, and government entities have been working for decades to develop better ways to address this need.” (p. 2)

LTC Comment: There is a reason why groups of all sorts have studied long-term care ad nauseam for decades unsuccessfully. Brought together to summon and balance many different perspectives, such groups can never agree on anything beyond marginal variations from conventional wisdom. The conventional wisdom is that government must do something. The right approach is instead to ask and explain why the problems exist before proposing to add more government funding and regulation, which may, arguably, have caused or contributed to the problems in the first place. Read our Medicaid and Long-Term Care for that analysis.

Milken: “The access, delivery, and financial challenges are too vast for either the private or the public sectors to shoulder alone.” (p. 2)

LTC Comment: Agreed. But we already have a public/private approach to LTC financing. It is supposed to work like this: People pay their own way until they can’t and Medicaid picks up the difference. That doesn’t work, you say? Well, the right answer is to fix it, not to impose a compulsory new government program burdened with another insolvent “trust fund,”

Milken: “But middle-income households cannot qualify for Medicaid without spending down their assets to meet the strict income limits.” (p. 4)

LTC Comment: This is the false premise that dooms Milken to invalid conclusions. Most large assets, including nearly all home equity, seniors’ biggest resource, are exempt for determining Medicaid LTC eligibility. Non-exempt assets are easily converted to exempt status. Excess income must be applied to the cost of care, but that’s a relatively small co-insurance to pay in exchange for receiving expensive long-term care at Medicaid’s discounted rates. Estate recovery is easily evaded and MACPAC recently proposed to hobble that program further. Medicaid is a time-delay trap that anesthetizes the public to LTC risk and cost until a care crisis occurs and then ameliorates the otherwise catastrophic financial consequences. That is the real reason long-term care is in the mess it’s in. Again, see Medicaid and Long-Term Care.

Milken: “In 2010 the Affordable Care Act (ACA) established the Community Living Assistance Services and Supports (CLASS) Act, which would have provided a federally administered and voluntary long-term care insurance (LTCI) program. Ultimately, however, lawmakers deemed the program financially untenable and repealed it in 2013.” (p. 5)

LTC Comment: Why did CLASS fail? Advocates say because it was voluntary. So what they want is a program that is mandatory, that removes the freedom of the marketplace and substitutes the compulsion of government. That’s a Faustian bargain, the wages of which will come due when profligate public spending ends in spiking consumer inflation.

Milken: “Beginning in 2022, Washington will fund its mandatory program through a payroll tax of 58 cents for every $100 of income for all W-2 workers in the state; self-employed workers can participate if they choose.” (p. 5)

LTC Comment: So all rally around Washington State’s new program, but look what that leads to …

Milken: “And in November 2020, voters rejected a referendum to expand the types of investments available to the program’s trust fund to include private equities. As a result, the trust fund investments remain limited to corporate bonds and certificates of deposit. These restrictions will cause the current level of payroll tax to be inadequate for funding the program in the long term, according to a study by Milliman.” (p. 6)

LTC Comment: So, we not only have to force people to participate in government-mandated LTC insurance, we have to risk their “trust fund” by investing it in private equities that are vulnerable to collapse in value. Such a government gamble is likely to leave the Washington State program no better off than the Social Security and Medicare “trust funds” which contain nothing but federal IOUs.

Milken: “A recent AP poll shows that 67 percent of respondents had done little to no planning for LTC, and 57 percent mistakenly believe that Medicare will cover their LTC costs. According to Vanguard, in 2019, the average 401(k) account balance for those 65 and older was $216,720, and the median was $64,548.20. These amounts are wholly inadequate when one considers that costs rise proportionally to the complexity and duration of care, quickly exhausting the personal savings of individuals with severe and extended care needs.” (p. 6)

LTC Comment: Wouldn’t you think Milken, et al., would wonder why most people don’t plan for long-term care, when the risk and cost is so high, the media badgers them incessantly that they’ll lose their life savings if they don’t plan, and they’re “quickly exhausting” their personal savings when “severe and extended care needs” occur. The answer is that people would plan if they were suffering those catastrophic consequences, but they’re not. There is no evidence of widespread catastrophic LTC spend down. That’s why the Milken report cites none.

Milken: “Over the past 15 years, the number of LTC insurers in the market dwindled from over 100 in 2004 to about a dozen in 2018. This is attributed in part to inaccurate actuarial assumptions on older policies and the high levels of losses that insurers sustained. (p. 6)

LTC Comment: LTC insurance carriers didn’t get all their actuarial assumptions correct, but that was not all their fault. The Federal Reserve forced interest rates arbitrarily and artificially to near zero making it impossible for carriers to get the return on reserves they reasonably expected. Medicaid made access to expensive long-term care available to middle class and affluent people after the insurable event occurred obviating demand for the product. Bottom line, government interference in the LTC insurance marketplace is the bigger cause of its dysfunction.

Milken: “Most important, Lab participants noted, there are no current complementary public and private LTCI solutions.” (p. 11)

LTC Comment: That is not true. As mentioned above, there is a public/private solution in place. This is it: Medicaid for the indigent, home equity spend-down for the middle class, and private insurance for the upper middle class and affluent. The problem is that by exempting home equity from LTC risk and cost, and by allowing generous eligibility with many elastic loopholes, Medicaid has short-circuited a system that could work very well. I explain that system in “LTC Bullet: The Key to LTC” and I provide a full explanation of why and how most analysts evade the reality of Medicaid’s perverse incentives that discourage responsible long-term care planning in Medicaid and Long-Term Care.

Milken: “As we stand in early 2021, however, COVID-19 has decimated state budgets, making it more difficult to secure funding or the political will to raise the taxes necessary to build state-level public long-term care programs.” (p. 11)

LTC Comment: All the more reason to look for private sector solutions that build on the Medicaid LTC program for the needy that is already there. The government has no money other than what it borrows or prints. Tax revenues cover less than half of federal spending, according to the US Debt Clock. When the cost for that profligacy comes due in the form of inflation, the idea government can fund big new programs for long-term care on the backs of taxed out consumers will be even more far-fetched than it is already.

Milken: “Because the Lab focused on middle-income access to affordable LTC, the discussion does not extend to Medicaid coverage of LTC.” (p. 13)

LTC Comment: It is beyond bizarre that people who call themselves experts are unaware that Medicaid is the primary payer for expensive long-term care not just for the poor but for the middle class as well. That fact is well-established in the academic literature.

Milken: “As noted, participants agreed that a private funding source would be most expedient and politically feasible to conduct the demonstration. Many argued that the regulatory approval needed for a CMS-sponsored project would present too many constraints.” (p. 17)

LTC Comment: That is a tacit acknowledgement that government won’t help; in the end, we’ll have to rely primarily on the private sector. Better to do that sooner than later in order to save what can be saved of the Medicaid safety net for people in true need.

Milken: “Lab participants were in remarkable agreement that the public and private sectors should work together to design complementary insurance programs and products to provide coverage that would offer financial protection and reduce reliance on Medicaid.”

LTC Comment: The “solution” Milken proposes—front end compulsory public program, private wrap-around coverage, and Medicaid for the back end—won’t save Medicaid anything unless financial eligibility for Medicaid is changed to eliminate its easy access. People will use the government program, skip voluntary private LTCI, and go on Medicaid as they do now. Fix that so that Medicaid truly requires either spend down up front or pay back from estates, and you won’t need new government and private insurance programs. With the right incentives, the system will right itself.

Milken: “In addition, stakeholders reiterated that expanding Medicare to include LTC benefits could be a viable and efficient path forward.” (p. 25)

LTC Comment: That would be like adding deck chairs to the Titanic after the incident with the iceberg.

Milken: “The Lab recommends that policymakers first select their funding mechanisms and set funding levels, and then build out a benefit package to fit that budget.” (p. 27)

LTC Comment: Well that makes sense but it is certainly not what Washington State did. Its politicians came up with a rather meager benefit and they’re now struggling to find a way to fund it. Like the CLASS Act in that respect, it will likely fall of its own weight.

Milken: “In terms of financial solvency, policymakers must first determine if the program is prefunded or pay as-you-go. They will have to create a trust fund and ringfence those dollars. … As noted, Washington voters turned down a referendum in late 2020 that would have expanded investment options for the state’s LTC trust fund. Projections now show a major shortfall in the state’s future fund balances that state lawmakers will have to address in the coming years by increasing the payroll tax, reducing benefit levels, or putting the issue to voters again.” (p. 29)

LTC Comment: How do you “ringfence” a “trust fund” that must be filled with risky investments to have any chance for long-term solvency?

Milken: “One innovative approach to lowering premium levels and boosting uptake could be through the utilization of reinsurance. … Notably, many reinsurers left the LTC insurance market because of significant past losses.” (p. 31)

LTC Comment: The only “reinsurer” they’ll ever find for a program like this is the federal government’s power to tax, borrow, print and spend money citizens will repay through inflation in the end. To find the reinsurer of last resort, look in a mirror.

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Updated, Monday, April 12, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-012: LTC NEWS AND COMMENT

Biden Begins An Important, Much-Delayed, National Debate About Long-Term Care Reform
42% of older adults have unmet need for assistive bathing, toileting devices
Untracked COVID: Nursing home workers have died at twice the rate of hospital workers
CNAs virtually march on Washington, calling for higher wages, more recognition
COVID-19 Helped Long-Term Care Insurers in 2020: Fitch
Genworth Ends China Oceanwide Merger Agreement
Comment: Protect state’s new long-term care trust program
Diane Archer on the Medicare Advantage Racket
Study: Alzheimer's disease treatments could reduce the financial burden to U.S. state budgets
Senior housing wealth exceeds record $8.05 trillion
Washington long-term care insurance program, a ‘compliance nightmare,’ may face ERISA preemption

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Updated, Monday, April 5, 2021, 9:22 AM (Pacific)

Seattle—

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LTC E-ALERT #21-011: LTC NEWS AND COMMENT

A Revolution Is Underway in Alzheimer's, and It's Not All Good
Alzheimer’s origin story is about metabolism and lifestyle, scientists contend
Biden Proposes The Biggest Medicaid Home-Based Long-Term Care Expansion In History, But….
Home care providers laud Biden plan to invest $400B in HCBS
Nursing home residents have a little more time to spend stimulus checks before losing Medicaid
Dementia toolkit for clinicians underscores urgency of early diagnosis
Too Much Restaurant Fare Could Shorten Your Life
Shipping containers show promise as affordable senior living solution
‘We pretend to work and they pretend to pay’
MassMutual Sees Crisis Hitting Younger Adults Harder
The Nursing Home Vulnerabilities That Led to Disaster

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Updated, Friday, April 2, 2021, 10:24 AM (Pacific)

Seattle—

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LTC BULLET: MACPAC CAPTURED

LTC Comment: Signs in MACPAC’s estate recovery report point to its capture by the Medicaid planning bar. Evidence after the ***news.***

*** ILTCI’s VIRTUAL CONFERENCE will convene every Tuesday and Thursday from 12-4pm EDT starting April 13th. Conference Chairperson Barry Fisher and Co-Chair Vince Bodnar report participants should register individually for each session they want to attend or view the recording. All sessions are now open for registration! Click Here to register for the Opening Session and Keynote. Click the following links to register for individual sessions in each track.
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You can also click here to see all of the sessions at a glance and register from a single page. Registration and participation are free of charge! ***

*** CENTER SEEKS reporters. As we’ve done every year since the first Intercompany Long-Term Care Insurance Conference (2001 in Miami), the Center for Long-Term Care Reform intends to cover this one. But Center president Steve Moses is unavailable to monitor two days of the conference, April 15 and 20. So we’re inviting anyone who attends those two days to forward their notes on the sessions they attend to smoses@centerltc.com. Steve will integrate the material into as comprehensive a report on the 2021 virtual meeting as possible. But don’t limit yourselves to those two days; we welcome your coverage of all sessions on every day. Thanks for your interest and assistance. ***

*** MOVIE NEWS: Ross Schriftman’ “My Million Dollar Mom” film has been accepted into its sixth festival, the first in the Midwest: the Julien Dubuque Festival in Iowa. Ross also reports: “We received an excellence award from the Best Shorts Competition.” Congratulations to longtime Center member and supporter Ross Schriftman for bringing the importance of long-term care planning to the public’s attention in this creative and impactful way. ***

*** YESTERDAY, the Center for Long-Term Care Reform celebrated its 23^rd anniversary. No foolin.’ Check out our Membership Levels and Benefits and sign up today to help us carry on another year with the kind of trenchant analysis and public policy influence that follows. ***

LTC BULLET: MACPAC CAPTURED

LTC Comment: Medicaid is a means tested public assistance program. It is the primary funder of expensive long-term care (LTC) in the United States. Unlike other welfare programs, however, Medicaid does not have stringent income and asset eligibility limits for its long-term care benefit. Instead, so that people are not wiped out financially when stricken by chronic illness that requires formal long-term care, Medicaid lets them apply excess income toward their care, keep a substantial amount of assets including home equity, and receive care at Medicaid’s substantially discounted rate. The only quid pro quo is that recipients must agree to repay the cost of their care to Medicaid after they pass away, from their estates, unless that would create a financial hardship for a surviving dependent. This is a generous benefit, in essence a government-sponsored loan that allows people and their families to avoid the worst financial consequences of an uninsured extended care need.

But the Medicaid and CHIP Payment and Access Commission (MACPAC) wants to curtail Medicaid estate recoveries. MACPAC recently asked Congress to (1) make estate recoveries voluntary, (2) reduce recoveries from Medicaid’s rapidly expanding Managed Long-Term Services and Supports (MLTSS) programs, and (3) mandate “hardship” waivers for heirs when no financial hardship exists. Without estate recoveries, Medicaid’s generous long-term care benefit is a giant giveaway to people with money who could have paid some or all of the cost of their own care, diverting them from taking timely personal responsibility for LTC risk and cost.

Why would MACPAC seek to make estate recoveries less effective, reduce vital nontax revenue to Medicaid from estates, and reward the heirs of people who failed to save, invest or insure for long-term care with taxpayer-financed loan forgiveness? The answer is that the Commission was unduly influenced by the Medicaid estate planning bar, the lawyers who make their livings counseling affluent clients on how to circumvent Medicaid’s financial eligibility rules and evade estate recoveries. This conclusion is unavoidable upon close review, which follows, of MACPAC’s latest report to Congress.

Chapter 3 of MACPAC’s March 2021 Report to Congress on Medicaid and CHIP is titled “Medicaid Estate Recovery: Improving Policy and Promoting Equity.” It contains MACPAC’s recommendations to Congress regarding Medicaid estate recoveries. What follows are quotations from that chapter followed by our analysis in corresponding “LTC Comments.”

MACPAC: “We conducted nine interviews with AARP, the Centers for Medicare & Medicaid Services (CMS), estate recovery contractor HMS, retired elder law attorney Jason Frank, Justice in Aging, the National Academy of Elder Law Attorneys, the National Association of Medicaid Directors, and state officials from Oregon and Tennessee.” (p. 96)

LTC Comment: This list of interviewees is overweight with senior advocates (AARP, Justice in Aging) and Medicaid planning lawyers (National Academy of Elder Law Attorneys and Jason Frank), underweight in representation from nonpolitical experts on Medicaid estate recovery, and totally missing the front line Medicaid eligibility workers who have the most direct knowledge of how lawyers dodge Medicaid financial eligibility rules and evade estate recovery for their affluent clients.

MACPAC: “[C]ritics have noted that many people with sizeable wealth are able to legally shield assets from Medicaid estate recovery so these can be used for their benefit or passed on to heirs. This leaves the burden of estate recovery to fall primarily on those of modest means; this may also disproportionately affect people of color given disparities in household wealth.” (p. 73)

LTC Comment: Is that the fault of estate recoveries or of the “people with sizeable wealth” and their enablers who dodge estate recovery? This is a theme the Commission returns to over and over again as indicated by the following series of quotes. They have their argument backwards. Their legitimate complaint is with Medicaid planning abuse, not estate recovery. Estate recovery, by definition, reduces “disparities in household wealth” by returning protected wealth to Medicaid for the benefit of the disadvantaged of any color.

MACPAC: “The program mainly recovers from estates of modest size, suggesting that individuals with greater means find ways to circumvent estate recovery and raising concerns about equity.” (p. 73)

“As we heard in our interviews with stakeholders, individuals with greater awareness of estate recovery and resources may protect their assets from estate recovery while preserving Medicaid eligibility, allowing resources to be passed on to their heirs.” (p. 84)

“Because wealthier beneficiaries have found ways to protect assets so they can be passed on to their heirs, current Medicaid estate recovery policy places an unfair burden on beneficiaries with limited means, whose heirs would likely receive substantial protection from poverty or housing insecurity if they were able to retain an estate of even modest size.” (p. 92)

“Given that estate recovery likely only occurs for those without the resources and awareness to avoid it through estate planning, making it optional will help address equity concerns we heard in our interviews.” (p. 94)

“The Commission recognizes the growing financial pressures on the LTSS system, and that one way of addressing that pressure could be to explore mechanisms for people with substantial means to fund their own LTSS (e.g., private insurance) instead of seeking Medicaid. As noted above, during the Commission’s various discussions on estate recovery policy, a concern was raised about potential abuses of Medicaid planning activities that allow individuals to shield assets to gain Medicaid eligibility. Given that this is a wholly separate issue from estate recovery, the Commission agreed to defer further discussion of that issue for now and explore later whether there is a need for policy improvements related to eligibility.” (p. 96)

LTC Comment: The Commission has the cart before the horse. Medicaid planning abuse is not a “wholly separate issue from estate recovery.” It is the essence of estate recovery. Medicaid programs cannot recover what is not in an estate because it was divested prior to or during Medicaid eligibility. Most of the complaints the Commission raises about estate recovery—including low recovery amounts, recovery from small estates, and the inequity of the wealthy dodging the system while the less savvy pay up—would be eliminated by ending Medicaid planning abuse. The logical progression is to address the abuses of Medicaid planning before considering estate recovery. Instead the Commission seeks to hamstring estate recovery which is the only thing preventing Medicaid planners and their prosperous clients from getting off scot-free from long-term care responsibility at the expense of taxpayers and to the detriment of the actually needy people Medicaid is supposed to serve.

MACPAC: “Individuals who engage in Medicaid planning may be able to legally protect some of their assets, thus keeping assets that would otherwise deem them ineligible for Medicaid LTSS. One technique allowed in some states to reduce the length of the penalty period is known as the reverse half-a-loaf mechanism (GAO 2014).” (p. 80)

LTC Comment: Medicaid planning includes a wide range of techniques from very simple and common (the purchase of exempt assets to reduce countable wealth) to relatively sophisticated, somewhat less common methods (Medicaid compliant annuities and Medicaid Asset Protection Trusts) to mind-numbingly complicated, relatively rare strategies like the “reverse half-a-loaf” gimmick. Yet when the Commission gives an example of Medicaid planning, they offer the relatively obscure reverse half-a-loaf. That’s a very lawyerly way to divert attention and criticism from the much more common practices used to dodge Medicaid eligibility rules. For example, Medicaid planners give their clients long lists of things they can buy such as a more expensive home or car, household goods and personal belongings that convert wealth from countable to non-countable. This practice is almost universal, so a much more honest example of Medicaid planning than “reverse half-a-loaf.”

MACPAC: “Finally, Medicaid estate recovery policies are unique among federal programs. For example, many people who use LTSS are dually eligible for Medicare and Medicaid, yet as one advocate noted, the federal government does not pursue Medicare costs, which can also be quite high … .” (p. 84)

LTC Comment: MACPAC is confused about the nature of Medicaid and Medicare. Medicaid is public charity for which people become eligible based on their inability to afford health and long-term care. Medicare is social insurance which entitles people to benefits by virtue of their having contributed substantial payroll taxes over many years. Medicaid is welfare, unearned; Medicare is like private insurance which requires “premiums” and is thus “earned.” Medicaid has “recipients;” Medicare has “beneficiaries,” but MACPAC uses the incorrect term “Medicaid beneficiary” a dozen times in this chapter. MACPAC displays its confusion about these programs by referring everywhere in the report to Medicaid recipients as if they were beneficiaries, giving the former a status they have not earned. Obviously, Medicare beneficiaries who paid for the benefits they received are not required to repay the cost of their care from their as Medicaid recipients must, who received benefits and retained wealth without having to contribute toward the cost of their care.

MACPAC: “If an individual’s home equity is above the state’s limit, they will be deemed ineligible to receive Medicaid LTSS; for 2021, the federal minimum home equity limit is $603,000 and the maximum limit is $906,000 (CMS 2021). In 2018, 40 states used the federal minimum limit, nine states used the maximum limit, one state, Wisconsin, set a limit in between, and one state, California, had no limit (KFF 2019).”

LTC Comment: Prior to the Deficit Reduction Act of 2005, Medicaid had no limit whatsoever on home equity. Unfortunately, the limits cited here, reflecting inflation since the DRA ’05 was passed, are meaningless. Recent research concluded “we estimate that nearly the entire elderly population would meet the home equity threshold of 552,000 [as of 2015].” (Robert Hest, Giovaan Alarcon & Lynn A. Blewett (2020): Modeling Financial Eligibility for Medicaid Long-term Services and Supports, Journal of Aging & Social Policy, DOI: 10.1080/08959420.2020.1740638, p. 7) Without estate recoveries, this enormous real property wealth is eliminated as a source of funding for long-term care, funding for which the country is desperately in need. MACPAC realized this fact as the next quote indicates but ignored it anyway.

MACPAC: “During the Commission’s deliberations, a concern was raised that allowing states to discontinue estate recovery would essentially exempt all home equity below the minimum home equity asset standard (currently set at $603,000) used for eligibility determination. Ultimately the Commission decided that issues and concerns related to eligibility determination should be taken up separately from estate recovery.” (p. 93)

LTC Comment: According to Kiplinger, “homeowners age 62 and older have a record $6.5 trillion of ‘tappable’ equity.” Imagine the potential for that wealth to relieve the stress on America’s long-term care financing system. Yet MACPAC neither proposes mandating reverse mortgages to capture that potential on the front end nor defends estate recovery to put it to use on the back end.

MACPAC: “For heirs of these modest estates, estate recovery may remove a source of income or a residence which, if retained, would protect the heirs from poverty or housing insecurity. As multiple interviewees commented, this contributes to generational poverty and wealth inequality. The policy may also place an unequal burden on people of color, compounding existing wealth inequalities among racial and ethnic groups.” (p. 84)

LTC Comment: This makes no sense. How could requiring people to repay the cost of their care—from wealth Medicaid enabled them to protect while receiving assistance—contribute to “existing wealth inequalities among racial and ethnic groups?” It does exactly the opposite. It reduces the discrepancy in wealth between those who have (including clients of Medicaid planners) and those who have not (underprivileged racial and ethnic groups). Furthermore, it is not in the interest of the state to impose such unreasonable burdens on heirs as to drive them onto public assistance. Hardship waivers are liberally granted in such cases although relatively few are requested.

MACPAC: “Estate recovery recoups relatively little—only about 0.55 percent of total fee-for-service LTSS spending.” (p. 72)

LTC Comment: Every dollar Medicaid does recover from estates goes back into the system to help others in their time of need. MACPAC should focus on preventing leakage of sheltered wealth from estates prior to recovery. Instead the Commission seeks to cripple estate recovery itself. Besides, Medicaid estate recovery barely scratches the surface of the potential nontax revenue that could redound to the program, as MACPAC acknowledges in the next quote.

MACPAC: “Research suggests that states do not recover all they could—one study estimated states could have collected 5.5 times more from 2002 to 2011 if all their efforts matched those states that were most effective at estate recovery (Warshawsky and Marchand 2017).”

LTC Comment: It should be noted, however, that even more important than the actual dollar totals that could be collected is the potential cost avoidance from estate recoveries. Properly publicized and enforced so that the public knows that long-term care is a risk they must pay for later if they don’t plan and prepare now, responsible people will be far more likely than they are today to think about ways to plan, save, invest or insure for the risk. The public policy goal should be to divert people from dependency on Medicaid not to seduce them onto the program as elastic eligibility policies manipulated by Medicaid planners do now.

MACPAC: “Due to restrictions on Medicaid eligibility for LTSS, older adults covered by Medicaid have few assets. Three-quarters of Medicaid decedents had net wealth of less than $48,500.” (p. 72)

LTC Comment: MACPAC can’t have it both ways. Either wealthy people dodge Medicaid financial eligibility rules as the Commission frequently acknowledges or “restrictions on Medicaid eligibility” cause estates to be small. Both aren’t true. Estates are small not because stringent eligibility requirements force a lot of people to spend down into impoverishment. Such requirements don’t exist. Rather, most people on Medicaid had little to “spend down” in the first place. They are the people Medicaid is intended to serve. But Medicaid planners reduce their clients’ net worth by means of Medicaid compliant annuities, Medicaid Asset Protection Trusts, exempt asset transfers, and many other techniques of artificial self-impoverishment. It is those artificially poor Medicaid recipients who are being asked to pay their fair share.

MACPAC: “Fear of estate recovery may deter some individuals from seeking Medicaid LTSS, however, awareness and understanding of these policies by potential Medicaid beneficiaries is low.” (p. 72)

LTC Comment: This is another self-contradictory statement. How can “fear of estate recovery” deter seeking Medicaid if “awareness and understanding of these policies” is low? The solution to this quandary is to publicize the Medicaid estate recovery requirement more widely and often so everyone knows that relying on public assistance while retaining wealth requires a payback from the estate. With that knowledge, more people would take long-term care risk and cost seriously; save, invest or insure to offset or spread that risk; and end up in a better position to pay privately for better care than Medicaid can afford to provide. Especially, knowing that home equity is at risk for estate recovery would encourage more people to tap their home equity through reverse mortgages unleashing a massive new LTC funding source that is so desperately needed to relieve the fiscal pressure on Medicaid.

MACPAC: “In general, this study found that, with some exceptions, the assets of older adults enrolled in Medicaid are quite modest, with a substantial proportion of individuals having little to no wealth (Table 3A-1). At age 65 and older, the average net wealth among Medicaid decedents was $44,393. … the highest quartile held an average of $173,436 in net wealth.” (p. 81)

LTC Comment: Some exceptions? Well I guess so! A quarter of the sample had almost $175,000 in net wealth or more. It’s not clear at all why public policy should discourage recovery from such large estates, but that would be the effect of MACPAC’s recommendations The Congressional Budget Office (CBO) confirmed that all three of MACPAC’s proposals would increase federal expenditures and reduce resources available to Medicaid.

MACPAC: “CBO estimates that this recommendation [to make estate recovery voluntary] would reduce estate recovery collections from state Medicaid programs, which would increase federal spending on Medicaid. Federal spending would increase by $50–250 million per year between 2022 and 2030, less than $1 billion between 2021 and 2025, and $1–5 billion between 2021 and 2030.” (pps. 93-94)

“CBO estimates that this recommendation [to restrict MLTSS recoveries] would reduce estate recovery collections from state Medicaid programs, which would increase federal spending on Medicaid. CBO was unable to provide a specific estimate for us … .” (p. 94)

“CBO estimates that this recommendation [to base hardship waivers on estate values instead of financial hardship] would reduce estate recovery collections from state Medicaid programs and increase administrative costs, which would increase federal spending on Medicaid CBO was unable to provide a specific estimate for us … .” (pps. 95-96)

LTC Comment: No one besides MACPAC is looking for ways to reduce revenue to Medicaid for long-term care. The program is desperately short of funding and notoriously scrimpy in its reimbursement levels for long-term care providers. Low Medicaid funding is often associated in the literature with too few caregiving staff and serious access and quality problems. Medicaid needs more revenue, not less. What exactly does MACPAC recommend?

MACPAC: “Recommendations
3.1Congress should amend Section 1917(b)(1) of Title XIX of the Social Security Act to make Medicaid estate recovery optional for the populations and services for which it is required under current law.” (p. 72)

LTC Comment: Mandatory estate recoveries are critical to the Medicaid long-term care program’s success as explained in the “LTC Comments” above. The policy should affect everyone equally throughout the country in order to discourage excessive reliance on Medicaid for long-term care and to encourage personal responsibility and early long-term care planning. It was a great victory in the Omnibus Reconciliation Act of 1993 (OBRA ’93) to make estate recoveries mandatory in every state based on analysis and recommendations in a 1988 report of the Department of Health and Human Services’ Inspector General: Medicaid Estate Recoveries: National Program Inspection -- Office of Inspector General (1988). See also the related Transfer of Assets in the Medicaid Program: A Case Study in Washington State -- Office of Inspector General (1989). It would be a tragedy to reverse that progress in the way MACPAC recommends.

MACPAC: “3.2 Congress should amend Section 1917 of Title XIX of the Social Security Act to allow states providing long-term services and supports under managed care arrangements to pursue estate recovery based on the cost of care when the cost of services used by a beneficiary was less than the capitation payment made to a managed care plan.” (p. 72)

LTC Comment: Addressing capitation payments as in this recommendation is simplistic. Managed care organizations apply complicated formulas to determine what they charge for their fees and what they pay for all the medical bills, and then they must negotiate with the state. These are very large contracts based on actuarially determined risks and benefits. Insurance is inherently inequitable, because some people pay premiums and get no benefits, while other people pay the same premiums, but become sick, injured, careless or unlucky, and receive large benefits. That is how insurance spreads risk. Managed care organizations already rate the monthly capitation fee by the level of service of individuals. That protects beneficiaries who use relatively few services, but it also covers some potential risks in the same way as private insurance would. Requiring managed care companies to tally up their charges for all services they have paid adds another level of service and causes complications such as attending court hearings and responding to complaints of family members after death about what was paid to providers. This added duty would increase fees to the states. Determining the claim amount is a pre-death matter. Whether fee-for-service or capitation payments are used, the recovery should be for what Medicaid paid on the deceased recipients' behalf. If there are inequities in the system, then those should be resolved before death, because collecting only fee for service in a capitation system would add extra administrative burdens for the managed care organizations to prove up the claims to the heirs and to the courts.

MACPAC: “3.3 Congress should amend Section 1917 of Title XIX of the Social Security Act to direct the Secretary of the U.S. Department of Health and Human Services to set minimum standards for hardship waivers under the Medicaid estate recovery program. States should not be allowed to pursue recovery for: (1) any asset that is the sole income-producing asset of survivors; (2) homes of modest value; or (3) any estate valued under a certain threshold. The Secretary should continue to allow states to use additional hardship waiver standards.” (p. 72)

LTC Comment: Hardship waivers should relate to the financial condition of the qualified heir or dependent. They should have nothing to do with the value of the house, the estate, or an income-producing asset. What matters is whether the person requesting the hardship is actually facing financial hardship. Hardship waivers are rarely requested (1%) and should be routinely granted to avoid generational poverty. Nearly two-thirds of potential Medicaid estate recovery is not collectible at all. There is no effect on race or generational poverty if there is no recovery. Hardship waiver policies across the states are inconsistent as are other estate recovery policies. Seeking uniformity is not a reason to create more loopholes in the process. Hardship waivers should be based on dependents’ income, assets, and whether collection of the debt would deprive the person seeking the waiver of necessities like food, shelter, clothing, or medical care.

Closing LTC Comment: Medicaid estate recoveries help to sustain the Medicaid long-term care program and to discourage excessive dependency on it. MACPAC’s recommendations would line the pockets of Medicaid estate planning lawyers and indemnify their affluent client heirs for the long-term care costs their parents’ avoided at public expense. Is it any wonder that advice from “elder law attorneys” is cited repeatedly throughout this report but we hear nothing from Medicaid eligibility workers or estate recovery staff who know firsthand how desperately inequitable the system MACPAC proposes would be? Medicaid planners have the most to gain from curtailing estate recoveries. By not acknowledging, much less disavowing, this obvious conflict of interest, MACPAC destroyed the objectivity and credibility of its recommendations.

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Updated, Monday, March 29, 2021, 9:20 AM (Pacific)

Seattle—

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LTC E-ALERT #21-010: LTC NEWS AND COMMENT

Reverse Mortgages: 10 Things You Must Know
Genworth Names Chairman With Private Equity Deal Experience
Lawmakers might close a window on workers who would rather choose their long-term care plan than be taxed for a publicly financed one
Middle-Age Loneliness Linked to Alzheimer's Disease
Cutting Medicaid and SNAP Red Tape During the Pandemic
How to Walk the Medicare Advantage Communications Tightrope
Is Eating Processed Meat a Risk Factor for Dementia?
The Nation’s Fiscal Health: After Pandemic Recovery, Focus Needed on Achieving Long-Term Fiscal Sustainability
Implementation of a $15 federal minimum wage may help reduce turnover in long-term care: expert

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Updated, Monday, March 22, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-009: LTC NEWS AND COMMENT

Senator calls for mandatory Medicaid coverage of HCBS as nursing homes remain under fire on Capitol Hill
New Video Library
Long-Term Care Insurers Reveal Early COVID-19 Effects
2021 Poverty Projections: Assessing Four American Rescue Plan Policies
Study: Heart problems in young adulthood increase cognitive decline later
The Boom in Out-of-State Telehealth Threatens In-State Providers
Amazon Care reportedly to launch telehealth offering in all 50 states
Report: Adult family care homes deserve ‘closer look’ as viable alternative to nursing homes
MedPAC to Congress: Reduce payments to home health in 2022, expand telehealth beyond public health emergency
Nearly all seniors are now prescribed drugs tied to falls: Study
Advocates Release Nursing Home Industry Reform Proposals
Home Equity Continues To Soar
House expected to vote to delay start of Medicare sequester
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Can we keep Medicare from being insolvent by 2024?

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Updated, Friday, March 19, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: THE KEY TO LTC

LTC Comment: Solving the long-term care financing crisis isn’t so hard if you avoid ideology and take human nature into account. We explain after the ***news.***

*** DEBT BOMB, tick, tick, tick: Have you checked the US Debt Clock lately? The Treasury is hemorrhaging debt and the Federal Reserve is monetizing it apace. Federal spending this year is $8.0 trillion, but tax revenue is less than $3.5 trillion. How can that be? The Fed is printing the money, creating it out of thin air, to fund the difference between tax inflow and spending outgo. Bottom line, we’re pulling capital out of the productive economy to shower it on everyone and everything not producing anything. The result is more money and less to buy with it. As Elon Musk said: “If you don’t make stuff, there is no stuff.” Is this the elusive free lunch of Modern Monetary Theory? Hardly. The bill will come due in the form of inflation, the most pernicious tax that hurts the poor most of all. So much for the sanctimonious, hypocritical effusions of politicians and analysts who just want to “help people” by spending money the economy has not earned. ***

LTC BULLET: THE KEY TO LTC

LTC Comment: Long-term care services and financing in the USA are in a world of hurt. More and more people need care; families are stretched thin to provide free care; government programs are inadequate (Medicare) or pay too little (Medicaid) to ensure quality care in the most appropriate venue; private financing from personal spending, home equity or private insurance is extremely limited. The situation gets worse every year. Most analysts prescribe more government spending and regulation, but there is no evidence that vast increases in public spending and control have helped rather than worsened long-term care access and quality so far.

In fact, little has changed for the better since I first analyzed long-term care in the early 1980s. Then as now most people ignored long-term care risk and cost until they suddenly needed expensive care at which time the option of qualifying for Medicaid opened up for them. Generous income and asset eligibility rules eased the way onto public assistance creating a moral hazard for the aging infirm and a conflict of interest for their heirs. Pay privately and be wiped out financially or let Medicaid foot the bill and accept the downsides of limited choice, poor quality and mostly nursing home care. This was the Hobson’s choice, take it or leave it, most families faced. Of course, most families took the path of least resistance. They accepted public assistance, placed their elders in Medicaid nursing homes, and thus perpetuated the system that persists to this day.

As I began to study this problem in 1982, two paths to a solution opened up before me. We could change Medicaid LTC eligibility rules so they truly require impoverishment. That would remove the moral hazard and the perverse incentive to rely on public assistance, but it would be harsh and politically infeasible. The other way would be to keep Medicaid LTC eligibility generous, even make it more so, but require that assets preserved during a recipient’s lifetime while his or her care was covered by Medicaid should be recovered later, from the recipient’s estate, after no exempt relative still depended on them. The key to this “kinder gentler” solution was estate recovery. That would remove the incentive to ignore LTC risk and cost until confronted with the need and it would give seniors their dignity back. It isn’t welfare if you repay Medicaid.

I developed these ideas and documented them in a report for the HCFA titled “The Medicaid Estate Recoveries Study.” It is still available online here. Although HCFA did not publish this study, the USDHHS Office of Inspector General and the then General Accounting Office (now Government Accountability Office) both picked up on it and conducted their own national studies developing the theme. The Inspector General hired me out of HCFA so that I could conduct the IG study and write its report: “Medicaid Estate Recoveries: National Program Inspection.” It remains available on the IG’s website here.

Following are the Inspector General’s recommendations. They were designed to keep Medicaid long-term care eligibility readily available for people, even those with substantial wealth, who had insufficient cash flow to afford needed care and would be devastated financially if they had to pay up front. The quid pro quo for this public munificence was that costs expended by Medicaid would be recovered from each recipient’s estate. The goal of these recommendations was to awaken the public to the need to plan for long-term care, reward personal responsibility and early planning, prepare them to pay privately when and if expensive care became necessary, encourage the use of home equity conversion and private insurance, create a new nontax revenue source for Medicaid, and hence over time return Medicaid mostly to people in true need and make it a better, more well-financed program for all.

Now, please read the IG’s recommendations from “Medicaid Estate Recoveries: National Program Inspection.” The recommendations that later became federal law are bolded. I’ll return at the end with an “LTC Comment” to explain what happened: which recommendations became law and when, why the goal of saving Medicaid LTC by encouraging personal responsibility has failed so far, and what would need to be done to fix the long-term care services and financing crisis now.

The following is a verbatim quote from “Medicaid Estate Recoveries: National Program Inspection,” pages 50-53.

RECOMMENDATION #l--ELIGIBILITY AND TREATMENT OF RESOURCES

FINDING: Some HCFA, SSI, and state Medicaid policies promote retention of assets during Medicaid eligibility while others encourage precipitous liquidation of property with concomitant losses in value. Assets retained by recipients, in the absence of estate recovery programs, pass unencumbered to heirs at the expense of the taxpayers. Assets liquidated, sheltered or concealed to obtain eligibility are lost as a long-term care funding resource also. Incapacitated elderly people are sometimes financially abused by people who want to take their property, while at the same time, qualifying them for Medicaid nursing home benefits.

RECOMMENDATION: Change Medicaid rules to permit families to retain and manage property while their elders receive long-term care. Specifically: eliminate SSI "intent to return" rules as they apply to Medicaid long-term care recipients. Reinstate and broaden the "bona fide effort to sell" exemption. Allow Medicaid recipients to retain more income-producing property such as "contracts of deeds" or rental homes. Require agreement to liens and estate recoveries as a condition of Medicaid eligibility for people with property. Encourage State Medicaid programs to protect recipients and their property from financial exploitation through conservatorships, legal representation, and property management when necessary.

IMPACT: This policy would ease the financial impact of catastrophic long-term care costs on the elderly and their families, giving them time to cope with the problem. Total Medicaid costs would decline as estate recoveries increase.

RECOMMENDATION #2--TRANSFER OF ASSETS

FINDING: Despite almost universal State implementation of the TEFRA authority to restrict transfers of assets for the purpose of obtaining Medicaid eligibility, people are still able to give away property to qualify for assistance. This may be done by using the legal "loopholes" recommended in law journal articles or by deceit and concealment.

RECOMMENDATION: Strengthen the transfer of assets rules so that people cannot give away property to qualify for Medicaid. Specifically: improve State verification of property and transfers. Clarify that the "transfer of assets" restrictions apply to all property including that which is, or would be, exempt from eligibility determination. Expressly prohibit the transfer of property to spouses and other dependents which is permitted under current law. Extend the current 2-year "look-back" period to 5 or more years. Have HCFA publish regulations on transfer of assets.

IMPACT: More property will be retained by recipients to reimburse Medicaid for their cost of care after they and their dependents are no longer in need.

RECOMMENDATION #3—LIENS

FINDING: State Medicaid programs need a way to track property owned by recipients and ensure that it is not transferred or otherwise disposed before recovery of Medicaid benefits can be accomplished. Liens achieve these objectives most efficiently. While permitting liens, TEFRA placed so many qualifications on their use that only two states have employed liens to secure property for recovery of benefits correctly paid.

RECOMMENDATION: Require a legal instrument as a condition of Medicaid eligibility to secure property owned by applicants and recipients for later recovery. Specifically: Make liens, or some other form of encumbrance, a condition of eligibility so that the recipient’s interest in any property solely or jointly owned will inure, up to the cost of care paid by Medicaid, to the Medicaid program when neither the recipient nor dependents need the property further. Promote home equity conversion by using liens, "voluntary mortgages,” open-ended mortgages " and accounts receivable to let people extract their equities gradually while they receive assistance.

IMPACT: Mandatory liens would secure the State and Federal Government’s investment and permit Medicaid recipients to retain needed property while receiving highly expensive, but essential care.

RECOMMENDATION #4--ESTATE RECOVERIES

FINDING: Less than half of the States pursue Medicaid estate recoveries for benefits correctly paid. Of those which do, a few are very effective, but most are not. The HCFA and State Medicaid managements place little emphasis on retention of recipient property or estate recoveries. The TEFRA authority for estate recoveries, as for transfer of assets restrictions and liens, is only voluntary. Many State staff believe that TEFRA limitations hobble estate recoveries without safeguarding legitimate recipient interests.

RECOMMENDATION: Increase estate recoveries as a nontax revenue source for the Medicaid program while steadfastly protecting the property rights of recipients and their dependents. Specifically: Make estate recovery programs mandatory like other forms of third party liability. Provide technical assistance on estate recoveries, so that States can implement quickly and easily to generate an immediate cash flow for the Medicaid program. Promote awareness of the importance of real property ownership and estate recoveries for Medicaid funding. Allow estate recovery of benefits received before age 65. Permit estate recovery in cases of joint tenancy with right of survivorship. Require spousal and dependent recoveries upon death or seniority (of a minor child.)

IMPACT: Based on Oregon' s experience--even under current restrictive laws, regulations and policies--estate recoveries can recoup 5.2 percent of Medicaid nursing home costs, 5.0 percent of Medicaid payments to people over age 65, and 1. 7 percent of total Medicaid vendor payments. With enhanced legal authorities and greater programmatic emphasis, the contribution of estate recoveries to Medicaid’s program resources could be truly staggering.

RECOMMENDATION #5--FUTURE STUDIES

FINDING: We have a great deal of circumstantial evidence about public assistance resource avoidance and estate planning to qualify for Medicaid. No hard data are available, however, on the extent of these practices. We also are unaware of how much Federal money is spent by the Legal Services Corporation and other national programs to promote Medicaid eligibility for people with property. We cannot account, without further review, for large discrepancies in amounts of estate recoveries reported to us versus "probate recoveries" reported to HCFA (for purposes of reimbursing the Federal share of recoveries. Finally, a priori, it would seem that the ability to receive Medicaid while preserving assets is a strong disincentive to the purchase of private long-term care insurance. Is this true, and if so, would programmatic changes such as those recommended here remove the disincentive and promote nonpublic assistance options to funding long-term care?

RECOMMENDATION: At a minimum, the following actions should be taken:

Conduct a comprehensive study of the transfer of assets problem to estimate how much equity is being diverted from long-term care costs at the expense of the Medicaid program. To what extent is the Federal Government funding this diversion by training attorneys and counseling prospective Medicaid recipients?
Conduct a thorough audit of Medicaid estate recovery programs to determine if the Federal Government is receiving its full share of the proceeds.
Perform a review to determine whether the availability of Medicaid without encumbering assets has a chilling effect on the marketability of private sector risk-sharing products such as long-term care insurance.

IMPACT: Results of these studies could point the way to a more equitable and efficient utilization of economic resources for the satisfaction of catastrophic long-term care needs.

LTC Comment: The USDHHS Inspector General’s report “Medicaid Estate Recoveries: National Program Inspection” proposed a straight forward solution for long-term care financing. Let Medicaid pay for long-term care when people lack sufficient income to pay privately, but counterbalance that considerable benefit with a guarantee secured by a lien that families do not divest their wealth before or while receiving publicly financed care and a requirement that benefits received be paid back out of estates whenever recovery does not create a financial hardship on heirs. The goals of this proposal were to eliminate the tragedy of catastrophic LTC spenddown, create an incentive for people to plan early for long-term care by saving, investing, or insuring privately, to generate a large new nontax revenue source for Medicaid, and to reduce dependency on Medicaid by the middle class so that it could become a better program for a smaller number of genuinely needy recipients.

So what happened? We got part way there statutorily. As the highlights in the proceeding quotation indicate, Medicaid estate recoveries became mandatory. That occurred in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). Several federal laws strengthened the transfer of assets restrictions, gradually extending the look back period from two years to five years in the Deficit Reduction Act of 2005 (DRA ’05). DRA ’05 also put the first cap ever on Medicaid’s home equity exemption potentially encouraging home equity conversion to fund LTC in lieu of Medicaid although the cap was too high at $500,000 increasing with inflation to achieve that objective. Transfer of assets restrictions were extended to include transfers of an exempt home which transfers were previously permitted without affecting eligibility. The HCFA finally published regulations on asset transfers after a long delay. Other federal statutes allowed estate recovery of benefits received before age 65 and permitted estate recovery in cases of joint tenancy with right of survivorship.

All these measures were steps in the right direction. But other key recommendations by the Inspector General were left unfulfilled. Liens to hold property during Medicaid eligibility were never required so wealth continued to disappear while recipients received Medicaid LTC coverage. None of the recommended studies to elucidate the reality and potential of eligibility controls, liens and estate recoveries were ever conducted. Most importantly the federal government did not enforce the new restrictions aggressively; most states did not implement them fully and some ignored the federal mandates entirely; the media did not publicize the estate recovery liability; so the public blithely continued to ignore LTC risk and cost until they needed expensive care and Medicaid eligibility opened up as a slick way to avoid personal financial loss.

So what’s the lesson to be learned? Clearly we need to revisit the analysis and recommendations in the IG report, implement them fully, enforce them aggressively, publicize them widely, and get long-term care financing back on an even keel, dominantly financed privately by home equity conversion and, ultimately, by a revitalized private long-term care insurance market. What we do not need is more government money flowing into a system that defies human nature by disincentivizing personal responsibility and rewarding the failure to plan for long-term care. Yet that is exactly what MACPAC (the Medicaid and CHIP Payment and Access Commission) proposes to do as we explained recently in “LTC Bullet: MACPAC Misfires.”

Here’s the latest. On March 15, 2021, MACPAC published its annual “Report to Congress on Medicaid and CHIP.” According to that report:

Chapter 3 makes recommendations to ease the burden of Medicaid estate recovery, which often falls on those with modest means, and may disproportionally affect people of color and perpetuate intergenerational poverty. Federal law requires state Medicaid programs to seek recovery from the estates of certain deceased beneficiaries for payments for long-term services and supports (LTSS) and other services. The Commission recommends returning to prior law, making estate recovery optional, rather than mandatory. It also recommends allowing states that cover LTSS under managed care to pursue recovery based on the cost of services where it is less than the capitation payment paid to a managed care plan; and directs the Secretary of the U.S. Department of Health and Human Services (HHS) to establish minimum hardship waiver standards, including a minimum estate value threshold for estate recovery.

If Congress were to follow these recommendations, the country’s long-term care financing system would be further hampered in its ability to supply quality care for all Americans. It is clear from MACPAC’s report that the commission’s “research” on the subject of Medicaid estate recoveries included extensive consultation with elder law attorneys who make their livings putting affluent people on Medicaid and helping them evade estate recovery. Of course Medicaid planners oppose eligibility controls and estate recovery. The few mentions in the report of “state officials” reflect mostly favorable attitudes toward controlling eligibility and requiring estate recoveries, but it is clear MACPAC did not engage closely with front line Medicaid eligibility workers. Those workers in my experience, having interviewed hundreds of them over decades, passionately favor targeting Medicaid to people in need and recovering from estates of people who shelter wealth. Almost to a person they expressed anger and frustration that it’s so hard to qualify the poor for care, but lawyers fill out applications thick with documentation for their wealthy clients who then qualify easily for Medicaid.

The system MACPAC seeks to sustain and empower by curtailing Medicaid estate recovery is corrupt. It rewards irresponsibility. It discourages early LTC planning. It tips LTC toward public financing and away from private sources such as home equity conversion, private LTC insurance and estate recovery. Human nature being what it is people will always adapt to the rules government imposes in order to maximize their interests. That’s not a bad thing unless government rules incentivize bad behavior as they do now and as MACPAC would further encourage. Instead we should strengthen estate recovery rules so people benefit by planning early for long-term care, saving, investing or insuring, using home equity to get the best care in the most appropriate venue, staying off Medicaid and out of nursing homes.

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Updated, Monday, March 8, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-008: LTC NEWS AND COMMENT

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Alzheimer's May Strike Women and Men in Different Ways
Reforming Medicaid LTSS would increase HCBS access, create better jobs: report

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Updated, Friday, March 5, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: MACPAC MISFIRES

LTC Comment: MACPAC proposals would cripple Medicaid long-term care and aggravate inequality. Details after the ***news.***

*** WHY LTCI FAILS: Don’t miss Steve Moses’s article of that title in the March issue of Broker World magazine. Read it here. Then subscribe to the insurance trade journal to receive future issues. While you’re there, catch Margie Barrie and Leni Webber’s “COVID-19 and Long Term Care Planning,” expanding on a topic we addressed in “LTC Bullet: Long-Term Care and the Pandemic.” ***

*** MACPAC MEETS: Yesterday, the Medicaid and CHIP Payment and Access Commission met online. What to do about Medicaid estate recoveries was not on the agenda. But the Commission’s Executive Director assures me that “We have read your comments [I sent her a draft of today’s LTC Bullet] and will share them with members of the Commission. … The full report, with a detailed explanation of MACPAC's analysis and recommendations, will be out on March 15.” We’ll watch for that report and update you on whether or not it corrects the deficiencies identified below. ***

LTC BULLET: MACPAC MISFIRES

The issue in a nutshell:

Generous and elastic Medicaid income and asset eligibility limits enable middle class Americans to receive expensive long-term care when they need it while preserving most of their wealth. See “Welfare for the Well-to-do” (Wall Street Journal) and “Pretending to Be Poor” (New York Times).
The quid pro quo for this munificent public benefit is that recipients must agree to pay back the cost of their care after their deaths from their estates when their sheltered wealth is no longer needed by an exempt dependent relative and would not create a hardship for heirs.
MACPAC proposes to weaken Medicaid estate recoveries by (1) making them voluntary, (2) diluting recovery potential below what Medicaid actually pays, and (3) redefining hardship waivers so they do not require financial hardship.
If implemented, these measures would harm the poor by reducing Medicaid program resources, give heirs a tax-payer financed windfall for placing their parents on the public welfare program, further desensitize the public to long-term care risk and cost, cause even more people to end up on public assistance and increase Medicaid expenditures significantly.
Medicaid estate recoveries should be encouraged instead: (1) close Medicaid eligibility loopholes that allow affluent people to divest wealth making it unavailable for estate recovery, (2) require automatic liens to secure sheltered property so it remains available for later recovery, and (3) eliminate counterproductive rules that discourage efficient, cost-effective estate recovery, as recommended for example in Maximizing NonTax Revenue from MaineCare Estate Recoveries, 2013.

LTC Comment: The Medicaid and CHIP Payment and Access Commission (MACPAC) proposes to undercut a critical part of the long-term care financing system. To comprehend what MACPAC recommends and why it would be so detrimental if Congress accepted their advice, we must first review how the United States finances long-term care.

The vast majority of long-term care in the U.S. is provided for free by spouses, families and friends at tremendous financial and emotional stress. When free care is unavailable or exhausted and expensive formal care becomes necessary, Medicaid is the primary payer. Although it is a means-tested public assistance program, Medicaid has come to be the primary source of long-term care financing for the middle class as well as the poor. That is true because, although Medicaid’s financial eligibility rules sound very restrictive, the way the program works in practice is much more elastic and generous.

Medicaid LTSS Financial Eligibility

Most writers claim Medicaid benefits only go to “low-income” people, but medical and long-term care expenses are subtracted from income before eligibility is determined. So, very-high- income people do qualify for benefits if their health care expenses are commensurately elevated, as they usually are for people who need long-term care. The rule of thumb is that Medicaid’s eligibility cut-off for monthly income is roughly the same as the cost of a month in a nursing home, about $7,500 on average nationally for a semi-private room. That’s $90,000 per year, hardly low income.

The seemingly draconian limit on countable assets, $2,000 in most states, is also much less onerous than it appears. That’s because non-countable assets are practically unlimited and countable assets are easily converted to non-countable or exempt assets. Home equity, for example, is completely exempt up to $603,000 in most states and up to $906,000 in nine states. Recent research concluded that Medicaid’s home equity “limits” exclude almost no one. Other non-countable assets, allowed in unlimited amounts, include one automobile, Individual Retirement Accounts (IRAs) that are in payout status as they must be at age 72, one business including the capital and cash flow, term life insurance, household goods and personal belongings including family heirlooms, prepaid burial plans, and others. Lawyers who help affluent clients qualify for Medicaid long-term care benefits by means of sophisticated annuities, trusts, and other asset sheltering techniques, also routinely provide long lists of non-countable assets people can buy to “spend down” artificially to Medicaid’s countable asset limit.

Is Such Easy Access to Medicaid’s Extended Care Benefits Intentional?

Does this sound like a crazy system that could never have been intentionally imposed on unsuspecting taxpayers? If you think that, you are wrong. Medicaid long-term care benefits were originally much more generous than now. From the program’s beginning in 1965 until 1980, federal law expressly permitted asset transfers to qualify for benefits. Even millionaires could give away all their wealth to anyone else and qualify immediately. Unsurprisingly, Medicaid long-term care expenditures exploded from the first day. So a long series of Congresses and Presidents passed laws and imposed regulations that discouraged artificial self-impoverishment to qualify. (See “Appendix I: Supplemental Bibliography” (pps. 34-63) in How to Fix Long-Term Care Financing for the whole history of this process.)

Still, Medicaid long-term care costs continued to escalate throughout the 1980s. Something had to be done to control costs. But it was neither desirable nor politically feasible to stanch Medicaid’s financial hemorrhaging by forcing people into impoverishment before they could get help from the government. So the powers-that-be hit upon an ingenious solution. Let people keep their wealth while they get help with long-term care from Medicaid, but make sure they pay it back after they die out of their estates. That way Medicaid would no longer discourage people from planning early for long-term care. The new system was on the principle “pay now or pay later.” Medicaid would no longer reward heirs for waiting until their parents needed long-term care and then relying on taxpayers to indemnify their inheritances.

This scheme became law in the Omnibus Budget Reconciliation Act of 1993. It was reinforced by the Deficit Reduction Act of 2005. OBRA ’93 made transfer of assets restrictions longer and stronger to encourage people to hold onto their wealth while they received Medicaid benefits. But it made estate recovery mandatory so every state in the country would be required to track exempt wealth and recover it later to reimburse Medicaid. The DRA ’05 closed more of the eligibility loopholes that caused wealth to leak out of estates before it could be recovered later, but the DRA also put the first limit ever on home equity to convey that Medicaid’s generosity is not unlimited.

The Critical Role of Estate Recoveries

So, easy access to Medicaid LTC benefits for the middle class and affluent was not unintentional. It was just supposed to be mitigated by means of mandatory estate recovery. To avoid Medicaid dependency followed by repayment of benefits received from one’s estate, sensible people would plan early and save, invest or insure for long-term care. But to this day, very few people worry about long-term care until they need it. They end up on Medicaid as the path of least resistance, qualify under the program’s generous financial eligibility criteria, and often evade estate recovery with the help of Medicaid planning specialists. What happened?

Transfer of assets restrictions, while occasionally tightened were never made tight enough. Liens to hold property until later recovery remained voluntary and were fraught with loopholes. Likewise estate recovery rules were too easy to circumvent. But most importantly, the federal government did not enforce transfer of assets, lien and estate recovery rules effectively; the states did not implement the requirements consistently; the media didn’t publicize the risk of estate recovery liability; so the public continued to ignore long-term care risks and costs, failed to save, invest or insure, and ended up more dependent than ever on public assistance. That’s the mess in which America’s long-term care financing system remains today. So what should and should not be done?

MACPAC Would Weaken, not Strengthen Estate Recoveries

Let’s circle back to MACPAC now. What has the Commission recommended that Congress change about Medicaid’s long-term care program? These are the proposals approved at the Commission’s January 2021 meeting followed by our analysis.

MACPAC Recommendation #1: “Congress should amend Section 1917(b)(1) of Title XIX of the Social Security Act to make Medicaid estate recovery optional for the populations and services for which it is required under current law.”

LTC Comment: Making estate recovery optional for state Medicaid programs would cripple its ability to recover and reuse nontax revenue for the benefit of genuinely needy recipients, thus further aggravating the program’s financial and racial inequality. Estate recovery saves Medicaid money, preserves scarce resources for those who need them most, encourages early and responsible planning, and discourages abuse of Medicaid by people who should, could and would have paid for their own long-term care absent perverse policy incentives to ignore that risk and cost. Estate recovery should be encouraged and strengthened, not hobbled. Eliminate statutory and regulatory obstacles that prevent efficient enforcement. Stop the well-to-do from evading recovery with the help of legal enablers.

MACPAC Recommendation #2: “Congress should amend Section 1917 of Title XIX of the Social Security Act to allow states providing long-term services and supports under managed care arrangements to pursue estate recovery based on the cost of care when the cost of services used by a beneficiary were less than the capitation payment made to a managed care plan.”

LTC Comment: Medicaid estate recovery ensures that assets sheltered during recipients’ lives are used after their deaths to repay funds advanced by Medicaid for their care. Whether Medicaid pays a monthly fee to Medicare, private health insurance premiums, managed care rates, or fees for service, the principle is the same. Medicaid advanced funds to relieve the recipient of an onerous expense and the recipient’s estate should reimburse the full amount advanced to the extent the estate is sufficient to do so. Medicaid exists to help people in need fund long-term care, not to protect estates or indemnify heirs. Families who wish to preserve estates should consider reverse mortgages or private long-term care insurance to fund long-term care instead of relying on Medicaid and then evading or minimizing estate recovery.

MACPAC Recommendation #3: “Congress should amend Section 1917 of Title XIX of the Social Security Act to direct the Secretary of the U.S. Department of Health and Human Services to set minimum standards for hardship waivers under the Medicaid estate recovery program. States should not be allowed to pursue recovery for: (1) any asset that is the sole income-producing asset of survivors; (2) homes of modest value; or (3) any estate valued under a certain threshold. The Secretary should continue to allow states to use additional hardship waiver standards.”

LTC Comment: Clumsy restrictions like these only hamstring Medicaid estate recovery efforts more than they already are without serving any legitimate purpose. Medicaid estate recovery units do not pursue recoveries unless they are cost effective and humane. To do so would be political suicide. Hardship waivers must be based on whether there is an eligible person who faces a hardship. The MACPAC proposals ignore that precept. Regardless of the value of the house or the small amount left in the estate, the Medicaid program should be reimbursed for the costs of care paid on behalf of the deceased Medicaid recipient unless a qualified heir is actually facing hardship. Heirs should not receive taxpayer financed benefits just because their parents lived in modest houses or had nominal bank accounts at death. Research, referenced below, indicates that Medicaid estate recovery can return 15 times or more the cost of recovery to state and federal revenues. They can only do that by prioritizing their efforts and following good business practices that do not bring political disapproval onto the program.

MACPAC Proposals Are Shortsighted and Counterproductive

Clearly, MACPAC looked at estate recoveries through a microscope instead of taking a wider, telescopic view of their importance for responsible public policy. It is very clear from their staff reports going back to 2015 that the Commission was never provided the rationale behind and the history of estate recoveries. There is no reference, for example, to the US Department of Health and Human Services Inspector General Report from 1988 that analyzed the potential for estate recoveries, recommended strong transfer of assets restrictions, mandatory liens and estate recoveries, and explained how these measures could mitigate exploding Medicaid long-term care costs and incentivize Americans to plan early and responsibly for long-term care.

Here’s an excerpt from that report, Medicaid Estate Recoveries: National Program Inspection, Office of Inspector General, 1988:

A large nontax revenue source generated by Medicaid estate recoveries could be recycled to help the truly destitute. It is possible, however, that enhanced estate recoveries would have more far-reaching effects on long-term care funding. Faced with the certainty--which is almost nonexistent today--that accepting care from Medicaid means paying back the cost out of one’s estate, people might seek other alternatives. Such alternatives include Social Health Maintenance Organizations (SHMO' s), continuing care communities, targeted savings accounts and private long-term care insurance. To pay for these nonpublic assistance options, the elderly would have to turn more to private home equity conversion or to assistance from their adult children. It is their children, after all, who stand to inherit whatever property remains after the costs of long-term care are paid and who currently reap the windfall of Medicaid subsidies. We must emphasize that the issue is enrichment of nonneedy adult heirs, not denial of care to the elderly. For those who opt to rely on Medicaid, or have no other choice, eligibility conditional upon a promise (secured by an automatic lien) to repay benefits from their estates would assure all elderly people of (1) access to care, (2) retention of home property as long as it is needed by spouse and dependents, and (3) the dignity of paying their own way in the end. (pps. 47-48, emphasis added)

For the full picture, see the Medicaid Estate Recoveries report’s recommendations at pages 50 to 53. They propose to strengthen rules that discourage asset divestiture, encourage families to keep and use their property while receiving Medicaid long-term care benefits, but also ensure that protected wealth goes to repay Medicaid for benefits received rather than passing as a taxpayer financed indemnity to heirs. Several of these recommendations became law in OBRA ’93, DRA ’05 and other legislation over the years, but they have never been adequately implemented or enforced. They should be expanded, reinforced and carried out, not diluted as MACPAC proposes. In a subsequent LTC Bullet, we will republish the Inspector General’s recommendations and explain why they should be fully implemented now more than ever. (Full disclosure: I led the IG’s 1988 estate recovery study and wrote the agency’s report.)

This is the honorable principle behind Medicaid estate recoveries:

We have very limited dollars available for public assistance. We must take care of the truly poor and disadvantaged first. The middle class and well-to-do should pay privately for long-term care to the extent they are able without suffering financial devastation. Prosperous people who rely on Medicaid for long-term care should reimburse the taxpayers from their estates before giving away their wealth to heirs. Seniors and their heirs who wish to avoid such recovery from the estate should plan ahead, use their own financial resources first (including home equity by means of reverse mortgages) to pay for home and community-based services and/or purchase quality private long-term care insurance to finance their care.

We can return dignity to the Medicaid long-term care program. It isn’t welfare if you pay it back. That’s what Medicaid estate recoveries enable recipients and their families to do, while at the same time, preserving more resources for the needy and underprivileged.

A wag once defined “commission” as a group of people who’ve done nothing individually who come together to conclude that nothing can be done. If MACPAC isn’t to be a case in point, they should review this new, actually old and heretofore ignored, evidence about Medicaid estate recoveries before making such counterproductive recommendations to Congress. Save Medicaid long-term care from the unintended consequences of misplaced good intentions.

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Updated, Monday, March 1, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-007: LTC NEWS AND COMMENT

The Top Eight Mistakes People Make With Medicaid
Universal coverage of long-term care for older Americans may stabilize provider revenues: A report calls for establishing universal coverage for all Americans' long-term care needs through Medicare
COVID Cases, Deaths Plummet in Nursing Homes After Vaccine Rollout
Unconscionable’: Senior living eliminated from COVID relief package
Is The Shift Of Medicaid Long-Term Care From Nursing Facilities To Home About To Accelerate?
Majority Of Working Americans Are Optimistic About Their Financial Future, Even While Lacking Savings
U.S. unpaid caregivers struggling the most with emotional health problems: report
Alzheimer's May Start Sooner for People With Anxiety, Depression History
At-home hospital-level care is growing fast, home care execs say
Why Some 'Super Ager' Folks Keep Their Minds Dementia-Free
Nursing care prices increase 3.3% in January, but spending down 7.8%,
As Nursing Homes Lose Patients to Home Health During COVID, Past Shifts Show Path Forward
How older adults may be doubling their risk of dementia

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Updated, Monday, February 22, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-006: LTC NEWS AND COMMENT

MA Members Could See High Out-of-Pocket Costs For COVID-19
One of Ten in U.S. May Have to Switch Occupations Post Pandemic
Nursing Home Workers Had One of the Deadliest Jobs of 2020
Advantages, Disadvantages and Considerations for LTC Policy Buyouts
US life expectancy dropped a full year in first half of 2020, according to CDC
Accessory dwelling units may help cities deal with housing shortages for ballooning senior population
Black Caregivers Value Long-Term Care Insurance: Nationwide
Improving the Long-Term Care Insurance Customer Experience
‘The situation is dire’: Provider group seeks $5 billion in COVID relief for senior living

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Updated, Friday, February 19, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: RETHINK LTC FINANCING

LTC Comment: We review a study that, correctly interpreted, would bust the LTC financing debate wide open, after the ***news.***

*** THE 2021 INTERCOMPANY LONG-TERM CARE INSURANCE CONFERENCE will convene virtually and for FREE April 13th – 29^th. Expect 40+ sessions from the usual tracks, but apparently minus Public Policy & Alternative Solutions (my favorite), and adding an Aging in Place Solutions track. ILTCI’s 2021 Virtual Conference will be presented 4 hours per day on Tuesdays and Thursdays over three weeks beginning April 13th. Choose from 2 sessions per time slot! CLICK HERE to view the schedule when it becomes available. Barry Fisher, Conference Chairperson and Vince Bodnar, Conference Co-Chairperson say: “Registration is expected to open later this month. Join us and get the inside scoop on current trends in the long-term care insurance industry and what the future holds. We look forward to seeing you on April 13th. ***

LTC BULLET: RETHINK LTC FINANCING

LTC Comment: The long-term care financing conversation has settled into a comfortable narrative that goes something like this. The need for long-term care is growing and overwhelming both private and public funding sources. Medicaid requires impoverishment. Private LTC insurance failed. So we need a new compulsory tax-based government program to pay for long-term care. But what if private insurance failed largely because Medicaid does not require impoverishment? What if public LTC funding caused, and more of it would only worsen, the crisis? Let’s consider some new evidence.

Very little scholarly work tackles the critical, but complicated topic of Medicaid long-term care eligibility in any meaningful way. You’ll see the statement “Medicaid requires impoverishment” or variations of it in most peer-reviewed articles on long-term care. But analysis that approaches the highly nuanced truth of that subject is rare indeed. For example, you will virtually never find anything in the scholarly literature about people with substantial wealth qualifying for Medicaid LTC benefits by taking advantage of simple and/or sophisticated self-qualification methods. Scholars evade that subject despite the fact that such methods are widely available in popular books and articles and from online advertising, law journal articles and thousands of Medicaid planning specialists throughout the country.

So, because its Abstract promised to show that many more people could qualify for Medicaid LTC benefits besides the poor, I couldn’t wait to read this article:

Robert Hest, Giovaan Alarcon & Lynn A. Blewett (2020): Modeling Financial Eligibility for Medicaid Long-term Services and Supports, Journal of Aging & Social Policy, DOI: 10.1080/08959420.2020.1740638. To link to this paywalled article, click here. (I want to thank LaRhae Knatterud of the Minnesota Department of Human Services and lead author Robert Hest for their time explaining this article’s background, methods and findings to me on a Zoom call and for listening and responding to my positive and critical feedback.)

The article’s “Abstract” states that the authors modeled “the impact of changing income, home equity, and asset limitations on Medicaid eligibility across states” and “found that one in five elderly adults (10 million individuals) meet all three tests and would be financially eligible for Medicaid LTSS.”

Wow! They concluded that 22 percent of all elderly Americans, more than double the official poverty rate of 9.2 percent (KFH, 2018), would qualify for Medicaid LTC benefits. That sure doesn’t support the conventional academic wisdom that Medicaid requires impoverishment. So I hastened eagerly to delve into the study’s details.

What I found pleased and disappointed me. The work is ground-breaking, the results surprising, and their true meaning far more important than the authors themselves realize. Instead, they ignored key evidence in order to conform their findings to the current “LTC Narrative”--that more social insurance is the only hope for long-term care and that targeting financial eligibility for Medicaid to the neediest would be ineffective and unadvisable. To support that assessment, here are some quotes from the article followed by my analysis:

JASP Article: “Medicaid plays a significant role in financing long-term services and supports (LTSS) for low-income elderly (65+) in the United States.”

LTC Comment: True, but Medicaid also “plays a significant role in financing” long-term care for higher income people, because medical and LTC expenses are usually deducted from income before income eligibility is determined. The constant reference in the media and scholarly literature to Medicaid helping only low-income people diverts attention from the fact that people with substantial incomes also qualify routinely.

JASP Article: “Given the high cost of LTSS, individuals often exhaust their personal resources in paying for services and must rely on Medicaid to finance ongoing care.” (p. 1)

LTC Comment: Neither this article, nor any peer-reviewed journal article I can recall, provides evidence for that statement. It is certainly true of low income/low asset people who are quickly wiped out financially by Medicaid eligibility rules. It is definitely not true of higher income/higher asset people with financial savvy and access to legal advice. See for example the 29-page “Bibliography of Books, Elder Law Treatises and Law Journal Articles on Medicaid Planning Listed Chronologically” in How to Fix Long-Term Care Financing (Moses, 2017). That source contains hundreds of techniques elder law attorneys use to qualify their affluent clients for Medicaid LTC benefits. With so much legal smoke, is it reasonable to ignore the fire, i.e. widespread use of Medicaid by prosperous people the program was never intended to serve? Yet the JASP article does not mention the possibility that people with incomes and assets much higher than the amounts they modeled could have achieved eligibility by means of self-impoverishment methods widely recommended in the popular and legal media.

JASP Article: “To qualify for Medicaid payment of LTSS, most individuals must spend nearly all of their income on their care.” (p. 4)

LTC Comment: It is true income must be spent down on care-related expenses, but that gives the lie to the common notion that only low-income people qualify for Medicaid. People who need long-term care have very high medical and LTC expenses. So, because those expenses are deducted before their income eligibility is determined, they can have very high incomes indeed and still qualify for benefits. Furthermore, while it is true that income must be spent for care, it assuredly is not true that assets must be spent on care, although that claim is made in the literature. In fact, there is no limit on how many assets an individual or couple may retain while on Medicaid as long as the wealth is held in exempt form, such as a home, IRAs making periodic payments, an automobile, prepaid burial benefits, household goods, family heirlooms, etc. Countable assets are easily converted to exempt assets as the extensive Medicaid planning literature cited above frequently observes.

JASP Article: “Under the Deficit Reduction Act of 2005, the applicant’s homestead is an excluded asset if the individual lives in the residence, is expected to return to the residence, or a community spouse or dependent relative lives in the residence (ElderLaw Answers, 2018a). … In some states, the home is not considered when determining Medicaid eligibility if the nursing home resident plans to return to the home; in other states, the resident must prove that they are likely to return home (U.S. Department of Health and Human Services, 2005).” (p. 5)

LTC Comment: Actually, the terms “expected to return,” “plans to return,” and “likely to return” are unofficial and inaccurate. Rather, the federal Medicaid criterion for permitting the home equity exemption is a totally subjective “intent to return” expressed by the recipient or a representative with no verification whatsoever required.

JASP Article: “Our data come from the 2014 Health and Retirement Study (HRS), a longitudinal household survey of Americans age 50 or older ….” (p. 6)

“We also want to note that our primary data source, the Health and Retirement Study, though now said to be representative of the institutionalized population, was not originally designed to be representative of that population and some concerns remain about the sample’s representativeness of the nursing home population, especially when used longitudinally (RAND Center for the Study of Aging, 2019; Sonnega et al., 2014).” (p. 12)

LTC Comment: The JASP article relies on HRS data to determine the wealth (income and assets) of people to whom the authors then apply Medicaid LTC financial eligibility standards. But what if the HRS data, commonly assumed to be a gold-standard source, are really highly dubious? That would mean HRS respondents might actually have much more income and assets than they report. Or it could mean that the income and assets they report are correct but that they arrived at the reported levels not by spending their wealth on long-term care but by taking advantage of Medicaid’s generous and elastic financial eligibility rules or by retaining the services of an elder law attorney specializing in Medicaid planning.

I found the HRS data highly questionable in “How to Fix Long-Term Care Financing” (pps. 16-17). For example: “One expert found significant data quality issues in the surveys due to “measurement errors in the data, particularly those arising from item nonresponse and from inaccurate respondent reports of the ownership and level of assets.” (Venti, p. 3) “Furthermore,” as I explained in the report, “there are many reasons why survey respondents and their representatives might fail to report income and assets to surveyors or even purposefully misrepresent the facts. People who have reconfigured their wealth to qualify for public welfare benefits may be ashamed of having done so or simply unaware that their heirs did this on their behalf. Seniors reporting on themselves may be cognitively impaired or intimidated by self-interested family members. Heirs who benefit from preserving parents’ estates may prefer to conceal the facts. Lawyers who do Medicaid planning are protected from disclosure by attorney/client privilege, while long-term care providers and Medicaid eligibility staff, who often know which wealthy locals are taking advantage of Medicaid, cannot disclose the information because of legally enforced confidentiality. Getting to the truth in such matters is extremely difficult.” (p. 16)

JASP Article: “We find that applying the most restrictive income allowances across the states would result in an estimated 6.8 million individuals potentially losing financial eligibility for Medicaid LTSS.” (p. 7)

LTC Comment: So, don’t tighten income allowances. It is well accepted that loss of income is the “deductible” people must pay to get Medicaid to cover their LTC expenses. The real potential savings are on the asset side of the ledger. But federal law does not permit states to do what would need to be done to divert many more people away from Medicaid dependency. That is, change the home equity exemption so that home equity goes to fund better LTSS in homes instead of passing as a windfall to heirs at government expense. Loss of the home equity exemption would make people think and plan earlier for LTC resulting in fewer ending up on Medicaid. Eliminating some of the most common Medicaid planning strategies would also help to divert the middle class away from Medicaid without negatively affecting, in fact actually helping, the needy for whom more program resources would remain available.

Having interviewed hundreds of Medicaid LTC eligibility workers over the years, I found little relationship between the ostensibly draconian income and asset eligibility rules and the way the system works in practice. Workers told me they’re frustrated that people of few means quickly get wiped out financially whereas people with substantial wealth qualify immediately and easily because lawyers fill out their applications, know all the loopholes, provide all the documentation, and follow up until eligibility is granted.

JASP Article: “The population of elderly adults studied has an average age of 74.6 and is 56.3 percent female. Among the population, the median household income is 40,912, USD the median value of household net assets is 79,400 USD (excluding housing assets), and the median net primary residence value is 100,000. USD.” (p. 7)

LTC Comment: These are very high medians, which indicates that half of the studied population has even higher incomes and assets. Remember, this study found that 22 percent of the studied population not the median households would be “financially eligible for Medicaid LTSS” (p. 7). In How to Fix Long-Term Care Financing (pps. 8-9), I found that while half of all Medicare beneficiaries had annual incomes below $26,200 in 2016, 45 percent had annual incomes between $26,200 and $103,450, all of whom could qualify for Medicaid LTC benefits based on income if their deductible medical and LTC expenses were high enough. Furthermore, I found that while half of all Medicare beneficiaries had savings of $74,450 or less in 2016, 45 percent of them had savings between $74,450 and $1.4 million, all easily converted to Medicaid LTC asset eligibility with the simplest kinds of Medicaid planning measures. In other words, up to the 95^th percentile of Medicare beneficiaries could qualify for Medicaid LTC eligibility and, in the real world, they often do. This analysis applies equally well to the current study’s findings.

JASP Article: “If the most common state thresholds were applied across all states, we estimate that nearly the entire elderly population would meet the home equity threshold of 552,000. USD Just more than half (54 percent) would meet the home equity and income test, and only 22 percent, or 10 million adults age 65 and older, would meet all three tests – home equity, income, and assets – and be financially eligible for Medicaid LTSS.” (p. 7)

LTC Comment: Now, that statement is far more dramatic than it appears to be on the surface. Let’s deconstruct it. Nearly the entire elderly population would meet the home equity threshold of $552,000, but that was the exempt home equity amount as of 2015. The comparable amount for 2021 is $603,000. In nine states, the home equity exemption was $828,000 in 2015, but it is $906,000 today, because the exempt amount increases every year with inflation. What is the point of having a limit on home equity that does not exclude anyone? What is the public policy reasoning for preventing so much private wealth from funding quality long-term care for prosperous people? Over half the study population (54 percent) meet the home equity and income test? More than one-fifth meet all three (home equity, income and asset) tests? These figures apply to the whole population not just to the median? So much for the fallacy that Medicaid requires impoverishment.

JASP Article: “We found that the population that would be made financially ineligible for Medicaid LTSS by restricting income allowances and thresholds likely has a greater need for services, is less likely to have a spouse who could potentially provide informal care, has fewer financial resources to pay for formal care, and is less likely to be currently using formal LTSS compared to the population ineligible for Medicaid LTSS under the most common income allowances and thresholds. This indicates that Medicaid LTSS eligibility is already narrowly targeted under the most common allowances and thresholds.” (p. 11)

LTC Comment: That statement aligns with the fact that current Medicaid financial eligibility rules are devastating for low income, low asset people. They’re wiped out financially as soon as they begin to need expensive long-term care. But the study’s conclusion that “Medicaid LTSS eligibility is already narrowly targeted” is untrue. Higher income people qualify because their health and LTC expenses are deducted before their income eligibility is determined. Higher asset people qualify because they can easily convert assets into exempt form. Much higher asset people qualify by retaining the services of Medicaid planning attorneys, services and techniques this research and most other research of its kind completely ignore..

JASP Article: “On the surface, this [$552,000 home equity exemption] may seem a generous threshold; however, most states have estate recovery laws that allow a state to seek retroactive payments for LTSS from an enrollee’s estate upon their death (ElderLaw Answers, 2017).” (p. 11)

LTC Comment: Estate recovery was made “mandatory” in the Omnibus Budget Reconciliation Act of 1993, but unfortunately the federal government did not enforce the requirement, states did not administer it fully or consistently, the media did not publicize it, and consequently consumer behavior did not adapt to plan for long-term care in order to avoid estate recovery. By citing “ElderLaw Answers,” the study’s authors display a closed-minded bias. ElderLaw Answers is published by Medicaid planning lawyers whose principal source of revenue is affluent clients they convert to Medicaid eligibility by circumventing the same income and asset limits the study’s authors claim are so restrictive. Did the study’s authors not consider this blaring conflict of interest?

JASP Article: “We believe Minnesota’s eligibility model represents the key components of financial eligibility used by all states and provides a reasonable approximation of the impact of changes to these components on eligibility levels.” (p. 12)

LTC Comment: The study’s authors acknowledge that one of the limitations of their work is the assumption that “Minnesota’s eligibility model represents the key components of financial eligibility used by all states.” Given the constraints of such research, it’s reasonable to accept that limitation. But then, why not ask what methods of artificial self-impoverishment (Medicaid planning) are effective in Minnesota as well? A simple internet search for “Medicaid planning in Minnesota” reveals scores of Medicaid planners available throughout the state to use hundreds of simple and more sophisticated methods to get around Minnesota’s ostensibly strict but actually generous and elastic Medicaid financial eligibility rules.

A few examples: the Medicaid Asset Protection Trust; the “Family Pot Trust;” “Advanced Medicaid Planning Techniques: Trusts, Private Annuities, Spousal Transfers, Caregiver Agreements;” “Elder Law & Medicaid Services: We help clients qualify for government medical benefits legally and ensure their estates are preserved for their families, instead of their nest egg being wiped out by high nursing home expenses.”; “Life Estates.” I found these sources in a few minutes perusing the internet. What value can “modeling” Medicaid financial eligibility rules possibly have when it ignores how Medicaid eligibility qualification is actually done?

JASP Article: “Our study highlights the already strict eligibility levels that limit access to Medicaid LTSS.”

LTC Comment: This study does nothing of the sort. It completely ignores the well-documented evidence of widespread Medicaid planning which allows people far above Medicaid’s apparent financial eligibility limits to qualify. Modeling financial eligibility rules that are actually circumvented routinely in real life is more misleading than informative.

JASP Article: “The Medicaid program for LTSS among the 65+ population is already well targeted and restricting eligibility would likely exclude individuals in need of services. Few states have opted to further restrict access to needed services and are instead opting to find more ways to keep people living independently in the community.” (p. 12)

LTC Comment: As we’ve shown, Medicaid is definitely not “already well targeted.” Few states have opted to target services to the needy because federal law prevents them from changing eligibility rules to exclude the affluent and achieve that objective.

JASP Article: “We caution policymakers who feel pressure to constrain eligibility for Medicaid LTSS as a cost-savings measure against taking this action.” (p. 13)

LTC Comment: This is a wrong conclusion unjustified by findings that ignore the ease of converting countable into non-countable assets and disregard the potential for home equity conversion to fund long-term care privately. In fact, changes in federal law recommended in How to Fix Long-Term Care Financing would allow states to target scarce Medicaid resources to the needy thus impelling those with means to plan early for long-term care and avoid government dependency later on.

Closing LTC Comment: The JASP article dramatically shows that over twice the proportion of elderly poor in America would qualify for Medicaid LTC benefits based on income and assets. It proves this without considering the possibility that many more people, with much higher income and assets, qualify using widely known and applied techniques of Medicaid planning. Only by ignoring the vast legal and popular literature on how to qualify for Medicaid LTC benefits without spending down can the authors cling to the conventional “LTC Narrative” that “a broader finance solution that spreads out the cost risk via a social insurance program” (p. 13) is necessary. I implore these authors and their scholarly colleagues to ask Medicaid LTC eligibility workers how Medicaid eligibility really works and to read the legal literature on qualifying for Medicaid that I painstakingly documented in How to Fix Long-Term Care Financing, pps. 34-63. Then, try modeling reality instead of the Medicaid spend-down myth. If I can help in any way, I would be happy to do so.

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Updated, Monday, February 15, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-005: LTC NEWS AND COMMENT

COVID-19 mortality tied to racial disparities in nursing homes, industry expert says
Analysis Sees $94 Billion in Industry Losses Over Two Years
Covid Has Black Americans Thinking More About Financial Planning
Lincoln to Add Variable Universal Life-Long Term Care Hybrid
Dementia doubles COVID risk — even after accounting for LTC residence, study finds
MA Enrollment in Plans With Extra Benefits for Chronically Ill Tripled in 2021
Legal experts warn of incoming lawsuits for long-term care
COVID-19, in some respects, made senior living more appealing: survey
Why the Medicaid block grant is the right strategy for Tennessee | Opinion
Coronavirus cases drop at US homes for elderly and infirm

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Updated, Monday, February 8, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-004: LTC NEWS AND COMMENT

Long-term care in the age of Covid, and beyond
Using Estate Planning to Prepare for Medicaid
Baby boomers face financial distress and age discrimination
Long-Term Care Insurance: First, You Should Find an Agent
Want to age at home instead of a nursing home? Consider this first
We need comprehensive long-term care reform, and we need it now
More than a fourth of Americans 40 and younger don’t think they need to be saving for retirement: survey
Six-year study links hearing loss to dementia risk
Here's a New COVID-19 Nightmare, for You
Veterans Community Care Program: Immediate Actions Needed to Ensure Health Providers Associated with Poor Quality Care Are Excluded
NAIFA-ND Activates Grassroots to Counter LTC Proposal
Boren-like solution needed nationwide to address Medicaid shortfalls, expert says

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Updated, Friday, February 5, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: SOCIAL INSURANCE IS AND OXYMORON

LTC Comment: Insurance is individualistic, so “social insurance” is a contradiction in terms. Meaning and consequences follow the ***news.***

*** LTCI SURVEY NEWS: Oliver Wyman and Ice Floe Consulting have presented the Executive Summary of the “Who is Selling What? To Whom, How & Why?” agent and advisor survey they conducted last fall. The study team gathered a great deal of actionable intelligence from agents and advisors actively engaged in the long-term care insurance planning process. Click here for the executive summary of results. You can request their full report starting next week at this Oliver Wyman webpage. Ron Hagelman and Barrie Fisher published an excellent review of the survey results titled “Actionable Intelligence in Long Term Care Planning” in the February issue of Broker World just out, here. ***

*** WA AND ND SLIDE OFF THE RAILS: Evidently the people in Washington State who are trying to design compulsory social insurance for long-term care can’t decide whether or not people who own private insurance already or buy it now should have to pay for the new state-mandated plan too. Wouldn’t that be double jeopardy? In the meantime, North Dakota wasn’t messing around with any such nuance; they had a bill to stop the sale of private LTC insurance for three years altogether. Apparently they’ve relented on that nuclear option and will only “study” the subject going forward. We thank Stephen D. Forman of Long-Term Care Associates for keeping us apprised of the politicians’ latest shenanigans. ***

LTC BULLET: SOCIAL INSURANCE IS AND OXYMORON

LTC Comment: The LTC policy world is smitten by a dream that they can solve the LTC financing crisis by means of social insurance. (Are you listening Marc Cohen, Judy Feder, et al.?) Washington State’s plan to compel workers to fund a government designed and managed LTC “insurance” plan is the basic model. But other states are building similar programs and many more have a social insurance long-term care program on their wish list. What’s wrong with that? Today’s LTC Bullet explains.

The following article, originally published in 2002, begins by defining insurance and explaining its fundamental principles. The article proceeds to describe the many ways the honorable concept of private insurance has been corrupted by government interference and regulation in the name of “social insurance.” It closes with a comparison of the moral consequences of real private insurance compared to so-called social insurance.

In a nutshell, real private insurance is individualistic, voluntary, fair, rational, objective, and based on the trader principle. It serves life. Social insurance is collectivistic, subjective, non-rational, inequitable, and violates the trader principle. So it undermines life. Now read on to see how I justify those conclusions by comparing and contrasting true insurance with the oxymoron “social insurance.”

Stephen A. Moses, "The Inherent Individualism of Insurance," Navigator, Vol. 5, Nos. 10-11, November-December 2002, pps. 10-12, 14-16, published in January 2003.

“The Inherent Individualism of Insurance”

By Stephen A. Moses

As human beings, we fear chaos and confusion and fight against them. We appreciate order. We celebrate reason, logic, and science because they help us bring order and manageability to our experience of reality. But no matter how rational and focused we are, we remain vulnerable to unexpected events that can throw our lives into turmoil. A slippery sidewalk, an unanticipated illness, a drunken driver, a freak storm, or (who knows?) an errant meteor. Besides, "the best laid plans of mice and men oft go astray." We need a tool to help us mitigate the consequences of uncertainty in day-to-day life, just as reason and logic help us to bring order and predictability to cognition. Fortunately, we have such a tool: it's called insurance. Insurance cannot repair the damaged or heal the sick, but it can alleviate the economic consequences of unpredictable negative events like accidents, natural calamities, and illness or death.

What is insurance and why do we need it?

"Insurance" is a financial tool with which we can replace the small risk of a catastrophic financial loss with the certainty of an affordable payment. Insurance companies help people achieve this objective by spreading and pricing risk. For example, let's say there is one chance in a million that I will be hit by a truck, resulting in a $1 million loss. That event—unlikely as it might be—would devastate me financially as an individual. I would gladly pay $2 to make the monetary part of this risk disappear. So would millions of other people. Therefore, an insurance company can profitably sell such protection, called an insurance "policy," to me and to 999,999 others for a reasonable fee, called a "premium."

The insurer promises to "indemnify" me and all other policyholders (or "insureds") if and when the insured event occurs by paying us a specified "claim" amount that restores us to our financial position before the loss occurred. If the company sells one million such policies for $2 each and incurs the anticipated single "loss" of $1 million, it makes a hefty 100 percent profit and performs a valuable public service in the process. The insureds can relax and enjoy life in the knowledge that if the worst happens, at least they are protected financially. That is called "spreading risk." But what if five of the insurance company's beneficiaries are hit by trucks instead of just one? Then the company would have collected only $2 million in premiums, but would owe $5 million in claims, a $3 million loss. To know what to charge for insurance protection, companies must "assess the risk." They must measure, record, and analyze extensive "actuarial" data on the incidence and frequency of the insurable event. In other words, they must answer the question: What is the probability that the insurable event will occur to individuals among the insured group and what will be the cost if it does? That is called "pricing the risk."

Of course, they cannot say with certainty whether you or I may be the victim, but they can say with a high degree of confidence what level of risk we face as a group of individuals. Thus, insurance makes it possible for us to "transfer risk" from ourselves as individuals to a third party, the insurance company, in a voluntary commercial relationship that benefits both parties. The insureds gain peace of mind. The insurer gains profitability.

So far so good. But what if I want to buy insurance because I know I am very likely to need it? This is called "adverse selection," and insurance companies must discourage it. Or else, what would happen if I bring more risk into the risk pool than you do? Would it be fair to charge me the same premium as you have to pay? In fact, would you even purchase an insurance product that guaranteed to give a higher return on average to other, higher-risk insureds than to yourself? Probably not.

For example, say that I am a heavy smoker and I am therefore more vulnerable than a non-smoker to emphysema and lung cancer. If I'm already sick, selling me health insurance would be like providing fire insurance to someone whose house is already in flames—blatant adverse selection. But even if I'm not yet ill, if I were to pay the same premium for health insurance as a non-smoker, I would be getting more protection for my money, dollar for dollar. That's because, as a smoker, I would be much more likely than the non-smoker to file an insurance claim for medical treatments related to my unhealthful behavior. Put another way, the non-smoker would be subsidizing my health insurance premium by paying a higher premium himself than the level of risk he brings to the risk pool warrants.

Thus, insurance companies must not only assess but also "classify" risks. They do this through "underwriting." That is, they ask questions, examine evidence, or do tests to determine the level of risk that each individual or class of individuals brings into the "risk pool," so they will know how much premium to charge each insured or group of insureds. Thus, your insurance company may examine your driving history or review your medical records before underwriting you for auto or life insurance, for example. If insurance companies failed to classify risks in this way, the whole system would fall apart very quickly.

In the example of the smoker and the non-smoker, the non-smoker—unless he's an inveterate altruist—would get smart sooner or later, drop any health insurance that punished him financially but rewarded smokers, and look for a policy that treats everyone fairly. This would have a devastating effect on the "reserve fund" that insurers must maintain and invest. Insurers need reserves to pay claims when they occur, to cover administrative costs, and, of course, to return an acceptable profit to their investors or shareholders. When non-smokers, i.e., "good risks," drop their policies and stop paying premiums while smokers, i.e., "bad risks," keep their underpriced policies, something has to give. Either the insurer must raise premiums for the remaining smokers covered by the policy to ensure sufficient reserves to pay the higher anticipated claims or the reserve fund will become "insolvent," i.e., insufficiently capitalized to pay expected claims. Either way, nobody wins.

Another beneficial effect when insurers classify and price risk accurately is to encourage positive behaviors and discourage negative behaviors. The price of insurance should alert us to the long-term cost of our decisions. When insurance is very expensive, it sends the message that our conduct or condition may be excessively risky. For example, people who have poor driving records usually pay higher auto insurance premiums, sooner or later. Their careless or drunken driving may have little or no cost for a long time. Once a traffic ticket is issued, however, it becomes part of the public record. An auto insurance company can review the public record and raise the violator's insurance rates to reflect the added risk he brings to the risk pool. On the margin, this added cost associated with carelessness or illegality tends to discourage irresponsible behavior and reward responsible behavior. Conversely, over time, if one's driving record improves, one's insurance premiums will decline once again to reflect better performance, thus rewarding improved behavior. Insurance achieves this positive social effect justly and without coercion by objectively pricing the risky behavior of individuals.

Even when our behavior is not dangerous to others or otherwise irresponsible, however, accurately priced insurance premiums still give us valuable personal information and promote fairness and equity. For example, why should a sedate philosophy professor pay the same life insurance premium as a skydiver or motorcycle daredevil? There is nothing wrong with the adventurous life, but insurance helps make sure that those who choose it take their fair share of the fiscal, as well as the physical, risk. Properly conceived, therefore, private insurance is in many ways a marvelous early warning system for us both as individuals and as a society.

Notice, finally, that insurance is different from saving, though the two are intimately related as ways of preparing for future needs. When we save, we are putting money aside for future use, normally in an account or investment that earns a return; we retain the money rather than paying it to someone else, and we get back only what we put in (plus interest or dividends). We can use savings to deal with various risks, but saving per se does not spread risks among people and thus does not require the kind of risk classification that insurance does.

Insurance and savings can of course be bundled together as products. An example is whole life as opposed to term life insurance. When you buy a whole life policy, you are not buying pure insurance; you are investing a portion of your premium with an insurance company. Most people can invest their money much more profitably through independent investment vehicles. In the same way, most managed-care health plans cover both unpredictable catastrophic illness or injury and routine, predictable medical expenses like annual checkups. In effect, managed care is a combination of a lay-away plan for routine care and insurance for catastrophic care. Bundling those functions together is generally not a good idea—though in this case government policies have pushed most people in that direction.

Why and how is insurance corrupted?

Well, if insurance is that wonderful, why do so many people have such a bad opinion of it? What's the "rap" against private insurance? Maybe the following comments will sound familiar:

"Private insurance is heartless. It blames the victim. It punishes people for conditions that are no fault of their own." For example:

Health insurance callously excludes anyone with a serious pre-existing medical condition.
Home owners insurance may be prohibitively expensive for otherwise fine citizens who just happen to live in crime-infested neighborhoods.
AIDS patients can't get life insurance, and Alzheimer's patients can't get long-term care insurance, even though these are the people who need the protection most.

Are these legitimate criticisms? No, of course not. Insurance is a business, not a charity or a welfare program. Private charity or government welfare programs may be legitimate ways to help the uninsurable, but that's a different issue. To achieve the benefits I described earlier, insurance must remain a business enterprise, motivated by self-interest, regulated by competition, and priced by objective evaluation of risks and returns. When politicians, bureaucrats, or "advocates" of one kind or another try to achieve welfare goals through private insurance—when they try to "improve" on private insurance with mandates, controls, or regulations—all sorts of unforeseen and unintended consequences follow.

Here is how it starts. In the interest of protecting consumers, someone insists that insurance should be required to cover a benefit that was previously not covered or covered only as an optional benefit for an added premium. Or, in the interest of assisting the uninsurable, someone demands that everyone should be able to buy insurance and that premiums should not exceed "reasonable" levels. Or, in the interest of helping people who are vulnerable to certain illnesses, someone wants to prohibit the collection and review of medical or genetic information by insurance companies.

Demands for politically induced insurance "reforms" like these start small and quietly. They build over time with growing support from the often small minority of individuals who stand to benefit most from the changes. Gradually, interest groups mobilize to represent the benefit seekers and to promote their claims. A relatively small number of people and organizations have a relatively intense interest in promoting laws that benefit them.

Opposition remains quiescent for two main reasons. "There but for the grace of God go I," think some. "Maybe this new law will actually help me someday." Others think, "I should not begrudge the less fortunate their getting something from private insurance companies. After all, those companies have deep pockets and, even if they pass the cost on to me, how much more will helping the needy cost me anyway?" Most people do not understand the trade-offs between a free and a controlled insurance market. Others don't care. Thus, whether motivated by self-sacrifice or the hope of unearned gain, by ignorance or apathy, most people go along to get along, supporting government intervention in the insurance industry.

All of these interventions attempt to reduce the cost of insurance protection for high-risk individuals by increasing the cost to low-risk individuals. Therefore, their purpose and effect is not to reduce risk but to spread wealth. Like other egalitarian measures, they unjustly grant unearned benefits to some while imposing undeserved penalties on others. And, accordingly, the results are destructive. There is an old saying that "you get more of what you subsidize and less of what you tax." By subsidizing high-risk behaviors and conditions while taxing low-risk behaviors and conditions, these measures have exactly the opposite effect of the benign results we attributed earlier to private insurance. They reward irresponsible behavior and punish responsible behavior, creating a downward spiral of perverse incentives.

Regulation, Welfarization, and Social Insurance

Government efforts to improve on private insurance fall into two major categories. First is the regulation of private insurance through "prior approval," restrictions on risk classification, and mandated coverage (that is, the company must offer certain types of insurance in the state if it offers any). In the second category are the "social insurance" programs that government itself provides.

The first tactics used by state regulators were prior approval of insurance rates, policy forms, or both. Historically, insurance regulation has been a state-level function with relatively little federal involvement. Insurance companies that wish to market a policy nationally must file for approval in all 50 states. Each state has different requirements, some stricter than others; the most rigid states require the use of state-mandated rates or forms. Frequently, the regulation of insurance becomes the politicization of insurance and then the welfarization of insurance. According to testimony given before Congress by Robert E. Litan, co-director of the American Enterprise Institute-Brookings Joint Center on Regulatory Studies:

Regulated rates are often distorted by political pressures in order to subsidize certain classes of drivers. The AEI-Brookings study found evidence that not only does regulation often suppress average rates, but distorts rates between different classes of drivers—keeping rates for high-risk drivers artificially low, while raising rates for lower-risk drivers. This cross-subsidization is accomplished directly through limits on rates in certain classifications…. The Massachusetts case study, for example, found that some high-risk drivers receive subsidies as high as 60 percent, requiring some lower-risk drivers to pay 11 percent more in premiums than they would pay in a competitive environment ("State Regulation of Auto Insurance," Testimony before the Subcommittee on Oversight and Investigations of the House Committee on Financial Services, August 2001).

The obvious solution to bring the market back into equilibrium is to eliminate the rate caps. That is hard to do, however, because advocates for the "disadvantaged" who live in high-risk urban areas insist that the caps favor consumers and that dropping the caps would benefit only the insurance industry by allowing it to charge higher premiums. All too often, the media accept and promulgate this argument. Thus, for reasons discussed above—vested interests for some, forced altruism for others, and ignorance or apathy for most—such insurance "reforms" tend to remain in place and other similar measures constantly gain support and adoption. I call this process the "welfarization" of insurance, that is, the transformation of private insurance by government intervention from a market-based product into a tool to improve the condition of some people in relation to and at the expense of others.

Another form of welfarization is to impose restrictions on risk classification. As explained earlier, insurers must classify kinds and levels of risk carefully to avoid "adverse selection" and to price policies accurately in accordance with the levels of risk that various policyholders bring into the risk pool. In the absence of risk classification, smokers and non-smokers, good and bad drivers, daredevils and college professors would pay identical premiums.

An example of insurance "reform" that eliminates or severely restricts risk classification is "community rating," which requires that insurance premiums reflect the average risk in a geographic region. Under community rating, the level of insurance premium for everyone is determined by adding up the cost of paying benefits for everyone—rich and poor, sick and well, responsible and irresponsible—and dividing by the total number of individuals in the covered population. To many people, this sounds like a fair and effective way to address the endemic problems of unaffordability and the uninsured, especially in the case of health insurance.

But look at what happens. Low-risk insureds soon realize that they have to pay more for insurance than was the case before community rating, and they tend to drop such over-priced coverage. High-risk insureds, on the other hand, have every reason to keep their under-priced coverage. In fact, high-risk people who were previously uninsured tend to purchase this highly attractive new insurance. Gradually, the risk pool becomes heavily weighted with people who are highly likely to file claims. Insurance companies begin to lose money and must either raise premiums to remain solvent or stop offering the coverage altogether. If the insurer raises premiums, the coverage becomes less attractive to low-risk insureds, further exacerbating the problem. Sooner or later, the only viable option for insurance carriers is to drop the policy and leave the state. The money they can collect from premiums will not cover the anticipated expenditures for claims, much less return administrative costs and an acceptable profit.

Viewed logically and analytically, this outcome seems obvious. But that has not stopped real-world regulators from imposing community rating and unleashing the inevitable consequences. For example, New York legislators mandated community rating for health insurance in 1993. The National Center for Policy Analysis summarized the effects:

Consider the impact on policies sold by Mutual of Omaha, one of the largest sellers of individual health insurance policies in the state:

Before community rating was instituted in New York, a 25-year-old male on Long Island paid $81.64 a month for health insurance, and a 55-year-old paid $179.60.

After community rating, both paid $135.95, a 67 percent increase for the 25-year-old and a 25 percent decrease for the 55-year-old.

Because young, healthy people began canceling policies, by 1994 both paid $183.79—more than the 55-year-old was paying before community rating was implemented—and by 1997 that community-rated premium had risen to $217.59 a month.

As a result of the departure of thousands, the uninsured population in New York City grew from 20.9 percent in 1990 to 24.8 percent in 1995, according to one report, while the national rate grew from 16.6 percent to 17.4 percent over that same period. ("Explaining the Growing Number of Uninsured," National Center for Policy Analysis)

In Kentucky, the same tactic prompted 45 of 47 insurance companies to withdraw from the state's individual health insurance market. Market failure caused by government intervention then became one more reason in the minds of politicians to impose even more government intervention—a chain reaction that leads deeper and deeper into political manipulation and further dysfunction.

In addition to manipulating private insurance, government has created its own insurance programs—with equally unsatisfactory results. "Social insurance" is the idea that we should all pay the same premium, usually in the form of a payroll deduction, and that we should all be entitled to the same benefits regardless of the level of risk we bring to the global risk pool. America's Social Security and Medicare programs are social insurance systems. Both of these programs are enormously popular. Many people consider them to be unqualifiedly successful. Similar and more extensive social insurance programs in Europe have even greater popular support despite the enormous tax burden they impose on wage-earning participants.

Nevertheless, these programs are highly destructive. For one thing, social insurance is a pay-as-you-go system, and thus a Ponzi scheme. The government does not invest the payroll taxes it collects from workers in order to support their future benefits. Rather, it pays out their taxes to current retirees; when those who are currently working and paying taxes retire, they will have to depend on taxes from the next generation of workers. This system seemed to work early on when a large number of people were paying into the system while only a small number of people were drawing benefits out. But, in the future, as Europe, the United States, and the rest of the world confront a new demographic of aging, analysts say a shrinking pool of workers will be unable to support full social insurance benefits for a retiring baby-boom generation of gigantic size and unreasonably large expectations. If warnings from the General Accounting Office, the Congressional Budget Office, and dozens of independent experts are accurate, Social Security and Medicare will leave both their participants and the government worse off in the long run.

Insurance performs the critical economic functions of spreading risk and of pricing risk. If we do not price risk fairly and objectively, we end up with a system that rewards high-risk (including irresponsible) behavior and punishes low-risk (including responsible) behavior. One of the main differences between social insurance and private insurance is that, although both spread risk, only private insurance prices risk in a meaningful way. Private insurers have a legal and fiduciary responsibility to their insureds. They must price insurance coverage at a level sufficient to accumulate reserves that will be adequate to pay carefully anticipated claims rates. Private policyholders possess legal contracts, enforceable in a court of law, that assure them recourse in case of dispute, malfeasance, or insolvency by the insurance company.

Social insurance, on the other hand, offers none of these protections. Social Security and Medicare, for example, are notorious for growing exponentially beyond their original cost projections. Socially insured people have no legal recourse or protection against increases in premiums (payroll taxes), decreases in benefits (program cutbacks), or the imposition of means tests (welfarization).

In America's mixed economy, social insurance is usually considered a safety net and not a first line of financial defense. When savings, investments, pensions, and private insurance prove inadequate, we look to social insurance to pick up the slack. Unfortunately, however, the very existence of compulsory social insurance debilitates the effectiveness of these private financing vehicles. People save or purchase insurance if they perceive they are vulnerable to a large financial loss. Social insurance distorts that perception. By creating an illusion of low risk, it reduces the demand for private insurance protection.

For example, when President Lyndon Johnson signed the act that created Medicare in 1965, he stated confidently that "no longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings they have so carefully put away over a lifetime so that they might enjoy dignity in their later years. No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations." By building up false hopes like these, Medicare effectively scuttled any hope for a private health insurance market to cover seniors. Today, the elderly spend a larger proportion of their income for health care than they did before Medicare began; Medicare has little hope of continuing to provide full benefits without major premium increases as the baby-boom generation retires; and a private insurance system to take Medicare's place has no realistic chance to develop.

The same problem occurs in other categories of insurance. Most people buy private car, fire, and life insurance. If they did not have these kinds of coverage and the insurable event occurred, they would usually experience a major loss with little direct assistance from the government. On the other hand, very few people purchase hurricane, flood, or earthquake insurance. When a major natural disaster occurs, local and national politicians jump at the opportunity of promising financial assistance of all kinds to the victims. Nothing lets a politician appear compassionate and generous without fear of criticism like a major disaster. Why buy flood insurance if the government indemnifies you with grants and loans every time the Mississippi escapes its banks? In the same way, the marketability of private long-term care insurance is also undercut by the easy availability of nursing-home care financed by Medicaid. One can only wonder at the possible effect on private life insurance sales of the government's liberal indemnification of families victimized by the World Trade Center attacks.

Thus, government impedes the effectiveness of private insurance in two main ways: first, by trying to improve on private insurance with arbitrary controls; secondly, by allegedly mitigating the risks against which private insurance should protect us through mandatory social insurance, public welfare, and emergency grants and loans.

Insurance and Morality

We have seen that insurance performs a vital economic function. To the extent that government regulates or subsidizes insurance, it also becomes a political issue. But insurance has a moral dimension as well. Insuring against risk is one of the most important ways in which individuals take full responsibility for their lives, in accordance with the ethics of Objectivism. And the private marketplace for insurance illustrates how trade allows individuals to cooperate for mutual benefit.

* Insurance is individualistic. Individuals buy insurance by voluntary choice to protect their own self-interest (including the interests of their loved ones and dependents) in accordance with their own assessment of their individual needs and circumstances.

* Insurance is rational and objective. It helps us prepare for the unexpected based on facts and analysis, so we don't have to depend on wishful thinking or blind hope. Premiums and benefits are based on objective risks as determined by hard actuarial data.

* Insurance depends on the trader principle. You won't buy it and the insurance carrier will not sell it unless you each perceive that the transaction will leave you both better off than you were before. When this simple principle is allowed to operate in a free market, the result is a profusion of different policies—covering a wide range of risks, benefit levels, terms and conditions, and durations—that an individual can tailor to his unique situation, with prices controlled by competition.

* Insurance is fair. You know you get what you pay for because your premium is based on underwriting, which measures and prices the level of risk you bring to the risk pool. Nobody forces you to buy insurance, but if you don't have it, you are responsible for the punishing financial consequences if and when the insurable event occurs.

* Insurance serves life. It helps us to manage uncertainty and therefore preserves, sustains, and promotes life.

By contrast, social insurance violates those same ethical principles.

* Social insurance is collectivistic. It treats individuals as means to an end by sacrificing their interests for the sake of others.

* Social insurance is subjective. "Premiums" and benefits are based on political considerations and are established by the authorities.

* Social insurance is non-rational. You pay what it charges and get what it gives you without regard to any reasoned calculation of what you want, what you need, or what you can afford.

* Social insurance is inequitable. By treating everyone the same, it punishes some people (the most responsible and least risky) to reward others (the least responsible and most risky).

* Social insurance violates the trader principle. It is compulsory and monopolistic. It prevents people from choosing to opt out; it offers a single policy with few options, if any; and it is not subject to competition.

* Lastly, social insurance undermines life. It creates a false sense of security that anesthetizes people to risks that they must recognize and confront to live safely.

For all these reasons, it should be clear that "social insurance" is not a type of insurance but its antithesis. It is not a means of dealing with the chaos and confusion of life; it is a source of chaos and confusion. Because social insurance rests on the politics of demagogy, it renders future freedoms and obligations unknowable, and so vitiates our ability to plan. Because social insurance operates through taxes, it robs us of our money—the principal tool we need to give substance to our plans.

The question, then, is not whether social insurance should become private. That is like asking whether drunk drivers should become sober drivers. Of course they should. And social insurance thus needs to be fought through a well-grounded moral crusade, carried to the voting public through lectures, articles, and other means. But until politicians show an inclination to give up their demagogic joy rides, the uncertainties generated by social insurance will remain a personal threat, compounding the uncertainties that are inherent in life. Although we cannot entirely escape the cost of government intervention, we can gain a measure of independence by refusing to rely on government's offer to help. We can and should use genuine insurance—private insurance—to build a wall of private protection between ourselves and life's uncertainty that depends as little as possible on government promises and programs.

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Updated, Monday, February 1, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-003: LTC NEWS AND COMMENT

COVID-19 and Long-Term Care: LTCI Insider
Trust Fall II: Surfin' USA
An afternoon nap could improve your cognitive abilities, study says
New York AG: Nursing Home COVID Deaths Undercounted by 50%
Group Sees Long-Term Care Insurance Claims Rising
American Academy of Actuaries Examines COVID-19's Potential Impacts on Long-Term Care Insurance
Eating Nuts In Your Forties Could Cut Dementia Risk In Later Life, Study Finds
Promoting the sixth insurance program
Dementia, Alzheimer’s not an inevitable part of aging: Study
Some senior living operators add vaccine access to marketing toolkits to help rebuild occupancy
Hourly rates for assisted living CNAs increased by nearly 6% last year

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Updated, Monday, January 25, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-002: LTC NEWS AND COMMENT

Nursing home sector continues to lose jobs, while healthcare overall rebounds: report
Pandemic forcing nursing homes across the country to close
Washington state lawmakers look to the market to cover long-term care costs
Low Interest Rates Push LTCI Prices Up
The Social Security retirement age could change. What that could mean for benefits
Nearly half of Alzheimer’s cases are mild, supporting a focus on early intervention
Six Months Later, Most Wuhan COVID Survivors Still Have Health Issues
Poor Performance of Long-Term Care Product Persists
Joe Biden’s New Health Care Agenda (and CMS’s Big Role In It)
IRS Reversal: Expenses Paid With PPP Loan Funds Are Now Tax-Deductible
CDC study confirms: Coronavirus most often spread by asymptomatic carriers

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Updated, Friday, January 22, 2021, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: SPOUSAL IMPOVERISHMENT, THEN AND NOW

LTC Comment: The myth that access to Medicaid LTC benefits requires impoverishment is pervasive. A dose of reality concerning spousal impoverishment specifically follows the ***news.***

*** NEW 2021 MEDICAID SPOUSAL IMPOVERISHMENT NUMBERS. We’ve just 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 sustained access, contact Steve Moses at smoses@centerltc.com. The 2021 spousal impoverishment numbers are included in the following LTC Bullet. ***

*** 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 Steve at smoses@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. ***

*** QUINTESSENTIAL QUERY: After a program I gave for LTCI producers recently, an attendee asked:

I never have been able to understand why the state and federal government do not enforce existing rules about qualifying for Medicaid or create new ones that will limit their liability. It is a welfare program designed to help those who need it and not a program for the people who can afford to pay for their own care. We have known for years that the Baby Boomers are a ticking time bomb, yet the government ignores it. Can you explain why they are not interested in making Medicaid a program that can be accessed by the ones who really need it?

I replied:

In a nutshell, the problem is decades of drift toward collectivism and dependency on government as everyone’s provider/protector implemented through compulsory social insurance. We’re now paying the price for replacing personal responsibility with government promises. I expect the full bill to come due by 2031 when boomers start turning 85, Social Security and Medicare “trust funds” are depleted and the Fed’s and Treasury’s Faustian bargain with Modern Monetary Theory plays out. Then we’ll learn if there is anything left of the individualistic values and principles that made America great in the first place.

For the full explanation, I recommend my two latest studies, a monograph published in January 2020 titled Medicaid and Long-Term Care and How to Fix Long-Term Care Financing from 2017, published with the Foundation for Government Accountability. ***

LTC BULLET: SPOUSAL IMPOVERISHMENT, THEN AND NOW

LTC Comment: Before the Medicare Catastrophic Coverage Act of 1988, which was signed into law by President Ronald Reagan July 1, 1988, access to Medicaid’s generous long-term care benefits did require spousal impoverishment under certain circumstances. While the “catastrophic” law was still under consideration in Congress, I described the problem and how the proposed legislation would address it in the U.S. Department of Health and Human Services Office of Inspector General’s June 1988 report titled “Medicaid Estate Recoveries: National Program Inspection”:

Under current law, spouses of institutionalized Medicaid recipients are sometimes forced into impoverishment by Medicaid eligibility rules. This usually occurs because the husband is institutionalized first. If, as is often the case, most of the family's income such as Social Security and/or a pension is in the husband's name, Medicaid rules provide that all but a small amount must be applied toward his cost of care. The wife who is left in the home, i.e., the community spouse, retains only a pittance. On the other hand, if the wife is institutionalized first, and the income is still in the husband's name, he keeps the money, because the community spouse has no legal obligation to contribute toward the cost of the institutionalized spouse's care.

The catastrophic bill addresses this problem by increasing the amount of income and resources that the community spouse may retain without affecting the Medicaid eligibility of the institutionalized spouse. Because more people would qualify for assistance and less family income would apply toward the cost of institutional care, the fiscal impact of this solution would be to increase Medicaid expenditures. We found that 3-year cost estimates on similar provisions in different bills varied from $410 million (Congressional Budget Office) to $1,275 million (HCFA actuaries) depending on implementation assumptions. All estimates ascend steeply into future years. (pps. iii-iv, emphasis added.)

Boy did we get that right! Medicaid’s long-term care expenditures have skyrocketed ever since, from $18.5 billion for nursing home and home health care in 1990 to $87.1 billion in 2019, nearly quintupling in the ensuing 29 years.

What MCCA ’88 Did

MCCA ’88 dealt with the spousal impoverishment problem in several ways. It guaranteed the community spouse a “Maximum Monthly Maintenance Needs Allowance” or MMMNA of up to $1,500 per month. The law granted a “Community Spouse Resource Allowance” or CSRA of $60,000.

What these provisions meant is that the wife or husband of an institutionalized Medicaid recipient could retain up to $1,500 per month of the Medicaid spouse’s income instead of that income having to be used to offset Medicaid’s cost of his or her care in the nursing home. Likewise, the community spouse could retain half of the couple’s joint assets not to exceed $60,000, thus exempting those funds from private LTC liability and increasing Medicaid’s expenditures.

MCCA ’88 provided for these spousal impoverishment protections to increase with inflation annually. As of 2021, the original numbers have more than doubled. The MMMNA is now $3,259.50 per month and the CSRA is $130,380. A little over $3,200 per month is not easy living, but it is also most assuredly not “spousal impoverishment.” The official poverty level for single individuals as of 2021 is $12,760 per year or $1,063 per month, a little less than one-third of the MMMNA. Medicaid’s LTC role is to provide a safety net for the poor, not to protect a middle-class life style for people who fail to plan, save, invest or insure for long-term care. So the term “spousal impoverishment” should be stricken from the LTC financing lexicon.

Updated Medicaid Spousal Impoverishment Numbers

In case you’re interested, we’ve updated and published the Medicaid spousal impoverishment numbers every year since 1991, when the MMMNA was $1,662 and the CSRA was $66,480. Those data are available to Center members in The Zone here. You’ll need your user name and password for access to The Zone. Get a reminder from smoses@centerltc.com if you’re already a Member or contact him to join and get access to this valuable resource. Our source is the Centers for Medicare and Medicaid Services (CMS) “2021 SSI and Spousal Impoverishment Standards” here.

A Better Way

Now back to that old OIG report from 1988. Did it oppose the MCCA ‘88’s provisions to eliminate spousal impoverishment? No! But it did offer an alternative approach designed to achieve the same result more cost-effectively:

Certain findings from the OIG’s Medicaid Estate Recoveries report have a direct bearing on the spousal impoverishment issue. In fact, we believe this problem can be resolved at considerably less public expense than is contemplated in the current legislation. We found, for example, that many "impoverished spouses" own their homes free and clear. Their problem is cash flow, not poverty per se. We found that two-thirds of the elderly poor are unable to qualify for any Medicaid services, although many individuals with large assets are eligible for the program's most valuable benefit (institutional care). We documented that recovery of Medicaid payments from the estates of property-holding recipients is very unusual. This is true because assets are (1) transferred, sheltered, expended or concealed by recipients and their families and/or (2) public officials have taken no action to recover. In light of these facts we recommended that propertied recipients be permitted to retain their income and assets while receiving Medicaid long-term care benefits, but only in exchange for a promise, secured by a legal encumbrance, to repay the cost of their care when they no longer need their property. This repayment would be made from their estates or the estates of their last surviving dependent relatives after the property is no longer needed for a livelihood. Such a plan would resolve the spousal impoverishment problem, eliminate the most catastrophic financial impact of long-term illness and add a major nontax revenue source for Medicaid. More importantly, the risk of losing their financial legacy would influence the elderly and their heirs to seek private long-term care insurance protection and thus further relieve fiscal pressure on public programs. (p. iv)

Congress later adopted some of our 1988 report’s recommendations in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). It made estate recoveries mandatory, for example, but it left Medicaid’s many income and asset exemptions unprotected by the “legal encumbrance” to secure that wealth for later recovery as we had recommended. Nor did the federal government strongly enforce the newly required estate recoveries. Worse, OBRA ’93 left the home equity exemption unlimited. That only changed with the Deficit Reduction Act of 2005 (DRA ’05), which capped home equity at $500,000 to $750,000 ($603,000 to $906,000, as of 2021) at state legislatures’ discretion.

The end result is that Medicaid LTC expenditures continue to grow rapidly, the public remains desensitized to LTC risks and costs, private financing of LTC through home equity conversion and private insurance is stymied, and LTC access and quality continue to be serious problems.

If all this seems just a little too “inside baseball” to you, then you have a good idea why the complicated subject of long-term care financing policy remains a mystery to most analysts and policy makers. If you really want to understand what it means, and what has to be done to resolve the problems once and for all, you could do worse than to spend an hour reading the OIG’s report from 33 years ago. Here it is again: “Medicaid Estate Recoveries: National Program Inspection.”

I’d also like to point readers to an earlier study I conducted and wrote that led directly to the Inspector General’s report. The Medicaid Estate Recoveries Study--Volume I: Estate Recoveries in the Medicaid Program -- Health Care Financing Administration (1985). Read it and see if you don’t think we nailed the problem and the solution 36 years ago!

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Updated, Monday, January 11, 2021, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #21-001: LTC NEWS AND COMMENT

Trump Officials Approve Tennessee's Controversial Request To Revamp Medicaid Funding
New Analysis Finds Significant Financial Benefits Locked in Long-Term Care Insurance Policies Sold Fifteen to Twenty-Five Years Ago
One-week US Covid-19 case and death totals are higher than ever
Genworth May Cut Remaining LTCI Sales and Marketing Operations
December Proved To Be Deadliest Month For Residents In Long-Term Care
2021 Economic Outlook Fraught With Uncertainty
Older Adults and COVID-19: Implications for Aging Policy and Practice
MA Beneficiaries See Nearly 20% Fewer Home Health Days Than Traditional Medicare Peers
Genworth to Shift to China Oceanwide Deal Backup Plan
‘Because of You Guys, I’m Stuck in My Room’
The COVID-19 Pandemic Has Upended The LTCi Market
What's Most Hurting the Financial Security of Older Americans?
We need long-term solutions for older Americans’ long-term care
Elder Law Guys: The twelve COVID elder law days of Christmas
Trust Fall
Crushing Despair, Glimmers of Hope: The Top Skilled Nursing Stories of 2020
Senate Passes $2.3T Package of Relief, Funding and Tax Breaks

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Updated, Friday, January 8, 2021, 10:40 AM (Pacific)

Seattle—

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LTC Bullet: Long-Term Care and the Pandemic

LTC Comment: What has the Covid-19 pandemic wrought for long-term care? Answers after the ***news.***

*** ILTCI CONFERENCE GOES VIRTUAL: “After surveying our attendees and careful consideration, we will change the 2021 ILTCI Conference from an in-person meeting to a virtual format.” So announced Barry Fisher, Conference Chairperson and Vince Bodnar, Conference Co-Chairperson recently. They’ve polled past participants for their preferences regarding how to structure and present the leading LTC insurance industry conference in a virtual format. Whatever they come up with will be far better than nothing (last year) but could never match past in-person versions. Nevertheless, we’ll take whatever we can get! Read the Center for Long-Term Care Reform’s History of LTC Insurance Conferences (2019) for a detailed look back at all the Intercompany Long-Term Care Insurance Conferences from the first one, 2001 in Miami to the latest, 2019 in Chicago. ***

*** “Trust Fall: The Untold Story of Washington's LTC Trust Act” is an excellent essay by LTC Associates’ Senior Vice President, Stephen D. Forman. In it Forman describes, explains and debunks the CLASS-like public policy misfire currently being operationalized in the Evergreen State. This evergreen new deal for long-term care “vigorously remakes Washington’s insurance market—without voice from the insurance industry—to the financial injury of residents.” We hope to bring you a “guest bullet” by Mr. Forman summarizing the key points in his essay. In the meantime, don’t wait. Read this provocative essay now while there’s still time to talk sense to Washington State policy makers. As with CLASS, it may be possible to derail this taxpayer shakedown before its major damage is done. Washington voters have already expressed their opposition to the plan twice by rejecting it at the ballot box in 2019 and refusing to fund it with risky investments in 2020. ***

*** IF YOU FIND VALUE IN TODAY’S LTC BULLET, please consider joining the Center for Long-Term Care Reform so you can enjoy the many benefits of membership and stay tuned daily with our LTC Clippings, weekly with LTC E-Alerts and bi-weekly with LTC Bullets. Get in front of your prospects and clients by knowing what’s happening in long-term care news and analysis—and what to say about it—before they blindside you with stories you haven’t heard. ***

LTC BULLET: LONG-TERM CARE AND THE PANDEMIC

LTC Comment: Invited by two leading national distributors of long-term care insurance to help kick off their 2021 sales year, Center for Long-Term Care Reform president Steve Moses delivered the following presentation on Wednesday and Friday of this week. He thanks GoldenCareUSA and Long-Term Care Resources (LTCR) for this opportunity to reflect on the impact Covid-19 is having on long-term care services and financing, including the future prospects for LTC insurance sales. Read on for Steve’s insights in the following presentation notes.

Long-Term Care and the Pandemic
Presented to GoldenCareUSA and Long-Term Care Resources agents and staff
Wednesday and Friday, respectively, January 6 and 8, 2021
By Stephen A. Moses, President
Center for Long-Term Care Reform

Covid Impact: Earthquake, life as we’ve known it changed radically, huge opportunities, giant risks, long-term care and LTC financing are more interesting, challenging, and fun than ever before in my 38 years following the field. The opportunity to do well by doing good selling LTCI has never been greater. You producers, distributors and the carriers you represent to consumers are critical to our country’s surviving this crisis and prospering in the future.

3 Themes: I’ll discuss three major themes or contexts of the Covid-19 pandemic:

Health and long-term care
The Economy
Politics

LTC Clippings since last month, December 2020, are the source for most of what follows. LTC Clippings is a publication we produce and distribute to subscribers.

We send an average of two clippings per day by email to subscribers. Each clipping gives the title, a link to the source, a representative quote and a couple sentences of my analysis to put the information in context.

The purpose of LTC Clippings is to inform agents of news, data, reports, articles, etc. that they need to know before they’re blind-sided by prospects or clients who’ve read something the agents haven’t seen yet.

I’ll make today’s presentation and all the links to original stories it covers available in our next LTC Bullet to be published on Friday. The same day it will be posted on The Moses LTC Blog at www.centerltc.com. You can find it there.

My point: if you received the LTC Clippings you would know all of what I’ll say today already.

If you’re blown away and you want to subscribe, check out our “Membership Levels and Benefits” link and our “Join and Contribute Online” link. Both links will be live in the LTC Bullet on the blog.

Health and LTC Context

Acknowledge sources: Experts like Claude Thau, Sally Leimbach and Margie Barrie.

Watch for two forthcoming white papers by Margie Barrie: “The Impact of Covid-19 on Long-Term Care” and “The Medicare White Paper”

Long-term care is in the news—that’s a big change for better and worse
On the bad side, people are dying in LTC facilities:

Even though just 1 percent of the U.S. population resides in a long-term-care facility, LTC deaths represent nearly four in 10 COVID-19 deaths. (Source – Christine Benz, Morningstar, December 8, 2020.)

I covered the causes, consequences and solutions in my June 1, 2020 op-ed in the WSJ: Nursing Homes, Coronavirus and Medicaid

On January 1, 2021, the New York Times published heart wrenching stories about people who have been trapped in nursing homes watching friends and fellow residents sicken and die around them

1/1/2021, “‘Because of You Guys, I’m Stuck in My Room’,” by Kristin Lin, New York Times

LTC providers have been devastated:

“The dual factors of sharply declining occupancy [down from 85% in Feb to 74% in Sept.] coupled with the high cost of personal protective equipment, COVID-19 testing, and hazard pay for workers is placing the skilled nursing sector under unsustainable financial strain.”
12/4/2020, “ NIC Points to Unprecedented Challenges for Skilled Nursing as Occupancy Remains Low ,” by Patrick Connole, Provider

“Two-thirds of nursing homes say they won’t make it another year given the current operating pace due to increased COVID costs. … Staffing has been the top cost in response to COVID with nine out of 10 nursing homes hiring additional staff and/or paying staff overtime.”
12/16/2020 , “ State of Nursing Home Industry: Facing Financial Crisis and Staffing Challenges” by Beth Martino, AHCA/NCAL

“The COVID-19 pandemic [will contribute] to substantial eldercare cost hikes, especially for assisted living and in-home care. … Over the course of a single year, assisted living community rates increased by 6.15% to an annual national median cost of $51,600.” (And pre-Covid)
12/3/2020, “ COVID-19 linked to ‘substantial cost increases’ in assisted living: survey ,” by Kimberly Bonvissuto, McKnight’s Senior Living

“The United States spent a collective $172.2 billion on care at nursing homes and continuing care retirement communities (CCRCs) in 2019…; that’s a gain of 3.3% [from] 2018. But that increase pales in comparison to the 7.7% jump in spending on home health services during that time, from $105.4 billion in 2018 to $113.5 billion in 2019.” Again, all pre-Covid so expect much more coming.
12/16/2020, “ Spending Growth on Nursing Home Care Falls Far Behind Home Health, Hospitals ,” by Alex Spanko, Skilled Nursing News

Shortage of health care workers: “Notwithstanding sign-on bonuses, competitive salaries and benefits packages, recruiting [caregivers] is a challenge, [one home health provider] said. ‘Before the pandemic, I used to get 10 applicants a week for our open positions. Now I’m getting one or two.’”
12/14/2020, “Help wanted: More home healthcare workers due to COVID-19 ,” by Joe Jancsurak, McKnight’s Senior Living

People aren’t exactly lining up for minimum-wage jobs in Covid’s bullseye with higher unemployment benefits readily available. Go figure.

Covid had a crazy impact on health care costs beyond long-term care:

Hospital costs down 36% due to elimination of noncritical services such as elective surgeries

Dental care down 65%. When was the last time you saw a dentist?

Flu cases lower than normal so far this year; measures taken to avoid COVID-19 are likely the reason
12/11/2020, “Flu cases lower than normal so far this year, COVID-19 likely the reason ,” by Brian P. Dunleavy, UPI
12/16/2020, “COVID-19 Shocks The US Health Sector: A Review Of Early Economic Impacts,” by George Miller, Corwin Rhyan, Ani Turner, and Katherine Hempstead, Health Affairs

How is the public reacting to all this? People want to stay home and they want to keep their parents at home:

“The number of COVID-19 cases and deaths for home- and community-based services programs pales in comparison with those for nursing homes … After [researchers] compared positive COVID-19 cases and deaths in three Medicaid [home care] programs to results for nursing home and assisted living residents for March through July, they found that only 3% of older [home care] adults were infected, and only 1% died from COVID-19. Meanwhile, nursing home and assisted living residents showed a 37% positivity rate and an 11% death rate.”
12/10/2020, “Study shows far fewer COVID-19 cases at home than in nursing homes, assisted living,” by Joe Jancsurak , McKnight’s Senior Living

“61% of Americans now report that they would rather die than live in a nursing home. … Americans prefer to stay in their home for long-term care (71%), and most would like to have the option of relying on a family member if they needed long-term care (68%) but would not expect them to [provide such care] if they were unable to pay them (69%).’”
12/9/2020, “More than 6 in 10 Americans now say they would rather die than live in nursing home: survey ,” by Amy Novotney, McKnight’s Senior Living

“The vast majority of Americans (87%) believe it’s more important than ever for people to stay at home for long-term care, as well as have a plan for long-term care (85%) and have long-term care insurance (81%) as COVID-19 has raised concerns about the safety of nursing homes.”
12/16/2020, “Americans Worry More Now About Their Long-Term Care Plans and Prioritize Staying At Home ,” by Nationwide Retirement Institute, Advisor Magazine

There will be more cost and more cost increase awareness

Nursing home, assisted living and home care costs will rise further, especially for home care

LTCI prices are rising, especially for hybrids

According to Margie Barrie: “Virtually all carriers have increased their premium rates and most have limited the application age to 70.”

The impact on traditional LTCI products has been more limited, but stricter underwriting requirements keep coming: Applications may be postponed if someone has been outside the country within the past month; or in contact with somebody who tested positive; or if quarantined, even with no diagnosis or symptoms.

Simultaneously Medicare is pushing more costs onto consumers. To ensure that Medicare remains financially viable, a number of major changes have been introduced over the last several years:

So called “Value Based Care” means fewer services being provided to beneficiaries.

People are being sent home sooner from the hospital and nursing home.

Medicare has changed the payment process. Hospitals will now control the distribution of payments for all parts of the long term care continuum.

For details, read Margie’s forthcoming “The Medicare White Paper.”

Sensitivity to risk is very high: the unpredictability of life and health is on everyone’s mind, observes Sally Leimbach

“A majority of today’s workers and retirees range from feeling cautious to pessimistic about the economic outlook for 2021, with nearly 75% concerned about how the global pandemic may impact their retirement savings ….”
1/5/2021, “2021 Economic Outlook Fraught With Uncertainty,” by Principal Financial Group, Advisor Today

People are more aware of their own and their parents’ vulnerability

Will we have more pandemics, different ones, worse ones? Will Covid-19 have long-term negative effects on brain health?

“Although almost every household with an income of $100,000 or more reports saving for retirement, only half of them (49%) say they believe they will ever be able to retire.”

12/8/2020, “ Half of Americans with incomes over $100,000 think they’ll never be able to retire ,” by Amy Novotney, McKnight’s Senior Living

“According to an analysis of applicants for traditional long-term care insurance in 2019, decline rates ranged from 19.4 percent for individuals applying between ages 40 to 49 to 53.6 percent after age 75. ‘Couples comprise the majority of traditional long-term care insurance applicants,’ explains Claude Thau, National Brokerage Director at USA-BGA … ‘The likelihood that at least one spouse will be declined ranges from 35.0 percent for spouses between ages 40 and 49 to 78.5 percent for couples age 75 or older.’” That’s pre-Covid too so likely getting worse.
12/10/2020, “Long-Term Care Insurance Decline Rates Reported,” by Jesse Slome, American Association for Long-Term Care Insurance

Insurability is declining as urgency for consumers is increasing: Insurance companies are wary to take on applicants who have had the virus or been exposed to it. Intelligent people who realize this are more inclined to purchase LTCI while they still can prove that Covid-19 has not yet compromised their health history.

New and different products are available and catching hold

Hybrids provide a wide range of benefits

Traditional products still offer the biggest leverage against LTC risk

But carriers face increasing costs and consumers confront higher premiums and/or reduced benefits due to the government’s artificially low interest rates.
12/18/2020, “ COVID-19 Drove Up Group Term Life Death Claims: SOA Survey,” by Allison Bell, ThinkAdvisor

In the meantime, Suze Orman says people “must have LTCI”

Virtual marketing and sales via face-to-face electronic connections make LTCI easier and less expensive to sell, eliminating drive time for example

People will be back at work after the vaccine, so their future financial outlook will become more stable.

Bottom line: there’s never been a better time to sell (or to buy) LTCI

Now let’s examine the situation from the standpoint of the …

Economic Context
Characterized by irresponsible fiscal and monetary policy

Consider the national debt. According to the “Debt clock” for 2008 (Obama’s first term) $9.6 trillion; 2016 (Trump elected) $19.2 trillion; 2021, (now) $27.8 trillion; 2025 (end of Biden term) $48.9 trillion projected. See a trend?
These current and projected numbers are going up so fast, they may increase by hundreds of billions of dollars between the time I posted them yesterday and when you click the links
So-called “stimulus” to confront the economic downturn caused by the pandemic has resulted in these huge deficits and rampant money printing by the Federal Reserve to monetize the skyrocketing debt.

All this new money had to go somewhere. It didn’t inflate consumer prices so much because of low demand suppressed by high unemployment.

So instead, we’ve seen rapid inflation in equities (stocks and bonds) and real estate.

Ironically, in this economic crisis stock markets are at all-time highs.

Home prices rose 8.4% in the year that ended in October, up from a 7% annual rate the prior month to a 14-year high: U.S. Home-Price Growth Accelerated in October

People working from home with shorter or no commutes are looking for larger homes in suburbia offering more space, better home offices and a place to provide home care if needed for themselves or their parents.

The result is that we have more upper-middle-class people, exactly the demographic cohort most likely to consider and buy LTCI

They have more wealth to protect and more money for premiums.

People going back to work after the vaccines kick in means a bigger worksite market.

On the negative side, inequality is exacerbated: elderly poor get poorer even as the rich get richer.

There will be more elderly debt: “Adults age 70 and older have increased their debt since the Great Recession — largely due to mortgage payments — and this hampers their ability to overcome ‘negative events’ as they age …” Substitute “a long-term care crisis” for “negative events” and you can see what this means.

The elderly poor get poorer even as the rich get richer due to irresponsible monetary policies that inflate stock and real estate values. What this means in terms of long-term care is that more people will depend on Medicaid when Medicaid is least able to support them. The good news is that the well-to-do will have more wealth to protect and more money to pay premiums for LTC insurance. So the current mess in LTC services and financing will worsen. Medicaid will continue to deteriorate and private LTCI will become more desirable and salable than ever before.

12/29/2020, “What's Hurting the Financial Security of Older Americans?,” by Ginger Szala, ThinkAdvisor

Bottom line: there’s never been a better time to sell LTCI

Now let’s look at the political context. As I prepared this presentation before the Georgia Senate run-off elections, it was impossible to predict what the future might hold politically. Would the Democrats win control of the Senate taking the trifecta of President, House and Senate? That would free them to pursue their left wing’s most radical progressive wish list. Or would the Republicans hold control of the Senate and remain a bulwark of opposition to the goals of Bernie Sanders, Elizabeth Warren, and Alexandria Ocasio-Cortez.

It was a cliff-hanger, but now we know …

The Democrats have taken both Georgia Senate races and so will control both houses of Congress as well as the Presidency. Vice President Kamala Harris will cast the deciding vote in case of a 50/50 tie on key issues. We’ll likely see more progressive measures pass, more spending approved, more money printing to cover it, and higher national debt than otherwise. Only time will tell what the long-term results of such policies will be.

Political Context
Biden Administration

As we’ve seen from the economic context, there isn’t much concern for financial responsibility any more in either party. We have to ask …

Will Modern Monetary Theory, the idea that the government can print and spend unlimited amounts of money without consequences, will MMT prevail allowing progressives to pursue their whole bucket list of goals including “free” long-term care provided by Medicare? That would finally wipe out private LTC insurance.

Actually, the Biden Administration’s LTC wish list is much less ambitious.

According to the “Biden-Harris Plan to Make Nursing Homes and Long-term Care Facilities Safe” the Biden Administration’s whole focus is on regulation and enforcement. For example, they want to …

Promote safety and care
Ensure appropriate oversight of facilities to protect patient safety and wellbeing
Provide oversight for how taxpayer and resident funds are spent and provide avenues for bringing complaints
Increase access to home and community-based services for the number of older Americans and people with disabilities able to receive home and community-based services (HCBS).
All nice sounding ideas, but what they mean is more inspections, more fines and financial penalties, not more money and support. In a phrase “The beatings will continue until morale improves.”

The Biden Plan For Older Americans addresses long-term care by promising to …

Protect Medicare as we know it.

“The Congressional Budget Office (CBO) now projects that the trust fund will be exhausted in 2024 , a little more than three years from now, which is the nearest the fund has come to exhaustion in the 55 years of its existence.

12/15/2020, “The Coming Crisis For The Medicare Trust Fund ,” by David Muhlestein, Health Affairs

The Biden Plan will protect Medicaid funding and make sure the program gives those on Medicaid who need long-term care the flexibility to choose home- and community-based care.

Heavier than ever reliance on Medicaid, a bankrupt welfare program, is a mistake. Making Medicaid LTC more attractive by offering more home care does not save money and further reduces consumers’ perception of LTC risk.

Consider Medicaid’s well-known deficiencies …

Access and quality problems, notoriously low reimbursement rates, discrimination, institutional bias, loss of independence and control, but add to these some new defects …

Managed long-term care through Medicaid is increasing, adding another layer of compensation and control between the patient and provider.
“Over half of states contract with managed care organizations to provide [LTC] services. [GAO] examined 6 states, each of which reported finding significant problems with the quality of care provided through these contracts. In some cases, the problems led to patient injury or neglect.” 12/16/2020, “Medicaid Long-Term Services and Supports: Access and Quality Problems in Managed Care Demand Improved Oversight

On top of that: “The true Medicaid improper-payment rate now exceeds 25 percent, meaning that more than one in every four dollars spent in the Medicaid program — or more than $100 billion in federal spending each year — is in violation of program rules. It turns out that millions of Medicaid enrollees are ineligible for the program — in most cases because they earn too much income, but in others because they are not lawful residents.”
12/9/2020, “ Improper Medicaid Payments Have Soared since Obamacare ,” by Brian Blase and Hayden Dublois, National Review

The Biden Plan promises a $5,000 tax credit for informal caregivers, but that’s

Not above the line LTCI tax deductibility

Not cafeteria plan eligibility for LTCI

Biden will increase the generosity of tax benefits for older Americans who choose to buy long-term care insurance and pay for it using their savings for retirement.

Let people use retirement funds for LTCI premiums. (Good)

Biden made an unpromising first political appointment: California’s Attorney General, Xavier Becerra, is going to run DHHS

He was a big supporter of the CLASS Act and all of ObamaCare

12/8/2020, “Biden nominates defender of long-term care causes and a virus expert to health team,” by Alicia Lasek, McKnight’s LTC News

Biden wants to lower the Medicare age to 60

What happened to “Medicare for All?” “Medicare at 60” is “Medicare For…Gotten.”
Hospitals fear adding millions of people to Medicare will cost them billions of dollars in revenue.”
11/11/2020, “Biden Plan to Lower Medicare Eligibility Age to 60 Faces Hostility From Hospitals,” by Phil Galewitz, Kaiser Health News
Medicare at 60 is just one more way for government to say “don’t worry” just before bottom falls out of the trust fund.

I’m going to close by explaining biggest risk to private long-term care insurance:
LTC intelligentsia has formed a consensus around compulsory social insurance

Their analysis goes like this:

Long-term care is in crisis;
Especially now in the pandemic;
The middle class is unprotected;
LTCI failed;
Big government programs aren’t coming;
Medicaid requires impoverishment;
So our best hope is what Washington State is doing:
Compulsory social insurance funded by mandatory taxes on workers and with a back-end focus;
But “Keystone Kops” and “Trust Fall.”

I’ll explain why this analysis and recommendation is wrong and doomed to fail disastrously in “Why LTCI Fails,” my article in the February Broker World. Watch for it.

Bottom line: Given what’s happening in health and long-term care, in the U.S. economy, and politically, there’s never been a better time to sell LTCI.

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Updated, Monday, December 21, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-049: LTC NEWS AND COMMENT

COVID-19 Shocks The US Health Sector: A Review Of Early Economic Impacts
COVID-19 Drove Up Group Term Life Death Claims: SOA Survey
Spending Growth on Nursing Home Care Falls Far Behind Home Health, Hospitals
Medicaid Long-Term Services and Supports: Access and Quality Problems in Managed Care Demand Improved Oversight
Americans Worry More Now About Their Long-Term Care Plans and Prioritize Staying At Home
State of Nursing Home Industry: Facing Financial Crisis and Staffing Challenges
HC2 Gets Offer for Long-Term Care Insurance Business
The Coming Crisis For The Medicare Trust Fund
Making Care Work Pay: How A Living Wage For LTSS Workers Benefits All
Medicare Advantage Beneficiaries Log Almost 30% Fewer SNF Days Than Traditional Medicare
Help wanted: More home healthcare workers due to COVID-19
Flu cases lower than normal so far this year, COVID-19 likely the reason

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Updated, Friday, December 18, 2020, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2019 DATA UPDATE

*** TODAY'S LTC BULLET is sponsored by Claude Thau, who provides many unique services to advisors as National Brokerage Director for USA-BGA and to other entities as a consultant, in the individual, worksite and affinity group markets. For example, his revolutionary “Range of Exposure” tool projects clients’ likelihood (joint for a couple) of spending $100,000; $250K; $500K or over $1,000,000 on long-term care, based on their personal characteristics and estimates how much of their cost in each range would be covered by various traditional or linked insurance designs. Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. You can reach him at 913-707-8863 or claude.thau@gmail.com. ***

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2019 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 2019 statistics on its website at NHE Tables (ZIP). Click on that link to download the tables, unzip them, then click on the data tables of interest, Tables 14 and 15 for our purposes.

Health Affairs has published a summary and analysis of the new data titled “National Health Care Spending in 2019: Steady Growth for the Fourth Consecutive Year." Health Affairs subscribers can access the full text of that article here. Others can purchase it. The “Abstract” is available free. A good summary of the new long-term care data is here.

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 eighteenth in a row we’ve done annually to analyze the federal government’s enormous, and we argue, often detrimental, impact on long-term care financing. If you'd like to see the earlier versions, go here and search for “So What if the Government Pays for Most LTC.” You’ll find our yearly analyses of the data going all the way back to "So What If the Government Pays for Most LTC, 2002 Data Update."

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"So What If the Government Pays for Most LTC, 2019 Data Update"
by
Stephen A. Moses

Nursing Homes

America spent $172.7 billion on nursing facilities and continuing care retirement communities in 2019. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 49 years (from 26.8% in 1970 to 51.5% in 2019, up 24.7 % of the total) while out-of-pocket costs have declined (from 49.2% in 1970 to 26.4% in 2019, down 22.8% 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 1970-2019.

So What? Consumers' liability for nursing home and CCRC costs has declined by nearly half, down 46.3% in the past almost five decades while the share paid by Medicaid and Medicare has nearly doubled, up 92.2%.

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 $595,000 and in some states up to $893,000 of home equity (as of 1/1/20). No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program. Thus, although Medicaid pays less than one-third of the cost of nursing home (and CCRC) care (29.4% of the dollars in 2019), it covers two-thirds (66.5%) of all nursing home patient days.

So What? Medicaid pays in full or subsidizes two-thirds of all nursing home patient days. Even if Medicaid pays nothing with the entire amount due contributed from the recipient's income, the nursing home receives Medicaid's dismally low reimbursement rate.

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care. No wonder nursing homes risk insolvency when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care. “With states setting the Medicaid rates paid to nursing centers, there is a wide variation in the percentage of costs covered by the rates. In 2015, the coverage ranged from a low of 73.5 percent to a high of 100 percent. A similar range exists with the 2017 projected shortfall across the states.” (Latest available data) Source: A Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Private Health Insurance

Don't be fooled by the 10.4% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2019. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because many LTCI policies pay beneficiaries who then pay the providers. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments. This fact further inflates the out-of-pocket figure artificially.

Assisted Living

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 $595,000 or $893,000 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.

Home Health Care

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $113.5 billion on home health care in 2019. Medicare (38.7%) and Medicaid (32.0%) paid 70.7% of this total and private health insurance (not LTC insurance) paid 14.6%. Only 11.0% 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 1970-2019.

So What? Only one out of every nine dollars spent on home health care comes out of the pockets of patients and a large portion of that comes from the income (not assets) of people already on Medicaid.

No wonder the public does not feel the sense of urgency about this risk that they would if they were more at risk for the cost of their care.

Note especially:

Medicaid and Long-Term Care (2020) at http://www.centerltc.com/pubs/Medicaid_and_Long-Term_Care.pdf

“How to Fix Long-Term Care Financing” (2017), at http://www.centerltc.com/pubs/How-To-Fix-Long-Term-Care-Financing.pdf

“CASSANDRA’S QUANDARY: The Future of Long-Term Care” (2016), at http://www.centerltc.com/pubs/FIA-Cassandra-Quandry.pdf.

“How to Fix Long-Term Care,” at http://www.centerltc.com/BriefingPapers/Overview.htm;

"Medi-Cal Long-Term Care: Safety Net or Hammock?" at http://www.centerltc.com/pubs/Medi-Cal_LTC--Safety_Net_or_Hammock.pdf;

"The LTC Graduate Seminar Transcript" here (requires password, contact smoses@centerltc.com);

"Aging America's Achilles' Heel: Medicaid Long-Term Care" at http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and

"The Realist's Guide to Medicaid and Long-Term Care" at http://www.centerltc.org/realistsguide.pdf.

In the Deficit Reduction Act of 2005, Congress took some significant steps toward addressing these problems. A cap was placed for the first time on Medicaid's home equity exemption and several of the more egregious Medicaid planning abuses were ended. But much more remains to be done. With the Age Wave starting to crest and threatening to crash over the next two decades, we can only hope it isn't too late already.

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Updated, Monday, December 14, 2020, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #20-048: LTC NEWS AND COMMENT

GE Puts SEC Long-Term Care Insurance Probe Behind It
Long-Term Care Insurance Decline Rates Reported
Improper Medicaid Payments Have Soared since Obamacare
Study shows far fewer COVID-19 cases at home than in nursing homes, assisted living
‘We can no longer ignore this’: Affordable long-term care is urgent priority, panelists say
Measuring The New Costs Of Care: How the pandemic is exacerbating the already rising price-points of long-term-care
More than 6 in 10 Americans now say they would rather die than live in nursing home: survey
Long-Term Care Planning Firm Sees Life-LTC Hybrid Prices Rising
Half of Americans with incomes over $100,000 think they’ll never be able to retire
Biden nominates defender of long-term care causes and a virus expert to health team
BREAKING: HHS awards nursing homes $523M in COVID-19 performance payments
MedPAC: Nursing Homes on Solid Financial Ground Despite COVID, Medicare Boost ‘Poor Approach’
NIC Points to Unprecedented Challenges for Skilled Nursing as Occupancy Remains Low

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Updated, Monday, December 7, 2020, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #20-047: LTC NEWS AND COMMENT

COVID-19 linked to ‘substantial cost increases’ in assisted living: survey
Cost of Care: Trends & Insights
Town’s only nursing facility converting to ALF, as national study finds ‘dangerously low’ occupancy threatening many SNFs
SNF occupancy ticks up but is ‘dangerously’ low and threatens long-term survival
CDC advisers: Long-term care workers, residents should receive first COVID-19 vaccinations
Life’s Third Age: A Public Television Pledge Special
Genworth, China Oceanwide Push Deal Deadline Back
Financial ‘symptoms’ of dementia seen up to 6 years before diagnosis
Medicaid is hemorrhaging $100B on Americans ineligible for the program
Nearly 6 million Americans expect to lose homes in the next 2 months: survey
COVID-19 Has Claimed the Lives of 100,000 Long-Term Care Residents and Staff
Nursing home residents could start receiving COVID vaccines in about 2 weeks
CMS’s 2020 Final Medicaid Managed Care Rule: A Summary of Major Changes
COVID-19 Pandemic Shifts Caregiving Responsibilities

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Updated, Friday, December 4, 2020, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: IS MEDICAID THE LTC SOLUTION OR THE PROBLEM?

LTC Comment: Will more Medicaid funding and regulation help (short-term) and harm (long-term) America’s fragile long-term care system? Answers after the ***news.***

*** “LTC CLIPPINGS” is a special daily service that premium Center members ($250 per year or $21 per month) and above can opt to receive. Steve Moses scans the internet for news, articles, reports and data you need to know before your prospects start asking about them. He provides the date, title, author, a link, a representative quote and a brief, often humorous or satirical, but always thoughtful comment. Know what you need to know before you’re caught off guard. Subscribe to LTC Clippings. ***

*** RECENT LTC CLIPPINGS:

11/28/2020, “Medicaid is hemorrhaging $100B on Americans ineligible for the program,” by Brian Blase, New York Post

Quote: “The federal government’s improper Medicaid payments now exceed $100 billion a year. This means that more than one-in-four dollars flowing out of Medicaid — our nation’s third-largest government program — do not meet program rules. This staggering failure doesn’t just reduce health-care access for the truly eligible, it also harms taxpayers who fund it.”

LTC Comment: This is an excellent piece by my co-author of “Nursing Homes, Coronavirus and Medicaid,” published June 1, 2020, in the Wall Street Journal. The problem of improper payments is even worse since the Families First Coronavirus Response Act (FFCRA), signed March 18, 2020, imposed maintenance of effort rules prohibiting states from terminating eligibility even for the ineligible. See Medicaid Maintenance of Eligibility (MOE) Requirements: Issues to Watch When They End, Kaiser Family Foundation, September 22, 2020, for details. Kind of makes tracking improper payments moot if ineligibility itself isn’t “improper.” Ugh!

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11/25/2020, “COVID-19 Has Claimed the Lives of 100,000 Long-Term Care Residents and Staff,” by Priya Chidambaram, Rachel Garfield and Tricia Neuman, Kaiser Family Foundation

Quote: “This week marks a bleak milestone in the pandemic’s effect on residents and staff in long-term care facilities across the country. According to our latest analysis of state-reported data, COVID-19 has claimed the lives of more than 100,000 long-term care facility residents and staff as of the last week in November. This finding comes at a time when public health experts are predicting a surge in cases after holiday gatherings and increased time indoors due to winter weather, which will have ripple effects on hospitals and nursing homes, given the close relationship between community spread and cases in congregate care settings. As the nation braces for the fallout of the holiday, recent data on deaths in long-term care facilities highlight the ongoing disproportionate impact on this high-risk population.”

LTC Comment: Maybe the time has come for another “Long-Term Care Consciousness Tour.” Here’s what the first one was like: http://www.centerltc.com/LTC%20Tour/LTC_Tour_Index.htm. This is my favorite reminiscence of that 2008-9 Tour. The need for long-term care planning is even greater now than it was then.

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11/20/2020, “Nearly 6 million Americans expect to lose homes in the next 2 months: survey,” by Amy Novotney, McKnight’s Senior Living

Quote: “Approximately 5.8 million Americans — including many seniors — say they are somewhat or very likely to face eviction or foreclosure in the next two months, according to a Bloomberg analysis of survey data from the U.S. Census Bureau. The survey also found that about 28% of renters, or roughly 14.9 million Americans, have little to no confidence that they’ll be able to pay their December rent.”

LTC Comment: So what’s next? Let them suffer? Or another paroxysm of government borrowing and money printing to aid home buyers and renters? And, when that public debt bill comes due, what then? ***

LTC BULLET: IS MEDICAID THE LTC SOLUTION OR THE PROBLEM?

LTC Comment: As the Covid plague surged through long-term care facilities this spring, one thing was certain. The long-term care intelligentsia would recommend more government, specifically Medicaid, spending. Our favorite federal fetishist, Judith Feder of the McCourt School of Public Policy at Georgetown University, was no exception. In May 2020, she proposed …

Long-term care financing policy should be modified to either adjust federal matching funds by the age of each state’s population, or fully federalize the funding of LTC expenses of Medicaid beneficiaries who are also eligible for Medicare. (p. 350)

That didn’t happen, won’t, and shouldn’t. Federal funding and regulation of long-term care are what caused us to rely excessively on underfinanced institutional care settings for elderly people leaving them susceptible to the pandemic’s ravages. More of what caused the problem in the first place will hurt, not help.

In fact, what the federal government actually did exacerbated the problem of excessive federal dependency. In Feder’s words …

The Families First Coronavirus Response Act included a modest 6.2 percentage point bump in the Medicaid match tied to the public health emergency, conditional on states’ retention of current eligibility levels or “maintenance of effort” (Broaddus, 2020). (p. 352)

So, the Feds gave states a little more money but only if they maintained their current Medicaid efforts. What does this “maintenance of effort” mean? According to the Kaiser Family Foundation …

To receive the enhanced federal matching funds, states must meet certain MOE requirements that include ensuring continuous coverage for current enrollees. Specifically, states must provide continuous eligibility through the end of the month in which the PHE [public health emergency] ends for those enrolled as of March 18, 2020, or at any time thereafter during the PHE period, unless the person ceases to be a state resident or requests a voluntary coverage termination. Medicaid eligibility during this time must continue “regardless of any changes in circumstances or redeterminations at scheduled renewals that would otherwise result in termination.”¹ (Emphasis in the original)

In case that bureaucratese confounds you, what it means is that state Medicaid programs, if they want to receive the extra federal money, can’t tighten their loose LTC financial eligibility rules. They can’t even terminate Medicaid recipients who are proven to be totally ineligible. They must throw the federal financial floodgates wide open.

So how is this generous policy working out so far? Are people in nursing homes finally free from worry and sickness? Hardly. According to the Kaiser Family Foundation …

This week marks a bleak milestone in the pandemic’s effect on residents and staff in long-term care facilities across the country. According to our latest analysis of state-reported data, COVID-19 has claimed the lives of more than 100,000 long-term care facility residents and staff as of the last week in November.

The holidays and long winter months ahead presage much worse. Current public policy for long-term care services and financing is deadly. We should be asking: “How did we get into this mess?” not “How much more federal money and regulations can we pour on?”

For an answer to the first question, see Medicaid and Long-Term. That 2020 monograph explains step by step how Medicaid caused the very problems that people ask it to solve today. The study’s recommendations explain how to fix the problems Medicaid created.

For specific state-by-state analysis and recommendation, see our many state-specific reports at http://www.centerltc.com/reports.htm. As you see the increasingly frequent pleas of Governors and long-term care trade groups for federal relief, visit that site, find our report for whichever state, and forward its link to them. Policy makers can reduce Medicaid costs and simultaneously expand and improve care, but they must first understand why costs are so high now and care quality so diminished.

Answers to long-term care’s persistent problems—poor access and quality, institutional bias, inadequate funding, etc.—are readily available. The knee-jerk reaction to increase Medicaid actually cripples any hope to fix these problems in the future. Yet, it’s easy to understand why politicians and provider associations gravitate toward the easy money in the current crisis. Any port in a storm.

Unfortunately, higher spending for Medicaid in the short term is far more likely than thoughtful restraint given the incoming Biden administration’s ideological predispositions. With Yellen at Treasury, pile-it-on Powell at the Fed, the Modern Monetary Theory predominating, and fulsome support for unlimited federal spending guaranteed from academia and the media, greater damage to long-term care services and financing is probably inescapable.

It’s as though a family had their maxed-out credit card limit miraculously doubled all of a sudden. The good times would roll until they hit the higher limit too. What’s the upper limit for federal spending? I don’t know, but I’m afraid we’re going to find out.

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Updated, Monday, November 23, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-046: LTC NEWS AND COMMENT

How to Save Money on Assisted Living Costs
Higher Medicare Premiums For 2021 Announced, Topping Out At $504.90
CalPERS approves 90% price increase for long term care insurance plans
Vast majority of providers struggling to fill work shifts or hire new employees: industry survey shows
Where Are the Gray Panthers
COVID-19’s Deadly Lesson: Time To Revamp Long-Term Care
Vulnerable Senior Populations in the Pandemic
89 percent of families with loved ones in long-term care facilities consider home care: survey
Economists warn of lag time between vaccine and recovery
Parkinson: ‘Worst Fears Have Come True’ as Nursing Home COVID Cases Hit New Record, Operators ‘Powerless’ to Stop Trend Alone
81% of providers encouraging residents to stay put for Thanksgiving: survey
Big, big changes’ coming to nursing home regulation thanks to pandemic’s destruction, Grabowski says

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Updated, Friday, November 20, 2020, 9:00 AM (Pacific)

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LTC Comment: Today’s “Guest Bullet” by Bruce Stahl of RGA Reinsurance Company develops the idea of “Caregiver Insurance” after the ***news.***

* LTC IMPACT WEEK EXCELLS: Last week, on November 10, 11, 12, NAIFA’s Limited & Extended Care Planning Center Zoomed nine hours of briefings aimed at LTCI producers. Kudos to LECP Executive Director Carroll Golden for sponsoring this creative educational program and to Steve Cain of LTCI Partners for his omnipresent participation. Highlights included Matt Hamann of Transamerica speaking on “Why LTC Now?”; Denise Gott of ACSIA Partners on “LTC Worksite Enrollments in a Virtual World”; Marc Glickman of BuddyIns presentation on the “Technology Panel”; Shelley Giordano of Mutual of Omaha Mortgage on “No, Long Term Care Insurance Does Not Mean No Plan at All for Long Term Care Needs”; and Barry Fisher and Ron Hagelman, Jr., Principals of Ice Floe Consulting, LLC reporting on results of their survey with Oliver Wyman’s Vince Bodnar, “Who is Selling What? To Whom, How & Why?” This innovative program provided a great foundation on which to build. Room for improvement includes increasing the turnout which I never noticed reaching 200 attendees and considering the larger market in which LTC insurance is sold, including the public policy context, LTC providers, and the elephant in the room, Medicaid’s crowd out of LTC risk and planning. *

*** SUBSCRIBE to LTC Bullets, LTC E-Alerts, and LTC Clippings. Join the Center for Long-Term Care Reform here. Due to the pandemic, long-term care is in the news more than ever before. Calls for more funding to alleviate the strain on seniors’ housing and caregivers are everywhere in the media. But no one has any idea where to find the money to improve long-term care. Except the Center for Long-Term Care Reform. We advocate targeting scarce public resources to those most in need and using the savings to incentivize private financing alternatives such as home equity conversion and long-term care insurance. Check out our analysis and recommendations in Medicaid and Long-Term Care (2020) and How to Fix Long-Term Care Financing (2017). Then join the Center and encourage your employers to join as corporate members. Our “Membership Levels and Benefits” schedule explains all the options. Contact Steve Moses at 425-891-3640 or smoses@centerltc.com with questions or comments. ***

LTC BULLET: CAREGIVER INSURANCE

LTC Comment: Bruce Stahl and Winona Berdine, both vice presidents at RGA Reinsurance Company, published “A Middle-Market Senior Care Solution” in the August 2020 issue of the Society of Actuaries’ Long-Term Care News. Their idea is a product to mitigate LTCI’s “affordability gap.”

They propose a “living benefits solution” that “reaches the middle market, provides security to generations of family members, satisfies real customer financial needs and provides them with peace of mind, minimizes risk in the morbidity tail, reduces asset and interest rate risk, and reduces concerns about pandemic risk in facilities.” (LTC News)

A tall order, but intriguing, so we asked Bruce Stahl to tell us more. His reply follows. But first read “A Middle-Market Senior Care Solution” to get details on the proposed product.

“Caregiver Insurance”
by
Bruce Stahl

The attributes of the product define it better than the name. Our focus groups recommended calling it something with a personal flavor, like “Caregiver Insurance.” Originally, we at RGA were calling it a decreasing term product and a career protection product. Yet the attribute of having a pre-chosen terminus date and the fact that the benefits would be determined by another person’s expenses make the product valuable.

Here’s how it works: The parents are underwritten, but the working adult child is the policyholder. The policy covers the costs of a parent’s care while the child is working. This allows the child to save for their own retirement while still addressing the cost of care needs of parents. The term of coverage is designed to end when the policyholder retires and can care for parents themselves without interrupting their own career.

Typically, care is assumed to be in the parent’s home, given the expectation that the retiree will care for their parents at a time suitable to their plans and budget. The applicant would hypothetically purchase a policy to cover care expenses for the span of time they intend to remain in the workforce. The applicant could also choose a term that allows payment of benefits for additional time after retirement, such as for a prolonged vacation, before taking up caregiver duties. But the policy does not have a waiver of premium benefit, so the policyholder would want to plan on continuing premium payments even when not earning income.

Distributors of senior benefits products might find Caregiver Insurance an attractive product to promote to the insurers they represent. It could fit well as a supplemental worksite benefit if underwriting with electronic medical records could be sufficient. It could also work well for Medicare Supplemental or Advantage distributors, who can contact these adult children policyholders ten to twenty years before they themselves are ready for Med Supp.

Also, if distributors are concerned that their insurance partners might not be willing to take on investment risk at this time, the product has only a small pool of assets available to invest because the maximum benefit decreases as the policy ages, the risk is far lower.

Finally, if insurers want to avoid standalone LTCI’s reputation for premium rate increases, this product, even though it is not LTCI, does cover many long-term care needs without the concerns of increased longevity and lack of very old age mortality and morbidity experience.

Bruce Stahl, ASA MAAA is senior vice president, head of U.S. Individual Health for RGA Reinsurance Company. Reach him at bstahl@rgare.com.

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Updated, Monday, November 16, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-045: LTC NEWS AND COMMENT

Federal Medicaid Outlays During the COVID-19 Pandemic
Medicare Part B premiums are rising in 2021 by more than double the Social Security COLA bump
Baby boomer retirements have taken a big jump in the past year
Pandemic is forcing providers to be ‘catalysts of change’ for long-term care sector, association head explains
Biden Plan to Lower Medicare Eligibility Age to 60 Faces Hostility From Hospitals
28% Growth in Medicare Advantage Plans Led By Senior Housing and Care Providers
As Admissions Stall and Aid Dries Up, ‘Losses are Coming’ for Nursing Homes in ‘Bleak’ First Half of 2021
COVID-19 Tied to New Psych Diagnoses; Pessimism & Bipolar Disorder
70 percent of long-term care claims begin with home care
Nursing home COVID-19 cases rise four-fold in surge states
Medicare Part B Premium to Jump $3.90 a Month for 2021
Welcome to 2020 Impact Week: Long Term Care

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Updated, Monday, November 9, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-044: LTC NEWS AND COMMENT

How To Plan For Nursing Home And Long-Term Care Costs
Long-Term Care Insurance: A Comprehensive Guide to Costs, Coverage, and Whether It's Right for You
What COVID-19 Exposed In Long-Term Care
Are You a Good Candidate for Long Term Care Insurance?
Skilled nursing occupancy hits new low of 73.8%: NIC
Verma: COVID-19 Shows LTC ‘Relies Too Heavily on Nursing Homes’
Retirees, Make the Most of Your Home Equity
A Middle-Market Senior Care Solution
Does Hard Work Help Preserve the Brain?
Community spread triggers growing number of COVID-19 cases in nursing homes: AHCA
Integrity Expands in the Southwestern United States with the Addition of Western Asset Protection

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Updated, Friday, November 6, 2020, 9:00 AM (Pacific)

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LTC BULLET: LONG-TERM CARE INSURANCE IN CHINA

*** KUDOS to Bruce Stahl and Winona Berdine of Reinsurance Group of America (a corporate member of the Center for Long-Term Care Reform) for this creative idea highlighted in our recent LTC Clipping:

8/2020, “A Middle-Market Senior Care Solution,” by Bruce Stahl and Winona Berdine, Long-Term Care News
Quote: “Would you like to have an insurance product in your company’s lineup that provides all of the following? • Reaches the middle market, • provides security to generations of family members, • satisfies real customer financial needs and provides them with peace of mind, • minimizes risk in the morbidity tail, • reduces asset and interest rate risk, and • reduces concerns about pandemic risk in facilities.”
LTC Comment: Well, yeah! Click through to read this intriguing proposal.

We hope soon to publish a “Guest Bullet” by Bruce Stahl further developing and explaining this “caregiver insurance proposal. Your comments on the idea are welcome. ***

*** PREDICTING IS HARD, they say, especially about the future. Toward the end of the 2017 Intercompany Long-Term Care Conference in Jacksonville, Florida, which took place shortly after Donald Trump was inaugurated, attendees were invited to answer this question via electronic polling:

Q7. Do you think the next four years will bring an improved economic climate? Or will we see a continuation of low interest rates?
Answers:
1. Improved economic climate/higher interest rates = 76%
2. Stay pretty much the same = 13%
3. Get worse = 11%

In “LTC Bullet: LTC Policy Poll Results,” on April 14, 2017, I offered my own answer to that question and suggested to readers: “Tickle your calendar to review this prediction on election day, November 3, 2020. I’ll do the same.” Here’s my answer then followed by my comment now.

Then: “LTC Comment: I think these voters are vastly over-optimistic. I’d agree with the stay-the-same or get-worse minority. The current ‘economic recovery’ is long in the tooth; the ‘Trump trade’ is already petering out as health and tax reform languish; we may already be in a recession; the Federal Reserve’s tightening cycle has nearly run its course; after perhaps one more interest rate increase, the next step is down and most likely we’ll see more quantitative easing (QE4). That means more and more debt. The U.S. dollar is unsupported by real value and very vulnerable; foreign countries that give us real economic goods in exchange for paper (bonds that the U.S. cannot ever afford to redeem) could wise up any time, stop buying our debt, and start selling it; carrying costs on our $20 trillion debt [$27.2 trillion as of today (11/6/20)] will force a reversal of the Fed’s tightening soon, as the economy worsens. The credit bubble inflating for a decade will pop. Sadly for the Trump Administration, the wages for the economic sins of its predecessors will come due in its first term. (Tickle your calendar to review this prediction on election day, November 3, 2020. I’ll do the same.)”

Now: LTC Comment: QE4 actually turned into QE Infinity. Modern Monetary Theory, as explained and critiqued in “LTC Bullet: Modern Monetary Theory and Long-Term Care,” is sweeping the land. The Federal Reserve has forced real interest rates (nominal rates minus inflation) into negative territory. It appears Trump has been swept out of office and the incoming Biden administration will likely double down on the same inflationary policies. Thus “the wages for the economic sins” of Trump and his predecessors will come due in the term of his successors. We are in for a rough economic ride, exacerbated by the pandemic, but inevitable regardless, because of the irresponsible fiscal and monetary policy of both political parties. ***

*** NOWADAYS, we need clear-eyed analysis of the prospects for long-term care services and financing more than ever. Don’t ingest the “soma” of social insurance purveyed by most of the LTC intelligentsia. If you haven’t already, join the Center for Long-Term Care Reform here. Encourage your company to support the Center as a corporate member. Share our “Membership Levels and Benefits Schedule” with any and all. Join the fight for rational long-term care financing policy. Thanks for your consideration. ***

LTC BULLET: LONG-TERM CARE INSURANCE INBB CHINA

LTC Comment: With Genworth long hanging on the cusp of sale to a Chinese company, what could be a more timely topic than LTCI in China?

On October 20, 2020 the Society of Actuaries LTCI Section sponsored a webinar titled “Long-Term Care Insurance in China.” Moderator Vincent L. Bodnar, ASA, MAAA, a Partner and Long-Term Care Practice Leader, at Oliver Wyman introduced the program and the panel of three experts, two of whom called in from Beijing at midnight local time. (Vince visited China some years ago, conducted a briefing on the U.S. experience with LTCI, found avid interest there and has followed China’s LTCI experience ever since.)

A recording of the “LTCI in China” webinar should be available to buy on the SOA website soon. Attendees who purchased the original webcast will be able to access the recording for free. But here’s a synopsis of the program for those of you who missed the original and may want to consider obtaining the recording:

Panelists:

Guangyao Liu, FSA
Executive Actuary
China Life Reinsurance Company

Xiaochen Sun
Product Actuary
China Life Reinsurance Co Ltd

Song-Song S. Liao
President
Song-Song & Associates

Guangyao Liu opened the session with an introduction to China’s “LTC Pilot Program.” He began by summarizing the uniquely challenging demographics his country faces. China has more “baby boomers,” 359 million, born between 1962 and 1975, than the USA has people (328 million). A second wave of Chinese boomers, 374 million, born between 1981 and 1997, is not far behind. With 176 million elderly (over age 65) people, 12.6% of the population as of 2019, China is looking at 28% and 380 million by 2050. In the meantime, China’s birth rate has been decreasing since the 1990s, due in large part to the country’s one-child policy, exacerbating the elderly dependency ratio and resulting in 120 million “empty nest elderly.”

Anticipating the inevitable challenges of providing and paying for the care of this burgeoning elderly population, the Ministry of Human Resources and Social Security/National Healthcare Security Administration implemented a four-year pilot project in 2016 which is expected to be extended this year. The pilot covers 15 cities and 88.5 million people (out of a total of 1.4 billion). It covers 426,000 insureds at an equivalent cost of 1,300 U.S. dollars per person per year. Care provided is 70% home care and 30% facility care.

Problems of the pilot include limited coverage as only seven pilot cities cover rural residents; an imbalance of funding structure, which is highly dependent on China’s government healthcare fund; inadequate professional care services, which cannot meet demand; lack of uniform standards for care service, ADL assessment, etc.; and large variation of program administration across pilot cities ‐ hard to copy to other cities.

But substantial benefits accrue to commercial LTC insurance including a start to educate residents about the concept of long‐term care and raise potential demand; improve care facility development and care service quality; and participating commercial life and health insurers gain experience data and operating expertise.

Xiaochen Sun next discussed commercial LTCI in China, the first example of which, with a “sum assured” benefit, emerged in 2005. In 2010 a product appeared with a benefit structure like “universal life” and 2017 saw a reimbursement or sum-assured benefit directly to care providers. As of 2020, the Chinese commercial LTCI market has 20 players and 40 products.

The big takeaways from this section of the program, as summarized by Vince Bodnar are:

China has both standalone and hybrid products, like the US
There are two big players in the market today: Taikang Life and Pingan Life
Taikang offers a high-end product that gives the policyholder access to its LTC facilities. It looks a little like a CCRC approach.
Pingan sells a “trauma-led” product, which is cheap. They sell 10,000 of these policies a month.

Song-Song S. Liao concluded the survey of LTCI in China with an excellent summary of the challenges and opportunities the country faces. For example, there is no clear distinction in China between nursing homes and other levels of care. There is inconsistency in defining and monitoring activities of daily living and benefit triggers. Cultural differences often complicate the business. Admission to a long-term care facility, for example, could be considered a disgrace because of the traditional Chinese belief in the responsibility of the younger generation for the older generation. The potentially unrealistic goal is to have 90% age at home with only 3% depending on institutional care.

Further difficulties include insufficient infrastructure and a commercial insurance industry that is very small compared to China’s dominant social insurance structure. Chinese actuaries are exploring all the approaches tried in U.S. It is not a lack of product ideas limiting product development; it’s that the Chinese infrastructure does not support U.S. LTC products. It may be China requires a product more like what we call “critical illness” insurance. Or a product that only provides cash; not care services. Shanghai pushed out a product like the US model, but can’t sell it. The current infrastructure is the biggest obstacle to design a product for China, but “we all know the need is there.”

Song Song summarized the “Contextual Differences” thus:

• LTC business could mean handling government pilots, not commercial LTC

• Commercial LTC is supplemental to social insurance

• Differentiation between medical/acute care vs residential care vs nursing

homes/SNF settings is not distinct in China

• Regulation and standards may exist but not in full compliance

• Much narrower coverage, more restrictive benefit triggers, and more carve outs in China

• ADL 2/6 vs 3/6 or even 4/6

• E.g. restrict to 12 types of diseases, not including cancer, diabetes.

• Age limits and long elimination period

LTC Comment: Congratulations to the Society of Actuaries and Vince Bodnar for conducting this review of nascent LTC insurance in China. We’ll be hearing much more about this topic over time.

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Updated, Monday, November 2, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-043: LTC NEWS AND COMMENT

Medicare Advantage 2021 Spotlight: First Look,” by Medicare Advantage 2021 Spotlight: First Look
U.S. cities seen ill-prepared for boom in elderly population
LONG TERM CARE: Caught in the Middle: How Young Parents Can Plan for Long-term Care
BREAKING: First Alzheimer’s commercial blood test to detect amyloid beta hits the market
Older Americans 2020: Key Indicators of Well-Being
2021 Tax Deductibility Limits
Leisure Activity and Dementia Risk: When Does It Matter?
Report shows 51% growth for home-based services
How do you get the new Medicare Advantage benefits? It’s not easy
Social Security will be exhausted several years earlier than expected: report
Retirement: Average Boomer's savings would only last seven years, study finds

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Updated, Monday, October 26, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-042: LTC NEWS AND COMMENT

Community noise may affect dementia risk
New poll shows most older adults worried about potential healthcare and long-term care costs
Binge drinking may cause Alzheimer's disease—and it might strike younger and in a severe form
Nearly half of COVID-positives were asymptomatic, nursing home study finds
The Collapse of Long-Term Care Insurance
Long-Term Care Awareness Month Approaches Like an Avenging Angel
As most states see nursing home cases increase, providers fear third wave of COVID-19
Most Americans want health insurance companies and Medicare to pay for long-term care: poll
Report shows huge jumps in Medicare Advantage enrollment among minorities, dually eligible
30 percent of COVID deaths in long-term care have occurred in assisted living: study

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Updated, Friday, October 23, 2020, 9:00 AM (Pacific)

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LTC Comment: Finally, a solution for the long-term care financing crisis. Or not? Explanation after the ***news.***

LTC BULLET: MODERN MONETARY THEORY AND LONG-TERM CARE

LTC Comment: Policy wonks have anguished over how to finance long-term care for decades. Most have concluded (wrongly I think, see Medicaid and Long-Term Care) that the only answer is some form of compulsory, government-imposed LTC social insurance program. But, given the insolvency of all existing social insurance programs (Social Security, Medicare, Medicaid, etc.), voters have not been willing to approve even more of these unfundable liabilities. Result: stalemate, frustration, anger, despair, and, finally, hanging their meager hopes on another hapless experiment in government-designed and –imposed LTC insurance that is already foundering in Washington State. (See “LTC Bullet: The Keystone Kops of LTC Insurance.”)

What’s needed to save the policy pundits’ preferred social insurance model is an economic miracle. What if it were possible to find the unlimited government financing that social insurance would need to survive indefinitely? That’s what “Modern Monetary Theory” (MMT) promises to deliver.

For easy, entertaining access to the principles and arguments behind MMT read Stephanie Kelton’s best-selling book The Deficit Myth. Better yet, don’t invest so much of your precious professional time on that source. You can get more than enough to understand Modern Monetary Theory from a summary of the book here.

But let’s cut right to the chase today. Here’s the essence of MMT and the bottom line on what it means. (If what follows seems too bizarre to be credible, refer to the book summary just referenced. You’ll see I’ve neither mis-stated nor exaggerated MMT’s ideas and claims.)

According to MMT, currency issuers like the USA, can print as much money as they want. They do not have to work within conventional financial limits, with revenue matching outlays over time, as mere currency users, such as families, businesses, or countries borrowing in a currency not their own, must.

The power to spend with no set limits is especially true for the U.S. because the dollar is the world’s reserve currency.

TABS or STAB: Conventional economic theory assumes governments must Tax and Borrow to be able to Spend (TABS), but MMT says what really happens is that governments create money by Spending and then they Tax and Borrow (STAB) to control any resulting excessive inflation.

Currency issuers, according to MMT, don’t need to collect taxes, in order to be able to spend. Taxes are necessary but not to generate revenue. Rather the purpose of taxes is to compel citizens to work and provide goods and services the economy needs in order to earn the money to be able to pay the required taxes.

Deficits don’t matter per se. The Federal Reserve could print enough money to pay off the national debt and eliminate the interest cost of servicing the debt. No kidding. MMT actually claims this.

Therefore, to achieve any and all social goals, such as controlling climate change, free college, universal health care, or generous long-term care financing, etc., all it takes is for a currency issuer’s government to have the will to spend/create enough money.

The only limit on printing and spending money in one’s own currency is inflation. When too many dollars chase too few goods, prices increase, thus devaluing the currency and leaving people unable to afford goods and services they need.

So, if inflation starts to become a problem, MMT says the government should raise taxes to reduce the amount of money in circulation and thus stanch inflation before it gets out of control.

Crazy? Of course. But seductive? Very. If you trust government to solve problems, Modern Monetary Theory is your key to unlock not just the Treasury, but the entire productive capacity of the national economy.

But here’s the rub. The net effect of Modern Monetary Theory is redistribution by the Marxist principle “from each according to his ability to each according to his need.”

Government spending (money creation) pursues “progressive” goals, i.e. Need, such as financing free health care, free college, the Green New Deal, free LTC, etc. But when all that extra money printing/spending spikes inflation, who gets taxed to tamp it down? People with the money, i.e. Ability, are the only ones who can be taxed.

MMT is “Miracle Gro” for the idea that taxing productive people is the best way to provide for the needs of unproductive people. Unfortunately, this tried and true principle always applies: you get less of what you tax (ability) and more of what you subsidize (need).

In other words, need is unlimited. It always grows to consume whatever ability, always scarce, is able to produce. Subsidize the former by taxing the latter for 85 years and what you get is …

The whole mess we’re in today including the long-term care financing crisis.

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Updated, Monday, October 19, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-041: LTC NEWS AND COMMENT

Was COVID-19 Really the Killer?
Medicare Advantage Plans May Have More Search Buzz
Covid-19 Has Made Caregiving Harder, But Isn’t Making Americans More Likely To Plan For Their Old Age
Long-Term Care Insurance Benefits Cut Panel Drafts Principles
Having Dementia Doesn’t Mean You Can’t Vote
HCBS could be solution to ‘catastrophic costs’ of long-term care: report
Apathy Predicts Dementia in Cognitively Normal Older People
Extreme confusion most common Covid-19 symptom in frail older adults, new research discovers
Long-term care usage increased under ACA-funded Medicaid expansion
US sees 20% more deaths than expected this year, most due to Covid-19, research finds
HHS officially extends COVID-19 public health emergency again ahead of upcoming expiration date
The Times recommends: Vote to support trust fund for long-term care

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Updated, Monday, October 12, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-040: LTC NEWS AND COMMENT

What Does Retirement Look Like in a Pandemic?
SEC Adds to General Electric's Long-Term Care Insurance Headaches
9 Surprising Secrets About Long-Term Care and Medicaid
Measuring The Financial Impact of Cognitive Decline
Skilled nursing, assisted living facilities top OSHA’s COVID-19 violators list
The Nation's Fiscal Health: A Long-Term Plan Is Needed for Fiscal Sustainability
The Alzheimer's Stamp Now Available to Purchase
Walmart Jumps Into the Medicare Plan Distribution Market
The Problem With Buying Bundled Life and Long-Term Care Insurance
Northwestern Mutual Announces New Senior Leadership Appointments
Looming Medicare Cuts Threaten Physician Services in Nursing Homes, Even as COVID Continues

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Updated, Friday, October 9, 2020, 9:00 AM (Pacific)

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LTC BULLET: THE KEYSTONE KOPS OF LTC INSURANCE

LTC Comment: What happens when the Keystone Kops design a long-term care insurance plan? Details after the ***news.***

*** LONG-TERM CARE INSURANCE IN CHINA: Don’t miss this Society of Actuaries webcast on Oct. 20 as speakers discuss the history of long-term care insurance products in China, current government pilot programs and the opportunity for new products. Register here by October 18, 2020. What could be more timely as Genworth contemplates entering the Chinese market? ***

*** LTCI SURVEY: The deadline for responding to the survey has been extended to October 15^th. Take the Who is Selling What? To Whom, How & Why Survey today! Even if you don’t ordinarily discuss long-term care planning with your prospects and clients, your thoughts are vitally important. This is the largest national effort of its kind, spearheaded by Oliver Wyman Actuarial and Ice Floe Consulting, and supported by NAIFA, NAILBA, Broker World Magazine, the Center for Long-Term Care Reform, and life and long-term care insurance companies. Take the survey and you’ll be first in line to receive its findings. ***

LTC BULLET: THE KEYSTONE KOPS OF LTC INSURANCE

The "Keystone Kops" are fictional, humorously incompetent policemen featured in silent film slapstick comedies between 1912 and 1917. Play this video and you’ll have a pretty good idea what the Washington State Long-Term Services and Supports (LTSS) Trust Commission’s September 30, 2020 meeting was like. More on that below. It’s always a comedy when governments try to do long-term care insurance. Remember CalPERS? CLASS? Every public commission ever mandated to fix long-term care? This new adventure in state-based LTCI hubris is headed toward the same fate.

Washington State’s “Long-Term Services and Supports Trust Act (Trust Act),” enacted in 2019, created a long-term care insurance benefit for all eligible Washington employees that would cover some of the cost of their long-term services and supports. Specifically, a .58% mandatory payroll tax would fund benefits up to a lifetime total of $36,500 for people who paid premiums either (1) for 3 years within the past 6 years, or (2) for a total of 10 years, with at least 5 of those years paid without interruption. The state won’t collect the tax until January, 2022 and doesn’t pay benefits until 2025. Eligibility triggers at the need for help with three or more ADLs. Benefits are paid directly to service providers which may include sufficiently trained family members. There are more complications in the legislation, but this is enough to indicate what’s wrong.

The same Trust Act that created this program also created the Long-Term Services and Supports Trust Commission to figure out how to implement it. The Commission consists of legislators, administering agencies, and stakeholder representatives. It “makes recommendations regarding criteria for determining who is a qualified individual, minimum provider qualifications, service payment maximums, actions needed to maintain Trust solvency, and monitoring of agency expenses.” Now ask yourself, aren’t these basic questions that should have been analyzed before imposing a compulsory tax-supported program on citizens? Didn’t the Washington State Legislature put the cart in front of the horse?

What would happen to a private LTC insurance plan dreamed up by an insurance executive and offered to the public without first thinking through who qualifies, provider standards, payment maximums, solvency issues and expenses? Free markets are vicious. No caring person would wish the inevitable catastrophic consequences that would ensue on such a hapless entrepreneur. Yet politicians can wave a magic wand, create such a program, force it on their constituents, and then turn it over to be somehow fixed by a commission comprised of more clueless legislators, bureaucrats, and highly paid representatives of rent-seeking special interest groups … though with not a single representative from the one profession that could help … the private long-term care insurance business.

Now back to the LTSS Commission’s September 30, 2020 virtual meeting. I followed the three-hour session in jaw-dropped awe as one critical issue after another was raised, discussed, and tabled for future consideration. Premium rates? Gotta wait to set those because the law caps the maximum rate and who knows if premiums plus investment returns will cover costs. Qualified individuals? When does the clock start on the required period of employment; when does the look back period begin; how about people too near retirement who will be left out? People disabled before age 18? There ensued a long discussion on how to handle the under-18 who are excluded in the law but mandated to be considered for inclusion. No decisions. As one astute commenter exclaimed: “They don’t even know what they don’t know.”

I think the one thing Washington State has gotten right in this project was to hire Milliman to guide them through the actuarial thicket created by the state legislature’s carelessness. Anyone knowledgeable about insurance could not help but smile as Milliman’s Chris Giese patiently explained adverse selection to the committee. In paraphrase: “You need to set a rate that matches health risk. With no underwriting, the question of who can opt in or opt out creates challenges. Individuals will evaluate what’s best for them in their circumstances. Healthy individuals might opt out. When they opt out, you’re left with a pool of individuals using benefits who are at higher risk. If you adjust the premium rate up to compensate, then more healthy people won’t participate. You get more uncertainty and a spiral of higher and higher costs.” Wow! What an insight? Who could have imagined that adverse selection might be a problem before the program was carved in statutory stone?

Giese also explained the financial facts of life to the Commission. You see, the program must generate enough in premiums plus investment returns on reserves to cover costs. But Treasury yields are very low these days. Stocks have the potential to earn much more, but they’re riskier. How does that impact program income and long-term solvency? The pandemic is a monkey wrench further complicating this problem. Washington State revenues have plummeted as have the incomes of the citizens compelled to fund this program’s new tax. It’s probably not a great time to pile on more government at the expense of the productive private sector.

The LTSS Commission has hundreds of little definitional issues to straighten out. Giese talked about several. The issue of opting out by purchasing private LTC insurance, he explained, is “still relatively undefined.” What if top wage earners opt out? What if half of wage earners opt out by getting private coverage? Who gets to opt out? Only those who had private LTCI before? People who buy it later just to escape the government program? What qualifies for the escape hatch: hybrid policies too or just traditional LTCI. How to handle the self-employed? What if you opt out, can you opt back in? What about elimination periods? What about portability and divesting alternatives? There will be additional costs if people want to receive benefits outside Washington State. On and on and on. Repeatedly, the approach to issues like these was to create yet another “work group,” but (no surprise) volunteers were scarce.

People who monitored the meeting through Zoom had the opportunity to comment or ask questions at the end of the program. One very thoughtful auditor, Stephen D. Forman of LTC Associates posed this:

The Commission has referenced the stakeholder community several times, but I'm not seeing any private insurance industry representation, why is that? It's a 300 million dollar per year market that is being broadly remade by the Commission's decisions. The decisions have the potential to discourage responsible planning by those who have the means to do so, thereby protecting Medicaid, which is a point of the Trust Act. In February we proposed a number of blind spots and loopholes in the Act before the Legislature--including the lack of stakeholder representation--and the fact that these remain speaks to the fact that this institutional expertise is needed. Thank you for listening, and for your hard work!

So, that’s what happens when the Keystone Kops design a long-term care insurance program. It would be funny if it weren’t so sad.

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Updated, Monday, October 5, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-039: LTC NEWS AND COMMENT

Genworth and China Oceanwide Push Back Deal Completion Deadline
Elderly and Homeless: America’s Next Housing Crisis
Low Interest Rates Push Prices for New Life-LTC Hybrids Higher: Milliman
Medicaid expansion filled unmet needs for home health, other long-term care: JAMA
More than 50 coronavirus wrongful death suits have been filed against long-term care facilities
Home healthcare outpaces skilled nursing in its post-COVID-19 rebound
Keeping workers will be biggest struggle for nursing homes as pandemic persists, national policy expert predicts
Medicare Advantage plans banking on non-medical home care needs
CMS touts lower premiums and benefits of Medicare Advantage plans
Nursing homes in Washington state struggled with adequate staffing for years. Then coronavirus struck

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Updated, Monday, September 28, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-038: LTC NEWS AND COMMENT

Nation’s first COVID-19 criminal charges against nursing home operators filed in Massachusetts
Americans worry about Alzheimer's disease, survey finds, but most don't know the early signs and symptoms
Virus Cases Surged in Young Adults. The Elderly Were Hit Next
CMS announces $165 million in funding to move people from nursing homes to assisted living and other settings
Medicaid Maintenance of Eligibility (MOE) Requirements: Issues to Watch When They End
The Nation’s Fiscal Health: Effective Use of Fiscal Rules and Targets
Can You Pass the New York State COVID-19 Death Risk Test?
“‘Living wage’ would benefit 75 percent of direct care workforce: LeadingAge report
The work-from-home surge may lead workers to buy retirement homes even before they retire
4 in 5 Americans Lack Retirement Planning Knowledge: Survey
Older adults in Philly turn COVID-19 into musical comedy
Can The Dutch Example Help Us Improve Long-Term Care And Manage Its Costs? Maybe
Davies announces acquisition of TriPlus as it steps-up North American expansion plans
Nursing Homes Oust Unwanted Patients With Claims of Psychosis

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Updated, Friday, September 25, 2020, 9:00 AM (Pacific)

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LTC BULLET: DYING WITH OR OF COVID AND THE DOUBLE WHAMMY OF A SECOND WAVE IN THE COMING FLU SEASON

LTC Comment: For fresh thinking on the pandemic and long-term care, look no further than “60 Seconds with Steve Monroe.” We explain after the ***news.***

*** TAKE THE SURVEY: It’s not too late to participate in the nation’s largest opinion survey of agents and advisors that we announced and described in “LTC Bullet: The Who is Selling What to Whom, Why & How Survey.” Read more about this important study in Ron Hagelman’s Broker World column this month. You have until October 8 to do your part by contributing to our knowledge of this critical subject. Take the survey here. ***

*** ARE YOU A MEMBER? If you’re not receiving an LTC E-Alert every Monday and an LTC Bullet every second Friday like clockwork, then you’re not a member of the Center for Long-Term Care Reform and you’re only receiving our occasional wider distribution to non-members (or a bootleg copy from someone else.) You can fix that today. Check out our “Membership Levels and Benefits” here and join the Center here. Note that premium members hear from us daily with LTC Clippings that keep them current on all kinds of LTC information you need to know. For questions or comments, contact smoss@centerltc.com or 425-891-3640. ***

*** TRUE FREEDOM, 9/14/2020, “True Freedom and GoldenCare USA Partner to Provide Seniors with Innovative Home Care Solutions”

Quote: “True Freedom announces our Preferred Marketer partnership with GoldenCare USA, an Integrity Marketing Group company. True Freedom is the only company that provides nationwide home care plans for seniors as an alternative to traditional insurance. GoldenCare and their western-states counterpart, American Independent Marketing, have been leading subject matter experts in long-term care for more than 40 years. By partnering together, they can now serve more Americans by providing unique options for long-term care.”

LTC Comment: Congratulations to long-time friend and corporate member Golden Care on this exciting new partnership. ***

LTC BULLET: DYING WITH OR OF COVID AND THE DOUBLE WHAMMY OF A SECOND WAVE IN THE COMING FLU SEASON

LTC Comment: Do we face double pandemic jeopardy when flu compounds the Covid crisis this fall? What does it mean to die “of” Covid when the Coronavirus only shortens the life by a week or two of people with multiple co-morbidities?

Those are two of the intriguing questions raised and answered by Irving Levin Associates’ Steve Monroe in his weekly video series “Sixty Seconds with Steve Monroe.” Stephen M. Monroe has been a healthcare and senior care financial expert for over 30 years. In addition to being an often-quoted healthcare finance expert in mainstream media, he has published over 50 bylined articles dealing with various aspects of investing in health care and senior’s housing. He is also called upon to keynote and speak at organizations such as the American Seniors Housing Association, Assisted Living Federation of America, National Investment Center for Seniors Housing and Care, American Health Care Association and the New York State Health Facilities Association, among others.

I’ve followed Steve’s analysis for two decades or more, ever since I became intrigued by the role of finance in shaping the type and availability of seniors housing. When he told me many years ago that he bought private long-term care insurance and it cost him less than the cost of a daily cup of coffee, that sealed it for me. I’ve followed his thoughtful commentaries ever since.

Here are two of them that he and his employer have allowed me to share with you. This material is proprietary so not usually available for free. If you find it helpful, there’s more where this came from and you can subscribe for a 60-day free trial here.

“Beware the Flu Season?,” by Steve Monroe, August 26, 2020

Almost every conversation surrounding the coronavirus and outbreaks in nursing homes or assisted living communities eventually gets around to the double whammy of a “second wave” combined with the upcoming flu season.

Yes, providers will have to be vigilant, but they have never been as well prepared for the flu season as they are today. Think about it. Less than a year ago, do you remember ever walking into any senior care facility where the staff were all wearing masks, where hand sanitizers were everywhere, where your temperature was taken at the entrance, where mobile residents were wearing masks? No, it never happened except if someone had the flu.

My bet is that there will be a record number of people, in and out of senior care, who will get the flu shot this year. And transmission will be lower because most Americans are wearing masks in public, hands are cleaner than ever before, and we are all still coming into contact with fewer people on a daily basis than at the start of any other flu season.

The coronavirus will still be with us, but because of the extra care taken in all senior care communities, its prevalence has declined and the double whammy with the flu season will not be as bad as people fear.

“Death By or With COVID,” by Steve Monroe, August 28, 2020

We are sure every provider is sick and tired of hearing about how many residents have died of COVID-19 in a nursing home or assisted living community. The problem is that the classification may be all wrong.

Unfortunately, there may be a financial reason for such classifications, as in more reimbursement, or more governmental aid. And for those who can profit from making this pandemic seem worse than it is (yes, they do exist), piling up the number of COVID deaths helps to make their case. It has certainly helped the mainstream media and their advertising dollars. But here is the problem, at least as it relates to the deaths in assisted living, memory care and nursing homes. What the statistics don’t differentiate is those residents who died “of” COVID from those who died “with” it.

Let us explain. Most people who are long-term residents in nursing homes, or assisted living and memory care communities, have multiple health issues, commonly referred to as co-morbidities. It is a word often used in the senior care industry, but particularly during this pandemic.

In its most simple definition, a comorbidity is the presence of one or more “additional” health conditions, usually co-occurring with a primary condition. And we are not talking about minor health problems, but major ones, usually chronic and often cardiac or respiratory related, as well as diabetes. To be un-politically correct, these residents today have several health problems, any one of which could result in their death at some point.

In addition, the average length of stay for these residents is relatively short, even in the best of times, especially compared with independent living communities or CCRCs, not to mention active adult communities with their much younger average age. They have moved into nursing homes or AL/MC [assisted living/memory care] communities in a frailer condition than 20 and even 10 years ago. In many cases, they are going to die in six or 12 months even without a pandemic.

So, when a 90-year resident in a memory care wing (true story), on hospice, with maybe three weeks to live gets infected with the coronavirus and dies in two weeks, she is listed as having died “of” COVID. But that is not true. She died “with” COVID. She actually could have died from any of her comorbidities, if not just old age, but that is not how it is recorded. She becomes a statistic as one of the 170,000 and growing deaths from COVID. [The reported U.S. death toll passed 200,000 on September 22, 2020, a little less than a month after this column was published.]

The entire senior care industry has to get this message out and the only way to do so is to track what really is happening inside your buildings. The overall number of deaths “by” COVID will go down, and the industry can make a better case to the consumer for what is really happening to seniors under their care. We would love to receive your statistics, on or off the record.

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Updated, Monday, September 21, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-037: LTC NEWS AND COMMENT

True Freedom and GoldenCare USA Partner to Provide Seniors with Innovative Home Care Solutions
Nursing Homes Given Federal Go-Ahead To Allow More Visitors
Dementia mortality skyrockets since lockdowns; CMS loosens visitor restrictions
Opinion: Long-term care insurance: There’s no good alternative
Federal Nursing Home Commission Calls on CMS to Adopt 27 Recommendations, ‘Reduce Suffering’
When Elder Care Requires Legal Advice
Social Security COLA Estimated at 1.3% for 2021
Lapse In Long-Term Care Insurance Doesn’t Necessarily Ruin Coverage
U.S. health care system on life support, say test results from new study
A win for long-term care: Providers applaud withdrawal of MFAR proposal
Missed Vaccines, Skipped Colonoscopies: Preventive Care Plummets
COVID-19 pushed SNF occupancy below 75% in June: NIC
Ken Dychtwald: 75% of Households Could Face a Big Retirement Shock
COVID-19 and Fast Underwriting Are a Bad Mix: Veteran Underwriter
41% don’t trust assisted living, nursing homes to keep residents safe during pandemic: survey
Recession And Medicaid Budgets: What Are The Options?
How the Aging Immune System Makes Older People Vulnerable to Covid-19
Almost 40% of residential care aides live in low-income households: report
Vitamin D deficiency may nearly double coronavirus risk, study finds

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Updated, Friday, September 11, 2020, 9:00 AM (Pacific)

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LTC Comment: We’ll finally get answers to all those questions if you fill out this brief survey. We explain after the ***news.***

*** HOW AND WHY TO JOIN the Center for Long-Term Care Reform. After you read “LTC Bullet: What Value Do LTCI Producers Get from the Center for Long-Term Care Reform?, I hope and trust you’ll want to get everything the Center has to offer. So check out our “Membership Levels and Benefits” schedule here. That’ll help you decide between the various levels of individual and corporate membership. If you have questions, drop me a note or give me a call at smoses@centerltc.com or 425-891-3640. One of the benefits of all Center memberships is anytime access to me for questions about LTC services and financing policy. As I explained in that Bullet, I like hearing from agents and discussing the challenges you face. It helps keep my policy analysis grounded in your real world of LTCI prospecting, fighting against prospects’ denial, and answering the hard questions people actually ask. So let’s talk. ***

LTC BULLET: THE WHO IS SELLING WHAT TO WHOM, WHY & HOW SURVEY

LTC Comment: There probably aren’t many public policy analysts who have actually sold a long-term care insurance policy, but I’m one. After leaving my government career to become Director of Research for LTC, Inc., I took the sales training, got a license, did some phone prospecting, and hit the road with a pocket full of leads. My mission was to learn what LTCI agents were really up against.

Boy did I find out. After driving to a distant corner of Washington State so as not to burn leads real agents needed, I set to conducting sales interviews. I talked, they listened, and listened. I knew a lot and, by gum, they were going to hear it all. That’s when I learned the wisdom of the adage “You have two ears and one mouth. Use them in that proportion.”

Long story a little shorter, I got skunked. No buyers. I returned to the office with my tail between my legs wondering how in the world successful agents managed. But later that week I got a call from one of my prospects. He decided to buy a policy after all. What was it, I inquired, my expertise, my savvy selling, my personal charm? Nope, he said. He just didn’t like the policy his retired teachers’ association was promoting.

I’m telling this story because that was my earliest introduction to how little we really know about the who, what, when, where, why and how of long-term care insurance sales. Ever since that experience I’ve referred to the heroes who somehow manage to help people protect themselves for long-term care as AMG’s, altruistic, masochistic geniuses. It’s long past time we empowered those AMGs by giving them answers to those crucial questions. Finally someone is setting out to do so.

The Survey

Ron Hagelman and Barry Fisher of Ice Flow Consulting and Vince Bodnar of Oliver Wyman have teamed up to design and offer a survey questionnaire to address these issues:

Best practices in starting the long-term care planning conversation.
Agent/Advisor/Consumer product perceptions and preferences.
Best ways to get prospects and clients to “YES”.
New product insights.
Types of training and education that will improve sales results.
Why many agents/advisors DO NOT discuss long-term care planning with consumers.

The survey’s sponsors say “This agent/advisor-focused sales analysis is designed specifically to help reveal the mysteries of the structure and motivations of buying behavior from those who make the sales happen.” It will define the “new normal in long-term care planning.” The project is advised and supported by NAILBA, NAIFA, numerous traditional and combo carriers and key distribution friends. Learn more in the September issue of Broker World magazine.

The survey only takes about 5-15 minutes to complete. If you provide your email address, they’ll send you the executive summary as soon as the results are compiled. Don’t wait. Take the survey now here.

Don’t sell LTCI? Please take the survey anyway. The sponsors say: “We’d like you to take a few minutes out of your busy day to take the survey. If you do not discuss long-term care planning with consumers the survey will take 5 minutes or less. Knowing why you don’t is vitally important to us. If you do have long-term care planning conversations with prospects and clients, the survey will take about 15 minutes or less. Your insights into the aforementioned survey goals will help us with new product development, expanding the market, improving agent education and increased consumer awareness.”

We look forward to reviewing the results of this survey and we’ll bring them to you in a future LTC Bullet.

Now TAKE THE SURVEY!

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Updated, Monday, September 7, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-036: LTC NEWS AND COMMENT

Ethics Consult: Keep Patient on Feeding Tube After Dementia Diagnosis?— You make the call
COVID-19 shifts mindset of family caregivers about senior living decisions
Grabowski: As Case Counts Rise and PPE Issues Persist, Nursing Homes Face Grim ‘Groundhog Day’
CBO Cuts Forecast for Social Security Fund Life Span, Sees Debt Topping GDP in 2021
COVID-19 Outbreaks in Long-Term Care Facilities Were Most Severe in the Early Months of the Pandemic, but Data Show Cases and Deaths in Such Facilities May Be On the Rise Again
Skilled Nursing Distress Looms as CARES Funding Ebbs: ‘Bills Are Starting to Come Due’
Key Questions About the Impact of Coronavirus on Long-Term Care Facilities Over Time
China Oceanwide Is 'Progressing Well' Toward Getting Deal Funding: Genworth
Why you need to talk to your parents about how they want to die
Does Medicare cover long-term care?
Long, Frequent Naps Predict Alzheimer's Dementia

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Updated, Monday, August 31, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-035: LTC NEWS AND COMMENT

Bonnie Kraham column: 2020 rates for Community Medicaid and Nursing Home Medicaid
Hundreds of Thousands Of Nursing Home Residents Don’t Need To Be There
Longevity Brings Increased Risk of Cognitive Decline
Female chromosomes offer resilience to Alzheimer's
Morningstar gives ‘negative outlook’ rating to skilled care
State Actions to Sustain Medicaid Long-Term Services and Supports During COVID-19
Ending Payroll Tax Would Drain Social Security by Mid-2023
State with First COVID-19 Outbreak Rolls Back Medicaid Boost for Nursing Homes: ‘Needless Deaths Will Rise’
Dementia may be three times more deadly than thought, analysis finds
A Novel Way to Combat Covid-19 in Nursing Homes: Strike Teams
Two or more long-term health conditions linked to positive COVID-19 tests

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Updated, Friday, August 28, 2020, 9:00 AM (Pacific)

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LTC Bullet: What Value Do LTCI Producers Get from the Center for Long-Term Care Reform?

LTC Comment: Why join and support the Center for Long-Term Care Reform? What’s in it for you, after the ***news.***

*** HOW AND WHY TO JOIN the Center for Long-Term Care Reform. After you read today’s LTC Bullet I hope and trust you’ll want to get everything the Center has to offer. So check out our “Membership Levels and Benefits” schedule here. That’ll help you decide between the various levels of individual and corporate membership. If you have questions, drop me a note or give me a call at smoses@centerltc.com or 425-891-3640. One of the benefits of all Center memberships is anytime access to me for questions about LTC services and financing policy. As I explain in the following Bullet, I like hearing from agents and discussing the challenges you face. It helps keep my policy analysis grounded in your real world of LTCI prospecting, fighting against prospects’ denial, and answering the hard questions people actually ask. So let’s talk. ***

LTC BULLET: WHAT VALUE DO LTCI PRODUCERS GET FROM THE CENTER FOR LONG-TERM CARE REFORM?

LTC Comment: I enjoy speaking to agents about the challenges they face finding and convincing clients to protect themselves against long-term care risk and cost. Agents see the battle for better LTC from the foxholes. As a policy analyst, my perspective often feels high altitude by comparison. Hearing the problems and challenges agents face day in and day out helps ground me in practical ideas and proposals.

So that’s why I jumped at the chance when Center-corporate-member Long Term Care Associates (LTCA) invited me to address their next agent conference call. Special thanks to Stephen, Gary, and Robert Forman and their team for the opportunity to answer the following questions. Here’s what they asked and how I responded.

1. From your vantage, what value proposition from the Center do you think agents should be taking advantage of, which they’ve failed to over the years?

The agent’s role is to educate and sell. To do that well agents need to be on the forefront of professional knowledge and expertise. But how can they do that if they’re also doing all their own research? A critical role of the Center for Long-Term Care Reform is to keep agents apprised of important articles, reports, studies and data they need to know. How often have you been blind-sided by a prospect’s question or criticism that they picked up from a news report that you hadn’t seen or heard yet? Follow the Center and that won’t happen again. The best way to follow the Center is to know our website at www.centerltc.com inside out.

The website has two levels: One for the general public and one for Members Only. Check out the links at the top of the website to get started.

Here are the items available to all:

Take our virtual tour of the Center's website. (Be patient, it may take some time to load.) This video webinar explains how to access and navigate the valuable content on the CLTCR website. This is the best way to find everything quickly.

The “Moses LTC Blog” includes LTC Bullets and LTC E-Alerts as they’re posted. (To find it, scroll down from the top of www.centerltc.com)

Links to 1286 LTC Bullets newsletters, archived chronologically and by topic covering every aspect of LTC services and financing since 1998

Links to hundreds of articles, speeches, state-level and national reports on every aspect of LTC services and financing

Video of Steve Moses’s 9/21/11congressional testimony on “Examining Abuses of Medicaid Eligibility Rules” (Steve testifies at 18 minutes, 45 seconds into the hearing)

"Clash of the Titans: Moses vs Gordon on Medicaid and other Dark Matter" at the 12th Annual ILTCI Conference. Listen to this riveting debate. (May load slowly)

See a retrospective of the 2008 National LTC Consciousness Tour: LTC Tour Slide Show, pictures of the Silver Bullet of Long-Term Care; history of the year-long tour to raise consciousness about long-term care

Members only website content (available to all on a trial basis for two weeks; use user name: CLTCR2020 and password: FreeTrial):

NEW: LONG-TERM CARE CLIPPINGS ARCHIVE
MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY
LTC ALMANAC: Links to hundreds of articles, reports and data sources on these topics:

LTC Graduate Seminar Transcription
Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care
Long-Term Care Cost Surveys
Deductibility Limits for Long-Term Care Insurance
LTCI Tax Treatments
Unfunded Entitlement Liabilities -- Various articles and reports including data on unfunded entitlement liabilities.
LTC Embed Reports -- Brief on-site reports from the policy front in Washington, D.C. and elsewhere, wherever the LTC policy battle takes us.
Virtual Visits to LTCI conferences.
One-hour webinar about the CLASS Act with Steve Moses. Details in this E-Alert.
CLASS Act Update -- Quick reference to publications on CLASS.

2. You’ve been instrumental in many major pieces of Medicaid reform legislation: is there anything you or others you know of are currently working towards?

We’ve been on the defense for the past decade. Irresponsible monetary and fiscal policy since the Great Recession have convinced the powers-that-be the country can print and spend unlimited funds without producing new goods and services for people to buy. That’s a recipe for disaster and the catastrophe is baking in the economic oven right now, soon to be served up to the country.

In the meantime, the LTC intelligentsia—analysts and economists who opine about the long-term care problem and what to do about it—have come together in support of a compulsory, public, catastrophic LTC insurance plan based on payroll deductions similar to Social Security and Medicare. Handling LTC in this way won’t work any better than those programs, which are insolvent already and likely to survive only as means-tested welfare programs in the not-very-distant future.

Here’s the good news. Thanks to the dozens of state-level and national studies we’ve conducted and which are available on the Center’s website here, we know what to do and how to do it when policymakers are finally forced by circumstances to do what needs to be done.

What’s that? Redirect Medicaid to the needy and use some of the savings to incentivize responsible LTC planning including private LTCI. Specifically, eliminate Medicaid’s huge home equity exemption, close other eligibility loopholes, and enforce estate recovery. Operate Medicaid as a loan instead of a welfare trap for people with wealth. In time consumers will realize private insurance is a far better option than relying on Medicaid.

3. What’s the single greatest legislative change that could galvanize the private LTCI market?

We need to get the government to stop giving away what you’re trying to sell. Eliminating Medicaid as your primary competition for the business of middle class and affluent people is the one change that could make the biggest difference. Unfortunately, that’s not a very popular idea politically, so it’s not likely to happen until the economy tanks, which it is about to do. When states have to curb Medicaid’s excesses to make budget ends meet, they’ll listen again to what we have to say. That’s how we won in 1993 with the Omnibus Budget Reconciliation Act (OBRA ’93 closed eligibility loopholes and made estate recovery mandatory) and in 2005 with the Deficit Reduction Act (DRA ’05 unleashed LTC Partnerships and placed the first cap ever on Medicaid’s home equity exemption). We’re in a better place now than we have been in over a decade to get the policy changes we need done.

4. In all the state-level reports, data, and studies you read, what have you come across that would surprise our agents—and is there something they could use to advance the importance of LTC planning?

What it’s so hard for agents and everyone else to understand is how easy it is for people to qualify for Medicaid LTC benefits despite having large incomes and assets. I was amazed doing state Medicaid eligibility studies to find that eligibility workers are appalled at how easy it is. They’re angry that lawyers for well-heeled people prepare their perfect applications, sometimes three inches think with documentation. Welfare workers can’t get poor people on Medicaid without devastating the families, but the well-to-do go right on. Adult children have a financial conflict of interest and they’re usually the ones making the decisions once the elders are demented and need care. The system is corrupt and leads to bad consequences as we’re seeing during the pandemic especially, with tragic nursing home deaths and families kept from visiting their institutionalized loved ones.

5. You’ve been even-handed of your criticism of both major parties’ failing to address LTC financing: do you think choice of President or Congress matters much to LTC financing in this country, and if so, does either platform appeal to you more on this basis?

Honestly, no, politics doesn’t matter. Politics is the problem not the solution. Politics is about buying votes by promising people something for nothing. Economics is what matters. Markets fairly distribute goods and services based on merit and hard work instead of political influence and graft. So, no, it makes no difference who controls the government. They’re all prone to irresponsible excess. What matters is what we do when the wages of their irresponsibility come due. Fortunately, we’ve done the prep work to know how to fix long-term care when politics fails and markets matter again.

6. Despite continued efforts to “rebalance” Medicaid towards more home health care, it continues to bias toward nursing homes: how would you communicate this bias—and Medicaid’s other shortcomings—to a client who thinks they can self-insure or “Medicaid Plan”?

The idea that home care costs less than nursing home care is a fallacy. Across society home care delays but does not replace facility care. The two together always end up costing more. Bottom line, Medicaid can’t afford quality institutional care, much less a full continuum of care. Institutional bias is here to stay as the only way Medicaid can keep costs manageable. The public knows nursing homes are undesirable, more so now during the pandemic than ever before. The best way to stay out of a nursing home as long as possible and to access the best ones when necessary is to be able to pay privately for alternative care. The best way to do that is to share the risk and cost through private insurance.

7. Reaction to your message from the carriers sometimes seems tepid: why do you think it’s not been more universally welcomed?

Carriers fear that by exposing the abuse of Medicaid by middle class and affluent people in order to correct it I’m actually disclosing to consumers the secrets of how to dodge private insurance. My dilemma is that I can’t get the problem fixed without exposing and criticizing it. Carriers can be very short-sighted and exceedingly careful. They hear that Medicaid captures most of their potential market and instead of aggressively addressing that problem they too often fear criticism and do nothing. The truth is the only way to fix Medicaid for the poor is to get the non-poor to take responsibility and insure. That’s what I’m advocating.

8. What’s wrong with “selling the Medicaid myth”? (i.e. the notion that you have to spenddown to poverty in order to qualify) The insurance companies, the government, the media, and many agents all repeat this same myth—shouldn’t we?

The Medicaid myth is that you can’t get LTC benefits without spending down into impoverishment. It’s a myth because it isn’t true. If it were true, most people with the financial wherewithal to buy LTCI would own a policy. They’d be scared to death of losing their life’s savings if their life savings really were at risk. You could say the Medicaid myth is a “noble lie.” So if it helps you protect someone with a good policy, so be it. Just know yourself what’s really happening.

What’s really going on is that the public has been anesthetized to LTC risk and cost because Medicaid has picked up most of the catastrophic costs for LTC since 1965. So people don’t worry about LTC until they need it, and once they need it they slip onto Medicaid easily. You’re much better off to acknowledge virtually anyone can get Medicaid to pay for long-term care but to focus on the reasons for not doing that: the problems of access, quality, low reimbursement, institutional bias, discrimination, and loss of independence and control.

Do you say “my clients know about Medicaid’s deficiencies and they don’t want to end up on that welfare program?” If so, you’re missing the point. Nine out of ten potential prospects don’t even contact you or answer your calls. Most people don’t worry about long-term care until it’s too late to plan, save, invest or insure against the risk. That’s true because Medicaid has been the payor of last resort for so long. Undesirable as Medicaid is, it looks pretty tempting when it’s the only thing standing between a family and huge out of pocket costs. Help us remove Medicaid as an easy solution for middle class and affluent people after the insurable event has occurred, and then see how many people are beating down your door to get the LTCI protection they truly need.

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Updated, Monday, August 24, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-034: LTC NEWS AND COMMENT

Short-Term Bailouts Won’t Fix Nursing Homes or Medicaid Home-Based Long-Term Care
Covid-19 Vaccination Costs to Strain State Medicaid Programs
Task force delivers final report for senior living’s transformation post-COVID-19; 6 strategies identified
Seattle life plan community successfully shifts from communal dining to food court model
Assisted Living Communities Facing Similar Financial Hardship as Nursing Homes
Assisted living occupancy declines at highest rate since April: NIC
Nearly 75% of older Americans with dementia given drugs that don’t help them despite serious risks: Study
Game changer for long-term care? More like a game ender
REPORT: COVID Cases in Nursing Homes Surpass Peak Level Back in May
U.S. Treasury task force: Federal government must educate public about LTC costs

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Updated, Monday, August 17, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-033: LTC NEWS AND COMMENT

Nursing Home Families Yearn to Visit Loved Ones Again
Verma ‘Deeply Concerned’ About Rise in Nursing Home COVID Counts, ‘Significant Deficiencies’ in Infection Control
The Trump Administration Thought About Reforming Long-Term Care Insurance. But Decided Not To
SURVEY: Nursing Homes Incurring Significant Costs and Financial Hardship in Response to COVID-19
Coronavirus cases in nursing homes show alarming spike, AHCA warns
LTCG appoints Sharon Reed as SVP of Process Improvement and Enterprise Training
Older Americans Coping Better With Pandemic Than Younger Ones: Age Wave
Job losses continue in the eldercare sector: Labor Department
When Covid-19 Hit, Many Elderly Were Left to Die
Dementia on the Retreat in the U.S. and Europe
Long-term care groups, 490 others, call for enactment of COVID-related legal protections ‘as soon as possible’
1,600 nursing home workers plan strike

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Updated, Friday, August 14, 2020, 7:00 PM (Pacific)

Seattle—

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LTC Comment: Sometimes bad studies happen to good people. We explain after the ***news.***

*** ILTCI CONFERENCE: Why am I getting Denver history lessons from Barry Fisher? Because he’s a former resident, knows the city well and he’s in charge of the 20^th anniversary Intercompany Long-Term Care Insurance Conference to be held March 8-11, 2021 in Denver. This iteration of the event replaces the one canceled due to the pandemic in March of this year. Get all the details here and here. Barry reports “The good news is that almost all our exhibitors and sponsors have committed to attend the 2021 Conference. The Program and Education Committee is hard at work creating sessions designed to instruct, enlighten, and entertain. And, our Keynote Speaker, Futurist Anders Sorman-Nilsson, will share a whole new look into his crystal ball.” I’m reminded there’s a little Denver lore in the Moses family history also. It seems my great grandfather traded 40 acres of prairie waste land for a pair of pearl-handled six-shooters. Those 40 acres are downtown Denver today, but we don’t even have the pistols to show for it. Oh well! At least we have a great reunion with friends and colleagues coming up in the Mile High City next March … Covid-19 permitting, of course. ***

LTC BULLET: UMPTEENTH LONG-TERM CARE STUDY DISAPPOINTS

LTC Comment: Having toiled in the long-term care field for 38 years, I’ve seen a lot of study groups and commissions come and go aimed at finding a better way to provide and pay for long-term services and supports. Besides their universal abject failures, these many endeavors also have this in common. They brought together experts representing various “stakeholders’” interests who talked, talked, talked until they arrived at the lowest common denominator of their wishful thinking. That usually included a long list of wonderful things to do with no mention of how to pay for them. How might we define such a “study?” The Urban Dictionary suggests this: “A group discussion or activity between like-minded individuals that validates mutual biases or goals in a non-confrontational environment.” What got me thinking along those lines?

“Learning from New State Initiatives in Financing Long-Term Services and Supports” is a report published last month jointly by the Center for Consumer Engagement in Health Innovation at Community Catalyst and The LeadingAge LTSS Center @UMass Boston. Its authors include two, Marc Cohen and Eileen Tell, whose previous work deserves praise. The report is the fruit of deliberations by “42 stakeholders and state officials” who shared “their depth of knowledge and insightful observations on the reform efforts occurring in their states.” Their states, which have “adopted or are considering innovative state-based LTSS financing reforms” include California, Hawaii, Maine, Michigan, Minnesota and Washington. As I’ve conducted studies in three of those states (CA, ME and WA) I’ll offer some balancing perspective when relevant.

So let’s dive into this new report and see what we find. I’ll select a quote and then make a comment. I’m omitting the report’s footnotes but you can find them quickly in the original.

LTSS Report: “Most of the LTSS costs that people are projected to pay will be out of their own pockets (53%); this is especially true when it comes to home and community-based care (68%). Yet Americans are woefully unprepared to pay for their own care, should they need it.” (p. 4)

LTC Comment: What those percentages ignore is that the vast majority of all high cost long-term care expenses are paid for by Medicaid and Medicare. If these catastrophic costs were not removed by public financing, people would worry about and save, invest or insure for long-term care. They would be much better prepared for LTC risk and cost than they are now. I’ve explained in Medicaid and Long-Term Care (pp. 64ff) that “some recent research suggests how we might reconceptualize the quandary we are in so that it is not such a huge challenge and may in fact be amenable to a market-based solution.” Check it out.

LTSS Report: “The bottom line is that private LTC insurance is now out of the financial reach of most middle-income Americans and for that reason, it is not likely to play a meaningful role in financing LTSS costs in the coming decades.” (p. 4)

LTC Comment: This statement reflects a misunderstanding about why private LTCI take-up is so low. Many more consumers than now would find a way to afford the product if they believed they needed it. If, for example, their home equity were at risk for potential long-term care expenses, they’d see a real risk far more starkly. But despite decades of the media and insurance agents telling people they’ll lose their life savings if they don’t insure, they still don’t believe it. Ironically, they’re right. They can ignore the risk, avoid the premiums, and, if they ever need expensive long-term care, Medicaid provides while exempting most assets and charging only excess income as a kind of co-insurance. Until those facts change, the market for private LTC insurance will languish. But those facts will change soon when the bottom falls out of the existing welfare-based LTC financing system.

LTSS Report: “Medicaid provides coverage of LTSS only after individuals have depleted their own resources in paying for care.” (p. 4)

LTC Comment: That statement is so blatantly false it is hard to believe serious people still publish it. Medicaid requires excess income to be spent down for care. But that rule does not apply to excess assets. Assets may be spent down for anything of value. As long as the items purchased are exempt, and most large assets are, Medicaid does not care for purposes of determining eligibility. That’s why elder law attorneys keep long lists of exempt resources and encourage their clients to spend any disqualifying countable assets on them. Even Medicaid eligibility workers frequently advise families to do the same. It defies belief that long-term care experts remain so uninformed or naïve as to ignore these facts. You can find scores of examples with citations to the sources in How To Fix Long-Term Care Financing, pp. 34-63.

LTSS Report: “Currently, Medicaid pays roughly 57% of LTSS costs, elders and their families pay an additional 23%, other public sources contribute 16%, while private insurance pays less than 5% of the nation’s bill.” (p. 4)

LTC Comment: Of that 23% of LTSS costs attributed to elders and their families, roughly half is Social Security income received by people already on Medicaid, which they’re required to contribute to offset Medicaid’s cost for their care. In other words, it’s not—or even mostly—life savings being spent down catastrophically into impoverishment as analysts imply. I explain this Social Security “spend-through” and why it’s so critical to understanding LTC risk and cost in Medicaid and Long-Term Care at pp. 7-8. The key point is that nearly 90% of LTSS costs as cited by the LTSS report come from Medicaid (57%), other public sources (16%), LTCI (5%), or Social Security (1/2 of the 23% attributed to out of pocket expenditures). Why should we be surprised that most people fail to plan, save or insure for long-term care when they’re only personally at risk for about 10% of the cost? What’s worse, when the Social Security trust fund runs out, as it is likely to do much sooner than previously anticipated because of current monetary and fiscal policies aimed at providing coronavirus relief, Medicaid and its long-term care providers will have to adapt somehow to the loss of some or all of this substantial “spend-through” revenue. As Medicaid and providers are already vastly underfunded, this loss will be devastating.

LTSS Report: “Median retirement savings for Americans between age 55 and 64 is roughly $107,000, which is far less than the average expected LTSS costs for those who have to purchase care.” (p. 5).

LTC Comment: True, but irrelevant. Medicaid already covers people with median savings and below. The key question is whether Medicaid also covers most people with savings above the median. It can and often does. In Medicaid and Long-Term Care (pp. 44-46), I explain how Medicare beneficiaries up to the 95^th percentile of income and assets qualify financially for Medicaid LTC benefits. As long as this remains true, don’t expect most people to worry about long-term care until it’s too late to save or insure and Medicaid, despite its flaws, becomes preferable to spending privately.

LTSS Report: “All of the data suggests that our current approach – based on Medicaid, savings, and private insurance – is not meeting the needs of families, providers, nor public payers. Currently, there are two primary strategies designed to move the system toward greater insurance coverage: (1) a federal public insurance approach which is designed to add social insurance coverage for LTSS to existing health insurance programs offered at the federal level, and; (2) state-based social insurance programs, which represent the most recent efforts at reform and for which there is growing interest across multiple states. These state-based efforts are the primary subject of this report.” (p. 5)

LTC Comment: This is the switcheroo. Having described the existing LTC system’s many shortcomings, the LTSS Report jumps right into proposing “strategies” based on social insurance, i.e. more government money, regulation and compulsion. Neither this report nor others of its ilk give the slightest attention to why and how America’s long-term care system became so fouled up in the first place. How in the world can we conclude that new federal or state-based social insurance programs are the right strategies to pursue without explaining what went wrong with the existing government dominated system and why? That explanation is what I provided in Medicaid and Long-Term Care (pp. 10-16). I concluded that excessive government funding and regulation is exactly what ruined the long-term care system over the past eight decades. Adding more of what caused long-term care’s problems in the first place is hardly likely to fix them going forward.

LTSS Report: “In light of the fiscal strain brought on by the COVID-19 pandemic, as well as uncertainty regarding the upcoming federal election results, it is highly unlikely that these [federal LTC reform] bills will move forward in the immediate future.” (p. 7)

LTC Comment: This is a neat brush-off of omnipresent but simpleminded proposals to add long-term care to Medicare. But the same facts bear even more heavily against state-level reform plans. States can’t print and borrow unlimited funds like the federal government can. We’ve barely begun to see the devastation unconstrained federal monetary and fiscal profligacy will cause. Will the federal government pay all the states’ bills in the same way as it has taken the place of private payrolls nationwide? How long before the trillions of newly printed dollars, with no new goods and services for them to purchase, lose their value? “Too much money chasing too few goods?” Where have I heard that expression before? Oh yeah, Econ 101.

LTSS Report: “We describe recent LTSS financing reforms in six states, identify motivating factors that are driving policy change, describe how policy design decisions are being made, and document the key players involved in these reform initiatives. ... The fact that a growing number of states are seeing a broad and disparate array of LTSS stakeholders come together to work in concert on this issue represents a real change in the policy landscape; in essence, it highlights an expansion in the potential policy solution-set for this issue.” (p. 7)

LTC Comment: “Growing number of states?” These are the same six referenced in a program titled “State Initiatives for LTC Financing Reform” at the 19^th Annual ILTCI Conference in Chicago on March 25, 2019 minus one planned then for Illinois. We’re not exactly seeing a wave of new enthusiasm for higher payroll taxes to fund more government long-term care.

LTSS Report: “We conducted comparative qualitative case studies across six states in various stages of developing or executing on reform initiatives including Washington State, which recently passed and is currently implementing a new social insurance program for LTSS; Hawaii, which has programs designed to assist family caregivers; and Maine, which put a specific LTSS financing initiative on the ballot in 2018 that failed to pass. The other three study states – Minnesota, California and Michigan – are at various stages of building stakeholder coalitions to work with policymakers to develop new programs, undertaking studies of the issue to inform policy development, or are ready to move to a full-blown legislative agenda.” (p. 8)

LTC Comment: Now we’re getting into the meat of the report. Of the six states reviewed, only one, Washington, actually has “a new social insurance program for LTSS” underway. The rest have either tried and failed, done something very different, or are perennially studying the matter.

LTSS Report: “In total, we completed interviews with 42 stakeholders and state officials across these states, many of whom were referred by state leaders. Key informants included state officials, leaders working in aging services, consumer advocates working on a broad range of health, disability, and LTSS issues, union leaders, and an assortment of individuals from LTSS provider organizations.” (p. 8)

LTC Comment: What every one of these “stakeholders” has at stake is getting more money from the state and federal governments to finance their special interests. There’s a name for this process: “crony socialism.” When you decide before you begin a study that LTC only has two ways to go, federal or state social insurance, and then interview only people who stand to benefit from either of those options, you’ve squandered intellectual and financial resources.

LTSS Report: “In all the study states, the median monthly costs of home care and nursing home care exceed the national average, and in all but two, the median monthly costs for care in an assisted living facility are also in excess of the national average. This indicates a growing payment burden faced largely by families paying out-of-pocket or, on behalf of those who are poor or become poor paying for care, on the state’s Medicaid program.” (p. 11)

LTC Comment: No, what those constantly rising home care and nursing home costs “in excess of the national average” actually show is that these study states have failed miserably to control expenditures by means of the government regulation and interventions they’ve already employed. For example, rebalancing from nursing home care to home care was supposed to save money, but it didn’t. It turned out home care only delayed institutional care and the two combined cost more. Pouring more and more Medicaid money into experimental programs and continuing to allow easy access to Medicaid benefits with generous financial eligibility rules impeded the private markets for home care, home equity conversion, and private long-term care insurance leaving consumers dependent on poor public programs. Social insurance isn’t the solution for the long-term care problem; it is the problem. For full development of this argument, see any or all of the state-level studies here including these three reports covering states addressed in the current study: What We Don't Know About Medicaid and Long-Term Care is Hurting Washington State (2004); Medi-Cal LTC: Safety Net or Hammock? (2011); The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net (2013); and Maximizing NonTax Revenue from MaineCare Estate Recoveries (2013).

LTSS Report: “We compared the amount of taxes paid per capita by the study states to explore two opposing concepts. The first is that a high tax rate per capita could reflect a state’s willingness to invest in social infrastructure, inferring a greater probability that they would be willing to continue to do so for LTSS finance reform. … On the other hand, states with higher than average taxes per capita may be reluctant to put in place new programs requiring additional tax increases, feeling that citizens are already paying enough in taxes. While there is a great deal of variation in the ranking of taxes paid per capita among the case study states, five of the six states are within the top half of the country in terms of overall ‘tax burden,’ and four of them are in the top 11.” (p. 11)

LTC Comment: A more credible interpretation is that lukewarmness toward expensive new social insurance schemes documented in this study simply means overtaxed citizens are increasingly reluctant to take on an even greater tax burden.

LTSS Report: “In Appendix 2, we include state timelines showing key milestones in the move to adopt these financing initiatives. They clearly illustrate that the journey of reform is best described as a ‘long and winding road’ filled with both off-ramps and on-ramps.” (p. 12)

LTC Comment: An objective interpretation of these financing initiatives’ sluggish progress would use different metaphors, such as wild goose chase, cul-de-sac and dead end.

LTSS Report: “The profiles begin with a brief description of the type of initiative, its current status and the nature of the coalition working on it. Also summarized are the primary motivators driving the LTSS reform efforts identified by respondents. These motivators include easing the burden on family caregivers, concern about the growth in Medicaid budgets, financial help for the middle class, improving financial access to LTSS services, improving support for the LTSS workforce, and compensating for the failure of the private market.” (p. 12)

LTC Comment: All those “motivators” are fine goals. But don’t we need to understand first why and how our existing LTC system, dominated by government funding and regulation, came to have these problems? Don’t we risk making the problems worse by adding more of the same? Forging ahead to propose more government interference in the long-term care market without first explaining how (1) the LTC burden became so great on family caregivers, (2) Medicaid budgets exploded, (3) the middle class are financially overburdened, (4) the workforce struggles and (5) private insurance failed, is intellectually negligent.

LTSS Report: “The driving force in California is the need to address what stakeholders cited as ‘a rapidly rising and unsustainable’ Medicaid budget. Additionally, there is concern with providing financial protection for the state’s broad middle class. As one stakeholder stated the problem, ‘I would say it’s primarily related to the fact that people who are above the Medi-Cal eligibility level…I would say, the whole middle-income…of our state, can’t afford the cost of long-term care. They’re having to impoverish themselves…And Medi-Cal is not an ideal system…it has its own challenges.’ Working with an outside actuarial firm, the coalition is presently exploring a wide variety of program design options and the pricing implications of each.” (p. 12)

LTC Comment: This assessment of the long-term care problem in California would be laughable if it weren’t so sadly mistaken. Middle class people in California do not have to impoverish themselves to get long-term care. The state has the most generous Medicaid financial eligibility standards of any in the country and the biggest elder law bar artificially impoverishing more affluent people. California Medicaid has not even implemented some of the mandatory federal standards from OBRA ’93 and DRA ’05 designed to target Medicaid to the needy. Long-term care is a mess in California because the state trapped its population on Medicaid by making public welfare the path of least resistance for citizens who failed to plan, save, invest, or insure for long-term care. For a full development of this analysis, see Medi-Cal LTC: Safety Net or Hammock? (2011).

LTSS Report: “Hawaii does not currently have an LTSS social insurance program. However, of all the case study states, they have the longest history of attempting to pass a social insurance program for LTSS, as we describe below. … Unlike other states reviewed here, current activity in Hawaii is more narrowly focused on improving the caregiver support program rather than on trying to develop a new social insurance program for LTSS. … In 2012, the legislatively appointed State LTC Commission recommended establishing a ‘limited, mandatory public LTSS insurance program.’ It was to be funded by a 0.5% general excise tax on businesses and would provide 365 days of front-end insurance coverage paying up to $70 per day in benefits. The measure failed to pass the legislature …. Social insurance for LTSS has not been taken up since that time. Even so, Hawaii maintained its interest in addressing resident LTSS needs but no longer through a social insurance mechanism.” (p. 14)

LTC Comment: Well, then, it sounds like Hawaii thoroughly explored and decisively rejected the social insurance approach to long-term care. So why is Hawaii featured in a study that limits “primary strategies” on page 5 to two: either federal or state-based social insurance?

LTSS Report: “Maine’s attempt at LTSS financing reform was based on a ballot initiative – rather than the legislative approach in the other five states studied – to establish a social insurance program focusing exclusively on comprehensive in-home care. The ballot measure failed when put to a vote in November 2018.” (p. 15)

LTC Comment: What part of the public’s clear rejection of these tax-based social insurance programs do these researchers not get? If you want to know what’s really wrong with Maine’s long-term care system and what to do about it, read this: The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net (2013).

LTSS Report: “Michigan, like California, is in the earlier stages of building a coalition and exploring approaches for a social insurance LTSS finance reform solution. … The Michigan stakeholders are working in coalition, and have hired an outside actuarial firm to model the pricing impacts of a variety of program options. With the support of a state representative, Michigan created the Bipartisan Care Caucus in 2017 to advocate for LTSS care and finance reforms. … Legislation was introduced in the 99th Legislature (2017-2018) to require a feasibility study on a variety of LTSS finance and workforce reform proposals, including an actuarial study of a social insurance model. … Stakeholder listening sessions, the actuarial analysis, and a workforce analysis are in process. … The study is due to be completed before December 1, 2020 and delivered to the legislature within 60 days of the study completion date.” (p. 17)

LTC Comment: More bureaucratic and legislative wheel spinning with no clue why the problems they are trying to fix exist in the first place.

LTSS Report: Minnesota’s “reform approach is unique in focusing on options to enhance affordable private market solutions for middle income families. … For many years, Minnesota has focused on raising consumer awareness of the need to plan for LTSS needs and building better private LTSS financing vehicles to meet the needs of the middle-income market. … The first product is called LifeStage, a term life insurance policy that converts into long-term care insurance coverage when someone reaches the ‘policy conversion age.’ … The second product seeks to add expanded coverage for a package of home and community services to Medicare supplemental health policies sold in Minnesota.” (p. 18)

LTC Comment: Finally, a state that is trying to make personal responsibility and private insurance work. What Minnesota needs to understand is that what has kept them from fully succeeding with that approach are myriad federal Medicaid laws and regulations that prevent them from targeting Medicaid to the needy so that middle class and affluent people have a stronger reason to plan for long-term care before it’s too late for anything but Medicaid to save their wealth. Instead of celebrating Minnesota’s more thoughtful approach, the LTSS Report tells us that …

LTSS Report: “the Governor appointed a Blue Ribbon Commission to study LTSS finance reforms for Minnesota that go beyond these private sector product options. The commission’s work is about to commence and a number of stakeholders are interested in exploring social insurance options including a program to provide catastrophic coverage for individuals with long-duration LTSS needs.” (p. 18)

LTC Comment: So even in a state that gets it, that understands personal responsibility and private markets are the key to solving the long-term care problems government created, the LTSS reporters still think what Minnesota really needs is a Blue Ribbon Commission with stakeholders pushing social insurance programs.

LTSS Report: “With the passage of the Washington State LTC Trust Act in 2019, Washington became the first state in the country to establish a social insurance program for LTSS. … Premium collection for the LTSS program is scheduled to begin in 2022, with full program implementation in January 2025. The LTSS program will be available to all employed state residents (including those who are self-employed); it is funded through a mandatory employee payroll tax of 0.58%. The program reimburses expenses up to $100 per day (with annual adjustments for inflation) for care provided at home, in the community and in care facilities, up to a lifetime dollar maximum of $36,500. All workers who contribute to the program become eligible for benefits after an initial vesting period and once they meet eligibility requirements based on functional or cognitive impairments.” (p. 19)

LTC Comment: Washington’s program is the LTSS Report’s pièce de résistance. It has everything. Government control; mandatory participation; no premiums until 2022; a payroll tax; and a vesting period before outlays begin. CLASS redux? No, CLASS was voluntary. You could escape CLASS; not this program. Unfortunately for its supporters, this program will never pay a dollar in benefits. It will hit a brick wall of fiscal reality probably before any premiums are paid and certainly before anyone vests. Washington’s experiment with state-based LTC social insurance was doomed from the start but the Covid-19 pandemic, the worsening recession, and irresponsible federal monetary and fiscal policies sealed its fate earlier than otherwise.

LTSS Report: “The uniform view was that ‘success’—defined by an ability to form and sustain a coalition, articulate a common goal, and (for states further along in the policy development process) identify and/or implement a specific approach or program—depends on effectively developing, mobilizing and channeling ground-level demand for policy change.” (p. 21)

LTC Comment: Is it any wonder none of these initiatives will succeed when they’re grounded in bureaucratic claptrap like that? What’s really going on here is that these researchers and the stakeholders they interviewed have closed their minds to any facts or analysis that conflict with their social insurance ideology. That ideology embraces the Marxist precept “from each according to his ability to each according to his need.” Its fatal flaw is that ability is scarce and need always devours any available ability. Human nature rebels at self-sacrifice. Sacrificing ability to need, the philosophical foundation of social insurance, destroys ability without satisfying need. Thus good intentions pave hell. Using government force to compel participation in idealistic social insurance schemes is ironically what made long-term care so bad in the first place and why it keeps getting worse.

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Updated, Monday, August 10, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-032: LTC NEWS AND COMMENT

COVID-19 May Fix GE's Long-Term Care Problem
Bullish Investors Still Targeting Investment Returns Above 10%
COVID-19 long-term toll signals billions in healthcare costs ahead
What We Know About Provider Consolidation
Baby boomers show concerning decline in cognitive functioning
68 Million Americans Are Changing Their Retirement Plans
COVID-19 could lead to billions in long-term healthcare costs: experts
Despite PPE, healthcare workers face greater risk of positive COVID-19 test
After COVID-19: A Health Care Forecast for Older Americans
Approximately 95% of Green House homes have reported zero cases COVID-19 among residents or staff: study

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Updated, Monday, August 3, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-031: LTC NEWS AND COMMENT

Building The Long-Term Care System Of The Future: Will The COVID-19 Nursing Home Tragedies Lead To Real Reform?
Genworth Paid $10 Million in Q2 COVID-19 Life Insurance Claims
It’s ‘never too late’ to prevent or delay dementia, international commission claims
Mourning The Many Foibles Of Medicare And Medicaid At 55
COVID-19 Increased LTCI Claimant Mortality 30%: Unum
Scientists get closer to blood test for Alzheimer’s disease
Senior Living Providers Net At Least $252 Million in Small PPP Loans
The COVID-19 Downturn Triggers Jump in Medicaid Enrollment
Flu and pneumonia vaccinations linked to lower Alzheimer’s incidence
New Report: Exploring LTSS Social Insurance Strategies in 6 States
Whole Life Insurance … Love It or Leave It?

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Updated, Friday, July 31, 2020, 9:00 AM (Pacific)

Seattle—

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LTC Comment: Guest author Claude Thau explains how to improve Medicaid LTC after the ***news.***

*** DEBT CLOCK: U.S. national debt is approaching $26.6 trillion. Average debt per citizen is $80,506, $213,277 per taxpayer and $252,788.84 per family. Unfunded liabilities, including $20.6 trillion for Social Security (over 75 years, but $53 trillion over the infinite horizon) and $31.9 trillion for Medicare, total $153.6 trillion. The Federal Reserve has printed trillions of new dollars unsupported by new goods and services. The pandemic removed all stops on federal spending. Inflation hedge gold and silver prices soar. Yet, as we’ll report next time, analysts know nothing to propose for the long-term care problem besides more government spending, borrowing, printing and regulation. ***

*** WHY JOIN THE CENTER?: The Center for Long-Term Care Reform’s mission is to “ensure quality long-term care for all Americans.” We pursue that goal by conducting research, publishing analysis and recommendations, supporting good public policy, opposing bad policy, and helping everyone who works in long-term care stay on the forefront of professional knowledge and expertise. Find hundreds of our articles, speeches, and reports here. Read 1,285 LTC Bullets, archived chronologically and by topic here. Take our virtual tour of the Center's website here. Review our “Membership Levels and Benefits” schedule here. Regular members ($150 per year or $12.50 per month) receive our LTC Bullets and weekly LTC E-Alerts plus access to our Members-Only Website (The Zone), which is full of special resources including the comprehensive “Almanac of Long-Term Care.” Premium members ($250 per year or $21 per month) receive all of the above plus a subscription to LTC Clippings, our daily alerts pointing you to key articles, reports, or data that LTC professionals need to know before they’re barraged by questions and objections from their prospects and customers. Any individual or corporate member of the Center also has access by phone or email to Center president Steve Moses for questions or comments regarding all aspects of long-term care services and financing. ***

LTC BULLET: HOW TO IMPROVE MEDICAID LTC

LTC Comment: What’s right about Medicaid long-term care? What’s wrong? And what should we do about it? Today, we turn over the editorial reins to one of the LTC insurance industry’s leading lights, author, analyst, actuary, and broker general agent Claude Thau. After Claude has his say, I’ll chime back in with an LTC Comment anticipating and answering criticism his proposal is likely to elicit.

The Medicaid long-term care program is complicated. So here’s a brief set up for Claude’s piece:

Medicaid is a means-tested public assistance program; in a word, welfare. To qualify for Medicaid’s long-term care benefits, people must meet defined medical and financial qualifications. The financial qualifications sound very strict—monthly income of $723 or below and no more than $2,000 in countable assets. But in practice, there is no limit on income as long as a Medicaid applicant’s health and LTC expenses are high enough. Most of seniors’ large assets, such as home equity, are exempt, and the rest are easily converted to exempt status. As a rule of thumb, any medically needy senior holding virtually unlimited exempt assets who has income below the cost of a nursing home can qualify anywhere in the country for Medicaid LTC benefits.

That is why Medicaid’s estate recovery requirement is so important. It ensures that affluent people pay back the cost of their care from their estates after they and their last surviving exempt dependent relative pass on. Without estate recovery, Medicaid rewards recipients’ heirs with a taxpayer financed windfall, not for taking care of their parents, but for placing them on public assistance. As Claude points out, the right way to look at generous Medicaid long-term care eligibility tempered by estate recovery—or a private loan program that could serve the same purpose—is to view it as an excellent way to fund long-term care for people who need it, give them the dignity of staying off welfare (it isn’t welfare if you pay it back), and ensure that the public program does not disincentivize early and responsible long-term care planning through private savings, investment and insurance. For a full explanation of Medicaid long-term care benefits and eligibility, see Medicaid and Long-Term Care.

Medicaid Long-Term Care Reform Suggestions
by
Claude Thau

Medicaid is a wonderful program. In particular, it makes commercial long-term care services and support (LTSS) available to indigent people.

It is critical that we take steps to enable Medicaid to continue to provide such service. These steps include:

Encouraging non-indigent people to take personal responsibility for their LTSS costs, including, but not limited to, planning in advance

Using available resources most effectively to reduce the burden on Medicaid

Encouraging states to test ideas to help Medicaid

Aspects of the current Medicaid LTSS system

In addition to serving the indigent, Medicaid supports people who are not indigent. If people had to sell their homes to pay for LTC, and then recovered, they could not go back home. Therefore, we pay their LTSS costs, expecting to recover our expenditure from their estate, as required by OBRA 1993 (i.e., we loan them money).

Not only do we pool our money to provide such a loan, we provide that loan on an interest-free basis! And it is a long-term loan, as it does not require repayment until the care recipient dies. If the recipient’s spouse is living in the house, the loan does not have to be repaid until the spouse dies. If disabled or minor children live in the house or if adult children who were caregivers for a couple of years live in the house, the loan continues until they die or sell the house. If siblings were living in the house for at least a year before the care recipient entered a nursing home, the loan extends until their death.

Medicaid reimbursements pay LTSS providers less than the cost of LTSS. At best, they pay marginal costs without contributions to overhead and profit. When budgets are tight, state legislators and governors may slash such payments even further. Meanwhile government pushes provider costs upward with a variety of mandates, such as quality controls, mandatory staff training, etc.

With low reimbursements, LTSS providers cannot pay a competitive salary. So when they train staff, the newly-trained person often secures a higher-paying job in a hospital or elsewhere. The vacancy reduces the quality of care in the facility, and the facility incurs cost hiring a new employee, who typically is less experienced than the person who left.

LTSS providers may suffer 100% annual turn-over, which means some jobs turn over more than once; others not at all. Their best employees leave as they are most in demand, but providers get stuck with their hiring mistakes. Surely, good managers would fire weak performers, right? Unfortunately, it is not easy to fire anyone when you are understaffed. As time goes on, the labor pool quality, as regards caregivers, likely deteriorates. Even outstanding nursing home managers have an extremely difficult time providing excellent care in such an environment.

Private-pay LTSS recipients in Medicaid-certified facilities get “taxed” in three ways to support this system: 1) they pay income taxes to support Medicaid; 2) they pay higher fees to LTSS providers (subsidizing the costs of Medicaid recipients); 3) they can suffer from inferior care in facilities which have many Medicaid clients.

Therefore, some savvy private payors now avoid Medicaid-certified facilities. Instead of being seen as a badge of honor, Medicaid “certification” may be viewed by some people as a public announcement that cost transfer will occur and that care might be inferior.

When our government seeks loan repayment from the Medicaid beneficiary’s estate so that we will be able to loan the money to another individual who needs LTSS, some people bewail the plight of “poor Sarah” who wanted to leave her house to her children, but whose estate had to sell the house because it was partially encumbered by a government lien.

Of course, recouping payments from indigent welfare recipients sounds harsh. However, Sarah and other home-owners were not indigent. We all gave Sarah a 20-year interest-free loan; all we are trying to do is to recover the principal (no interest) so that we can lend the money to someone else.

Encouraging non-indigent people to take personal responsibility

Providing such loans is marvelous, but such loans should be provided through programs outside Medicaid, some of which already exist but suffer from having to “compete” against Medicaid.

When we provide such loans through Medicaid:

a) Recipients feel uncomfortable being "on welfare." They have scrimped and saved to maintain their independence since their youth. Why should they be placed on a welfare program when they are not indigent?

b) On Medicaid, they are restricted to Medicaid-certified LTSS providers. They cannot select the facility of their choice; nor can they have a private room; nor can they select an assisted living facility, commercial home care or reward relatives or friends for providing care. Eventually, they’ll be paying for the services with their money. Why should their use of their money be restricted?

c) Nursing homes, receive inadequate government reimbursement, so they cannot afford to pay competitive salaries. Shouldn’t providers receive full cost for clients who are not indigent?

d) The government loses revenue and incurs greater expenses.

We can improve this situation by not putting people on Medicaid if their assets could fund their LTSS. Instead, such loans could be financed privately. This simple change would have dramatic impact:

1. Such care recipients would no longer be upset that they are "on welfare."

2. They would have flexibility to purchase the kind of care they want, from whomever they want (instead of being assigned shared rooms in nursing homes perhaps not located conveniently for family visits).

3. Many more care recipients would remain “private payors” rather than being on Medicaid. Providers would benefit from the resultant higher fees.

4. State and federal governments will benefit from lower expenses and more revenue, that is both above-the-line and below-the-line benefits!

5. People’s buying decisions would encourage consumer-driven efficiency in the marketplace. Consumer choice and increased profitability (due to fewer low-margin Medicaid clients) would encourage more private investment in LTSS, creating more jobs and better services.

6. Improved care for LTSS recipients would ease burdens on family members, enabling them to maintain employment and productivity more effectively.

7. The additional provider revenue would lead to reduced cost transfer (less need for private-pay clients to make up for the low revenue generated by Medicaid LTSS recipients) and improved care.

8. As everyone expects to have to repay a loan, we avoid the problems of "repaying Medicaid" and "government liens."

Making such a change to Medicaid would reduce state government expenditures in several ways:

a) There will be many fewer people on Medicaid, so Medicaid payments for LTSS will decrease substantially (benefitting the federal government as well as the state government).

b) Additional savings accrue from not having to determine whether such people are “Medicaid eligible.”

c) The cost of processing their Medicaid payments disappears.

d) The entire administrative effort for recoveries can be dropped.

In addition to the substantial savings in expenses mentioned above, there is an increase in revenue!

The additional income of LTSS providers will be taxable, directly if they retain the money or through their staff if their staff’s salaries are increased.

More people will opt to purchase long-term care insurance (“LTCi”). To the degree that more people buy LTCi, insurers will pay state premium taxes and federal income taxes.

Insurance brokers will pay state and federal income taxes on their commissions.

Residents who use insurance money (rather than personal income or assets) to pay for LTSS will retain greater invested assets which will generate income taxes.

More people will opt for reverse mortgages. Commercial lenders and reverse mortgage brokers who participate in the resultant increase in reverse mortgages will also pay income taxes.

All of the above, except the investment income, involve an additional circulation of money through our nation’s economy, producing additional government income with no offset. Such revenue is significant.

The State also benefits because there will be more investment in LTSS and more consumer control over selection of their LTSS provider. Because of better quality LTSS, some family members are likely to be able to continue to be gainfully employed, thereby generating additional taxable income. In other cases, there will be more incentive for family care-giving.

The National Council on Aging reported that 48% of households headed by someone age 62 or older could get a reverse mortgage, for an average of $72,128/year.^{^[1]} That would go a long way toward reducing our Medicaid LTSS budget. The Center for Long-Term Care Reform estimates that $30 billion could be saved annually.^{^[2]}

Thus, my #1 suggestion for Medicaid Reform is to discontinue giving loans through Medicaid. Shift such loans to programs established for the purpose of providing loans.

Of course, we could also encourage personal responsibility by making it harder to reposition assets in order to qualify for Medicaid LTSS and by promoting LTCi, reverse mortgages and personal savings. One attractive idea is to permit tax-free and penalty-free withdrawals from retirement savings accounts to purchase LTCi. Another would be to allow reverse mortgages for ages under 62, perhaps with restrictions (such as spousal approval).

Using available resources most effectively to reduce the burden on Medicaid

Currently, life insurance policies with cash value greater than $1500 must be surrendered for their cash value, which must then be spent down, prior to obtaining Medicaid LTSS.

However, those policies are generally worth significantly more than their cash value because the life expectancy of the insured person is relatively short. The greater value can be accessed by creating an irrevocable LTSS account or by selling the policy on the secondary market.

For example, according to “The Treatment of Life Insurance as an Unqualified Asset for Medicaid Eligibility”: “By converting an existing life insurance policy to a long term care Assurance Benefit plan, the owner is spending down the asset towards their cost of care in a Medicaid compliant manner while still preserving a portion of the death benefit. If the insured passes away while spending down via their Assurance Benefit enrollment, any remaining death benefit would pay out to the designated beneficiary without being subject to Medicaid recovery.”

We should attempt to leverage the true value of such insurance policies. In that vein, the National Conference of Insurance Legislators (NCOIL) supports requiring life insurers to inform policy owners about options to consider instead of abandoning an in-force policy. Regardless of whether someone supports such legislation or not, some type of education to help people stay independent and to save Medicaid money is desirable.

This option also allows the owner to preserve a portion of the death benefit throughout the spend-down period, protecting it from Medicaid Recovery legal action against the estate.

Another way to use existing resources more efficiently would be to enact measures that would reduce the cost of liability insurance for LTSS providers. Tort reform could help boost our economy in several respects, well beyond simply the cost of LTSS.

A third way to use available resources more efficiently might be to facilitate use of under-utilized housing for LTSS. For example, many widows took care of their husbands, thereby developing LTSS expertise and now live in an otherwise-empty house with time on their hands and perhaps low income. If neighbors could access these people’s caregiving expertise, we might improve care while reducing expenses.

Encourage states to test ideas to help Medicaid

It may also be a good idea to allow states more freedom to obtain Medicaid waivers to try programs to encourage personal responsibility, reduce costs and leverage resources more effectively. For example, it would be great to find that a package of reform measures stabilizes the system sufficiently to allow Medicaid to pay for more home health care.

Summary

We need to continue to provide LTSS to the indigent and should attempt to improve the quality of that care. Medicaid reform is a topic that deserves a lot of attention. This paper supports the following changes:

Continue to provide loans to people who need LTSS but lack liquid assets, but do so through existing (or new) private lending programs rather than through Medicaid.

Allow withdrawals from qualified retirement accounts to purchase LTCi, without incurring taxes or penalties.

Encourage leveraging the value of life insurance policies rather than having them surrendered for their “cash value.”

Allow reverse mortgages for ages under 62, perhaps with restrictions (such as spousal approval).

Encourage more discussion of ideas to accomplish these goals, such as making it harder to reposition assets in order to qualify for Medicaid LTSS; support and promoting LTCi, reverse mortgages and personal savings; tort reform; and accessing the LTSS skill of people who provided LTSS to a family member until the family member’s death and now have time available to provide care to others.

Grant greater freedom to states to experiment with programs consistent with these goals.

These simple changes would have dramatic impact:

a) Care recipients with assets would no longer perceive themselves as “being on Medicaid.”

b) Care recipients would have greater control and flexibility with respect to the care they receive.

c) More care recipients would remain “private payers” rather than being on Medicaid. Providers would benefit from the resultant higher fees.

d) Providers will flourish, resulting in more investment and innovation in the area of LTSS.

e) Family caregivers may be less-burdened, hence may be more productive, stimulating the economy.

f) Governments will earn more revenue, while also reducing their expenditures.

Republicans should support these ideas because they strongly favor personal responsibility and reducing unnecessary government involvement. Democrats should support these ideas because they focus our limited resources on helping the truly needy.

Claude Thau is National Brokerage Director for USA-BGA (cthau@usa-bga.com) and President of Thau Inc. (consulting; claude.thau@gmail.com). You can call him at 913-707-8863.

LTC Comment: Claude’s ideas are thoughtful and thought-provoking. I share them, but in my mind I can hear the strident objections coming from analysts and advocates who prefer more, not less, government money and regulation in long-term care. So here’s how I’d reply to some of those objections. For a comprehensive response, see Medicaid and Long-Term Care.

Objection: Despite anecdotes about the “wealthy on welfare,” that rarely happens. Most people on Medicaid are poor.

Response: Of course most people on Medicaid are poor. They’re also young women, children or able-bodied adults, not aged, blind or disabled. What matters is that financial eligibility rules for Medicaid long-term care applicants, who are aged, blind or disabled, are extremely generous, a vast literature on how to qualify while preserving assets is readily available, and an army of Medicaid planning attorneys helps even the most affluent fit through Medicaid’s elastic loopholes. In fact, there is plenty of evidence, as summarized in Medicaid and Long-Term Care that people with significant wealth actually do take advantage of these benefits in large numbers. Read it and see.

Objection: As Claude admits, Medicaid has a reputation as a poor program with serious access and quality problems. Why would well-to-do people seek access to a program like that?

Response: Medicaid isn’t such a bad program for people with enough personal wealth to pay privately for a while. Medicaid planning lawyers call that “key money,” because it buys access to the best care. Medicaid planners reassure adult children that it’s OK to take an early inheritance from their parents’ savings in order to qualify them for Medicaid, because they don’t have to worry about the horror stories they hear regarding Medicaid nursing homes’ poor quality. By paying privately for a few months, these affluent clients buy their way into the best facilities. Nursing homes roll out the red carpet for private payers because they charge them half again as much as Medicaid pays. Once in the nice facilities, residents can’t be evicted just because their payment source changes. So the lawyer flips a legal switch, converts the client to Medicaid, and the family gets the dual benefit of avoiding the cost of care and knowing the loved one is in a top quality nursing home. Unfortunately, poor people don’t have key money. They lose everything they’ve saved quickly and they end up in the 100 percent Medicaid hell holes the media write about. For details on “Medicaid estate planning,” including its techniques, availability, and why analysts and advocates ignore or downplay it, see Medicaid and Long-Term Care.

Objection: Home equity is by far the biggest potential source of private financing in Claude’s plan, but most older people receiving Medicaid long-term care benefits don’t own homes. So the potential is very limited.

Response: The key question is not how many people currently on Medicaid own homes. The right question is how many older people on Medicaid owned homes 20 years ago and what happened to that home equity? Was it transferred to heirs five years before applying for Medicaid, making it uncountable in any amount, as all the Medicaid planning lawyers and books urge people to do? It’s a wonder any home equity remains with people after they need long-term care. Yet GAO found that 31 percent of the Medicaid nursing home recipients in its sample owned homes. See Medicaid and Long-Term Care, p. 56 for details and the full citation. If the GAO sample were projectable to the country as a whole, which it is not, it would mean “887,598 Medicaid nursing home recipients nationwide or 275,155 recipients own homes with a median equity value of $50,000, [so] at least $13.8 billion worth of their home equity is non-countable, a figure that is 1.7 times the annual $8.1 billion cost of their care.” If this is true, it shows Claude’s proposal has very substantial savings potential. Granted we cannot depend on this particular study, but why aren’t scholars conducting research that is projectable nationwide? For the answer to that question and for an explanation of why analysts have ignored the larger phenomenon of Medicaid overuse by people with significant wealth, see again Medicaid and Long-Term Care.

Objection: Why in the world would we want to fix Medicaid when a much better approach to funding and providing long-term care is available? Just pass and implement a universal public catastrophic long-term care insurance program as proposed by several study groups.

Response: Government funding and regulation of long-term care caused the problems long-term care faces today. Medicaid and Long-Term Care explains in historical detail how that happened. Compelling Americans to buy government-designed insurance they may or may not need or want will only further desensitize the public to the risk and cost of long-term care. The greater probability we face is that government entitlements like Medicaid, Medicare and Social Security will succumb to financial dissolution rather than a new program appearing to cover long-term care. We need more thinking outside the box like Claude Thau’s and less regurgitating worn out policy themes by ideologically biased researchers.

[1] National Council on the Aging Press Release and Fact Sheet, "Use Your Home to Stay at Home(tm): Program Study Shows That Reverse Mortgages Can Help Many with Long-Term Care Expenses," April 15, 2004.

[2] LTC Bullet: Dual Eligibles and Long-Term Care: How to Save Medicaid LTSS $30 Billion Per Year and Pay for the "Doc Fix"; Friday, March 9, 2012

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Updated, Monday, July 27, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-030: LTC NEWS AND COMMENT

Pandemic-Driven Change: 60 Seconds with Steve Monroe
Temporary Enhanced Federal Medicaid Funding Can Soften the Economic Blow of the COVID-19 Pandemic on States, but is Unlikely to Fully Offset State Revenue Declines or Forestall Budget Shortfalls
New study reveals older adults coped with pandemic best
Biden Makes Big Commitment To Home-Based Medicaid Long-Term Care, But Gaps Remain
Older adults excluded, underrepresented in clinical trials for COVID-19
Take the insurance coverage and risk COVID-19?
Ten Targets for Reducing Alzheimer's Risk
Now Available: 2019 Profile of Older Americans
Another Problem On The Health Horizon: Medicare Is Running Out Of Money
More REM Sleep Needed to Reduce Mortality Rate in Older Adults
Elderly who distinctly smell roses, paint-thinner or lemons 'have half the risk of dementia'
Senior living needs ‘substantial and immediate financial relief’ from COVID-19, leaders tell federal government
Home Health in the Time of COVID-19

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Updated, Monday, July 20, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-029: LTC NEWS AND COMMENT

The case for defunding nursing homes and replacing them with a radically different model
Joe Biden Is Slowly Acknowledging the Nation’s Need To Reform Long-Term Care
Millions of Seniors Live In Households with School-Age Children
Survey: 80% of Older Adults Have Faced Ageism
Nursing facilities in ‘hot spots’ to receive first batch of COVID-19 test equipment
Federal Government Will Send Point-of-Care COVID-19 Testing Units, Kits to All Nursing Homes in U.S. [Updated]
Journal Special Edition Dedicated to COVID-19 and Older Adults: Lessons From the Pandemic
Regulators May Hire LTCI Block Extraction Advisor
Woman gets job at long-term care facility to see her husband amid pandemic restrictions
States Allow In-Person Nursing Home Visits As Families Charge Residents Die ‘Of Broken Hearts’
Medicare Advantage Plans Increase, Improve Quality Over FFS Plans
Andrew Cuomo’s Report on Controversial Nursing Home Policy for COVID Patients Prompts More Controversy

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Updated, Friday, July 17, 2020, 9:00 AM (Pacific)

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LTC BULLET: THE CRISIS ON TOP OF THE CRISES

LTC Comment: What could be worse than the current cataclysm of nursing-home coronavirus deaths? More of the same if we keep doing what caused them. Explanation after the ***news.***

*** THE DEBT CLOCK shows the U.S. national debt exceeds $26.5 trillion, up more than another quarter trillion dollars since our last LTC Bullet nine days ago. Total unfunded liabilities, including $20.6 trillion for Social Security and $31.9 trillion for Medicare, are $153.3 trillion. Every citizen owes $80,387. The federal budget deficit was $2.7 trillion in the first nine months of fiscal year 2020. Where is the federal government getting all this lucre to spend? It’s printing the money, creating it out of thin air, and borrowing it by purchasing its own and private companies’ bonds, even their junk bonds. At some point, maybe not far off, printing more money won’t work because more money will no longer buy the same quantity of goods and services which are not being produced because of the lockdown-induced recession. Borrowing more won’t work because our own people, foreigners and other countries will lose confidence that America will ever be able to repay the loans, which it can’t. They’ll stop lending to us. Higher taxes won’t help because they would only stymie the real economy even further. In the end, inflation—the most grievous tax of all—will wipe out most government and private debt, effectively confiscating most private wealth held in dollars. Borrowers benefit; savers suffer. That is the danger of the course we are on. ***

*** THE TRAGIC IRONY of the Covid-19 crisis is that government responded by locking down the businesses and people least vulnerable to the virus while exposing the most vulnerable of all, residents in nursing homes, to sick and recovering patients from overburdened hospitals. For months, nursing homes begged for more personal protective equipment, testing, and funds to little avail. But as we pointed out in this LTC Clipping, that’s finally beginning to change.

7/16/2020, “Nursing facilities in ‘hot spots’ to receive first batch of COVID-19 test equipment,” by Alicia Lasek, McKnight’s LTC News

Quote: “Nursing homes with three or more COVID-19 cases will be the first to receive on-site diagnostic test equipment from federal health agencies — starting in regions where infections are spiking. The news was announced Wednesday by the Centers for Medicare & Medicaid Services, a day after Administrator Seema Verma revealed a new federal plan to deploy rapid point-of-care COVID-19 testing capabilities to eldercare facilities nationwide.”

LTC Comment: Harvard professor David Grabowski found that nursing home coronavirus deaths were highest in geographic areas with the highest Covid-19 incidence. Other factors, such as Medicaid census or for-profit status, didn’t seem to matter much. Businesses have to prioritize. Governments rarely do. So this new focus on protecting nursing home residents in high virus areas is a promising development. See tomorrow’s LTC Bullet titled “The Crisis on Top of the Crises” for more on this aspect. [Read it today below.]

To receive LTC Clippings in real time, join the Center at the “Premium” level. Steve Moses will become your research assistant. He reads everything related to long-term care services and financing; he culls out what’s most important for you to know; then he emails you with the title, author, a representative quote, a link to the source, and his brief analysis. In this way, you can stay abreast of all the news, reports, articles, data and stories about LTC that you need to know without having to do so much research yourself. Spend your time doing what you do best; let Steve do the time-consuming, painstaking research. Contact him at 425-891-3640 or smoses@centerltc.com or simply join here. ***

LTC BULLET: THE CRISIS ON TOP OF THE CRISES

David Grabowski is everywhere these days describing and explaining the Covid-19 disaster in nursing homes. The Harvard professor aptly documents how an epidemiological crisis on top of a long-term care financing crisis has devastated America’s nursing homes and the people who depend on them. But there is another crisis on top of those two, which poses greater danger than either. That is the risk and likelihood that public policy will make these problems worse instead of better.

Dr. Grabowski observed in a recent presentation that “deaths in long-term care facilities account for a majority of COVID-19 deaths in most states.” The US average is 45%, close to the OECD average of 42%. I note that Canada is even worse with 80% of coronavirus deaths in nursing homes. To stem this viral tide, U.S. nursing homes locked down, allowed no visitors, closed communal dining, and took staff temperatures at the start of each shift. Yet 66,000 staff with very limited personal protective equipment, testing, hazard pay, benefits, and sick leave, contracted the virus. Hundreds have died doing these very dangerous jobs.

What caused this awful situation? Grabowski says it’s a combination of things: low Medicaid reimbursement; poor staffing and infection control; clinicians “missing in action”; ineffective regulations; lack of quality transparency; and fragmented ownership structures. I’d summarize in one word—government—because government is responsible for all of these shortcomings including the “fragmented ownership structures” that private sector firms set up to take advantage of the perverse financial and operational incentives that public policies require.

Now consider Dr. Grabowski’s counter-intuitive research findings. Covid-19 nursing home deaths do not correlate with a higher or lower rating on CMS’s nursing home compare five-star quality rating scheme, nor do they correlate with having a prior infection violation, nor with whether a facility is for-profit or part of a chain. Even a high Medicaid census, despite that program’s notoriously low reimbursement and poor facility staffing levels, doesn’t signal greater nursing home virus risk. Grabowski summarizes that what matters is where you are—in geographic areas with higher Covid incidence—not who you are—such as a Medicaid recipient in a low quality nursing home. Bottom line, residing in a nursing home during the coronavirus contagion is deadly. It’s just more deadly if you live in an area with a higher incidence of Covid-19 in the local population.

So, we can extract two key points from Dr. Grabowski’s analysis. First, government funding and regulation of long-term care are responsible for the problems, such as poor funding, staffing, infection control, and quality, which killed so many people in nursing homes. Second, residing in a nursing home is dangerous during the contagion and much more so if your nursing home happens to be in a geographic area heavily stricken by Covid-19. How can we address both of those problems effectively?

The obvious answer is to divert people away from nursing homes as much as possible in the future. But that just begs the larger question: Why are so many people living in nursing homes in the first place, sharing underfunded “semi-private” rooms with potentially contagious roommates? The answer to that question is that Medicaid started making nursing home care virtually free for the poor, middle class and affluent in 1965 and has continued to do so ever since. Efforts to rebalance Medicaid from institutional to home care have partially succeeded but totally failed to save money as they were intended and expected to do. The only permanent answer is to end the perverse incentive of easy access to Medicaid long-term care after it is too late for people to save, invest or insure for the risk. To do that, save Medicaid money, improve care, and support more people in their own homes requires only clear thinking, objective analysis, and better public policy. I’ve provided those in Medicaid and Long-Term Care.

Thus the “crisis on top of the crises” is that we’ll keep doing what we’ve always done, which has caused the human tragedy in nursing homes that we’re now experiencing, and we’ll get ever more of the same. Instead, stop trapping people in Medicaid nursing homes by luring them away from early and responsible long-term care planning. Eliminate or radically reduce Medicaid’s gargantuan home equity exemption, upwards of $900,000 in some states but no less than $595,000 in any state, so that middle class and affluent people will use the wealth in their homes to fund care leaving more in Medicaid for the actually needy. Enforce estate recoveries, which have been mandatory since 1993, but largely unenforced. Use some of the savings to incentivize the purchase of private long-term care insurance. Legislate, implement and enforce these and the other recommendations in Medicaid and Long-Term Care.

The only good news in this whole tragic mess is that it has been self-inflicted by terribly counterproductive public policy and could be easily reversed with the better, more efficacious policies we’ve identified and recommended in that monograph.

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Updated, Monday, July 13, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-028: LTC NEWS AND COMMENT

BREAKING NEWS: CMS directing ‘immediate’ help to nursing homes in COVID-19 ‘hotspot’ areas
Insurance getting much more expensive, when it’s available
Medi(long-term)care for All: A Look into the Future of Long-Term Care Insurance—Part Two
Nevada lawmakers consider slashing millions in Medicaid services
This Threat Scares Investors More Than the IRS: Lincoln Financial
Why Nursing Homes Are Pandemic Hotbeds (Guest: Stephen Moses)
Milliman Actuary: COVID-19 Adding Fuel to Medicare Advantage’s Home Care Fire
Covid-19: Don’t Mess With My Retirement
Skilled Nursing Occupancy Fell to 78.9% in April as Medicaid Rates Jumped 5%
State Regulators May Form LTCI 'Rate Hike v. Reduced Benefits' Panel
COVID-19 has not changed consumer sentiment toward seniors housing: survey
Employee spread — not controversial admission policy — was driver behind COVID-19 deaths, report finds

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Updated, Monday, July 6, 2020, 8:51 PM (Pacific)

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LTC BULLET: WHAT TOPICS AND SPEAKERS DO YOU WANT FOR THE NEXT ILTCI?

LTC Comment: Wouldn’t a debate on the merits and potential of private vs. public long-term care financing spice up the next ILTCI conference? Offer your own suggestions to the event’s organizers after the ***news.***

*** THE DEBT CLOCK shows the U.S. national debt will soon exceed $26.5 trillion, up nearly another quarter trillion since our last Bullet ten days ago. Total unfunded liabilities, including $20.6 trillion for Social Security and $31.8 trillion for Medicare, are $153 trillion. Every citizen owes $80,285. At the rate we’re going, this 2024 version of the Debt Clock estimates the debt four years from now will be $45.3 trillion with unfunded liabilities of $199.4 trillion on a debt per citizen of $131,857. So eat, drink and be merry until the bill comes due for this paroxysm of funny money printing and spending by the Federal Reserve and Treasury. ***

LTC BULLET: WHAT TOPICS AND SPEAKERS DO YOU WANT FOR THE NEXT ILTCI?

LTC Comment: The coronavirus curveball ruined all our plans to learn and network at the 2020 Intercompany Long-Term Care Insurance conference. After fighting to save the program, the ILTCI Executive Committee finally had to surrender to hard reality and cancel. But the ILTCI conference is back on for Monday, March 8, 2021 through Thursday, March 11, 2021 at the same Sheraton Downtown venue in Denver, CO where we would have met this year.

The 2021 convocation will be ILTCI’s 20^th, so it is special. To mark the occasion, organizers have appealed to all potential attendees for their suggestions of “topics or content” to present and of speakers to address them. I don’t recall such a general invitation having been made before. It’s a great idea. I hope everyone will rack their brains and pour their recommended ideas in to the organizers. Here’s their appeal:

“Planning for the ILTCI Conference is underway and we can't wait to see you in Denver, Colorado from March 8-11, 2021. But first...

“We need your help with planning!

“What topics or content do you want to hear about? Have you thought of a session topic or speakers you'd want to present at the next ILTCI? This is your opportunity to help shape the 2021 conference! If you want to offer your assistance in producing or speaking at a session, this is also the time to raise your hand and get involved. Session ideas are being generated now and we want to make this a collaborative process with your feedback.

“Please complete this quick 4 question survey and enter one session idea or speaker suggestion at a time through this simple tool. There will be a link to enter additional ideas at the end of the survey for anyone with multiple ideas/speakers to submit. We know you have some good ideas for session content and topics - send them in and let’s collaborate for the 2021 ILTCI.”

Submit your Ideas

At my request organizers agreed to extend the deadline for submitting your content and speaker recommendations from the original deadline of Friday, July 10 until Tuesday, July 14. So, don’t wait—click “Submit your Ideas” now and offer your suggestions.

To spur your creative thinking about possible conference ideas, review the “History of Long-Term Care Conferences” that we published last year. You’ll find summaries of each ILTCI conference including the first, held January 21-23, 2001 in Miami. You’ll also discover some old photos of some LTCI leading lights who are still active in the field today, some with less hair and more heft, but still loaded with institutional memory and savvy. No one concerned about long-term care financing should miss the opportunity to confer with the long-term care insurance industry’s leaders at the 2021 ILTCI conference in Denver.

Now, while you cogitate, decide and submit your ideas for topics and speakers at the forthcoming conference, please consider my hopeful proposal.

I love debates. There is no better way to get a lot of ideas on the table in a hurry with contrasting points of view compellingly revealed. Nothing culls out bad ideas and elevates good ones like two contrasting experts challenging each other’s positions. So let’s debate this question at the next ILTCI conference: “Can and Should Private Financing Become a Bigger Funder of Long-Term Care than Government?” I’ll take the positive and I invite any of the leading advocates of expanding publicly financed long-term care coverage to take the negative. I’d especially like to debate Marc Cohen, Judy Feder, or Howard Gleckman, but there are many others who could bring the case for more government money and regulation thoughtfully.

As format for the debate I recommend the structure used by the distinguished Soho Forum of New York City. For their programs, the audience votes yes or no on the question under consideration both before and after the debate. The discussant who changes the most minds wins. The debate begins with each discussant delivering a 15-minute opening statement. Then each has five minutes for rebuttal followed by questions from the moderator, from each other and from the audience. Five minute closing statements end the debate. After the votes are counted, the winner is announced. (By the way, since the pandemic has shut down in-person events, the Soho Forum has gone virtual. You can follow their debates in Zoom here.)

The ILTCI Conference has a long history of hosting debates. There were probably others, but these are the ones I recall distinctly and fondly:

At the fourth annual Society of Actuaries Long-Term Care Insurance Conference (the meeting’s name before ILTCI) in Houston, Texas on February 10, 2004, I squared off with Dr. Judith Feder, then Professor and Dean of Public Policy at Georgetown University. Winthrop Cashdollar, then the Executive Director for DI & LTCI at AAHP-HIAA, moderated. My assignment was to make the case for more private financing of long-term care. Dr. Feder argued for heavier public funding. My remarks at the time are available here. Judy Feder is a distinguished scholar and more active than ever today researching and promoting her preferred solutions.

In 2011, the CLASS Act was the hot topic at the eleventh annual Intercompany Long Term Care Insurance Conference in Atlanta. Peter Goldstein, then of Univita, now LTCG, moderated a program titled “Panacea or Problem: Point/Counterpoint on CLASS,” in which John Greene of NAHU and I debated Ted Kennedy-protégé Connie Harner and Rhonda Richards of AARP. Eileen Tell enforced time limits on the debaters. I’m not saying John and I won, but CLASS was later repealed. Check out my three-minute opening statement here where I proposed a CLASS-like program called “Steve’s Insurance, LTC for You” or SILY for short. It involved no policies, no underwriting, no set premium levels, benefits, or triggers; you’d pay premiums for five years before you’d qualify for benefits; I’d spend all the proceeds as soon as they come in, but our trust fund would have lots of IOUs, uh bonds. In other words SILY was just like CLASS.

But the pièce de résistance was the “Clash of Titans” at the 2012 ILTCI conference in Las Vegas. Here’s how I described that program at the time in “LTC Bullet: LTC Embed Report from the ILTCI Conference in Las Vegas”:

“Now to recount the most fun that was had at the conference. In the afternoon of DAY ONE, a great debate ensued titled “Clash of the Titans: Moses vs Gordon on Medicaid and Other Dark Matter.” Ably produced and moderated by Federal Long-Term Care Insurance Program [now FedPoint] CEO Paul Forte, the program included a dramatic “fight poster” inviting the audience to attend, slides featuring great debates of the past, e.g. Lincoln vs. Douglas, etc., and a dual-podium presidential-style debate format. Moses and lawyer/author/entrepreneur Harley Gordon each began with 3-minute opening statements. (Find a transcript of the “fable” I began with at the end of today’s Bullet or here.)

After a coin flip to see who would get the first question, Forte pummeled the combatants in turn with six queries ranging from why the LTCI market languishes to what they’d advise presidential candidates to say about LTC financing. Answers were strictly enforced to no more than two minutes, with a one-minute rebuttal, and a final 30-second “re-direct” by the original answerer.

The program moved fast with lots of humor and more than just a little gentlemanly confrontation. In the second phase of the debate, the participants asked each other questions, with the same time limits applying. Neither knew what the other would ask so the questions and responses were totally spontaneous. Finally, the audience submitted written queries pinning down the debaters with new and different viewpoints.

Bruised, bloodied, but upright, Moses and Gordon shook hands at the end and affirmed they remain friends. They look forward to continue pursuing their different paths toward the common goal to improve long-term care for all.

Who won? Just between you, me and the lamppost, here’s how LTCI producer and author Craig McCormick, a former college debater himself, scored the matchup: 13 to 4, for Moses. Now, I acknowledge that Mr. McCormick may have a bias in my favor. So I invite any of you faithful readers out there who may have attended the debate to weigh in with your own scoring of the event. I’d particularly like to hear from anyone who gave the win to Harley instead of me. Well, I want to hear from anyone except you, Harley! I’ll publish any thoughtful comments or analysis of the debate in a future LTC Bullet. Let us hear from you.

“The Elephant, the Blind Men and Long-Term Care: Three-Minute Opening Statement” by Stephen A. Moses for the Debate with Harley Gordon at The 12^th Annual Intercompany Long-Term Care Insurance Conference in Las Vegas, Nevada on Monday, March 19, 2012

Once upon a time, some blind men approached an elephant.

The first blind man grasped the elephant’s tail and exclaimed: “This is a rope.”

The next blind man patted the elephant’s flank and said: “This is the side of a barn.”

A third blind man clutched the elephant’s trunk and stated confidently: “This is a hose.”

The moral of this fable?

You don’t know any complex thing until you comprehend its entirety, including all of its facets and their interrelationships.

Long-term care is like the elephant in this story and LTC interest groups are like the blind men.

Government is a blind man of long-term care. It’s paid for most expensive LTC since 1965, but can no longer afford the cost. The elephant of LTC gobbles budgets.

The public is a blind man of LTC. Most people don’t worry about LTC despite the apparent risk and cost. Somehow the elephant of long-term care provides.

Senior advocates blindly demand more and better long-term care from the government. To them the elephant of LTC is a cornucopia of free benefits.

Home care and nursing home providers obsess over low government reimbursements. They see the elephant as a stingy, but demanding customer.

What do long-term care insurers see when they look at the elephant of LTC? A puzzle. Why don’t consumers buy the product when they obviously need it?

If you want to understand the elephant of long-term care, you’d better be able to explain why those five blind men see the elephant so differently.

How can the government be bankrupt; the public, asleep; senior advocates, naïve; LTC providers, spoiled; and LTC insurers, befuddled? All at the same time.

No new policy designs, nor tax incentives, nor education programs will sell more LTC insurance until we resolve that paradox.

Here’s how I see it:

Government pays for most expensive LTC which desensitizes consumers to LTC risk resulting in a lack of demand for LTC insurance. But senior advocates and LTC providers are hooked on government money and dubious of private LTCI.

Nothing will end this stalemate short of weaning the elephant of long-term care away from the trough of public financing.

That’s what’s about to happen, either on purpose or by default, and that’s why the future of LTC insurance is bright.

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Updated, Monday, July 6, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-027: LTC NEWS AND COMMENT

The Next Pandemic Will Be Caused by the National Debt. It Will Crater the Economy
Coalition forms to oppose potential long-term care budget cuts
OSHA blasted for inaction on COVID-19 pleas
Returning Home To Assisted Living
Genworth Says Would-Be Buyer Is Having Trouble Closing on Financing
Amid pandemic, fears that older Americans are feeling 'expendable'
Strong job growth predicted for aides and other care positions in senior living and other settings
Housing wealth among older homeowners grew by $120 billion in Q1: report
NIC point-in-time survey shows COVID-19 cases, testing higher in settings where residents have greater care needs
Long Term Care Insurance — Act Now!

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Updated, Monday, June 29, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-026: LTC NEWS AND COMMENT

New Data Reveal Just How Deadly Covid-19 Is for the Elderly
LTC Partners Announces Rebrand to FedPoint
Nursing Homes Struggle As Staff Choose Unemployment Checks Over Paychecks
CNA to Offer Some LTCI Insureds Free Concierge Services
‘Sin Taxes’ Could Help States in Pandemic Budget Slump (at Least a Little Bit)
National median age increases 1.2 years as aging baby boomers grow older
Long-term care facilities as a risk factor in death from COVID-19
Younger adults most interested in solutions to pay for chronic care as they age: survey
A third of Medicare enrollees with coronavirus ended up in the hospital. A quarter of them died
Are Your Long-Term Care Plans Putting You in Danger?
Better COVID payments driving Medicaid-resident evictions: report
Senior healthcare workers are the forgotten front line
The Future of Nursing Homes in the Post-COVID-19 Era
Older adults concerned about retirements, look to alternatives to pad portfolios: surveys

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Updated, Friday, June 26, 2020, 9:00 AM (Pacific)

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LTC Comment: The Heartland Institute recorded a podcast with Steve Moses concerning “Covid and Nursing Home Deaths.” A transcript follows after the ***news.***

*** DEBT CLOCK: The U.S. national debt is 26 trillion, 258 billion dollars, fully one quarter of a trillion dollars higher than it was when we published our last LTC Bullet two weeks ago. In that time, total unfunded liabilities jumped nearly $5 trillion. Every citizen owes $79,588 and every taxpayer owes $211, 222. We’re in a financial sinkhole, but the politicians just keep digging. What will happen if we stay on this course? Stay tuned. ***

*** THE MEDICAID TRAP remains where most people end up if they have a big long-term care expense and they’ve failed to prepare to pay privately. What’s changed recently is how serious the outcome of ending up on Medicaid for long-term care really is. That’s the topic of the following podcast and of “Nursing Homes, Coronavirus, and Medicaid,” my June 1^st Wall Street Journal op-ed with Brian Blase. If you’re in the business of helping people prepare for future long-term care liability, you owe it to your prospects and clients to warn them about this added risk of failure to prepare. To overcome their denial and procrastination, you need facts and arguments. You’ll find them in our LTC Bullets, LTC E-Alerts, and LTC Clippings. Join the Center for Long-Term Care Reform and we’ll keep you up to date constantly with the data, reports, and articles you need to wake people up and get them to take action. Join the Center here or contact Steve Moses at 425-891-3640 or smoses@centerltc.com. It’s too late for most people to avoid the Medicaid trap, but it’s not too late for the people you can reach with this information. ***

LTC BULLET: COVID AND NURSING HOME DEATHS

LTC Comment: Following is the transcript of a podcast recorded with Steve Moses on June 23, 2020 regarding the impact of Covid-19 on nursing home deaths. We expect to have a link to the actual recording soon. Heartland’s Health Care News publication will have a related story. We’ll send you a link to that as well in a future LTC Bullet. For now, here’s the transcript.

Date for recording: June 23

Time: 11am ET

Title: Why Nursing Homes Have Failed to Protect the Elderly from COVID

Hello and welcome to the Heartland Daily Podcast. I’m your host today, AnneMarie Schieber, managing editor of Health Care News. We now are learning that the pandemic in the U.S. has been a crisis for nursing homes. The Centers for Medicare and Medicaid Services reports of the 122,289 people who died from COVID-19, nearly 30 thousand lived in nursing homes…about 1 in 4.

My guest today is not surprised. Stephen Moses is president of the Center for Longer-Term Care Reform and author of the new book, “Medicaid and Long Term Care.”

Welcome.

1 . For most people, this is the first glimpse they have had of nursing home care in the U.S. That it is substandard at best… Is that an accurate and fair assessment?

Yes, I’d say that statement is accurate and recognized by most economists and other analysts. Medicaid reimburses nursing homes only about 80 percent of the private-pay rate and often less than the cost of providing the care, according to the American Health Care Association. Consequently, nursing homes heavily dependent on Medicaid have difficulty hiring and retaining enough quality caregivers at the very low salaries they can afford to pay. Having inadequate caregiving staff is closely associated with lower care quality ratings.

2. How many seniors live in nursing homes and how many are covered by Medicaid?

Roughly 1.3 million people reside in America’s 15,600 nursing homes. Medicaid covers 62 percent of them for some or all of their bills. Medicaid residents tend to be long-stayers, so their low reimbursement rates touch a much higher proportion of nursing home patient days than their total numbers alone would imply.

3. How is it that such a large percentage of seniors are covered by Medicaid long term care?

You have to look way back in history to answer that question. As in third world countries, long-term care was provided largely by extended families in the U.S. for most of our history. In the 20^th century, as people started living longer, the state and federal governments began offering cash benefits to the indigent. Old and frail citizens used that cash to pay for residential care as families became less able to provide full time home care. Mom and pop nursing homes flourished. By mid-century, government programs began providing residential care for the “medically needy,” that is people who weren’t poor except because of their high medical or long-term care costs. The commercial nursing home industry took off as a result.

In 1965, as part of the Great Society programs of Lyndon Johnson, Medicaid became the dominant long-term care payer. That’s when the problems plaguing the system today started. From the beginning, Medicaid paid only for nursing home care, but that benefit included room, board, laundry and related services. Anyone who wanted home care had to pay for it and the other services totally out of pocket. Medicaid long-term care eligibility was originally available to almost anyone who applied. Transferring assets to qualify was explicitly permitted until 1980. Since then elastic income and asset eligibility rules have allowed the middle class and affluent to qualify for what was originally intended to be a poverty program. There is literally no limit on income if your medical and long-term care costs are high enough. Assets are also practically unlimited with home equity exempt between $595,000 and $893,000. Many other resources are exempt with no dollar limit, such as a car, term life insurance, individual retirement accounts, one business including the capital and cash flow, personal belongings and home furnishings including heirlooms. Generous matching funds from the federal government encouraged state Medicaid programs to maximize their grants almost without limit. Naturally, Medicaid expenditures exploded.

From 1965 to the present, Medicaid has paid for the vast majority of all expensive long-term care. Few people plan to rely on Medicaid, but most end up there if and when they need high cost care for an extended period. The dynamic works like this. People don’t worry or plan for long-term care because Medicaid has always been there as the safety net for poor, rich and in between. Once they need expensive care, the path of least resistance is to qualify for Medicaid. That’s the only way to preserve wealth and heirs’ inheritances which makes the program’s access and quality downsides more tolerable. Thousands of elder law attorneys across the country use sophisticated legal techniques to qualify affluent clients while preserving enough “key money” to buy their way into the higher quality, lower-Medicaid-census facilities.

4. How much does Medicaid pay for long care and what should it reasonably cost?

According to Genworth’s 2019 cost of care survey, the average private-pay monthly nursing home cost for a semi-private room is $7,513, and $8,517 for a private room. Costs in expensive urban areas can easily be half again as much or even double. As Medicaid pays about 80 percent of the private pay rate, it would pay about $6,010 on average for a semi-private room. Medicaid would rarely if ever pay for a private room.

It is important to understand that most people on Medicaid have some sources of personal income, nearly always Social Security at least. Medicaid requires that all income except for a tiny personal needs allowance must be used to offset the program’s cost for their care. For example, a person with several thousands of dollars’ worth of income from Social Security, a private pension, an exempt business, etc. qualifies for Medicaid nursing home benefits because their income is less that the cost of the nursing home. But once on Medicaid, they must pay most of that income back to the nursing home reducing Medicaid’s liability. There are even cases where the Medicaid recipient’s income covers the entire cost of the care at the Medicaid rate. This is very important because it shows (1) that Medicaid recipients get a substantial discount on the cost of their care, (2) nursing homes end up with more low-pay Medicaid recipients and fewer higher-pay private patients which impairs their ability to provide quality care, and (3) state and federal Medicaid programs subsidize welfare dependency at the expense of nursing home providers’ financial viability.

5. Why do families want to subject their loved ones to long term care under Medicaid?

Medicaid is the only way to get long-term care for free or highly subsidized. People don’t worry about long-term care until it’s too late. At that point, the elder is usually very old, infirm and often demented. Adult children are making the decisions and they have a financial conflict of interest. Their choices: take Medicaid, put Mom or Dad in a nursing home, and preserve the estate for their inheritance. Or use the parents’ wealth to buy high quality home care or assisted living in the private market and end up with less for themselves or nothing. Medicaid planning attorneys assure their well-heeled clients (usually the “kids,” not the elders) not to worry about the horror stories regarding Medicaid nursing homes. They’ll hold back enough money to pay privately for a few months. Nursing homes are so strapped for revenue that they roll out the red carpet for private payers. This key money buys access to the best nursing homes with the fewest Medicaid beds. After a few months, the attorney flips the switch and, voila, Medicaid picks up the tab going forward. Tragically, poor people don’t have key money so they end up in the 100 percent Medicaid hellholes.

6. Tell us about market place for private long-term care and insurance for it,

I’ve often explained it this way: you can’t sell apples on one side of the street when they’re giving them away on the other. Easy access to Medicaid after the insurable event has occurred was the biggest obstacle to private long-term care insurance. But the federal government added insult to injury by artificially forcing interest rates to nearly zero making it impossible for insurance carriers to get adequate returns on their reserves. That forced the carriers to raise premiums which enraged policy holders and repelled future prospects. These government policies nearly destroyed the traditional long-term care insurance market, but the industry has adapted by offering so-called hybrid products that combine life insurance or annuities with a long-term care financing component. Still, private long-term care insurance of any kind will never become a major market until people can no longer ignore the risk, avoid the premiums, wait until they need long-term care and then shunt the liability off onto taxpayers.

7. Let’s talk about solutions we’ve been hearing about. Congress is already talking about investigations. I’d like to go over a few that have been mentioned so far

a. Better oversight

Won’t work. As the saying goes, you can’t make a silk purse out of a sow’s ear. More oversight, regulations, and penalties without enhanced revenue will only tie caregivers in more paperwork knots. If you keep up the beatings, don’t expect morale to improve.

b. increasing Medicaid reimbursement

Won’t work. Low Medicaid reimbursement is a symptom, not the cause of the long-term care market’s malaise. Pump more money into it and all you’ll end up with is a more expensive welfare trap diverting more people and resources from the private sector into dependency on public assistance.

c. home care

Tried and failed. State and federal Medicaid programs have attempted for at least two decades to divert recipients from nursing homes to home care on the theory that home and community-based care saves money. It doesn’t and hasn’t. Total institutional and home care Medicaid costs have continued to increase year after year in every state. On average and across the society, home care delays but does not replace nursing home care. Home care is desirable. It is a worthy goal. But it does not save money.

So what would work? Stop discouraging responsible and early long-term care planning. Stop making Medicaid available to virtually everyone after expensive care is needed and when it’s too late to save, invest or insure for future care. Eliminate or vastly reduce Medicaid’s huge home equity exemption so that people who need long-term care but have insufficient income to pay for it can use reverse mortgages to purchase high-quality home care or assisted living of their choice. Enforce Medicaid’s estate recovery mandate and use some of the savings to educate the public about long-term care planning and to incentivize purchasing private LTC insurance.

8. What does Congress need to do? What should individuals do to best prepare for long term care?

Congress should remove the perverse incentives in public policy that discourage responsible long-term care planning as I just described.

Individuals should wake up to the reality that to avoid Medicaid and its nursing home trap, they must plan early, and save, invest or insure so if and when they need extended, expensive long-term care, they can pay privately for it. Money talks and it opens doors to the best long-term care in the most desirable venue, usually one’s own home.

As bad as the long-term care tragedy is in America, the good news is that it would be easy to fix. If we stop doing what we’ve always done, we’ll get a different and better result.

[The interviewer ended the podcast with a couple questions about long-term care problems that occur in government-financed systems. Moses explained that such systems are highly prone to rationing and even euthanasia because they lack the kinds of incentives and moderating controls that are present in free markets.]

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Updated, Monday, June 22, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-025: LTC NEWS AND COMMENT

As Covid-19 Hits Developing Countries, Its Victims Are Younger
Surprise: Unhealthy lifestyle tied to Alzheimer’s risk
So Far, So Good: No COVID-19 Spread From Protests...Yet
Why the coronavirus has taken so many lives in US nursing homes
What to Consider Before Moving a Parent Into Assisted Living During COVID-19
Life plan community model remains stable, viable: report
The Road Map to Maximizing Long Term Medicaid Coverage During the COVID-19 Emergency
Never Retire: Why People Are Still Working in Their 70s and 80s
What Albany did to seniors when we weren't looking
Quit treating the pandemic like a ‘bad apples’ problem, expert warns

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Updated, Monday, June 15, 2020, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #20-024: LTC NEWS AND COMMENT

How did we get here?
Nursing home industry on verge of financial collapse, group claims
Offer Appropriate Coverage for LTCi
Financial Crisis of Nursing Home Industry
HHS to distribute $25B for Medicaid, safety-net providers
COVID-19 pandemic encourages consumers to plan for long-term care: survey
Misconceptions about Paying for Long-term Care Part 2 of 3
Assisted Living Communities Ask HHS for COVID-19 Help, Support
As negative thoughts accumulate, so might Alzheimer’s risk
LTC workforce has declined nearly 5% since February
Long-term care facilities driving up COVID-19 death totals

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Updated, Friday, June 12, 2020, 8:00 PM (Pacific)

Seattle—

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LTC BULLET: HOW NOT TO REDESIGN LONG-TERM CARE

LTC Comment: Do we really need more government money and regulation for long-term care, as this Forbes columnist insists? Analysis and better choices, after the ***news.***

*** THE DEBT CLOCK: We introduced this new feature in last week’s LTC Bullet when the U.S. national debt stood at almost $26 trillion. Now it’s over that mark by $8 billion or so. Unfunded liabilities, including $20.5 trillion for Social Security and $31.8 trillion for Medicare, topped $148 trillion in the meantime. Here’s a little historical perspective. In “LTC Bullet: The Impending Collapse of the Roadblocks to LTC Insurance,” December 1, 2009, we reported “According to the U.S. National Debt Clock, our country is currently in hock nearly $12 trillion and soon Congress will be forced to lift the cap on that debt yet again.” By August 1, 2014 in “LTC Bullet: Entitlement Double Talk,” we lamented “Our national debt stands at $17.6 trillion according to the US Debt Clock.” Less than a year ago, we found in “LTC Bullet: The Post-Medicaid History of Long-Term Care,” August 9, 2019, that “The ‘National Debt Clock’ places U.S. national debt at $22.5 trillion and unfunded liabilities at $125.0 trillion, a little over $1 million per taxpayer.” Our national debt, therefore, has more than doubled since 2009, and it’s accelerating, up 16% in less than a year. Most scary, unfunded liabilities are up 18% in the past year. We’re falling into a monetary and fiscal sink hole. Dramatic consequences are coming. But what will they be and when will they arrive? We’ll keep trying to understand. We’ll tell you want we learn. ***

*** JOIN THE CENTER. We have not made a recent appeal for you to support the Center for Long-Term Care Reform. But now is the time. Our major federal legislative successes came during or after major recessions. OBRA ’93 required Medicaid estate recoveries and closed important eligibility loopholes. DRA ’05 put the first cap ever on Medicaid’s home equity exemption and removed the leash Henry Waxman had put on the Long-Term Care Partnership Program. We’re entering a period when Medicaid, especially its massive long-term care component, will consume more state revenue and crowd out other, critical state and local programs. By retargeting Medicaid to its originally intended recipients, people in need, the states and federal government can reduce expenditures and attract more private financing into the LTC service delivery system benefiting everyone. We’ve explained precisely how to do that in dozens of national and state-level studies available here and most recently in “Medicaid and Long-Term Care.” Help us spread the word and fix long-term care. Check out our “Membership Levels and Benefits” here and join the Center here. Thanks for your consideration. Address inquiries to smoses@centerltc.com or call Steve at 425-891-3640. ***

LTC BULLET: HOW NOT TO REDESIGN LONG-TERM CARE

LTC Comment: They say when the only tool you have is a hammer, every problem looks like a nail. Here’s a corollary: when the only tool you have is government, every problem looks like you need more public money and regulation.

That’s the fundamental problem with Howard Gleckman’s argument in “How To Redesign Long-Term Care For Older Adults After Covid-19,” Forbes, June 9, 2020. Compare these quotes from Gleckman (HG) with Steve Moses’s (SM) replies.

HG: “The way we care for older adults in the US is, self-evidently, not working. In just the past three months, at least 44,000 residents and staff of nursing homes and other long-term care facilities have died from Covid-19. Hundreds of thousands have been sickened. And millions have been isolated from family and friends for months.”

SM: Sadly true. I said as much in the Wall Street Journal recently: “Nursing Homes, Coronavirus and Medicaid,” June 1, 2020.

HG: “Yet, this crisis did not spring from nowhere. The Covid-19 epidemic has amplified and exposed an already deeply-flawed system for long-term supports and services (LTSS) in the US. As tragic as this episode is, it has created an opportunity to rethink our care model from the ground up. But what would it look like?”

SM: True again. We do need to start over with a new long-term care model. But “what would it look like?” is the wrong place to start. You need to ask and answer a more basic question first: how did we get into this mess that we need to fix? If you don’t start there, you run the risk of making the problems worse by doing more of what caused them in the first place. That’s why I started by explaining what caused the dysfunctional long-term care status quo in “Medicaid and Long-Term Care,” a January 2020 monograph. But that’s not where this writer takes us. He jumps right in to ask for more money.

HG: “In short, long-term care in the US needs more money and a new model for delivering care. Our system never will provide adequate care for frail older adults and younger people with disabilities as long as it remains so severely underfunded.”

SM: Hammer is to nail as government is to money. That’s the trap! Let’s see where this leads.

HG: “Imagine no entrenched business or bureaucratic interests struggling to protect an existing system. No legacy regulatory and payment systems. What sort of care system would we create? Not the one we have, for sure.”

SM: Absolutely! Imagine what a free market in long-term care could render. Entrepreneurs would compete to provide the best possible long-term care in the most desirable venues at the least possible cost. No government interference; no Medicaid-induced institutional bias; no lawyer-abetted Medicaid planning lure; no access and quality problems caused my parsimonious Medicaid reimbursements; more private pay at market rates lifting access and quality for all; fewer people drawing down Medicaid funds so the truly needy get better care. But is this what Mr. Gleckman wants? It does sound similar.

HG: “It might look like this: Frail older adults and younger people with disabilities, with support from family and a case manager, would choose the care setting and supports that would help them live the best life possible. Long-term supports and services would be well integrated with medical treatment, with no regulatory or payment barriers, and through a financial model that creates incentives for strong chronic care management.”

SM: Yes! Let’s do it. But, how? There’s the rub.

HG: “This could be delivered through managed care plans, such as Medicare Advantage, fully integrated programs such as the Program for All-Inclusive Care for the Elderly (PACE), or special needs plans (SNPs). It might also be possible in traditional Medicare through Medicare Supplement (Medigap) insurance. … A public program such as Medicaid still would support this care for those with very low incomes. But Medicaid would be far more flexible than today, and the default setting for care would be people’s own homes, not nursing homes.”

SM: Wait a minute! Haven’t we tried all those things already and they wouldn’t scale? What would you do differently that could make these longstanding programs work better and become bigger? Their advocates have claimed for decades that what these programs need is more money. Is that what you’re saying too? More of the same but expect a different result? This is where the article becomes very foggy.

HG: “A public program such as Medicaid still would support this care for those with very low incomes. But Medicaid would be far more flexible than today, and the default setting for care would be people’s own homes, not nursing homes.”

SM: Been there; done that; didn’t work.

HG: “States should better align Medicaid LTSS with other public services, such as low-income housing, transportation, home delivered meals, adult day, and primary medical care.”

SM: But would they? Why now and not before? This is aspirational, not realistic or practical.

HG: “The agencies that deliver these programs need to work with one another to provide flexible, holistic care.”

SM: OK, but why are these agencies going to hop out of their silos all of a sudden and start working cooperatively as never before?

HG: “The vast majority of those receiving long-term care at home are getting their support from relatives. Today, those family members are providing personal assistance with great love—and little or no skill. Like paid caregivers, they need training. Perhaps, they should even be paid.”

SM: Instead of relying on the free care provided by families and friends, which is the main prop sustaining the current Rube Goldberg financing scheme, we’re going to start paying them and provide more paid home caregivers also? How?

HG: “Where will the additional funding for all this come from? The reality is that few Americans have saved sufficiently for the cost of long-term care in old age, few have private long-term care insurance, and Medicaid does not have the resources to fund this care for the fast-growing Baby Boom generation.”

SM: Precisely the question that popped into my mind. So what’s the answer?

HG: “A public long-term care insurance program could supplement out-of-pocket spending, especially for those with true catastrophic costs that few private long-term care insurance policies cover.”

SM: Well, what do you know? The answer is to use the punitive power of government to force people to buy mandatory government insurance. If you liked the CLASS Act, you’ll love this compulsory version with a political bullwhip for enforcement.

HG: “Washington State already has adopted a modest public long-term care insurance plan. A half-dozen other states are exploring the idea. And there is some interest in Congress.”

SM: Have you heard anything about these “promising” ideas from anyone else lately? More likely, you’re hearing the lockdown is bankrupting state governments and the federal government is maxed out printing and borrowing money to support closed businesses and laid off workers.

HG: “The long-term care system in the US was failing long before Covid-19. But now that this terrible disease has exposed the flaws in our system, we have an opportunity to fix them.”

SM: See what happens when you start from the observation that LTC is failing in the U.S. and jump straight into proposing solutions? You end up as HG does proposing more of the government spending and regulation that caused the problems in the first place. So here’s what to do instead.

Analyze what caused long-term care’s problems. You’ll find that easy access to Medicaid nursing home care after care is needed but when it’s too late to preserve wealth otherwise caused excessive dependency on Medicaid. Fifty years of that pernicious public policy created the current system’s major dysfunctions including institutional bias; poor access and quality; stultified private home care and LTC insurance markets; overburdened family caregivers; and many thousands of unnecessary deaths from the virus contagion.

Unfortunately, the challenges facing long-term care are too complicated to explain in a few sentences or to resolve simply by throwing more government money at them. The key is to explain why the problems exist in the first place before trying to solve them with more government interference. Do that and you will find the same answers I did in “Medicaid and Long-Term Care.” Read it and see.

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Updated, Monday, June 8, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-023: LTC NEWS AND COMMENT

Four Ways the Coronavirus Pandemic May Affect Long-Term Care Insurance
CMS releases provider COVID-19 case, death totals to consumers on Nursing Home Compare
Congress’s Medicaid Funding Increase Creates Massive Legal Uncertainty for States During the Covid-19 Crisis
Nursing Homes Already Were Weakened—WSJ op-ed by Blase and Moses
Skilled Nursing Occupancy Hit Record Low in March, ‘Mainly’ Due to Post-Acute Admission Decline
How Covid-19 Will Shape the Future of Senior Living. New Models of Care, More Aging in Place
Nursing Homes, Coronavirus and Medicaid
BULLETIN: CMS ‘ratcheting up’ nursing home penalties in light of 26,000-resident, 450-worker COVID-19 death toll
More Universal Life Comes With Long-Term Care Riders: Milliman
Alzheimer's Gene Linked to Severe COVID-19 Risk
Public Opinion of Nursing Homes Takes COVID-19 Hit, But Most Think Government Didn’t Do Enough

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Updated, Friday, June 5, 2020, 9:00 AM (Pacific)

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LTC BULLET: WSJ COLUMN ON NURSING HOMES, CORONAVIRUS AND MEDICAID

LTC Comment: Steve Moses and Brian Blase published an op-ed in Tuesday’s Wall Street Journal. Here’s the back story and much more on the subject, after the ***news.***

*** THE DEBT CLOCK: New feature. We’re going to start posting a link to the U.S. Debt Clock at the top of each LTC Bullet. U.S. national debt stands now at almost $26 trillion. Worse yet, our country’s unfunded liabilities, including $20.5 trillion for Social Security and $31.7 trillion for Medicare, total $147.9 trillion. Evidently no one cares. The Federal Reserve is printing, the Treasury Department is spending, and together they’re borrowing unlimited funds ostensibly to stimulate the economy but effectively to re-inflate a bubble in stocks, bonds and real estate. This will not end well. The debt is suddenly skyrocketing. In future Bullets, we’ll track where the debt stood as we reported it occasionally in the past. ***

*** WHO KNEW? The coronavirus pandemic lockdown crashed the economy. America is burning, literally, with civil unrest. Government’s monetary and fiscal floodgates are wide open. Public and private debt is spiking. Unemployment is at depression levels. Yet the stock and bond markets are at or approaching new highs. Who knew we could borrow and spend unlimited amounts with no consequences? How great is this? You say: “Don’t waste a crisis.” I say “Why wait for a crisis?” Let the good times roll all the time. Who needs jobs and taxes? Just print enough money for everyone to have everything. Voila! Welcome to economic WallyWorld. ***

*** SOHO FORUM: I find these debates fascinating and now that they’re online, easy to access. The topics are always timely and usually pit a libertarian against a more middle-of-the-roader. Most recent topic paraphrased: did the lockdowns do more harm than good? I love the format. The audience votes on the question before and after the debate. The winner is the discussant who changes the most minds. Here’s how the Forum describes itself: “The Soho Forum is a monthly debate series held in Soho/Noho, Manhattan. A project of the Reason Foundation, the series features topics of special interest to libertarians and aims to enhance social and professional ties within the NYC libertarian community. Moderated by Gene Epstein, former economics editor of Barron's, The Soho Forum features some of the most highly regarded speakers across varied fields. At each event, the audience actively engages with the speakers, votes on the resolution, and there is a social reception that follows.” Enjoy! ***

LTC BULLET: WSJ COLUMN ON NURSING HOMES, CORONAVIRUS AND MEDICAID

LTC Comment: When people started dying in droves at nursing homes all across the country, it raised the question: why are so many frail, infirm elderly people residing in these institutional settings in the first place? My friend, Brian Blase of Blase Policy Strategies and most recently Special Assistant to the President for Health Care Policy, had the same thought.

We conferred and the Wall Street Journal published our op-ed “Nursing Homes, Coronavirus and Medicaid” online Monday evening, June 1 and in the print edition Tuesday, June 2. The WSJ has a pay wall so I can’t link you to the full piece, but here are the first three paragraphs, which I am allowed to share:

“A national tragedy began in March when Covid-19 killed 35 residents of Life Care Center in Kirkland, Wash. Since then, more than 22,000 nursing-home residents have died in Connecticut, Massachusetts, New Jersey, New York and Pennsylvania. Nearly half of all Americans who have fallen victim to the novel coronavirus lived in nursing homes.

“Politicians have made plenty of mistakes. Governors in several states, including New York and Pennsylvania, ordered nursing homes to take coronavirus patients discharged from hospitals and reversed the orders only after weeks of casualties. Families are suffering, forced to stare at their parents and grandparents through windows or talk only by phone. Overworked caregivers are at high risk of exposure.

“Why do so many elderly people live in low-quality nursing homes? Almost no one wants to end up in a nursing home, and most families prefer not to place their loved ones in one. The main answer is the legacy of Medicaid, a Great Society program intended to help the poor.”

Want more? If you don’t have a print or online subscription, maybe you can find someone who does. I can forward a limited number of copies for a limited number of days through the Center’s subscription. If you ask, I’ll try. After 30 days, the article will be in the public domain.

In the meantime, how about reading the “rest of the story” that didn’t make it into the WSJ piece? Here’s my two-part early draft: Part 1 answers the question of why so many people end up in nursing homes vulnerable to the coronavirus contagion. Part II explains what we can do to fix that problem.

“Covid-19 and Long-Term Care, Part 1: Why Are So Many Elderly People Trapped in Nursing Homes?”
by
Stephen A. Moses

News from the nursing home sector is not good.

Thirty-five die at a Life Care Center in Kirkland, WA. Locked out families stare plaintively at quarantined parents and grandparents through nursing home windows across the country. New York demands nursing homes take Coronavirus patients, then prohibits them. Half or more of COVID-19 deaths are nursing home residents.

What’s happening? Why are so many old, frail, often cognitively impaired elders residing in nursing homes? Why aren’t they aging in place at home, safer from contagion with visiting caregivers and telemedicine? Why is nursing home quality such a serious problem?

The answers to all those questions stem from a Great Society program intended to help the elderly poor. In 1965, Medicaid began providing nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds. It was welfare supposedly, but it allowed unlimited asset transfers to qualify until 1980. Since then, generous financial eligibility rules placed no set limit on income for people with high medical expenses and allowed virtually unlimited exempt assets, including home equity of $595,000 in every state ($893,000 in some states). A program intended for the poor became the fall back payor for middle class and affluent people who didn’t plan for long-term care and slipped through or manipulated Medicaid’s elastic financial eligibility rules.

By making long-term care virtually free when expensive care is needed: Medicaid (1) quickly exploded in cost, (2) created institutional bias by paying only for nursing homes, (3) caused access and quality problems by paying care providers too little, (4) enriched plaintiff’s attorneys with the resulting tort liability cases, (5) crowded out private markets for home care and long-term care insurance, and (6) kept poor people poor with punishing spend down rules, while (7) letting the well-to-do save and benefit through eligibility loopholes.

Medicaid pays the bills of 62 percent of nursing home residents. It pays notoriously low rates, often less than the cost of providing the care. Those low rates drag down nursing homes’ ability to provide quality care for Medicaid recipients and for the few remaining private payers. Very few private payers remain because Medicaid is so easy to obtain, even for the well-to-do. Thousands of elder law attorneys specialize in impoverishing affluent clients artificially to qualify them for Medicaid and to protect their heirs’ inheritances. Search “Medicaid planning” to find these specialists in every state.

Five and a half decades of easy access to Medicaid-subsidized nursing home care anesthetized consumers to the risk and cost of long-term care. Few people know who pays for it and fewer still worry or prepare as a result. Once they need long-term care, the path of least resistance is to qualify for Medicaid, preserve most of their assets for heirs, and take whatever Medicaid has to give. That’s usually nursing home care in facilities too heavily dependent on the impecunious public welfare program to provide high quality care.

That’s why so many frail, elderly people are trapped in poor nursing homes vulnerable to the ravages of Covid-19.

For the solution, read “Covid-19 and Long-Term Care: Part 2, Save Long-Term Care with Medicaid Reform.”

Stephen Moses is co-founder and president of the Center for Long-Term Care Reform and the author of Medicaid and Long-Term Care (2020).

“Covid-19 and Long-Term Care, Part 2: Save Long-Term Care with Medicaid Reform”
by
Stephen A. Moses

Too many infirm elderly people are trapped in beleaguered nursing homes inadequately funded by a public welfare program, Medicaid. They are vulnerable to the ravages of Covid-19, forcibly cut off from friends and family, and dying in droves. Part 1 explained why this is so. Part 2 proposes a solution. As bad as the nursing home problem is, there’s good news. It is easy to fix.

Fifty-five years of easy access to Medicaid financing when expensive extended care becomes necessary desensitized consumers to long-term care risk leaving them with a Hobson’s choice. Do we spend our life’s savings, including home equity, to pay for long-term care privately? Or do we accept welfare-financed nursing home care and preserve most of our wealth for a surviving spouse and heirs? In the end, most people choose the latter course.

That’s how Medicaid became the dominant long-term care payer for the middle class and affluent as well as the poor. Medicaid planners did a land office business artificially impoverishing people to qualify them for the program. Heirs received windfall inheritances, diverted from their parents’ long-term care expenses by a taxpayer-financed public assistance program originally intended only for the poor.

Analysts and policy makers study the serious problems afflicting America’s long-term care system—the poor access and quality, nursing home bias, too little preferred home care, inadequate financing, excessive dependency on unpaid family caregivers causing enormous financial and emotional distress. They propose measures to alleviate these symptoms, usually more government spending and regulation. But they rarely ask what caused the problems in the first place.

What if government interference in long-term care is exactly what caused long-term care’s problems? Wouldn’t that suggest a different approach than more of the same?

How about this? Remove the perverse public policy incentives that trap people on Medicaid. Don’t exempt their biggest asset, home equity, from long-term care risk. Let people who fail to plan, save, invest or insure for long-term care use reverse mortgages or other assets to pay for the home care they prefer. Perhaps losing their inheritances to their parents’ long-term care costs will make adult children more likely to plan responsibly for their own future. In other words, stop using Medicaid to subsidize people for ignoring the risk and cost of long-term care.

Do not delay making these changes. Budget shortfalls from the current recession will impair the states’ ability to fund Medicaid, further devastating nursing home finances and damaging care quality. In past economic downturns, Medicaid imposed asset transfer restrictions, mandated estate recovery, and closed eligibility loopholes to control costs. More of the same will be necessary in the current economic downturn. The poor will suffer most.

Directing Medicaid long-term care benefits only to the genuinely needy would ensure more resources and better care for them, achieving the original intent of the program. With Medicaid long-term care harder to get, consumers will do the right thing. They’ll plan for long-term care, save, invest and insure for it. New waves of private financing will surge through the long-term care market improving quality and choice for everyone. Care will quickly evolve away from nursing homes toward the home and community-based care people vastly prefer.

Stephen Moses is co-founder and president of the Center for Long-Term Care Reform and the author of Medicaid and Long-Term Care (2020).

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Updated, Tuesday, June 2, 2020, 9:00 AM (Pacific)

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LTC Bullet: WSJ Column on Nursing Homes, Coronavirus and Medicaid

Tuesday, June 2, 2020

Seattle—

LTC Comment: Steve Moses and Brian Blase (formerly Special Assistant to the President for Health Care Policy) have an op-ed in today’s Wall Street Journal. It explains why so many elderly Americans are confined to nursing homes where they’re disproportionately vulnerable to the virus contagion. This is just a quick notice so you can pick up a copy if you would like to. We’ll share some quotes and give you the back story in a full-sized LTC Bullet on Friday.

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Updated, Monday, June 1, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-022: LTC NEWS AND COMMENT

Social Security trust funds could run out even faster due to the coronavirus pandemic
The Most Important Coronavirus Statistic: 42% Of U.S. Deaths Are From 0.6% Of The Population
WHO launches digital app to improve care for the elderly
The Bifurcating Seniors Housing Market
Seniors housing municipal bonds under distress due to COVID-19 costs
The COVID Nursing Home Crisis Was 50 Years in the Making
Long-Term Care Policy after Covid-19 — Solving the Nursing Home Crisis
$672 million would be cost of one-time COVID-19 testing for all assisted living and nursing home residents, staff, AHCA / NCAL says
One in five COVID-19 tests fail to detect virus
Simplifying telemedicine use in long-term care facilities
Families still need care, but many are afraid of nursing homes amid the coronavirus pandemic

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Updated, Monday, May 25, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-21: LTC NEWS AND COMMENT

Ideal Nursing Homes: Individual Rooms, Better Staffing, More Accountability
Few Medicare Advantage plans cover social needs for chronically ill patients
FAQs About Coronavirus and Long-Term Care Insurance
COVID-19 and Long-Term Care Insurance
HHS Releases $4.9B in COVID-19 Relief for Skilled Nursing Facilities
Coronavirus or no, why do we have so many people in nursing homes?
Senior Employment Outlook and COVID-19
States using Medicaid to provide ‘lifeline’ for providers, association reports
Skilled nursing occupancy slips as COVID-19 pandemic rages: NIC
Home Health Industry ‘Getting Closer’ to Reimbursement for Telehealth Visits
Medicaid Providers At The End Of The Line For Federal COVID Funding
COVID-19-caused kidney injuries heighten demand for dialysis
Reopening Guidance by CMS Wins Praise for Aggressive Stance on Staff, Resident Testing
Governors eye Medicaid cuts to ease COVID-19 budget pain

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Updated, Friday, May 22, 2020, 9:00 AM (Pacific)

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LTC BULLET: THE REVERSE ROBIN HOOD ECONOMY AND LONG-TERM CARE

LTC Comment: Does government take from the rich to help the poor? Or is it just the opposite? We scrutinize after the ***news.***

*** THE ILTCI EXECUTIVE COMMITTEE reports that the Intercompany Long Term Care Insurance Conference, cancelled for 2020 due to the pandemic, will convene in 2021on Monday, March 8^th through Thursday, March 11^th at the Sheraton Downtown Denver in Denver, CO. They say “In the coming months we will be offering a selection of our 2020 ILTCI break-out sessions/workshops in the form of webinars and podcasts. The first one will take place this month. We are happy to make this content available and wish to thank all session producers and speakers who prepared informational and educational content this year. In the meantime don’t hesitate to visit our updated FAQs on www.iltciconf.org or email info@iltciconf.org if you have any questions. ***

LTC BULLET: THE REVERSE ROBIN HOOD ECONOMY AND LONG-TERM CARE

LTC Comment: The coronavirus pandemic has thrown millions out of work and ruined thousands of companies. But, not to worry, the federal government has taken unprecedented action to alleviate the economic pain until the virus goes away and we get back to normal.

Specifically, the Federal Reserve is printing money with no limit and the Treasury is borrowing and spending “whatever it takes.” Voila! People get paid whether they work or not and companies survive whether they’re open for business or not. Problem solved.

OK, but won’t someone, somehow, someday have to pay for all that printing, borrowing and spending? Yes, of course. TANSTAAFL: There’s No Such Thing As A Free Lunch. So who gets the bill? Presumably, the rich will pay as they have most of the money and they pay most of the taxes. This economy, therefore, is Robin Hood on steroids. Government takes from the rich to give to the poor.

Or does it? What’s really happening? Qui bono? That’s the apt question. Who benefits?

At first blush, it seems like the poor and unemployed receive a bonanza. They get money while remaining idle, sometimes even more income than when they were employed. But look under the economic surface. What happened to all that money the government created out of nothing?

Some of it will find its way into consumer spending, which means there will be much more money chasing fewer goods and services due to the economy’s shutting down. That is the definition of inflation. So the good news is government gave you money, but the bad news is that it won’t buy as much as before.

But the bulk of the new money will find its way into the stock, bond and real estate markets. That’s why equity values skyrocketed after the 2008 financial crisis when the same policies were employed. It’s why it is happening again now. In other words, the new money benefits the already well-to-do substantially, but only allows the unemployed to wait out the crisis less painfully.

So, what happens as we emerge from this pandemic-induced financial cataclysm? The government and the private sector have taken on unprecedented levels of debt. Debt is not free. It must be serviced. Even at artificially low interest rates, that’s difficult. There are only three ways to service debt: borrow more, raise taxes, or let inflation run rampant.

Borrowing more is possible only until lenders, i.e., the rest of the world, realize you’ve put no limits on debt. Sooner or later, they’ll figure out you’re unlikely to pay back what you’ve already borrowed, much less service even bigger liabilities. So, either you can’t borrow more or lenders demand higher interest rates. Either way, it’s harder than ever to service the compounding debt. It’s a vicious downward spiral.

Taxing to pay the interest and/or reduce the debt doesn’t work. People object to higher taxes. Politicians benefit by giving people what they want, specifically free stuff, not by raising taxes. Besides, taxes reduce private capital which is what creates jobs and prosperity which are the source of tax revenue in the first place. Everyone is better off when we leave money in the private sector where it can grow through wise investment.

Finally, inflation makes debt disappear instead of paying it off. Inflation hurts lenders who get their loans paid back in less valuable, or worthless, dollars. Inflation helps borrowers by letting them pay back their loans with cheaper dollars.

Who are the borrowers? Government and overleveraged companies. Who are the lenders? You’re looking at ‘em: the American people and all the suckers around the world who bought our bonds and let us use the proceeds to purchase their goods and services.

In other words, we’re in the middle of a big Ponzi scheme benefiting the rich at the expense of everyone else, especially the poor. As long as there is a bigger sucker willing to buy into the giant government debt bubble, it keeps getting bigger. But the coronavirus may just be the pin that finally pops this monetary balloon. We’re going to find out soon.

Long-Term Care

So where does long-term care come in? It’s similar in a way. Government purports to pay for long-term care for the poor by taxing the prosperous. Robin Hood again, right?

Think again. Medicaid, the government’s long-term care funding program, is readily available to the middle class and affluent as well as the poor. Find the evidence for that statement in Medicaid and Long-Term Care.

So, the poor end up in welfare-financed nursing homes with notoriously low quality care. But so do the affluent Medicaid recipients, right?

No. Prosperous people who take advantage of Medicaid hold back some cash so they can pay privately for a few months. That gets them into the best LTC facilities that have relatively few Medicaid recipients. Then they, or their Medicaid planning attorney, flip the switch and convert their payor to Medicaid.

The poor get the worst Medicaid has to offer. The well-to-do get the best.

Reverse Robin Hood redux.

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Updated, Monday, May 18, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-020: LTC NEWS AND COMMENT

States face looming crisis over Medicaid growth, which could trigger changes for providers and payers
Masks change everything
Seniors turn to reverse mortgages as a cash lifeline during the coronavirus crisis
WSJ: Seniors housing could face big vacancies with telemedicine available to help with care needs at home
The Pandemic and the Politics of Long-Term Care in Canada
Ken Dychtwald: Pandemic Will Force Big Changes in Retirement Planning
Fewer workers confident they can meet long-term care cost demands: survey
White House: Test all nursing home residents, staff for COVID-19 over next 2 weeks
Key Takeaways: The Impact of COVID-19 on Social Security and Highlights from the Trustees' 2020 Report
Algorithm Beats Experts in Alzheimer’s Diagnosis
New task force to develop guidance for reopening senior living and care communities
For Most States, At Least A Third Of COVID-19 Deaths Are In Long-Term Care Facilities

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Updated, Monday, May 11, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-019: LTC NEWS AND COMMENT

Senior living industry bracing for effects state reopening will have on residents, staff
Genworth Aims to Line Up Backup Financing Options
The Grim Post-COVID-19 Future For Nursing Homes
States cut Medicaid as millions of jobless workers look to safety net
How Are States Supporting Medicaid Home and Community-Based Services During the COVID-19 Crisis?
How Quarantine Is Affecting Different Generations: Ken Dychtwald
Medi(long-term)care for all: A look Into the future of long-term care insurance—Part one
Unum to Add $2.1 Billion to Long-Term Care Insurance Reserves Over 7 Years
Financial incentives might tempt facilities to admit infected residents: LA Times
States ordered nursing homes to take COVID-19 residents. Thousands died. How it happened

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Updated, Friday, May 8, 2020, 9:00 AM (Pacific)

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LTC Bullet: The Gold Standard for Long-Term Care Insurance

LTC Comment: We face a brave new world—epidemiologically and economically. What’s really happening and how can long-term care insurance adapt? Analysis and conjecture after the ***news.***

*** LTC BULLETS took some time off to reflect on the sea change impacting long-term care services and financing. We serialized our latest report, published in January, titled Medicaid and Long Term Care. That report presents our analysis and recommendation for long-term care policy as circumstances existed before the pandemic. Today and for the future we turn to the challenge of analyzing, understanding and opining out the radically different circumstances the long-term care profession faces today. We invite you to join the conversation by replying to each LTC Bullet as it is published whenever you agree, disagree, or just have something to say. Next week, we’ll address the question “Why Are So Many People Trapped in Nursing Homes?” It’s never been more important to understand the causes and consequences of Medicaid’s institutional bias than now, with SNF residents confined to quarters and their loved ones locked out. ***

*** ACTIONABLE NEWS about long-term care is more frequent and vital during the pandemic than ever before. The Center for Long-Term Care Reform’s LTC Clippings bring you one or two daily updates about critical information you need to know to stay at the forefront of professional knowledge. Steve Moses scans the news and LTC literature. He chooses reports, articles, stories and data that LTCI agents, financial advisors, and anyone involved in aging issues need to know. He provides the title, author, source, a hyperlink to the original, and a sentence or two of commentary. As a bonus to LTC Clippings subscribers, Steve will answer questions by phone or email usually within 24 hours. Hook yourself into this reliable source and you can safely spend less time scanning for information and more time doing what you do best professionally. Contact Steve at 425-891-3640 or smoses@centerltc.com to subscribe or learn more. Two sample clippings from this week:

5/4/2020, “The Grim Post-COVID-19 Future For Nursing Homes,” by Howard Gleckman, Forbes

Quote: “The deaths of more than 16,000 of their residents from COVID-19 has profoundly disrupted senior living facilities—especially nursing homes— and will drive historic change in the industry. Robert Kramer, president of the consulting firm Nexus Insights and a long-time observer of nursing home finances, told me, ‘There never will come a time when we will return to the old normal.’”

LTC Comment: Rare flawless analysis by this writer. Obvious conclusion based on the evidence adduced: stop trapping people in nursing homes on Medicaid and incentivize responsible LTC planning by means of saving, investment and insurance. But no, this article leaves us only with despair. There is nothing about why this system went so wrong and what needs to happen to fix it. For that, read Medicaid and Long-Term Care.

5/5/2020, “States cut Medicaid as millions of jobless workers look to safety net,” by Rachel Roubein and Dan Goldberg, Politico

Quote: “State Medicaid programs in the previous economic crisis cut everything from dental services to podiatry care — and reduced payments to hospitals and doctors in order to balance out spending on other needs like roads, schools and prisons. Medicaid officials warn the gutting could be far worse this time, because program enrollment has swelled in recent years largely because of Obamacare’s expansion.”

LTC Comment: So, tell me again why it makes sense to exempt up to $893,000 in home equity so that affluent Americans can avoid paying for private insurance and qualify for welfare-subsidized nursing home care, where they’re dying in droves cut off from friends and family. The only silver lining in this pandemic/recession is that maybe we can finally reform this corrupt LTC financing system. We made progress after recessions in the early 1990s and the early 2000s, but the system has stagnated unreformed since the Great Recession. To learn why, read Medicaid and Long-Term Care. ***

LTC BULLET: THE GOLD STANDARD FOR LONG-TERM CARE INSURANCE

“This too will pass”
“After the pandemic, markets will surge back”
“We have nothing to fear but fear itself”

If you believe this HHS (Happy Horse Sh**), you’d better open your eyes.

This crisis is not going to pass any time soon. Markets won’t surge back after the virus passes. There is no viable “back” to go to.

The roaring economy a couple months ago wasn’t real; it was an asset bubble.

The Federal Reserve pumped it up by imposing artificially low interest rates through quantitative easing, buying bonds with printed money.

The federal government, taking advantage of the low interest rates, overspent creating huge extra debt.

The private sector over-borrowed at low interest rates to fund malinvestments, starting uneconomical projects that only seemed to make sense because borrowing was so cheap.

All the extra money printed (created out of thin air) drifted into equities so stocks and bonds surged, diverting the huge money inflation so it didn’t show up significantly in consumer prices.

The wealthy, with real estate and equity investments, prospered while the poor and middle class languished economically.

The good times rolled as affluent Americans partied, buying tons of cheap goods from China.

But where’d they get the money to do buy those cheap goods? America doesn’t produce much to sell internationally anymore. Our trade deficits are huge.

Easy, we sold the treasury bonds created by the Federal Reserve to China and other foreign countries.

In short, they gave us dollars in exchange for paper promises to pay back the principal plus artificially low interest, someday, somehow.

We prospered on the easy money and left foreigners holding the paper-money bag.

That was the wonderful, booming, “best market in American history” according to the President, that we enjoyed until the bottom fell out in March.

In other words, it was all fake, an asset bubble created by, well, Modern Monetary Theory.

How did we get there?

Twenty years ago, back when we still had some semblance of a real economy, it blew apart with the dot-com bust when the Fed tried to cool the economy by raising interest rates.

Instead of letting the economy suffer the hangover of a severe recession that could have squeezed the public and private malinvestment out of the system …

The Fed pushed interest rates down artificially and left them there.

Public and private malinvestment surged with a vengeance, especially in the real estate market, resulting in the 2008 housing bust.

After that bubble burst, the Fed returned to the seemingly tried and true policy of artificially low interest rates.

A Tale of Two Bubbles: How the Fed Crashed the Tech and the Housing Markets

This time they added three rounds of Quantitative Easing (QE) vastly expanding the money supply with the hope of making people spend more because of the “wealth effect” created by all that extra cash going into the equity markets.

So, where are we now?

The Coronavirus pandemic shot through the latest asset-bubble economy like a ballistic missile.

The government closed down the economy to curtail the disease’s spread.

People are suddenly out of work and out of money as are the companies that used to employ them.

Few Americans have any appreciable savings because government programs—from Social Security in 1935 to Medicare/Medicaid in 1965, to the paroxysm of free stuff promised by present-day progressives—have desensitized the public to the need for personal responsibility.

So naturally the people from the government, who are always coming to help us, dove right in.

Did they learn their lesson from the earlier disastrous policies that created the previous asset bubbles?

Well no, they tripled down on those same policies in the hopes of re-inflating the bubble yet again once the pandemic goes away.

The Federal Reserve quickly forced interest rates back to near-zero and implemented not just QE4, but rather QE∞ (Quantitative Easing to Infinity).

The Treasury responded in kind promising to spend whatever it takes.

So the Fed is printing unlimited money and the Treasury is spending it as fast as it appears out of nowhere.

That’s called monetizing the debt and it’s economically fatal sooner or later.

The Trump Administration and Congress have pledged to pay everyone’s wages who isn’t working, to end evictions, to forgive all kinds of late or non-payments, to buy even junk bonds!

Already the money supply is exploding and the checks are still going out.

Inflation Alert: Money Supply Expanding At 26x Rate Of QE1

Next likely steps: (1) the Fed will start buying stocks so government owns the means of production (the definition of socialism) and (2) the Administration and Congress will ask for trillions more for “infrastructure” building jobs.

Moral hazard has become moral catastrophe.

OK, so here we are: the economy is shut down; production and distribution have plummeted; supply chains, including those cheap products from China, are interrupted, and suddenly we have a virtually unlimited supply of money.

At the same time, we’re producing fewer goods and services than ever.

Timid efforts to “restart the economy” will likely prove false starts indefinitely as the virus resurges wherever they’re tried.

“Too much money chasing too few goods?” Where have I heard that phrase before? Oh yeah, a couple decades ago before all this economic craziness got started in earnest.

Inflation? Yes of course. Inflation is nothing more than an increase in the money supply. This is inflation by definition and by orders of magnitude greater than ever before.

Well, then, why aren’t consumer prices going up more?

They didn’t go up commensurately with the increases in money supply during the previous two asset bubbles because most of the new money went into the debt and equity markets instead of consumer prices.

OK, so why won’t that just happen again? We’ll blow up an even bigger bubble and let the good times roll! Isn’t that what the currently resurging V-shaped stock market results are showing?

Nope: too much money this time. Too few goods to buy. Equity markets are unattractive for anyone without the rose-colored glasses of mindless confidence in the Fed.

Too many dollars with no place to go means the dollar loses value. People lose confidence in the dollar. The dollar loses its status as the world’s reserve currency.

Blow a balloon too big and it’ll pop even without a pin like the Coronavirus to puncture it.

So, this is it, the reckoning, the end game. Hyperinflation. The Weimar Republic, Argentina, Zimbabwe, the new USA.

The good news: Social Security and other government pensions and programs will pay in full; the bad news: what they pay won’t buy much.

On the other hand …

We’ll have no more moral hazard as the government will have no more ability to supply it.

Medicaid and Medicare? Maybe some residual safety net will remain, but the smart money will seek protection in the private market: saving, investing and insuring in real money.

Real money? It’ll be gold again as it always was under the surface and behind the scenes. It’s the only money that keeps its value as fiat currencies fluctuate.

Does this have anything to do with long-term care? You bet.

As the economy stabilizes around real money, we’ll have no more inflation, no more moral hazard from government “help.”

If Medicaid survives, it will be vastly attenuated, and certainly not a resource middle class and affluent people can rely on for long-term care as they have in the past.

Private charity will fill the gap left by disappearing entitlement programs, but it won’t be enough.

People will have to rely again on personal responsibility and private means: saving, investment, and insurance, as they did long ago when America was becoming the great economic powerhouse it has frittered away.

Long-term care will remain expensive and people will need it as much as ever.

With no government program to fall back on, private long-term care insurance will resurge, but underwritten by gold.

We’ll pay premiums, receive benefits, and finance stable long-term care expenditures with gold, the once and future objective standard of value.

Instead of “who needs it” private LTCI will become “can’t go without it” protection.

It’s a long, rocky road ahead, but that’s where we’re headed.

Your thoughts?

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Updated, Monday, May 4, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-018: LTC NEWS AND COMMENT

Want to slash coronavirus deaths? Start (really) caring about long term care
Coronavirus: Why so many US nurses are out of work
More than 80% of assisted living facilities report occupancy declines: NIC
White House creates national nursing home safety panel, will deliver 2 weeks’ worth of PPE to every facility in response to COVID-19 crisis
COVID-19 Could Increase Seniors’ Rapid Disenrollment in Medicare Advantage
How Can a Trust Help You Avoid Nursing Home Costs?
Aging in the Time of COVID-19: Reflections on Life, Health, Family, Community and Purpose - A Chat with Ken Dychtwald
MILLENNIALS SURPASS BABY BOOMERS AS LARGEST U.S. GENERATION, ENDING 20-YEAR RUN
Why Are We So Shocked By COVID-19 Nursing Home Deaths? We Have Been Failing Our Frail Older Adults For Decades
Nursing Homes Were a Disaster Waiting to Happen
Medicare Beneficiaries’ Financial Security Before the Coronavirus Pandemic
COVID-19 May Deplete Social Security Trust Funds This Decade

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Updated, Monday, April 27, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-017: LTC NEWS AND COMMENT

The Potential Health Care Costs And Resource Use Associated With COVID-19 In The United States
National Health Expenditure Projections, 2019–28: Expected Rebound In Prices Drives Rising Spending Growth
Coronavirus to accelerate Social Security, Medicare depletion dates, U.S. officials say
Seniors with COVID-19 showing unusual symptoms, plus: blood clotting an issue
A Dozen Facts About Medicare Advantage in 2020
Pandemic may push seniors housing occupancy below 80% for first time
Righteous COVID-19 indignation
Coronavirus Exposes the Dangers of Age Segregation
ACL Announces Nearly $1 Billion in CARES Act Grants to Support Older Adults and People with Disabilities in the Community During the COVID-19 Emergency
Pandemic’s Costs Stagger the Nursing Home Industry
CMS Requires SNFs to Report Confirmed COVID-19 Cases to Residents, Families, CDC
Dementia diagnosis often means death within five years, study finds
White House: Senior Care Facility Visits to Remain Banned Until Final Phase of COVID-19 Reopen Plan
CMS Orders Nursing Homes to Report All COVID-19 Cases to CDC, Plans Public Data Release
Some rules of Medicaid for long-term care are changing

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Updated, Monday, April 24, 2020, 9:00 AM (Pacific)

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LTC Bullet: Medicaid and Long-Term Care, the Serial, Part 7, the End

LTC Comment: The full Medicaid and Long-Term Care monograph is 78 pages, so we’re bringing it to you in bite-sized pieces. Here’s the seventh and last one, after the ***news.***

*** SERIAL ENDS, ACTION BEGINS: Today’s LTC Bullet brings you the exciting conclusion of Medicaid and Long-Term Care. In it, we capitalize on the findings in six earlier episodes to explain why and how Medicaid reform is necessary and sufficient to improve long-term care service delivery and financing in the United States. That’s our marker. Future LTC Bullets will move from analysis and recommendations toward advocacy and implementation. The U.S. government having thrown open the monetary and fiscal floodgates, anything is possible now. Will we slip into hyperinflation, depression, and ever greater government dependency or revive private markets, competition and personal responsibility? We’ll tackle that question in a new series of LTC Bullets. Stay tuned! ***

*** IN THE MEANTIME, there’s never been a better time to renew your support for the Center for Long-Term Care Reform. Our work was instrumental in winning federal level public policy improvements in OBRA ’93 (closed Medicaid loopholes and mandated estate recovery) and DRA ’05 (capped home equity exemption and unleashed LTC Partnerships). For the first time in a decade and a half, the potential for reforming Medicaid at the federal and state levels is great again. That is the key to unbridle private long-term care insurance as well. So, please renew and upgrade your Center memberships; subscribe to LTC Clippings; and urge your companies to join the Center as corporate members (making your personal membership free.) Check out our “Membership Levels and Benefits” schedule for all the details. Contact Steve Moses at 425-891-3640 or smoses@centerltc.com. You can also join or upgrade here: http://www.centerltc.com/support/index.htm. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 7, THE END

LTC Comment: Episode 1 of our serialization of the Center’s newest report described the current defective method of providing and paying for long-term care. Episode 2 explained how Medicaid became the dominant payor for long-term care, the dire consequences that ensued, and central planners’ futile efforts to fix the broken system. Episode 3 showed how scholars made the same mistakes as policymakers, lamenting long-term care’s problems without analyzing their causes, and recommending more of the same interventions that caused the problems in the first place. Episode 4 focused on how affluent people qualify for Medicaid long-term care benefits, why they ignore the risk and cost of long-term care until they need it, and how the government has tried, mostly unsuccessfully, to curtail artificial self-impoverishment to qualify for benefits. Episode 5 explained how and why most long-term care analysts ignore or misrepresent the vast literature on qualifying for Medicaid long-term care benefits while avoiding spend down of wealth. Episode 6 discussed and gave examples of the evidence that Medicaid’s spend down rules do not prevent middle class and affluent people from taking advantage of the welfare program’s long-term care benefits. In today’s seventh and final episode, Steve Moses capitalizes on the preceding evidence and arguments to explain how long-term care financing policy must change to ensure quality long-term care for all Americans.

Due to email formatting challenges, we’ll leave out the content of the report’s extensive footnotes in this serialized version. But the footnotes are important, and you can find them by clicking through to the unabridged version here. Likewise, citations to sources are given in the form (author, year, page number). To find the full citations for those sources, see the “References” section at the end of the full report.

Here’s the seventh and final episode of “Medicaid and Long-Term Care,” by Stephen A. Moses, Center for Long-Term Care Reform, Seattle, Washington, published January 17, 2020. This paper was presented to The Libertarian Scholars Conference on September 28, 2019 in New York City and to The Cato Institute’s State Health Policy Summit on January 3, 2020 in Orlando, Florida.

Ramifications

If Medicaid is not the catastrophic poverty-maker it is commonly made out to be, what is it? Simply put, Medicaid has become a long-term care entitlement for middle-class and affluent families. Individuals can ignore the risk of future long-term care expenses, avoid premiums for private insurance, and then protect home equity and other wealth for heirs if such care is ever needed, shifting the cost of long-term care to taxpayers. The consequences of this reality affect every aspect of the long-term care market.

By making nursing home care virtually free in the mid-1960s, Medicaid locked institutional bias into the long-term care system, crowded out a privately financed market for the home care seniors prefer, and trapped the World War II generation in welfare-financed nursing facilities.

By reimbursing nursing homes less than the cost of providing the care, Medicaid guaranteed that America’s long-term care service delivery system would suffer from serious access and quality problems.

By underfunding most long-term care providers—leading to doubtful quality—Medicaid incentivized plaintiffs’ lawyers to launch giant tort liability lawsuits, extract massive financial penalties, and further undercut providers’ ability to offer quality care.

(De Nardi, French and Jones, 2009, pp. 4-5⁸⁰).

These conditions have prevailed for Medicaid’s 55-year history. They explain why America’s long-term care service delivery and financing system is so dysfunctional. The widespread fallacy of impoverishment sustains this status quo because scholars fail to challenge it. This explains why long-term care dominates Medicaid expenditures but remains impervious to reform.

Policy Recommendations

Everyone agrees that America’s long-term care services and financing system is broken and unsustainable. But most analysis of the problem fails to address its causes rooted in public financing. The usual result is ever more emphasis on expanding government’s role even further. On that path lies more decline and dysfunction.

If the fundamental cause of long-term care problems is easy and elastic Medicaid financial eligibility combined with generous federal matching funds to induce Medicaid spending by states, then corrective action must address those causes if it is ever to effect improvements in the symptoms of exploding costs, dubious access and poor quality.

The best way to eliminate the incentive for states to maximize federal Medicaid matching funds is, for the first time ever, to cap those funds at some reasonable level based on past and anticipated future long-term care expenditures. Without unlimited access to federal funds and with fewer regulatory strings attached to the funds they do receive, states will have an incentive to make the best use of the federal revenue. They will experiment, succeed or fail, and learn from each other, taking full advantage of America’s inimitable federal system.

On the consumer side, the obvious solution is to eliminate incentives in public policy that discourage early and responsible long-term care planning. One way to do that would be to end all pathways that enable people to qualify for Medicaid while protecting income and assets. If individuals and families truly did face impoverishment when catastrophic long-term care expenditures occur, that risk and cost would move to the top of their retirement and estate planning priorities much earlier. But such an approach would be disruptive, disorienting, and cruel, as well as politically infeasible.

A less drastic measure would be to eliminate or greatly reduce Medicaid’s home equity exemption. Home equity is seniors’ largest asset. As of the third quarter of 2019, 78.9 percent of people over the age of 65 own their homes (U.S Census Bureau, 2019), and of these 63.2 percent own free and clear of mortgage debt (Census Bureau, 2017). “Housing wealth for homeowners 62 and older continues to grow at a steady clip, reaching a record $7.05 trillion in the fourth quarter of 2018” (Guerin, 2019). Ownership and transfers are easy to track through public records. Transfers of ownership within 20 years of applying for Medicaid could be deemed disqualifying as all transfers of any assets are now, though with only a five-year look-back. With home equity at risk, more people would save, invest or insure for long-term care. If they failed to do that, they would need to use reverse mortgages or some other method of public or private home equity conversion to pay for their care until they became legitimately eligible for public welfare assistance.

A less politically objectionable approach would be to allow people to receive long-term care help from Medicaid when they need it while retaining even more of their income and assets than is allowed now, but to lien that wealth effectively and recover it after the recipients’ passing, from their estates. Instead of making families run the gauntlet of degrading artificial self-impoverishment methods, let them keep and use what they have saved. As most of elders’ wealth is in their home equity, securing that wealth with a publicly administered and enforced home equity conversion program could reduce the cost of Medicaid and empower far more people to obtain high quality private long-term care in the most appropriate venue. To avoid dependency on Medicaid and the eventual liability of estate recovery, elders and their heirs would have a much stronger incentive to plan early and responsibly for long-term care risk and cost.

Critics may say we tried that approach with OBRA ’93, which discouraged divestment of wealth and required estate recovery. Unfortunately, that strategy did not work because the legislation left too many loopholes and exclusions enabling divestment and impeding estate recovery. The Medicaid planning bar creatively worked around the new restrictions finding ever more ingenious ways to defeat the policy. Furthermore, states failed to implement; the federal government did not enforce; and the media neglected to publicize the new rules that were intended to encourage people to plan ahead to avoid Medicaid dependency (USDHHS Inspector General, 2014⁸²). Consequently, consumer behavior did not change.

Policymakers should try again and this time eliminate the loopholes, enforce implementation, and publicize the methods and benefits of preparing to pay privately for long-term care. But first, we should all …

Redefine the Problem

Albert Einstein said “We can't solve problems by using the same kind of thinking we used when we created them.” The kind of thinking that created the long-term care problem is that markets cannot provide the services people need without massive government regulation and financing. No other way of thinking about the problem has been seriously considered heretofore. But some recent research suggests how we might reconceptualize the quandary we are in so that it is not such a huge challenge and may in fact be amenable to a market-based solution.

Long-term care may not be the titanic crisis it has been assumed to be. For example, in February 2016, the Department of Health and Human Services Assistant Secretary for Planning and Evaluation (ASPE) reported:

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 (Favreault and Dey, 2016, p. 1).

That does not sound so daunting, especially if you consider these authors believe half the cost of long-term care will be covered by other payers, including Medicaid. Where would the average person come up with $70,000 today so that it would appreciate from that present discounted value to the $138,000 he or she might need to cover long-term care costs in the future? The extractable home equity of 19.4 million senior households (age 65 plus) at a conservative Combined Loan to Value (CLTV) of 75 percent was $3.1 trillion in 2015, averaging $160,000 per household (Kaul and Goodman, 2017, pp. 2-3 and Tables 1 and 2). If Medicaid did not exempt a minimum of $595,000, more than triple the average extractable home equity amount, a way could be found to earmark enough of it to cover the total cost of most older homeowners’ long-term care. By diverting people with sufficient home equity from Medicaid dependency to financing their own care privately, the fiscal burden on Medicaid could be substantially reduced.

Obviously, there is no incentive for people to liquidate their wealth as long as Medicaid long-term care financial eligibility works the way it does. But if Medicaid’s perverse incentives were changed to encourage responsible long-term care planning and private payment, how would people respond? Home equity conversion could handle much of the financial burden for the majority of home-owning elders. Reverse mortgages would free up cash flow to cover home care expenses or, for people who plan ahead, the extra revenue could be used to fund long-term care insurance premiums.

Most analysts, however, have written off private long-term care insurance as unlikely ever to penetrate enough of the middle market to become a significant payment source. But they have always assumed that people would need much more coverage at too great a cost to attract enough buyers to make a big difference. That assumption may be wrong. The National Investment Center (NIC) recently reported that reducing the annual cost of seniors housing by $15,000, from $60,000 to $45,000 per year, would expand the middle market for seniors housing by 3.6 million individuals enabling 71 percent of middle-income seniors to afford the product (NIC, 2019, April⁸³).

Where could consumers find that extra $15,000 to bring the cost of seniors housing into reach? The premium for an annual long-term care insurance benefit of $15,000 would only cost a small fraction of the premium required for the full coverage that consumers find so financially daunting now. Unfortunately, insurance regulations forbid carriers from offering coverage with a benefit of less than $18,000 per year. Once again, well-intentioned regulation stands in the way of sensible long-term care policy and planning.

Then there is this. A Cato Institute Policy Analysis reports that “Improved estimates of poverty show that only about 2 percent of today’s population lives in poverty, well below the 11 percent to 15 percent that has been reported during the past five decades” (Early, 2018, p. 1). How can that be? “By design, the official estimates of income inequality and poverty omit significant government transfer payments to low-income households; they also ignore taxes paid by households” (Ibid., p. 2). What is the bottom line? “The net effect is that pretax data overstate the true income of upper-income households by as much as 50 percent, and missing transfers understate the true income of lower-income households by a factor of two or more” (Ibid., p. 4). The rich are poorer and the poor, richer than we thought. “More than 50 years after the United States declared the War on Poverty, poverty is almost entirely gone. … Public policy debate should begin with the realization that only about 2 percent of the population—not 13.5 percent—live in poverty” (Ibid., p. 21).

Former Democratic presidential candidate New York Mayor Bill de Blasio is correct when he says “There's plenty of money in this country.” He’s mistaken when he adds “it’s just in the wrong hands.” It’s in exactly the right hands, those of the people with personal resources or home equity sufficient to fund their own long-term care and stay off Medicaid. All they need is positive public policy incentives to get them to use it. But, unfortunately, the kind of corrective action needed to achieve that outcome is highly unlikely in the current economic environment of profligate fiscal and monetary policy.

The Broken Rhythm of Reform

Historically, progress toward making Medicaid a better long-term care safety for the poor—by diverting the middle class and affluent from dependency on it—tends to occur after major economic downturns when state and federal governments face serious budgetary constraints. After most recessions since 1965, congresses and presidents of widely divergent ideological persuasions backed legislation closing Medicaid long-term care eligibility loopholes and encouraging early and responsible long-term care planning. But as each recession was followed by a rapid economic recovery in which budgetary pressure abated, Medicaid long-term care benefits always reverted to virtually universal availability for all economic classes.

This pattern has changed since the start of the new millennium. After the recession from March 2001 to November 2001 following the internet bubble’s implosion, economic recovery came more slowly than before. Likewise, it took much longer for legislation discouraging the excessive use of Medicaid long-term care benefits to be passed. The Deficit Reduction Act of 2005, which imposed the first cap on home equity and expanded the asset transfer look back period, was not signed into law until February of 2006, nearly five years after the start of the previous recession. Economic recovery came and, true to form, enforcement of DRA 2005 declined.

The new boom ended when the housing bubble burst, causing the Great Recession of December 2007 to June 2009. Again, economic recovery came very slowly. To date, over ten years after the end of the last recession, we have seen no action to spend Medicaid’s scarce resources more wisely by aiming them toward people most in need. In fact, public policy analysts and advocates are moving in the opposite direction, towards proposing yet another compulsory government program funded by taxpayers to expand public financing of long-term care for all.

What might explain slower economic recoveries in recent years and less attention to the cost of Medicaid long-term care benefits? The Federal Reserve forced interest rates to artificially low levels during and since the Great Recession. The consequences of this policy have ramified through the economy in many ways. One way is that government has been able to finance deficit spending and the rapidly increasing national debt at considerably lower carrying costs than before, when interest rates were much higher. By enabling politicians to spend more without facing the normal budgetary consequences, this new economic policy has attracted greater financial resources, including borrowed funds, into public financing of all kinds and simultaneously diverted private wealth into low-interest-rate-induced malinvestment. Consequently, political concern about burgeoning budgets and debt has subsided and no significant effort to preserve Medicaid funds by targeting them to the poor has occurred.

The danger is that just as excessive public spending and private malinvestment in the early 2000s led to the housing bubble and its consequent recession, so the current much larger credit bubble driven by excessive government borrowing and spending could lead to an even greater economic collapse. With the current national debt exceeding $23 trillion and total unfunded entitlement liabilities around $128 trillion, a return to economically realistic market-based interest rates would render the federal government immediately insolvent (The National Debt Clock, 2019).

Further exacerbating the problem of long-term care financing is the fact that the long-anticipated age wave is finally cresting and will soon crash on the U.S. economy. Baby boomers began retiring and taking Social Security benefits at age 62 in 2008. At age 65 in 2011, they turned the Social Security program cash-flow negative (Burtless, 2011). Boomers began taking Required Minimum Distributions (RMDs) from their tax-deferred retirement accounts in 2016, depleting the supply of private investment capital. They will begin to reach the critical age (85 years plus) of rising long-term care needs in 2031, around the time Medicare (2026) and Social Security (2035) are expected to deplete their trust funds, forcing them to reduce benefits.

Of course, Medicaid is the main funder of long-term care, but according to the Centers for Medicare and Medicaid Services Chief Actuary in a statement of consummate denial: “. . . Medicaid outlays and revenues are automatically in financial balance, there is no need to maintain a contingency reserve, and, unlike Medicare, the ‘financial status’ of the program is not in question from an actuarial perspective” (Truffer, Wolfe, and Rennie, 2016, p. 3). In summary, conditions are coalescing for a potential economic cataclysm in or before the second-third of this century and public officials are almost entirely ignoring the risk.

Conclusion

America’s long-term care services and financing system is badly broken. An oncoming demographic age wave guarantees the symptoms of its dysfunctionality will get much worse if something is not done. But to address the symptoms of high cost and low quality without reducing reliance on the public financing which caused them will only make matters worse. Unfortunately, that is the course most scholarship on this subject takes, resulting in ever more urgent calls for even more state and federal financial involvement, with citizens compelled to participate and pay. Ludvig von Mises warned: “The goal of their policies is to substitute ‘planning’ for the alleged planlessness of the market economy. The term ‘planning’ as they use it means, of course, central planning by the authorities, enforced by the police power. It implies the nullification of each citizen’s right to plan his own life” (Mises, 1953, p. 436). A better course is to reduce states’ dependency on federal funds, target scarce public resources to people who need them most, and let free market incentives and products take care of the rest.

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Updated, Monday, April 24, 2020, 9:00 AM (Pacific)

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LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 7, THE END

LTC Comment: The full Medicaid and Long-Term Care monograph is 78 pages, so we’re bringing it to you in bite-sized pieces. Here’s the seventh and last one, after the ***news.***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 7, THE END

Ramifications

(De Nardi, French and Jones, 2009, pp. 4-5⁸⁰).

Policy Recommendations

Redefine the Problem

The Broken Rhythm of Reform

Conclusion

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Updated, Monday, April 20, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-016: LTC NEWS AND COMMENT

How Can It Happen Here? The Shocking Deaths in Canada’s Long-Term Care Homes
What to Do About Your Relatives in Long-Term Care During the Coronavirus Pandemic
COVID-19 Issues and Medicaid Policy Options for People Who Need Long-Term Services and Supports
How Much More Than Medicare Do Private Insurers Pay? A Review of the Literature
Virtually Perfect? Telemedicine for Covid-19
Long-term care deaths due to COVID-19 soar to more than 5,500; healthcare workers represent almost 20% of coronavirus cases
Senior living employers get a chance to turn the tables
In Shutting Out Threat, Seniors In Continuing Care Communities Feel Shut In
Pandemic putting pressure on seniors housing: Marcus & Millichap
CMS expected to order COVID-19 reporting; nursing home deaths surpass 3,600

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Updated, Monday, April 13, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-015: LTC NEWS AND COMMENT

How Your Stimulus Check Affects Medicaid Eligibility
The Economics of Lockdowns
COVID-19 Stimulus Package to Benefit U.S. Insurers
Hiring frenzy: Brookdale and other senior living operators seek to address labor shortage with displaced workers
Pandemic Delays Federal Probe Into Medicare Advantage Health Plans
China Oceanwide Renews Genworth Deal Financing Arrangement
Feds relax Medicare Advantage regulations amid pandemic
COVID-19 could have $57 billion impact on senior living; Argentum, ASHA request $20 billion from HHS
HHS OIG: Many long-term care facilities requiring negative COVID-19 tests before accepting hospital discharges
Public policy expert: COVID-19 is forcing U.S. to ‘disrupt and upend how we use post-acute care’
The Real Reasons People Decide to Buy Long-Term Care Insurance

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Updated, Monday, April 10, 2020, 9:00 AM (Pacific)

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LTC Comment: The full Medicaid and Long-Term Care monograph is 78 pages, so we’re bringing it to you in bite-sized pieces. Here’s the sixth one, after the ***news.***

*** HAPPY BIRTHDAY, CENTER: Steve Moses and David Rosenfeld co-founded the Center for Long-Term Care Financing [now Reform] on April 1, 1998. Damon Moses joined in 2001. Thank you for 22 years of your attention, support and good wishes. ***

*** THE ECONOMICS OF LOCKDOWNS: What will hurt or kill more people: the virus or a ruined economy? Click through to check out this excellent program broadcast yesterday by the Cato Institute. ***

*** HAS THE TIME COME FOR BETTER MEDICAID LTC POLICY? New York’s Medicaid program is the most generous purveyor of subsidized long-term care benefits in country. Its practically unlimited home health benefit, unencumbered by transfer of assets restrictions, was bankrupting the state. But finally, according to an Empire State Medicaid planning attorney: “Commencing on October 1, 2020, and as part of the New York State Budget enacted on April 3, 2020, there will now be imposed a thirty (30) month look back period for all home care services which is calculated the same way the penalty is calculated for skilled nursing home level Medicaid. Thus, for all home care applications filed on or after October 1, 2020, any transfer of assets (gifts/non-exempt transfers) will disqualify the applicant for Medicaid home care for thirty (30) months.” Good for New York Medicaid. Now if they’d just implement the rest of our recommendations from 2011, recipients and taxpayers would benefit far more. As economic reality reasserts itself all across the United States, every state will need to reassess long-term care financing policy. You’ll find dozens of national and state-level studies focused on how to do that here. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 6

LTC Comment: Episode 1 of our serialization of the Center’s newest report described the current defective method of providing and paying for long-term care. Episode 2 explained how Medicaid became the dominant payor for long-term care, the dire consequences that ensued, and central planners’ futile efforts to fix the broken system. Episode 3 showed how scholars made the same mistakes as policymakers, lamenting long-term care’s problems without analyzing their causes, and recommending more of the same interventions that caused the problems in the first place. Episode 4 focused on how affluent people qualify for Medicaid long-term care benefits, why they ignore the risk and cost of long-term care until they need it, and how the government has tried, mostly unsuccessfully, to curtail artificial self-impoverishment to qualify for benefits. Episode 5 explained how and why most long-term care analysts ignore or misrepresent the vast literature on qualifying for Medicaid long-term care benefits while avoiding spend down of wealth. In today’s Episode 6, Steve Moses explains and provides many examples of the evidence that Medicaid’s spend down rules do not prevent middle class and affluent people from taking advantage of the welfare program’s long-term care benefits.

Here’s the sixth episode of “Medicaid and Long-Term Care,” by Stephen A. Moses, Center for Long-Term Care Reform, Seattle, Washington, published January 17, 2020. This paper was presented to The Libertarian Scholars Conference on September 28, 2019 in New York City and to The Cato Institute’s State Health Policy Summit on January 3, 2020 in Orlando, Florida.

What is the Evidence that People Dodge Medicaid Asset Spend Down Requirements?

Anecdotal Evidence Abounds

Ask any Medicaid eligibility worker if he or she sees wealthy people taking advantage of Medicaid long-term care benefits and you are likely to hear a rant in reply. Workers are often frustrated by the difficulty they have qualifying really needy people for the program, while the well-to-do provide sanitized applications completed by their lawyers that are indisputable.

New York Medicaid eligibility supervisor Janice Eulau testified before Congress in 2011 that during her 36-year career in the field, she witnessed many individuals diverting significant resources in order to obtain Medicaid. She stated that about 60 percent of applicants do some form of Medicaid planning and added

It is not at all unusual to encounter individuals and couples with resources exceeding a half million dollars, some with over one million. There is no attempt to hide that this money exists; there is no need. There are various legal means to prevent those funds from being used to pay for the applicant’s nursing home care. Wealthy applicants for Medicaid’s nursing home coverage consider that benefit to be their right, regardless of their ability to pay themselves (Eulau, 2011).

In response to a Congressional inquiry,⁷⁷ states provided numerous examples of Medicaid planning practices. For example:

North Dakota

A couple with $700,000 in liquid assets qualified for Medicaid long-term care benefits by purchasing a more expensive house, car, and an additional annuity while receiving $8,000 per month of income from pensions, Social Security, annuity payments and oil lease money. Another couple had more than $528,000 in assets, but qualified when the community spouse bought a new home, a new car, and two annuities worth $240,000, and then applied for Medicaid to pay the institutionalized spouse’s nursing home costs.

Wisconsin

An ill spouse transferred $600,000 to the community spouse who refused to sign the Medicaid application, making the ill spouse eligible for Medicaid because “interspousal transfers are not considered divestment.”

New York

Using promissory notes, immediate annuities and spousal refusal, affluent long-term care Medicaid applicants qualify while retaining unlimited assets. This occurs even when the state has legal recourse, because “Medicaid does not have sufficient resources to pursue all these cases in court.”

Rhode Island

A couple with $400,000 in a bond account became eligible in one month by purchasing “a large single premium immediate annuity.” A single man transferred $100,000 to his son but dodged half of the penalty for transferring assets by using a promissory note to carry out a reverse half-a-loaf strategy.

Virginia

A man bought a $900,000 annuity in his wife’s name, which paid her $89,000 per month, but “the Virginia Medicaid program could not count this income for purposes of determining the husband’s Medicaid LTC eligibility.”

“Spending down” assets to qualify for Medicaid without expending those funds for long-term care or any other health-related expense is far easier and more commonplace than most economists and long-term care policy analysts willingly acknowledge.

But Hard Evidence is Scarce

Unfortunately, hard empirical evidence of Medicaid long-term care asset spend down avoidance is sparse. Most researchers have preferred to scan big data bases looking for evidence to the contrary instead of examining actual Medicaid long-term care cases. In May 2014, however, the Government Accountability Office published results of the only study to date of a sample of such cases for this purpose. They found dramatic results, but for some reason downplayed their own findings.

GAO identified four main methods used by applicants to reduce their countable assets—income or resources—and qualify for Medicaid coverage: 1. spending countable resources on goods and services that are not countable towards financial eligibility, such as prepaid funeral arrangements; 2. converting countable resources into noncountable resources that generate an income stream for the applicant, such as an annuity or promissory note; 3. giving away countable assets as a gift to another individual—such gifts could lead to a penalty period that delays Medicaid nursing home coverage [N.B.: but only if discovered]; and 4. for married applicants, increasing the amount of assets a spouse remaining in the community can retain, such as through the purchase of an annuity (GAO, 2014, unnumbered “GAO Highlights” page).

Those methods of qualifying for Medicaid without spending down resources for care are exactly in line with the techniques and procedures recommended by the popular and professional literature on the topic discussed above.

GAO analyzed a random, but non-generalizable, sample of 294 Medicaid nursing home applications in two counties in each of three states: Florida, New York, and South Carolina. They found “Nearly 75 percent of applicants owned some non-countable resources, such as burial contracts; the median amount of non-countable resources was $12,530” (Ibid.). That seems significant, but GAO does not draw out the implications in its report. A back-of-the-envelope estimate finds that if those results could be projected to the total of all Medicaid nursing home residents nationally—which they cannot, suggesting a study that could provide generalizable results is needed—665,700 Medicaid nursing home residents sheltered over $8.3 billion in non-countable resources or 42.4 percent of the $19.7 billion Medicaid paid for their nursing home care in 2009, the most recent data available at the time of the GAO study’s publication (Houser, Fox-Grage and Ujvari, 2012⁷⁹). That is a lot of money to divert from private long-term care financing liability.

GAO found “Eligibility workers in 10 of the 12 counties interviewed stated that purchasing burial contracts and prepaid funeral arrangements, which are generally noncountable resources, was a common way applicants reduced their countable assets; and eligibility workers from one state said they recommend making such purchases to applicants” (GAO, 2014, 25). In fact, 39 percent of GAO’s sample owned “Burial contracts and prepaid funeral arrangements” with a median value of $9,311. If that proportion holds for the country as a whole, $3.2 billion or 6.3 percent of total Medicaid nursing home expenditures are diverted from funding long-term care to relieving families of the final expenses for their loved ones. This matters because funeral and burial pre-planning to expedite Medicaid eligibility is big business in the United States. Heavy use by Medicaid families of prepaid burial plans to shelter otherwise countable assets has the effect of shifting scarce program resources from purchasing long-term care services for the poor to subsidizing the funeral industry and indemnifying often affluent adult children from the cost of burying their parents.

GAO found “. . . 44 percent of approved applicants—129 applicants—had between $2,501 and $100,000 in total resources, and 14 percent of approved applicants—42 applicants—had over $100,000 in total resources” (Ibid., p. 14). Pretending again that GAO’s findings are representative of all Medicaid nursing facility recipients, how much wealth would that mean Medicaid is sheltering from private long-term care financial liability nationwide? 887,598 nursing home residents receive Medicaid. If 14 percent of them, or 124,264 recipients, possessed $100,000 or more in non-countable resources, that is at least $12.4 billion or 3.4 times the $3.7 billion Medicaid spent for their nursing facility care. Yet, again, GAO does not draw out the implications.

GAO found: “For the 51 applicants for whom we were able to determine the equity interest in the home, the median home equity was $50,000, and ranged from $0 to $700,000” (Ibid., p. 20). Most home equity (equity, not value) is non-countable, up to as much as $893,000 in some states as of 2020. GAO found median home equity to be $50,000 among the 51 applicants (out of 91 total homeowners or 31 percent of the sample) for whom they were able to determine it. Thus 100 percent of their sample’s home equity was non-countable. Keep in mind that $50,000 is a median home equity value, meaning as many exempt homes were higher in home equity value as were lower, and meaning that the average or mean home equity value could be significantly higher. If 31 percent of 887,598 Medicaid nursing home recipients nationwide or 275,155 recipients own homes with a median equity value of $50,000, then at least $13.8 billion worth of their home equity is non-countable, a figure that is 1.7 times the annual $8.1 billion cost of their care. Did it not behoove GAO to dig a little deeper? How much money could Medicaid save by making nursing facility care available only after home equity is spent down by means of private or commercial home equity conversion methods?

GAO found: “Among the Medicaid application files that we reviewed in selected states, 16 of the 294 approved applicants (5 percent) had a personal service contract—all of which were determined to be for FMV [fair market value]. The median value of the personal service contracts was $37,000; the value of the contracts ranged from $4,460 to $250,004” (Ibid., p. 26). What if GAO’s findings were valid nationwide? If 5 percent of Medicaid nursing home recipients (44,380 recipients) sheltered a median value of $37,000 each in personal service contracts, the total diverted away from private long-term care financial liability would be $1.6 billion or 3.4 percent of total Medicaid nursing home expenditures nationally in the same year. That’s a very large subsidy to family members for taking care of their loved ones. Personal service contracts are a technique that is available mostly to savvier, more affluent families who seek legal advice on how to shelter assets. Commonly, the poor lose what little wealth they have to long-term care expenses without learning the often technical and complicated legal methods of artificial self-impoverishment.

GAO found: “Of the 70 married approved applicants whose files we reviewed, 13 had applications that contained a claim of spousal refusal. . . . These 13 applicants resided in two states and the community spouse retained a median value of $291,888 in non-housing resources; two of the community spouses were able to retain over $1 million in non-housing resources” (Ibid., p. 31). Spousal refusal is based on a bizarre interpretation of federal law commonplace in only two states (New York and Florida, both of which were included in GAO’s three-state sample for this study) by which spouses of institutionalized Medicaid recipients are allowed to refuse to contribute financially toward the cost of their spouse’s Medicaid-financed care—with impunity and in direct contradiction of the federal statute. The GAO report does not challenge this practice, nor has CMS taken action to curtail or end it. The spousal refusal cases GAO identified had a median value of nearly $292,000 in non-housing resources, but as they also found, some spousal refusal cases involve a million dollars or more. Why exactly is this allowed? Why doesn’t GAO question the practice? Where is CMS? The report makes no comment.

GAO found: “State Medicaid officials, county eligibility workers, and attorneys who provided information on the value of annuities for the community spouse reported average values ranging from $50,000 to $300,000. Officials from one state reported seeing annuities for the community spouse worth more than $1 million. Medicaid officials from one state indicated that they have seen annuities that disbursed all of the payments to the community spouse shortly after the annuity was purchased, while officials from another state said that annuities can have large monthly payments for the community spouse, such as $10,000 per month” (Ibid., p. 32). Spousal annuities are a huge loophole that allows many millions of dollars to be diverted from private long-term care financing into the pockets of affluent Medicaid nursing home recipients’ spouses. Yet GAO does not call for closing the annuity loophole nor has CMS done anything about it.

GAO found: “Among the 294 approved applicants whose files we reviewed, we identified 5 applicants (2 percent) who appeared to have used one of the ‘reverse half-a-loaf’ mechanisms; 4 of the applicants appeared to use the mechanism that involved creating an income stream through a promissory note to pay for nursing home care during the penalty period. These 4 applicants gifted between $20,150 and $227,250 worth of resources, and had penalty periods of between 2 months and 22 months” (Ibid., p. 29). Again, GAO gives only glancing attention to the reverse half-a-loaf technique often employed by Medicaid planners to reduce their affluent clients’ Medicaid spend down liability by half. The incidence of this technique’s use as identified by GAO—only 2 percent—seems small, but keep in mind that it is only used for people with substantial assets. Otherwise, it would hardly be worth the cost in attorneys’ fees to set up the complicated procedure. Public officials should ask about this and all the other techniques downplayed in the GAO report “how much public spending is being wasted?” and “why are such abuses allowed to continue?”

One final point about this study: GAO says “Our analysis was limited to information included in the application files, which states used to make their eligibility determinations. We did not independently verify the accuracy of this information (Ibid., pp. 4-5).” That single admission obviates any value or credibility this report might otherwise have. Federal quality control audits have found that state welfare eligibility determinations are wrong in a third to a half of all cases even after state quality control reviews have confirmed the original determinations by state or county workers. We will never know the true extent of Medicaid asset shelters, transfers and other artificial self-impoverishment techniques until someone reviews a valid random sample of long-term care cases that is generalizable statewide and nationwide and goes beyond the extremely limited information available in case records for purposes of verification.

The Government Accountability Office or the DHHS Inspector General or any serious researcher or organization should review a generalizable sample of Medicaid long-term care cases to establish once and for all how much money is being lost to Medicaid financial eligibility rules that divert the programs scarce resources from the needy to the affluent.

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Updated, Monday, April 6, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-014: LTC NEWS AND COMMENT

Coronavirus Is Making the Public Pension Crisis Even Worse
U.S. assisted living costs range from $50,892 to $62,976 per year, on average: survey
Here's Why Genworth Financial Is Soaring Today
As Nursing Homes with Cases Reach 400, AHCA Advises Operators to Assume All Untested Patients Positive for COVID-19
Second thoughts: Some opting to remove parents from senior living communities
CMS waives nurse-aide training, certification requirements
She’s Alone, 105 and in a Nursing Home Threatened by the Virus
Coronavirus Lands Another Blow to Senior Housing Operators
Should You Consider Taking a Loved One Out of a Long-Term-Care Facility Now?
Providers: Death total would rise if nursing homes forced to admit COVID-19 patients

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Updated, Monday, March 30, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-013: LTC NEWS AND COMMENT

This Causes Most Falls for Older Adults
When Dementia Meets the Coronavirus Crisis
Older patients stranded in hospitals as nursing homes turn them away over coronavirus
Who cares for those most vulnerable to COVID-19? 4 questions about home care aides answered
Operator survey: Coronavirus hasn’t scared families away from moving loved ones into senior living
Moderate drinkers have lower amyloid-beta levels, study finds
COVID-19 May Delay China Oceanwide-Genworth Deal Closing
Report documents quick spread of new coronavirus through U.S. nursing facilities
How Would Free Market Health Care Respond To The Coronavirus?
LTC providers getting creative to boost seniors’ morale during pandemic
New COVID-19 tip-off may be loss of smell

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Updated, Friday, March 27, 2020, 9:00 AM (Pacific)

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LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 5

LTC Comment: The full Medicaid and Long-Term Care monograph is 78 pages, so we’re bringing it to you in bite-sized pieces. Here’s the fifth one, after the ***news.***

*** THE TEST: Consensus has been forming among analysts for the past several years about the most politically expedient way to improve long-term care financing policy. The best articulation of the proposal I’ve seen goes like this. We should set up “A public catastrophic insurance program for LTSS costs that takes effect after an income-related waiting period has been met.” (Cohen, Feder, and Favreault, 2018, p. 7) What this means is that the federal and/or state governments should back up catastrophic long-term care expenses by borrowing more money than we have already (nearly $24 trillion), as there is no un-borrowed money to spend. If we’re going to try this, now is the time. The Federal Reserve has just removed all limits on government borrowing. Congress is about to lift all limits on spending. If it is possible to solve problems by printing money and spending it without limits, then now’s the time to throw long-term care into the mix as well. Will it work? What do you think? That’s THE TEST. If you want to know what I think, read the report serialized in today’s LTC Bullet.***

*** PREDICTIONS: We all lament cancellation of the 2020 ILTCI conference that would have begun in a few days. Fill that void vicariously by reading our History of LTC Insurance Conferences (2019). Here’s a little peek back at the Jacksonville, Florida 17^th Annual Inter-Company Long-Term Care Insurance Conference’s closing general session on March 28, 2017, which explored the topic “New President and Congress: Implications for Aging and LTC Finance.” Participants were asked to vote on several questions. One of them follows including my response. See the others in “LTC Bullet: LTC Policy Poll Results,” April 14, 2017.

“Q7. Do you think the next four years will bring an improved economic climate? Or will we see a continuation of low interest rates?

1. Improved economic climate/higher interest rates = 76%
2. Stay pretty much the same = 13%
3. Get worse = 11%

LTC Comment: I think these voters are vastly over-optimistic. I’d agree with the stay-the-same or get-worse minority. The current “economic recovery” is long in the tooth; the “Trump trade” is already petering out as health and tax reform languish; we may already be in a recession; the Federal Reserve’s tightening cycle has nearly run its course; after perhaps one more interest rate increase, the next step is down and most likely we’ll see more quantitative easing (QE4). That means more and more debt with the age wave and entitlement insolvencies looming. The U.S. dollar is unsupported by real value and very vulnerable; foreign countries that give us real economic goods in exchange for paper (bonds that the U.S. cannot ever afford to redeem) could wise up any time, stop buying our debt, and start selling it in competition with The Fed; carrying costs on our $20 trillion debt will force a reversal of The Fed’s tightening soon as the economy worsens. The credit bubble, inflating for a decade, will pop. Sadly for the Trump Administration, the wages for the economic sins of its predecessors will come due in its first term. (Tickle your calendar to review this prediction on election day November 3, 2020. I’ll do the same.)”

LTC Comment: I was a little early with this prediction. It took the current pandemic to prick the asset bubble I described, but here we are. What comes next is the critical TEST for the U.S. economy and for long-term care financing. Stay tuned. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 5

In Episode 5, which follows, Steve Moses explains how and why most long-term care analysts ignore or misrepresent the vast literature on qualifying for Medicaid long-term care benefits while avoiding spend down of wealth.

Here’s the fifth episode of “Medicaid and Long-Term Care,” by Stephen A. Moses, Center for Long-Term Care Reform, Seattle, Washington, published January 17, 2020. This paper was presented to The Libertarian Scholars Conference on September 28, 2019 in New York City and to The Cato Institute’s State Health Policy Summit on January 3, 2020 in Orlando, Florida.

Why Do Analysts Ignore this Vast Literature on Medicaid Eligibility Planning?

Long-term care researchers rarely mention, and never delve deeply into, the Medicaid planning literature. They pretend these easier pathways to eligibility are not widely used. Analysts might argue that widely available consumer information and the formal legal literature on Medicaid planning are irrelevant because the fact that people can qualify for Medicaid while preserving most of their wealth does not mean they do it. All that matters is the evidence showing whether people do or do not spend down. Yet, when analysts ignore the evidence of easy financial eligibility and widespread Medicaid planning, they are predisposed to expect more rather than less genuine spend down. If they knew and understood the methods, techniques, and incentives to use them described in this literature, they would be more likely to look for, find and understand evidence that disproves the presumption of widespread asset spend down for care.

Analysts know the official laws and regulations governing Medicaid long-term care eligibility are complicated and pliant. Yet they frequently apply only the ostensibly severe standards to data on seniors’ wealth and then conclude people must be spending down millions before they qualify. If Medicaid denies access to applicants with more than $723 per month of income and $2,000 in assets, then surely, they reason, the vast majority of people on Medicaid have spent down, often catastrophically before qualifying. With that mistaken assumption firmly fixed in their minds, analysts conduct studies and search giant data bases looking for evidence to support it. This confirmation bias skews what they find.

Analysts could avoid such bias by reviewing and taking into account the legal literature on how to qualify for Medicaid without spending down for care. But they do not, which is a peculiar oversight as the evidence adduced and referenced above is inescapable. How and why do scholars discuss Medicaid long-term care financial eligibility while avoiding the facts of easy access to Medicaid?

Evasion of and Equivocation on Critical Concepts and Facts

Long-term care scholarship does include several excellent explanations of the complicated federal and state Medicaid long-term care financial eligibility rules such as Musumeci, Chidambaram and O’Malley Watts, 2019. But these treatments rarely draw out the ramifications of allowing relatively high-income people with substantial wealth to qualify for public benefits. Nor do they discuss how the superficially strict but fundamentally generous income and asset rules can be stretched to expand eligibility to include even the very well-to-do. When analysts do acknowledge that Medicaid long-term care benefits reach more than the poor, they nearly always equivocate on key concepts such as impoverishment, spend down, decumulation, median wealth, Medicaid planning and out-of-pocket expenses. Moreover, they use highly dubious data sources to substantiate their conclusions. These examples will clarify this point.

Impoverishment

Medicaid long-term care eligibility requires inadequate cash flow, i.e. insufficient income, to cover all of an individual’s medical and long-term care costs. But it does not require low income, low assets, or financial destitution. Yet a typical analysis claims “Medicaid only covers the long-term care costs of the indigent” (Friedberg, Hou, Sun, and Webb, 2014, p. 1). Synonyms for the term “indigent” include “poor, impecunious, destitute, penniless, impoverished, poverty-stricken, down and out, pauperized, without a penny to one's name,” and many more (Dictionary definition of indigent). Clearly, if people with substantial income and assets can qualify for Medicaid long-term care benefits, then eligibility does not require impoverishment, much less indigence. The right conclusion to reach about Medicaid’s role in long-term care financing is that it substantially ameliorates the risk and cost of long-term care, not that it impoverishes people.

Spend Down

Medicaid financial eligibility rules allow people to spend down their private income and assets to reach eligibility limits. Income spend down must be done to purchase medical or long-term care services (Medicaid.gov, 2019)⁶⁹. But asset spend down does not have the same requirement (ElderLawAnswers, 2018⁷⁰). Excess assets may be spent on or converted to exempt resources. There is no requirement to spend down assets on medical or long-term care expenses (Schneider and Huber, 1989, p. 142⁷¹). An expensive birthday party or “one last tour of Reno’s finest establishments” (Gilfix and Woolpert, p. 42⁷²) are viable asset spend down options. Yet the presumption that wide swaths of the American public are forced to spend down their life’s savings on long-term care has prevailed in the research literature for decades.

When several “spend down” studies in the late 1980s and early 1990s set out to prove widespread asset spend down, they found it was far less common than previously believed. A 1992 analysis concluded: “Based on the studies conducted to date, it appears thatsomewhere between one in four and one in five persons who originally enter nursing homes as private payers convert to Medicaid before final discharge (Spend-Down I)” (Adams, Meiners and Burwell, 1992). Moreover, neither these early studies nor more recent ones distinguished between real spend down, paying privately for care until eligible, and artificial spend down, qualifying by purchasing exempt assets or otherwise sheltering or divesting wealth. Hence:

Very little is known about what has actually taken place for the individuals whom the foregoing studies have identified as asset spend-downers. Indeed, we cannot actually be sure these individuals have depleted assets; most of the studies can only identify that a change in payor source has taken place (Ibid.).

A well-known, more recent reportfurther exemplifies the point.“Medicaid Spend Down: Implications for Long-Term Services and Supports and Aging Policy” confidently states: “The high cost of long-term services and supports (LTSS) results in catastrophic out-of-pocket costs for many people needing services, some of whom spend down to Medicaid eligibility” (Wiener, et al., 2013, p. 1). Yet what this report calls “spend down” is nothing more than the “transition” from non-Medicaid status to Medicaid eligibility, which as explained above, is achievable without catastrophic financial consequences.

Asset Decumulation

Recent research on asset decumulation in retirement belies the conventional wisdom that widespread long-term-care spend down occurs. In a study sponsored by the Employee Benefits Research Institute, Sudipto Banerjee observed: “One of the assumptions underlying many models used to measure retirement income adequacy is that retirees will spend down their accumulated assets to fund their retirement needs.” Then he asked“While this may make sense in theory, do people actually behave like this?” (Banerjee, 2018, p. 4) What he found was stunning. People with relatively low savings, under $200,000 in non-housing assets, dropped in wealth only 24.4 percent in the first 18 years of retirement, a rate of asset decumulation “definitely much lower than what has been traditionally assumed by most retirement models” (Ibid., p. 5). Those with $200,000 to $500,000 dropped only 27.2 percent (Ibid., p. 7). “So, in this group as well, retirees did not spend down their assets as quickly as retirement models would generally predict” (Ibid.). Finally, the group with over $500,000 dropped only 11.2 percent. “So, the group with the highest level of assets had the lowest rate of asset spend down” (Ibid.).

Banerjee then asks “Why are retirees not spending down their assets?” (Ibid.) He speculates that people are reluctant to expend their savings because they do not know how long they will live or how large their medical or long-term care expenses may be. They may wish to leave a bequest or they are just being cautious or saving is a habit for them. But there could be a much simpler explanation. Once in retirement, consumers who safely ignored the risk and cost of long-term care during their work lives finally become concerned after their employment income has ended. Decades of academic studies and media reports convince them they will lose everything if they succumb to the high risk of needing long-term care. So, as best they can, people preserve their assets and spend only income. But catastrophic spend down for long-term care is a myth because Medicaid pays for most expensive long-term care, exempts most assets, is easy to get after care is needed without spending down wealth significantly and only requires income as the patient’s contribution to the cost of care. Consequently, after decades living in retirement, most people at most levels of wealth spend down very little.

Other research does show that people do spend down very rapidly at the very end of life, especially in the last year. But, again, no one knows for sure how much of this depletion of measurable wealth represents real or artificial spend down. French, et al., found that medical spending before death, combined with burial expenses explained only “about 24 percent of the decline in assets of the soon-to-be deceased and about 37 percent of the decline in assets in the last year of life” (French, De Nardi, Jones, Baker, and Doctor, 2006, p. 2). The bottom line question, however, is how much Medicaid actually helps affluent people defray the cost of late-life chronic illness and the answer is striking. For households at the top of the income distribution, Jones, et al., found

Medicaid covers 21 percent of lifetime costs at age 70, with the fraction rising to nearly 30 percent at age 100. While most high-income households do not receive Medicaid, those that do qualify under the Medically Needy provision, which assists households whose financial resources have been exhausted by medical expenses [N.B.: Or by Medicaid planning, a key point unmentioned in this article]. Such households tend to have high medical expenses and tend to receive large Medicaid benefits (Jones, Bailey, De Nardi, French, McGee, and Kirschner, 2018, p. 24).

The fact that Medicaid offsets upwards of one quarter of the lifetime medical and long-term care expenses of high income households is staggering and belies the common presumption that people must and do spend down into impoverishment to obtain benefits.

Median Wealth

Analysts focus on people with median or less income and assets, but they routinely evade the more interesting questions of whether and how people with much higher wealth qualify for Medicaid. For example, in testimony before the Commission on Long-Term Care, Richard W. Johnson of the Urban Institute summarized his research findings that people who end up in nursing homes on Medicaid tend to have relatively low incomes and assets. Then he concluded

Most older adults who end up on the program would never have been able to earn enough income or accumulate enough wealth to cover their nursing home costs. It seems likely that Medicaid will continue to play an important role in long-term care financing as long as those with long-term care needs are disproportionately those with limited financial resources (Johnson, 2013, p. 12).

It should not evoke surprise that poor people qualify for Medicaid or that most people who qualify for Medicaid are, and many always were, poor. Helping the poor is the program’s statutory purpose. But, what about people who do have income and assets well above the median? Take Medicare beneficiaries for example. The Kaiser Family Foundation states

While a small share of the Medicare population lives on relatively high incomes, most are of modest means, with half of people on Medicare living on less than $26,200 and one quarter living on less than $15,250 in 2016. The typical beneficiary has some savings and home equity, but the range of asset values among beneficiaries is wide and varies greatly across demographic characteristics. . . . As policymakers consider options for decreasing federal Medicare spending andaddressing the federal debt and deficit, these findings raise questions about the extent to which the next generation of Medicare beneficiaries will be able to bear a larger share of costs (Jacobson, Griffin, Neuman, and Smith, 2017, pp. 6-7).

In essence, Kaiser says Medicare beneficiaries are so poor that it behooves policymakers not to consider “decreasing federal Medicare spending” when they are “addressing the federal debt and deficit.” But, what about Medicare beneficiaries who are not so poor? Would they still qualify for Medicaid long-term care benefits?

According to the Kaiser issue brief, half of all Medicare beneficiaries have incomes of $26,200 or less (Ibid.). That is more than double the $12,490 poverty guideline for a single person as of 2017, but poor enough to be sure. These are the people we might hope the Medicaid long-term care safety net protects. In fact, it does. Anyone needing formal long-term care with that level of income would qualify easily anywhere in the United States.

But what about the other half of Medicare beneficiaries? Forty-five percent of them had incomes between $26,200 and $103,450. That is hardly impoverished. Could someone with an annual income of up to $103,450, at the 95^th percentile of all Medicare beneficiaries, qualify for Medicaid LTC benefits? Yes. All it would take is paying the cost of a nursing home out of pocket at a little more than the median national annual rate for a semi-private bed ($89,292), hardly uncommon in high-cost states like California, New York or Massachusetts. Anyone in the $26,200 to $103,450 range would qualify in most states as long as their total uncompensated medical and long-term care expenses exceeded their income, as they likely would for people who need expensive long-term services and supports.

Turning to the savings of Medicare beneficiaries, we find the same upside down policy incentives as for income. The one-half of beneficiaries with the least savings qualify easily for Medicaid LTC benefits, but so do most of the upper half.

Half of Medicare beneficiaries have savings of $74,450 or less, including “retirement account holdings (such as IRAs or 401Ks) and other financial assets, including savings accounts, bonds and stocks” (Ibid., p. 3). Although their savings exceed the usual Medicaid limit of $2,000 in countable assets, these people can easily purchase extra home equity and other exempt assets, in any amount, such as personal belongings, home furnishings, prepaid burial plans, term life insurance, an automobile, etc., in order to reduce their countable resources and reach the asset eligibility limit.

But,what about the 45 percent of Medicare beneficiaries who have savings between $74,450 and $1.4 million? These higher-savings seniors generally have greater access to professional financial advice on how to protect their wealth from long-term care expenditures. They can avail themselves of Medicaid’s $595,000 to $893,000 home equity exemption and purchase other exempt assets as well; they can take advantage of loopholes favoring the affluent such as Medicaid-friendly annuities, irrevocable income-only trusts, spousal refusal and reverse half-a-loaf strategies; or they can simply divest their savings five years or more before applying for Medicaid as most Medicaid planning attorneys recommend.

Because it is easy and financially beneficial to qualify for Medicaid long-term care benefits while sheltering or divesting up to $1.4 million (the 95^th percentile of Medicare beneficiaries’ savings) or more, Medicaid planners do a land-office business often in practices with multiple geographic locations.⁷³

Medicaid Planning

Medicaid planning is the practice of reconfiguring income and assets, with or without professional legal advice, to achieve financial eligibility for Medicaid long-term care benefits while minimizing financial consequences. Analysts seldom cite the extensive legal literature on Medicaid planning nor do they acknowledge the omnipresent information on its many methods and techniques available online and in the popular media. Instead, when they write about decumulating wealth to qualify for Medicaid, they assume and imply that savings are used to purchase long-term care rather than being divested, diverted, or sheltered to achieve eligibility.

In the rare instances when analysts consider the possibility that people might qualify for Medicaid without spending down wealth, they write only about “asset transfers” without considering other far more common and effective Medicaid planning techniques. For example: "[C]ritics contend that . . . Medicaid pays for the care of most nursing home residents because people with the resources to afford their own care—middle-income and wealthier people, even 'millionaires'—transfer their assets to qualify for public subsidies intended for the poor” (O’Brien, 2005, p. 2). First, no one contends that “most nursing home residents” transferred assets. Asset transfers are very expensive for taxpayers, having increased Medicaid spending by as much as “1 percent of total Medicaid spending for long-term care” (Waidmann and Liu, 2006, p. 1) or $1.7 billion as of 2016. But asset transfers are only the tip of the Medicaid planning iceberg, a minor factor compared to the more common methods of artificial self-impoverishment. Yet the O’Brien article makes only this passing reference to “establishing trusts,giving cash gifts to children and grandchildren, or otherwise concealingtheir ability to pay for their own care by converting countable assets toexempt forms (by spending assets on a car or on a home or home renovation,since those assets are not counted in making a Medicaid eligibilitydetermination)”(O’Brien, 2005, p. 2). By focusing exclusively on asset transfers while ignoring the abundant evidence for the more important Medicaid planning techniques, this article and most of its type violate the Strawman logical fallacy.⁷⁴

Furthermore, formal Medicaid planning itself pales in significance compared to the simple reality explained above that most income and assets do not impede access to Medicaid long-term care benefits. Average middle class people qualify fairly easily without using asset transfers or other Medicaid planning techniques that, when employed, enable even the wealthy to qualify by following sophisticated legal advice.

Long-term care researchers sometimes debunk the idea that Medicaid planning is common among the well-to-do by suggesting that Medicaid’s reputation for poor access and quality would discourage people with financial means from seeking eligibility. Two points rebut that argument. First, the principal drivers behind Medicaid planning are not the ailing parents, but rather the adult children who want to protect their inheritances and therefore have a financial conflict of interest. Second, Medicaid planners routinely advise clients and their families not to worry about Medicaid’s poor reputation. By holding back enough “key money” for the parent to pay privately for a few months, they can buy their way into the best facilities which have relatively few Medicaid beds. Nursing homes routinely give admission preference to higher-paying private payers (Gandhi, 2019, p.1⁷⁵). Then when the last of the cash runs out, the attorney files the Medicaid application and the client remains in the preferred facility because state and federal laws prevent expelling residents simply because their source of payment changes from private to Medicaid. Ironically, poor people for whom Medicaid is supposed to be a safety net, lack the key money to ensure access to the best care. They go to the Medicaid facilities with the bad reputations.

Out-of-Pocket Expenditures

Some analysts wrongly insist Medicaid requires impoverishment by claiming out-of-pocket expenditures are higher than they really are. For example, Melissa Favreault and Judith Dey conclude “Families will pay about half of the costs themselves out-of-pocket ….” (Favreault and Dey, 2016, p. 1). They arrive at that figure by including room and board expenses in residential care settings—costs that people would incur whether they need long-term care or not—and by excluding Medicare post-acute care expenditures, which as explained above, are critical to sustain Medicaid’s viability as the dominant long-term care financing source. The truth is that out-of-pocket long-term care costs have been declining for half a century. In 1970, five years after Medicaid began picking up the long-term care tab, nearly half of nursing home expenditures still came from private resources. That share has dropped to almost one quarter as of 2017, including the spend-through of Social Security income, as explained earlier. Bottom line, over 90 percent of the cost of nursing home care in the United States is explained without counting out-of-pocket asset, as opposed to income, spend down (Colello, 2018, p. 1⁷⁶).

The situation with home health care financing is very similar. According to CMS, of the $102.2 billion America spent on home health care in 2018, Medicare covered 39.4 percent and Medicaid 35.1 percent, totaling 74.5 percent.Private insurance paid 11.9 percent. Only 9.9 percent of home health care costs were paid out of pocket, roughly one dollar out of every $10, and some portion of that amount was income spend down that Medicaid requires from recipients. The remainder came from several small public and private financing sources(CMS, 2020, Table 14).

Faulty Data

When economists and health policy analysts claim that older people approaching the need for long-term care retain few assets and spend down rapidly, they generally draw their evidence from survey data provided by the Health and Retirement Study (HRS) and its auxiliary, the Asset and Health Dynamics among the Oldest Old (AHEAD) study. These longitudinal surveys contain information on home values, automobile ownership, liquid assets, farms and other businesses, retirement accounts, and other assets (De Nardi, French and Jones, 2016). Noteworthy is the fact that each of these financial holdings, as explained above,is either expressly exempt under federal law or easily converted into an exempt asset for purposes of achieving Medicaid long-term care eligibility. In other words, it would not matter for purposes of determining Medicaid long-term care eligibility whether such assets were retained or spent down.

Furthermore, the HRS and AHEADdata are highly dubious regarding amounts held in each of these asset classes.One expert describes “measurement errors in the data, particularly those arising from item nonresponse and frominaccurate respondent reports of the ownership and level of assets” (Venti, 2011, p. 3). Another identifies several other problems with the data including

The Health and Retirement Study contains no information on health and long-term services and supports expenditures, including out-of-pocket expenditures. Thus, it is not possible to directly link transition to Medicaid with out-of-pocket expenditures for health and long-term services and supports. … Finally, information on people who are cognitively impaired and who die is derived from proxy respondents, often relatives, who may not know about specific long-term services and supports use or Medicaid eligibility (Wiener, et al., 2013, p. 50).

There are many reasons why survey respondents and their representatives might fail to report income and assets to surveyors or even purposefully misrepresent the facts. People who have hidden or reconfigured their wealth to qualify for public welfare benefits may be ashamed of having done so or simply unaware that their heirs did this on their behalf. Seniors reporting on themselves may be cognitively impaired or intimidated by self-interested family members. Heirs who benefit from preserving parents’ estates by putting them on Medicaid may prefer to conceal the facts. Lawyers who do Medicaid planning are protected from disclosure by attorney/client privilege, while long-term care providers and Medicaid eligibility staff, who often know which affluent locals are taking advantage of Medicaid, cannot disclose the information because of legally enforced confidentiality. Getting to the truth in such matters is extremely difficult. Yet analysts routinely accept the HRS/AHEAD data as though it were unchallengeable. They often treat such data as incontrovertible proof of widespread catastrophic long-term care spend down.

< End >

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Updated, Monday, March 23, 2020, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #20-012: LTC NEWS AND COMMENT

Nursing Home and Assisted Living Breaking News: Revised DHS Guidance for Visitation
FAQs on Medicare Coverage and Costs Related to COVID-19 Testing and Treatment
Senior housing and care facilities could help employ today’s out-of-work restaurant, hotel and retail workers
Post-Acute Bed Capacity Concerns Loom as COVID-19 Cases Grow
U.S. coronavirus death toll surpasses 100
Coronavirus Is Changing The Way We Care For Frail Older Adults
Coronavirus bill provisions would ‘decimate’ senior living workforce, organizations say
CMS waives three-day stay requirement, MDS deadlines as dining struggles emerge amid COVID-19 response
Opportunities To Expand Telehealth Use Amid The Coronavirus Pandemic
McKnight’s 40 for 40: Bill Thomas

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Updated, Monday, March 16, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-011: LTC NEWS AND COMMENT

BREAKING: Feds to ban most nursing home visitors in escalation of coronavirus fight
Denver 2020 ILTCI Conference Cancelled
The Federal Government Is on an Unsustainable Fiscal Path
2020 Alzheimer’s Webinar Series
AHCA’s Parkinson: COVID-19 ‘Almost a Perfect Killing Machine’ for Elderly
Avalanche of Alzheimer's Cases: Are We Ready?
Study links 3 key risk factors to coronavirus deaths among older adults
BREAKING: Feds, providers take ‘unprecedented’ action regarding visitor access at long-term care facilities over COVID-19 fears
COVID-19: What's Cancelled, What Isn't
Nursing Homes Face Unique Challenge With Coronavirus
Senior living communities in Washington, Maryland take precautions after positive COVID-19 test results

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Updated, Friday, March 13, 2020, 10:40 AM (Pacific)

Seattle—

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LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 4

LTC Comment: The full Medicaid and Long-Term Care monograph is 78 pages, so we’re bringing it to you in bite-sized pieces. Here’s the fourth one, after the ***news.***

*** DENVER 2020 ILTCI CONFERENCE CANCELLED: “The Executive Committee of the ILTCI has monitored the COVID-19 virus closely. The situation in the host city of Denver, Colorado has worsened, including the governor of Colorado declaring a state of emergency. Unfortunately, we feel that it is impossible to proceed with the 2020 conference given the facts surrounding this pandemic. As likely goes without saying, we put the safety of our members first. Like most conferences, professional sports teams and other organizations whose members planned to meet in any material number this March, we have decided that proceeding with the conference does not justify the risk that our members could become ill. Steps taken by our members to mitigate the risk of infection have already resulted in speaker and attendee cancellations in significant numbers.

As a result, the ILTCI's Board of Directors voted unanimously to cancel the 2020 conference. We are continuing to evaluate whether the meeting can be rescheduled at a later time. As you can surely appreciate, that evaluation will be contingent on the future trajectory of COVID-19, which is presently unknown.

We will soon reach out to attendees, exhibitors, and sponsors under separate cover with communications regarding the implications of this cancellation.

We will have FAQs available soon on our website, www.iltciconf.org.

Sincerely,
The ILTCI Executive Committee”

LTC Comment: This is a sad but sensible decision. The virus pandemic puts older and immune-deficient people at greatest risk, the very people private LTCI aims to protect financially. What a PR fiasco if someone had sickened at the meeting spreading the infection and carrying it home. The ILTCI Conference has a long, proud tradition. We’re confident it will return next year bigger and stronger than ever. In the meantime, check out our history of the long-term care insurance conferences including all 19 ILTCI’s up to now: History of LTC Insurance Conferences (2019). We should all express our appreciation to the ILTCI conference’s organizers, staff, and contributors for their dedication, hard work and consummate professionalism under extremely difficult circumstances.

***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 4

In Episode 4 of this series, which follows, Steve Moses explains how affluent people qualify for Medicaid long-term care benefits and why they ignore the risk and cost of long-term care until they need it. He then describes the vast popular and legal literature on “Medicaid planning”--artificial self-impoverishment to qualify for assistance--providing many quotes as examples. Finally, he recounts each of the statutory measures taken by numerous presidents and congresses to counteract Medicaid eligibility abuse while also explaining how the Medicaid planning bar circumvented each of those corrective action measures.

Here’s the fourth episode of “Medicaid and Long-Term Care,” by Stephen A. Moses, Center for Long-Term Care Reform, Seattle, Washington, published January 17, 2020. This paper was presented to The Libertarian Scholars Conference on September 28, 2019 in New York City and to The Cato Institute’s State Health Policy Summit on January 3, 2020 in Orlando, Florida.

Are Consumers Planning to Use Medicaid for Long-Term Care?

Do consumers deliberately plan to take advantage of Medicaid if they ever need long-term care? Do they know the rules on how to qualify for Medicaid long-term care benefits while minimizing the financial spend down consequences? Research suggests they do not. Most people believe mistakenly that Medicare or their health insurance will cover long-term care (AP-NORC, 2017, p. 2⁶⁶). They remain blissfully ignorant of long-term care risk despite being inundated with claims like those cited above insisting the government will not help with long-term care costs except after one’s personal resources are exhausted. What seems to happen is that consumers ignore the alarmist information about catastrophic spend down risk until they need expensive long-term care. At that point, they become quickly aware of information on how to avoid serious spend down liability and they use it, with or without the help of professional advisors.

Such consumer behavior is rational and complies precisely with the real, though unintentional incentives in Medicaid eligibility policy. Eventual easy access to Medicaid long-term care benefits enables consumers to ignore warnings of long-term care risk with impunity. Then, if and when they need high-cost long-term care, they focus on how to pay and quickly discover the many ways to qualify for Medicaid. By then, however, the damage is done. It is too late, after someone already needs care, for him or her to save, invest, insure or otherwise prepare to pay privately for care. At that stage, Medicaid is the path of least resistance.

How Do People Qualify for Medicaid Long-Term Care Benefits While Preserving Most Wealth?

Once people are stricken by chronic illness that requires expensive long-term care, they and their families quickly become sensitive to the question of who pays and who does not. At first it sounds like they are on their own and the consequences could be devastating. But then they begin to learn how the system really works. After receiving no help from their Social Security, Medicare, or health insurance, they hear about Medicaid. When they—or more likely their adult children, as the parents themselves are disabled and often demented—go to the local welfare office, they receive a long, complicated Medicaid application form with many items of financial verification to complete, such as bank balances, home ownership and equity, asset transfers and why they made them, and so on. But they will also learn from the local Medicaid eligibility worker that income is not usually an obstacle, that many assets are totally exempt, and that they can and should use countable assets such as cash and liquid investments to purchase non-countable resources, such as prepaid burial plans or home improvements, in order to hasten the process of spend down and quicken eligibility. Some eligibility workers are more forthcoming than others with information on how to facilitate eligibility for benefits, but most are caring people eager to help families negotiate an emotionally and financially difficult transition.

By this point, people discover information everywhere on how to navigate the crisis. Consumer information on painlessly qualifying for Medicaid is universally available. How-to and self-help books abound. An internet search for “Medicaid planning” reveals thousands of articles on how to qualify without spending down significantly. Anyone can search “Medicaid planning in [your state]” to find websites of law firms that specialize in the practice. Many such firms offer online articles explaining in general how Medicaid planning works, but also warning, to attract clients, why it is too complicated for laypersons to attempt without their professional guidance. Such firms routinely obtain, fully document, fill out, and submit the Medicaid application, often inches thick with verifying documents, to the state agency on behalf of their affluent clients’ families. MedicaidPlanning.org encourages advisors “of any kind (e.g., attorney, financial planner, CPA, care planner, etc.)” to provide the service and offers a book and training on how to impoverish people artificially to qualify them for Medicaid. The American Council on Aging, not to be confused with AARP’s National Council on the Aging (NCOA), offers these Asset Planning Strategies covering “Irrevocable Funeral Trusts, Spousal Asset Transfers, Annuities, Spend Down Excess Assets, Lady Bird Deeds, Medicaid Divorces, Medicaid Asset Protection Trusts, ‘Half a Loaf’ Strategies, Income Planning Strategies, Spousal Income Transfers, Qualified Income Trusts/Miller Trusts, and Income Spend Down.”

Access to a Medicaid planner anywhere in the country is facilitated by the National Academy of Elder Law Attorneys (NAELA), the professional association of lawyers who specialize in the practice of Medicaid planning. NAELA has a national membership of 4,500 and an annual budget of $2 million (NAELA, 2019). Although elder law attorneys perform a wide range of beneficial services for their mostly affluent clients, their primary source of billable hours is Medicaid planning. The fee to qualify someone for Medicaid ranges “from $2500 for individuals with relatively simple estates to $10,000 for individuals with significant assets” (Markovic, 2016, footnote 88).

Medicaid planners’ services are most often sought by the adult children of declining elders for the purpose of preserving their inheritances by avoiding private long-term care expenses for the parents. As Medicaid dependency often involves impaired access to and quality of long-term care (Ameriks, 2007, p. 22), Medicaid planners are vulnerable to and sensitive about accusations of financial abuse of the elderly. This self-description and justification is typical:

It is not uncommon for couples and individuals to engage in a practice often referred to as “Medicaid Planning,” which one commentary defines as “the legal fiction of ‘rearranging assets’ to make someone poor on paper so that he or she may qualify for Medicaid.” It is well established that such “Medicaid Planning” is legal and that it is professionally ethical, or acceptable, for attorneys and financial planners to assist clients in such planning. Nonetheless, the Medicaid planning and spend down processes are quite complex, potentially highly financially disruptive, and may lead to inequitable results. Moreover, although legal, Medicaid planning is often perceived as “gaming the system” (Hyer, Hannah, Burkhart, and Toevs, 2012, p. 359).

Clearly, information on how to qualify for Medicaid long-term care benefits while avoiding the seemingly restrictive financial eligibility rules is widely available. The financial incentive to use such information is great. There is every reason to believe families use this information (and no evidence they do not) to minimize personal asset spend down and to hasten access to care financed by Medicaid.

The Legal Literature on Medicaid Planning

Beyond the ubiquitous consumer information on Medicaid planning, there is a large and always expanding professional legal literature on the topic. The first such article appeared within months of President Jimmy Carter’s signing the Omnibus Budget Reconciliation Act of 1980 (OBRA ’80), which imposed the first ever restriction on asset transfers done to qualify for Medicaid. OBRA ’80 became law in December 1980; “Medicaid as an Estate Planning Tool,” by William G. Talis, appeared in the Massachusetts Law Review’s Spring 1981 issue. It stated “Careful planning even under adverse state law will still be able to achieve the goal of excluding an applicant's resources for purposes of determining Medicaid eligibility” (Talis, 1980, p. 94).

The article also describes ways clients might reduce exposure to health costs through (1) creation of various trust devices, (2) conveyance of remainder interests in property, (3) conversion of property into assets exempted from eligibility tests for Medicaid, and (4) outright transfers of property. If a client can be rendered eligible for Medicaid, medical expenses will be paid in full and estate assets will be conserved. Moreover, while the Department of Public Welfare may seek recovery for payments made on behalf of elderly recipients from their estates, careful planning can lawfully defeat the Department’s ability to obtain indemnification (Ibid., p. 90).

Although some of the methods described in this early article have since been proscribed or delimited by federal law, most of them remain viable and widely used. Quotes on how to do Medicaid planning from this first article and a selection of 86 others spanning the next 35 years are compiled in “Appendix I: Supplemental Bibliography” of How to Fix Long-Term Care Financing (Moses, 2017). These include:

After President Ronald Reagan signed the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA ’82) authorizing states voluntarily to (1) restrict asset transfers done within two years of applying for Medicaid, (2) place liens on real property, and (3) recover benefits correctly paid from recipients’ estates, Medicaid planners concluded they could circumvent the new rules and explained how: “With long-range planning, the cooperation of relatives, some good health, and maybe a little luck, couples will be in a position to negotiate between the rock and a hard place that Congress has placed in the Medicaid path” (Deford, 1984, p. 139).

After President Reagan signed the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA ’85) restricting the use of Medicaid Qualifying Trusts, lawyers reassured their colleagues and clients: “Many people assume that a family’s resources must be virtually exhausted before any help will be available through the Medicaid program. In fact, people in Washington [state] who need nursing home care can benefit from Medicaid without devastating their families” (Greenfield and Isenhour, 1986, p. 29).

After President Reagan signed the Medicare Catastrophic Coverage Act of 1988 (MCCA ’88) making asset transfer penalties mandatory nationwide and expanding the look-back period to 30 months, one especially aggressive Medicaid planner wrote this in his best-selling book Avoiding the Medicaid Trap: How to Beat the Catastrophic Costs of Nursing-Home Care:

So is there any practical way to juggle assets to qualify for Medicaid before losing everything? The answer is yes! By following the tips on these pages, an older person or couple can save most or all of their savings, despite our lawmakers’ best efforts...Here are the best options: Hide money in exempt assets...Transfer assets directly to children tax-free...Pay children for their help...Juggle assets between spouses...Pass assets to children through a spouse...Transfer a home while retaining a life estate...Change wills and title to property...Write a durable power of attorney...Set up a Medicaid Trust... Get a divorce.... (Budish, 1989, p. 34)

After President Bill Clinton signed the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93) making estate recovery mandatory, expanding the asset transfer look back period to three years, eliminating the cap on asset transfer penalties, and prohibiting “pyramid divestment,” two experts reassured their colleagues: “Most of the basic planning options that seem to exist today will survive; but many of the more unique, aggressive tactics may or may not survive [p. 1] .... WE STILL BELIEVE THAT ALMOST ANYONE CAN BECOME MEDICAID ELIGIBLE FOR LONG-TERM CARE BENEFITS EVEN IN CRISIS.... [p. 11]” (Brown and Fleming, 1993, emphasis in original).

After President Clinton signed the Health Insurance Portability and Accountability Act of 1996 (HIPAA ’96) making it a crime to transfer assets for less than fair market value for the purpose of qualifying for Medicaid, planners sought ways around the new rules:

By using a LCC [Life Care Contract], the applicant is outside the purview of the disqualifying transfer section of Title 42 because the contract anticipates a transfer for value and not a gift. Therefore, to the extent that the elder’s assets are transferred pursuant to this contract, the elder will incur no period of ineligibility ... Using this one payment method, an elder can transfer a large number of assets and shortly thereafter qualify for Medicaid if the caregiver can prove that the medical condition causing the disability was totally unanticipated ... a one lump sum payment of $540,000 is a transfer for value and outside of the Medicaid rule ... IT DOESN’T MATTER IF MOM HAS A MASSIVE STROKE AND IS A CANDIDATE FOR LONG TERM CARE SIX MONTHS LATER....” (NAELA Conference Proceedings, 1996, pps. 1-2, 4, 11, double emphasis in the original).

After President Clinton signed the Balanced Budget Act of 1997 (BBA ’97) repealing the criminalization of asset transfers to qualify for Medicaid, but making it a crime to recommend asset transfers for the purpose of qualifying for Medicaid in exchange for a fee, mortified planners encouraged community spouses of institutionalized Medicaid recipients simply to dodge their spousal support responsibility.

The law, therefore, allows an institutionalized spouse to qualify for Medicaid benefits even though he or she may have a spouse that chooses to keep assets over the CSRA [Community Spouse Resource Allowance]. The spouse retains the assets, in any amount, and then refuses to make them available for the institutionalized spouse’s costs of long-term care. In turn, the state seeks an assignment of the institutionalized spouse’s support rights (Solkoff, 2001, p. 26).

After President George W. Bush signed the Deficit Reduction Act of 2005 (DRA ’05) placing the first cap ever on Medicaid’s home equity exemption, limiting the half-a-loaf loophole, amending the annuity rules, and unencumbering the Long-Term Care Partnership Program, Medicaid planners reassured their colleagues and clients that artificial self-impoverishment to qualify for Medicaid remained feasible and no less ethical than tax planning:

Due to the high cost of nursing home care, elderly people and their families have increasingly turned to Medicaid-planning strategies to qualify for Medicaid benefits and ease their financial burden. Medicaid planning involves taking measures to preserve one’s assets in order to gain Medicaid eligibility by meeting the program’s financial criteria (Wone, 2006, p. 487).

Many commentators, as well as taxpayers generally, have criticized the practice of ‘Medicaid estate planning, [when] individuals shelter or divest their assets to qualify for Medicaid without first depleting their life savings. … However, Medicaid estate planning is not only rational, but it is also consistent with notions of morality and fairness. Akin to tax planning, Medicaid estate planning is as justifiable as any other legal advice an attorney may give to a client to obtain favorable governmental treatment, despite recent measures taken by Congress that might suggest otherwise. The public perception seems to be that tax planning is perfectly acceptable, whereas Medicaid estate planning is morally questionable (Bothe, 2009-10, pp. 815-6).⁶⁷

No further government action has occurred since 2006 to target Medicaid long-term care benefits to the needy or to discourage their overuse by the affluent. These recent law journal articles show that most methods to qualify for Medicaid without spending down for care have survived and thrived:

Thus, for example, if a person gives away one million dollars six years before applying for Medicaid, that gift will not be considered in determining eligibility. (Miller, 2015-2016, p. 8)

In our earlier work on this topic, my co-authors and I described many Medicaid planning strategies. These include gifts beyond the five-year look-back period, disinheritance of the institutionalized person; the use of special needs trusts for the institutional spouse; annuitization of retirement accounts and savings (often for the benefit of the community spouse); spend down on the home or other exempt assets (called asset repositioning); caregiver agreements with family members; certain transfers of the home to a spouse, child or sibling; use of exempt assets (i.e., the home) to pay for the nursing home during a penalty period arising from gratuitous transfers; and, finally, divorce or marriage avoidance. Some of these are only designed to obtain Medicaid eligibility while preserving wealth during the recipient’s lifetime. Others, most prominently gifts and annuities, are designed to avoid estate recovery as well. The liberal income rules and the restrictive resource rules make the purchase of an annuity for the community spouse with excess resources an important planning tool for middle class couples. Indeed, the annuity purchase option is the chief planning alternative to divorce in many cases (Ibid., p. 14).

Countable assets which are attributable to the institutionalized spouse can be reduced by spending or consuming them for the benefit of either spouse. The applicant or their spouse could pay off a mortgage or other debt, pay attorney's fees or other professional fees, pay for travel for themselves, or pay for home care services. … Countable assets can be transformed into exempt assets, for example, by purchasing an irrevocable burial plan for each spouse and by paying for exempt assets which enhance the quality of life of either spouse, such as clothing, electronics, and repairs or improvements to the residence. … Countable assets may also be transformed into a stream of income by the purchase of an approved annuity, with the community spouse as annuitant (immediate payee) (Gilsinan, 2018, p. 19).

If a married couple who owns no primary residence but has substantial liquid assets engages in Medicaid planning, they could create an irrevocable trust and transfer all of their assets to that trust. … As long as there are no circumstances in which the trustee could pay them any amount of trust principal, and as long as the married couple complies with the five-year look-back rule, the applicant would be eligible for Medicaid benefits because the assets would not be countable as his or her assets. … The inclusion of the primary residence among the assets transferred to the irrevocable trust allows the grantor to avoid the estate recovery claim against his or her primary residence that would occur had the grantor obtained Medicaid long-term care benefits and continued to own the home until it was transferred to his or her heirs as part of the probate estate (Tunney, 2018, p. 23).

There are two main alternatives to the CSRA for protecting assets for the community spouse: spousal refusal and divorce. a. Spousal Refusal. A community spouse can simply refuse to allow his or her assets to be made available for use by the institutionalized spouse and refuse to cooperate in the application for Medicaid. … b. Divorce ... Following the divorce, the institutionalized spouse could quickly qualify for Medicaid, and the couple's assets would be preserved for the community spouse (Beckett, 2016, p. 31).⁶⁸

Clearly the practice of Medicaid planning remains vibrant and very well documented in the popular and professional literature on aging and estate planning.

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Updated, Monday, March 9, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-010: LTC NEWS AND COMMENT

Innovation in the LTC Insurance Market
The number of millennials with early-onset Alzheimer's disease is surging, report finds
An update from the ILTCI Conference regarding COVID-19
CMS to ‘Immediately’ Refocus Nursing Home Inspections on Infection Control Amid Coronavirus
Living The Golden Rule
COVID-19 Webinar & Educational Resources
Genworth reaches deal 'in principle' with New York regulator to clear acquisition by China-based company
Why Are So Many Nursing Homes Shutting Down?
COVID-19 Webinar Tomorrow
House task force introduces Older Americans Bill of Rights
Nursing home the site of first US coronavirus outbreak: 1 dead, 4 hospitalized

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Updated, Monday, March 2, 2020, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #20-009: LTC NEWS AND COMMENT

Debt among oldest Americans skyrockets 543% in two decades
Blue Cross Plans Say Alzheimer’s Has Tripled Among Adults Ages 30 To 64
Long-Term Care Insurance v. a Hybrid: AALTCI Gets the Numbers
One Conversation Can Make All the Difference
Prepare now for coronavirus, association warns
One LTCI Producer’s Take on Nursing Home Closures
550 Nursing Homes Closed from 2015-2019 — With Trend Accelerating Toward End of Decade
Cannabis use rising among older adults, study shows
Empire Center says billions could be saved through Medicaid cost-cutting proposals
Medicare Managers Hope to Lift Agent Referral Fee Cap
McKnight’s 40 for 40: Robert G. Kramer
State considers end to 'spousal refusal' to pay for nursing home care

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Updated, Friday, February 28, 2020, 9:00 AM (Pacific)

Seattle—

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LTC Comment: The full Medicaid and Long-Term Care monograph is 78 pages, so we’re bringing it to you in bite-sized pieces. Here’s the third one, after the ***news.***

*** HAPPY 20TH: This year’s Intercompany Long-Term Care Insurance Conference, which meets in Denver, March 29 to April 1, is the program’s 20^th iteration. To celebrate this memorable achievement, we published a 65-page History of LTC Insurance Conferences. It covers all of the ILTCI events, but also some of the other, earlier, now defunct industry meetings, such as Jesse Slome’s “LTCI Producer Summits” and Greg Luque’s “Forums.” For a quicker read, check out “LTC Bullet: History of LTC Insurance Conferences,” which provides thumbnail summaries of each of the conferences covered in the full report. We offer sincere thanks and congratulations to Jim Glickman and everyone associated with the leading LTC insurance industry conference. May it continue to unite, educate and motivate everyone dedicated to improving long-term care in America for many years to come. ***

*** ILTCI RECOGNITION AWARD nominations are open. The deadline for nominations is March 6 so act now! I just submitted my nomination. Can you guess whom I proposed? The Intercompany Long-Term Care Insurance Conference is sponsoring a third annual award for a person or organization “that has made a significant, long-term contribution towards the attainment of the ILTCI vision. The ILTCI vision is to create an environment for aging in America that includes thoughtful, informed planning that takes into account the most effective and efficient use of resources in addressing the risks and costs of long-term care for all levels of American society. For details and to submit your nomination, go to https://iltciconf.org/recognition-award/. Past recipients of the award were Marc Cohen and Stephen Moses. ***

*** CLTC MASTER CLASS AT ILTCI 2020: Veteran LTCI expert and trainer Bill Comfort will teach the two-day course March 28-29 at the Intercompany Long-Term Care Insurance Conference in Denver. Watch Video on CLTC Master Classes. The class and conference registrations are discounted now. For inquiries, contact: Audrey Sunner, CLTC, CSA at 919-230-8523 or asunner@ltc-cltc.com. The Center for Long-Term Care Reform is proud to acknowledge the Certification for Long-Term Care (CLTC) program as a corporate sponsor. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 3

LTC Comment: Episode 1 of our serialization of the Center’s newest report described the current method of providing and paying for long-term care, explained the long-term care financing problem in detail, and showed how heavily dependent the existing dysfunctional system is on public, especially Medicaid, financing.

Episode 2 explained how Medicaid became the dominant payor for long-term care, described the severe unintended access and quality problems that ensued, and recounted the long series of fruitless interventions policymakers have attempted aimed at correcting symptoms (high cost, nursing home bias, and poor quality) while ignoring their causes (strong financial incentives for states to maximize Medicaid spending and perverse incentives for consumers to rely on the safety net program rather than prepare to pay privately for long-term care.)

In Episode 3, which follows, Steve Moses explains how scholars have made the same mistakes as policymakers. They lament long-term care’s problems without analyzing their causes. Then they propose expanded government funding and regulation without accounting for the damage such interventions have produced in the past. Steve then addresses the key to unraveling the long-term care conundrum, which is to understand and interpret correctly Medicaid’s long-term care eligibility rules and their impact on consumers’ incentives to plan responsibly (or not) for long-term care risks and costs.

Episode 4 in this series, two weeks from now, will explain how Medicaid’s dominance as the principal funder of long-term care inhibited the private market for home care, which consumers prefer over nursing homes, and crippled the potential private sources of financing, such as home equity conversion and long-term care insurance, that could and should solve the system’s access and quality problems—all this transpiring without most consumers even knowing who pays for long-term care!

Here’s the third episode of “Medicaid and Long-Term Care,” by Stephen A. Moses, Center for Long-Term Care Reform, Seattle, Washington, published January 17, 2020. This paper was presented to The Libertarian Scholars Conference on September 28, 2019 in New York City and to The Cato Institute’s State Health Policy Summit on January 3, 2020 in Orlando, Florida.

Conventional Long-Term Care Scholarship

If government policy on long-term care has consistently addressed the symptoms of high cost and poor quality instead of the cause, excessive public financing, so has and does most scholarship. Building on decades of research and special commission reports, a scholarly consensus has formed regarding the long-term care problem and what to do about it. For example, a December 2015 article in Health Affairs (Favreault, Gleckman, and Johnson, 2015, p. 219048) assessed the problem as high and growing care needs, high and growing cost, inadequate private resources to pay for care exacerbated by the lack of private insurance, resulting in high, growing and unsustainable dependency on Medicaid. Without analyzing how or why these conditions obtain, the article recommends ever more government engagement in the market, specifically mandatory, comprehensive public insurance coverage for the catastrophic back end of the long-term care risk. In other words, we are advised to address the symptoms of the long-term care problem by adding more of the generous funding source that arguably caused them in the first place.

That article spawned three major reports in 2016 promoting its analysis and recommendations. Leading Age, a long-term care provider trade association, reviewed the usual symptoms and concluded “a mandatory, universal insurance approach that covers catastrophic events is the most effective pathway to pursue” (Leading Age, 2016, p. 12). The Bipartisan Policy Center, a Washington, DC think tank, concurred with a now rare nod to cost control, recommending: “Pursue the concepts and elements of a public insurance program to protect Americans from catastrophic LTSS expenses, while assuring that it does not add to the federal deficit” (BPC, 2016, p. 21). The “Long-Term Care Financing Collaborative,” a self-described “diverse group of policy experts and senior-level decision makers representing a wide range of interests and ideological views” proposed “A universal catastrophic insurance program aimed at providing financial support to those with high levels of care needs over a long period of time” (LTC Financing Collaborative, 2016, p. 2).

Nor has this emerging agreement on the problem (symptoms) and its preferred solution (more government) receded. Last year, a respected private long-term care insurance analyst teamed up with a researcher who favors public financing options to produce yet another proposal on the same theme. They recommend

A public catastrophic insurance program for LTSS costs that takes effect after an income-related waiting period has been met. … Eligibility … phased in over ten years, with people eligible for benefits once they work 40 quarters after the law’s enactment …. Benefits would become available once people incur impairments in 2+ ADLs [activities of daily living] and/or severe cognitive impairment … . Up to $110/day cash benefit (2014 dollars) … Paid out either daily or weekly … Unlimited benefit once an income-related waiting period is met … Waiting period of 1 year for people with lifetime incomes in the lowest two quintiles of the distribution and 2, 3, and 4 years for people with incomes in the third, fourth and highest quintiles, respectively. … Annual benefits increase at the rate that hourly costs increase for home health aide workers (Cohen, Feder, and Favreault, 2018, p. 7).

Would consumers choose to participate in this complicated scheme? There is no need to ask. The paper does not contain the terms obligatory, involuntary, or compulsory, but they all apply to this proposal. Like Social Security, Medicare and other plans to fix long-term care mentioned above and below, this one also forces people to pay up, take part and accept whatever the government delivers.

Two influential recent articles home in on special challenges facing the middle market and home care. In May 2019, “The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources for Housing and Health Care” correctly assessed the plight of middle-income seniors whose resources will be inadequate to fund their senior living and long-term care and suggested “lawmakers could consider a new benefit that explicitly funds long-term care (for example, a Medicare ‘Part E’ that shifts funds from Medicare Part A acute care)” (Pearson, et al., 2019, p. 8). In June 2019, “The Financial Burden of Paid Home Care on Older Adults: Oldest and Sickest Are Least Likely to Have Enough Income” argued that home care is desirable; too few people can afford enough of it; so “Government programs could be launched that cover LTSS expenses for the entire duration of an enrollee’s LTSS” (Johnson and Wang, 2019, p. 1000).

Many similar examples from the past three decades could be adduced. Conventional long-term care scholarship is tediously consistent in these respects. It begins by recounting the dire service delivery and financing challenges consumers face, but without analyzing or commenting on how or why those problems came to be. Then it recommends an expansion of government’s role, usually proposing a new or expanding an existing compulsory public financing program.

The Key: Medicaid Long-Term Care Financial Eligibility

The current paper takes a different approach to analyze the long-term care issue. It described and acknowledged the problems and dysfunctions in long-term care services and financing. But then it traced the history and evolution of those problems linking them causally to the early, substantial and constantly expanding role of government financing and regulation in the long-term care market.

Having shown how and why long-term care problems exist, we can now ask: Why are analysts and policymakers caught in the trap of looking only for government solutions to problems government created? Why do most researchers obsess about the status quo without explaining how it came to be? Why do they despair of financing quality long-term care without vastly expanding government spending? Ideological bias is one explanation, but there may be something more basic and easier to resolve at work. The key to answer these questions lies in understanding how Medicaid long-term care eligibility really works as compared to how it is represented to work by the popular media, by most scholarship, and ostensibly by the federal law and regulations themselves.

The federal rules governing financial eligibility for Medicaid long-term care benefits sound draconian. “Medicaid eligibility depends primarily on income and assets. … In general, aged, blind, and disabled beneficiaries may not have more than $2,000 in countable assets for individuals and $3,000 for couples, a level that has not changed since 1989” (Thach and Wiener, 2018, p. 4). No argument; that is poor. Income eligibility is more complicated than asset eligibility, because states may follow various “alternative or optional eligibility pathways to determine which groups qualify …” (Ibid.). But income eligibility under all those pathways still sounds stringent when represented as allowing only $723 per month of income (LTC Financing Collaborative, 2016, p. 19). These “official” financial eligibility rules seem to say that when it comes to paying for long-term care, you are on your own unless or until you spend down your income and life’s savings into impoverishment.

So quotes like these abound in the mass media:

People who exhaust their savings could wind up on Medicaid, the government health program for the indigent that pays for about half of all nursing home and custodial care (Weston, 2019) .

Essentially, you need to have spent practically all your assets before Medicaid will kick in (Eisenberg, 2017).

People may qualify for Medicaid after they have “spent-down” their assets (Lawrence, 2015).

Well-respected scholars often say the same.

The current program requires people to impoverish themselves (“spend down”) to qualify for coverage (Pearson, et al., 2019, p. 858).

At the same time, public ‘insurance’ – through Medicaid – supports services only after people pay what might be called an ‘infinite deductible’ – that is, only after they expend most, if not all, of their personal liquid financial resources (Cohen, Feder, and Favreault, 2018, p. 2).

Medicaid (the federal-state health care program for the poor) covers long-term care costs for individuals below certain income levels, but the deductible for Medicaid is nearly all of an individual's income and assets. As a result, Medicaid is the long-term care coverage of last resort for those with no assets (Banerjee, 2012, p. 4).

Beneficiaries are subject to strict eligibility rules. While these vary from state to state and differ by care setting, they typically limit beneficiaries to $2,000 in financial assets and $723 per month in income (the monthly benefit level for the Supplemental Security Income program). As a result, millions of middle-income families who face catastrophic LTSS costs must impoverish themselves before receiving public support (LTC Financing Collaborative, 2019, p. 19).

The reality of Medicaid long-term care financial eligibility is far more nuanced, generous, and elastic than these quotes convey. While scholars usually and the media sometimes explain (1) how Medicaid allows people with excess income to qualify by spending down privately for care until they reach the required level and (2) how some assets are non-countable and so do not affect eligibility and are not required to be spent down, generally both the media and scholars leave the strong impression that qualifying for Medicaid long-term care benefits is financially devastating and highly undesirable. Media articles usually point their readers to legal experts who can help families reconfigure their income and assets to qualify without spending down. Scholarly articles rarely take that alternative into account. This latter fact is the key to understanding why expanding government spending is usually the only option considered by analysts for reforming long-term care services and financing.

The Fallacy of Impoverishment

Income Eligibility

How does Medicaid long-term care eligibility really work? Most states use “medically needy” eligibility rules, which means people who have too much income can pay privately for their care until their net income level is reduced to the accepted limit (Thach and Wiener, 2018, p. 5⁴⁹). Other states apply “income caps,” usually 300 percent of the Supplemental Security Income (SSI) limit, currently $2,313 per month (Thach and Wiener, 2018, p. 5⁵⁰). But income cap states may allow people with excess income to qualify by setting up special “Miller income diversion trusts,” into which the recipient transfers excess income until the income eligibility level is reached. Then, the trust pays out the money to offset Medicaid’s cost for the recipient’s care (Musumeci, Chidambaram and O’Malley Watts, 2019, p.14⁵¹). The result is the same as under the medically needy system. The rule of thumb in all states, whether “medically needy” or “income cap” standards apply, is that anyone with income below the cost of a nursing home can qualify for Medicaid long-term care benefits based on income. As nursing home care is very expensive (roughly $7,500 or $8,500 per month on average and much higher in many urban venues) (Genworth, 2019), people with substantial incomes qualify routinely for Medicaid long-term care benefits throughout the United States. For example, someone with income of $7,500 per month or $90,000 per year would fall in the 84^th percentile of income nationally (PK, 2018), but would nevertheless qualify for publicly financed long-term care based on income if that income is expended for medical and/or long-term care expenses including home care, assisted living, or nursing home residency. Medicaid long-term care income eligibility requires a cash flow problem, but not low income.

Asset Eligibility

Similarly, Medicaid’s seemingly harsh asset spend down rules are much less so as applied. Most of the wealth seniors hold is not counted in determining eligibility. Home equity is entirely exempt if a spouse remains in the home. Between $595,000 and $893,000 of home equity, depending on the state (Musumeci, Chidambaram and O’Malley Watts, 2019, p. 15⁵²), continues exempt as of 2020 even if the home is unoccupied as long as the Medicaid recipient expresses a subjective, medically unverified intent to return to the home (Thomson/MEDSTAT, 2005, p. 3⁵³). Additional exempt assets, all without any dollar limits, include

one income-producing business,⁵⁴ including the capital and cash flow (Hales and Shandrick, 1992, p. 15⁵⁵)
individual retirement accounts (IRAs) (CANHR, 2019)⁵⁶ if generating periodic income⁵⁷ as most are required to do by age 70 ½ in compliance with the required minimum distribution rules (IRS, 20195⁸)
term life insurance,⁵⁹
prepaid burial funds for the immediate family,⁶⁰
one automobile,⁶¹
household goods and personal effects including heirlooms.⁶²

Thus federal law and regulations, which state Medicaid agencies are supposed to follow, allow applicants and recipients to possess virtually unlimited assets while receiving benefits. It is true that state Medicaid programs are technically required to recover such sheltered assets from the estates of deceased recipients, but enforcement of that requirement is inconsistent, complicated by regulations severely limiting lien placement, and relatively easy to avoid, especially with legal advice.⁶³

Married applicants receive additional financial eligibility considerations. Community spouses of institutionalized Medicaid recipients may retain a “Minimum Monthly Maintenance Needs Allowance” (MMMNA) of between $2,113.75 and $3,216.00 per month (ACA, 2020, MMMNA⁶⁴) plus a “Community Spouse Resource Allowance” (CSRA) of half the couple’s joint assets not to exceed $128,640 but no less than $25,728 (ACA, 2020, CSRA⁶⁵). These allowances began at $1,500 per month and $60,000, respectively, when the Medicare Catastrophic Coverage Act of 1988 established them. By law, they increase annually with inflation. The MMMNA and CSRA were created to end the “spousal impoverishment” that could occur previously when the institutionalized recipient’s (usually the man’s) income was captured as required by federal law to offset Medicaid’s cost of his or her care.

Although there is considerable variation in state Medicaid eligibility rules, DeNardi, et al. concluded there was “little practical difference in Medicaid eligibility across the different states” due to medical and long-term care expense deductions. They explain that “most individuals in nursing homes incur medical expenses far greater than 300 percent of the SSI level,” thus achieving eligibility (De Nardi, French, Jones and Gooptu, 2011, p. 26).

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Updated, Monday, February 24, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-008: LTC NEWS AND COMMENT

Continental, a Long-Term Care Insurance Block Buyer, Is Up for Sale
Long-Term Care Costs
Mediterranean diet improves gut health in elders; tied to lower frailty
Stalked by the Fear That Dementia Is Stalking You
GE’s Long-Term-Care Insurance Liability Is a Non-Issue in 2020
Medicare Advantage enrollment swells
VA Health Care: Veterans' Use of Long-Term Care Is Increasing, and VA Faces Challenges in Meeting the Demand
The Ballooning Costs Of Long Term Care
A VA Program Can Help War Veterans Pay For Long-Term Care, But Applying For It Can Be An Ordeal
What Every Dementia Caregiver Must Know
By 2060, a quarter of U.S. residents will be over age 65
What’s the best way to manage agitation related to dementia?

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Updated, Monday, February 17, 2020, 10:40 AM (Pacific)

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LTC E-ALERT #20-007: LTC NEWS AND COMMENT

Combining Life and Long-Term Care Insurance
Long-Term Care Annuities: Pros and Cons
Feds Probing How Personal Medicare Info Gets to Marketers
Seniors on Medicare Advantage less likely to have issues paying medical bills: CDC study
More Than Half Of Americans Disagree With How Their Tax Dollars Are Spent
Task Force: To Save Top Nursing Homes, Government Should Encourage Lower-Performing SNFs to Exit
A whole new world: 15% growth in post-acute care among 30-year nursing home industry changes
Operators treating Medicare Advantage enrollees for depression, dementia and frailty are unfairly penalized: viewpoint
No, the Trump administration is not cutting Medicaid

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Updated, Friday, February 14, 2020, 9:00 AM (Pacific)

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LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 2

LTC Comment: The full Medicaid and Long-Term Care monograph is 78 pages, so we’re bringing it to you in bite-sized pieces. Here’s the second one, after the ***news.***

*** ILTCI RECOGNITION AWARD nominations are open. The Intercompany Long-Term Care Insurance Conference is sponsoring a third annual award for a person or organization “that has made a significant, long-term contribution towards the attainment of the ILTCI vision. The ILTCI vision is to create an environment for aging in America that includes thoughtful, informed planning that takes into account the most effective and efficient use of resources in addressing the risks and costs of long-term care for all levels of American society. For details and to submit your nomination, go to https://iltciconf.org/recognition-award/. Past recipients of the award were Marc Cohen and Stephen Moses. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 2

LTC Comment: The one thing everyone agrees about long-term care is that our current system of providing and paying for it is a mess. Unfortunately, most researchers observe the existing system, agonize over its problems, and proceed to recommend solutions without first explaining what caused the problems in the first place and why they persist. These analysts put the proposal cart before the analytical horse.

Our new monograph, Medicaid and Long-Term Care, takes a different approach. Steve Moses first explains historically how long-term care’s major problems--such as institutional bias, inadequate funding, caregiver shortages, access and quality problems, etc.--came to be. Only after explaining the cause of the problems does he turn to ways to correct them, arriving at a much more promising solution than the usual proposals.

But at 78 pages Medicaid and Long-Term Care is a lot to take in as a whole. So we’re serializing the report. Today’s offering is Part 2. We’ll bring you the next installment in a couple weeks.

Here’s the second episode of “Medicaid and Long-Term Care,” by Stephen A. Moses, Center for Long-Term Care Reform, Seattle, Washington, published January 17, 2020. This paper was presented to The Libertarian Scholars Conference on September 28, 2019 in New York City and to The Cato Institute’s State Health Policy Summit on January 3, 2020 in Orlando, Florida.

How Did Medicaid Become the Dominant Long-Term Care Payer?

Social services and benefit programs in the United States evolved gradually in the country’s first two centuries from a system based on British poor laws—“indoor relief” with many poor houses—toward a system based on cash relief payments (Senior Living: 1776-1799). Cash payments from programs like Old Age Assistance and Social Security gave people funds to spend on residential long-term care enabling the nursing home industry to grow rapidly (Senior Living: 1930-1939). In 1960, the Medical Assistance for the Aged (MAA) program made health care available to people sixty-five and older with low or moderate income and required state matching funds (Senior Living: 1960-1969). The same Kerr Mills statute radically changed eligibility for nursing home care by adding people who “were not sufficiently needy to qualify for cash assistance to cover their ordinary expenses, but who were unable to pay their medical expenses” (Ibid.). In 1965, the new Medicaid program dropped strict eligibility criteria, transfer of assets restrictions, and mandatory liens which were commonplace previously. For its first 15 years, Medicaid explicitly permitted asset transfers for the purpose of qualifying for long-term care benefits (Carlucci, 1986-87, p. 372-3³²). Finally, Medicaid paid exclusively for nursing home care, incentivizing its use by covering “housing, food, housekeeping, and laundry, services” which were not covered for in-home services (Senior Living: 1960-1969).

These features of the new Medicaid program—medically needy eligibility exclusively for nursing home care, including normal costs of living as well as health care, funded with virtually unlimited federal and state matching funds and with no limits on asset transfers to qualify—guaranteed Medicaid would explode in cost from the outset, perpetrate a nursing home bias in long-term care services, discourage development of a private home and community-based care market, and crowd out private long-term care financing sources. That is exactly what happened (Bernard and Feingold, 1970, p. 745³³) and policymakers have been trying to reverse the damage ever since. But their efforts to tame Medicaid long-term care funding growth by capping supply and price, controlling financial eligibility, rebalancing services from institutional to home care, promoting private insurance, and enforcing federal rules on state programs have failed.

A Litany of Failed Interventions

From the beginning, efforts to fix the problems Medicaid created have addressed the symptoms—exploding costs, nursing home bias, and poor quality—not the causes—strong financial incentives for states to maximize Medicaid spending and perverse incentives for consumers to rely on the safety net program rather than prepare to pay privately for long-term care. Inevitable, if unintended, consequences followed a long series of policy errors.

In the 1970s, central health planners tried to control skyrocketing Medicaid nursing home costs by capping bed supply, requiring “Certificates of Need” (CONs) (NCSL, 201934) before allowing new construction on the premise “they can’t charge us for a bed that doesn’t exist.” Nursing homes gratefully took advantage of this new government-imposed monopoly which excluded new entrants from their market. But to compensate for their impeded growth, the nursing home industry raised the rates they charged Medicaid. In response, Medicaid capped nursing home reimbursement rates, which remain to this day only about four-fifths of private-pay rates (Liberman, 2018). But low Medicaid rates created a strong incentive for higher paying private-payers to convert to Medicaid. Consumers sought more and more creative ways to qualify for assistance, sometimes relying on the advice of specialized Medicaid planning attorneys to divest or shelter otherwise disqualifying resources.

Consequently, private-pay nursing home revenue declined from 49.2 percent in 1970 to 26.7 percent in 2017 while Medicaid funding increased from 23.3 percent to 30.2 percent in the same period (CMS, 2018, Table 15). The problem of declining private-pay and increasing Medicaid nursing home revenue is much worse than these numbers suggest due to a change in the definition of National Health Expenditure Accounts (NHEA) categories CMS made in 2011. CMS added Continuing Care Retirement Communities (CCRCs) to the category Nursing Care Facilities. Because CCRCs are much more likely than nursing homes to involve private payments, this misleading change had the effect of reducing Medicaid's reported contribution to the cost of nursing home care from over 40 percent in 2008 to under one-third (32.8 percent) in 2009.35

The federal government responded to the growing Medicaid dependency with a long series of laws attempting to restrict asset transfers and close other eligibility “loopholes” while requiring recovery of benefits paid from recipients’ estates. In 1996, President Clinton and the Gingrich Republicans even criminalized asset transfers for the purpose of qualifying for Medicaid.36 But this “throw Granny in jail law” was repealed a year later and replaced with a “throw Granny’s lawyer in jail” alternative, which quickly proved unenforceable.37 These efforts to target Medicaid long-term care resources to people most in need largely failed, though for correctable reasons discussed below. But the main failure was that these measures did not address the larger problem, financial eligibility rules that permit people with median and higher assets and income to qualify even without legal assistance.

By capping the supply and price of nursing home care without effectively controlling financial eligibility, Medicaid caused demand to skyrocket, filling nursing homes in the 1980s with too many recipients at too low reimbursements resulting in serious quality problems (Hawes and Phillips, 1986, p. 50838). By accepting Medicaid recipients, nursing homes could fill their beds no matter what quality of care they offered. Instead of addressing this problem’s cause, easy access to under-financed nursing home care, the government simply demanded higher quality care, requiring tougher care standards, extra staff and training in the Nursing Home Reform Act of 1987, but without appropriating extra funds to pay for the new mandates (Klauber and Wright, 200139). So this measure failed to improve care quality (Ibid.40). Caught between the rock of inadequate reimbursement and the hard place of mandatory quality, state nursing home trade associations sued for higher reimbursements under the 1980 Boren Amendment and usually won (MacPAC41). Government responded by repealing the Boren Amendment in 1997 leaving no legal floor under Medicaid nursing home reimbursements, thus exacerbating the quality problem and causing nursing homes’ reputation to disintegrate (Wiener and Stevenson, 1998, p. 142).

Trying to save money and give consumers more of the care they prefer, Medicaid encouraged states to rebalance from providing only nursing home care to supplying mostly home care. The premise of that policy was that home care costs less than institutional care. Unfortunately, combined institutional and home and community-based care expenditures usually exceed institutional costs alone. Medicaid long-term care costs for older adults and people with physical disabilities continued to grow from $36 billion in 1995 to $104 billion in 2016 despite, or because of, aggressive rebalancing (Eiken, et al., 2016, p. 1443). The evidence is overwhelming that changing from institutional care to home and community-based care does not save money in the long run. Home care delays but does not reliably replace nursing home care (Holahan and Cohen, 1986, p. 10644) and home care is more desirable than institutional care so more people come out of the woodwork (Ng, Harrington, and Kitchener, 2010, p. 2745) to seek Medicaid eligibility (Grabowski, 2006, p. 346).

Attempting to divert consumers from Medicaid to private insurance, government encouraged the use of “long-term care partnerships” which enabled consumers who purchased qualified policies to protect extra assets from Medicaid’s spend down and estate recovery rules (McCall, 2001). But the real problem was that Medicaid’s spend down and estate recovery rules are ineffectual and often unenforced. Forgiving a liability that does not exist in the first place did not incentivize many people to purchase private long-term care insurance policies. A federal income tax deduction for private insurance introduced in the Health Insurance Portability and Accountability Act of 1996 also helped little as it applied only to people with medical and long-term care expenditures exceeding 7.5 percent of adjusted gross income. Few people healthy enough to qualify medically for private long-term care insurance had medical expenses high enough to qualify for the tax deduction.

Having largely crowded out a market for private insurance by paying for most expensive long-term care, the government added insult to injury by driving interest rates on carrier reserves to near zero, forcing premium rates up to compensate, upsetting policyholders and potential buyers, and effectively suppressing the market. Seeing that nothing they did seemed to work, Congress and President Obama tried to nudge the public into voluntarily buying government long-term care insurance with the unfunded and misbegotten CLASS Act that was quickly repealed (Kane, 201147).

The latest attempt by Medicaid to mitigate the rising cost of long-term care is to modify the reimbursement system. Huge changes in how the government pays for post-acute and long-term care are underway and about to revolutionize long-term care service delivery. The transformation to "managed care," whereby state Medicaid programs turn over responsibility for providing and paying for long-term care to the highest bidders, has long been sweeping the country. Most long-term care will still be provided by nursing homes and home care companies, but now a new middle-man, the managed care company, is coming between the payer (Medicaid) and the provider, which already stand between the patient and access to quality care.

The newest move toward centralized control of the long-term care 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). "Prospective payment," "bundling," and “value-based” reimbursement are the watchwords of the day. Instead of consumers pursuing value by purchasing care from providers they prefer, bureaucrats and politicians will define value, reward providers who deliver it and punish those who do not. The new system will put care managers and providers at far greater financial risk. Experts worry the end result will be a two-tiered system with poor providers getting worse and becoming more dependent than ever on low Medicaid reimbursements.

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Updated, Monday, February 10, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-006: LTC NEWS AND COMMENT

Adverse Childhood Events Tied to Dementia
Pennsylvania Puts LTCI Issuer in Rehabilitation
Social Security: Where Do the 2020 Candidates Stand?
How to Deal With an Aging Advisor Force and Aging Clients
How the Longevity Project Is Reimagining Our Longer Lives
Flu more deadly for U.S. seniors than coronavirus, say doctors
Are Tax Credits The Best Way To Subsidize Long-Term Care Costs?
WHY HOME HEALTH CARE IS SUDDENLY HARDER TO COME BY FOR MEDICARE PATIENTS
New Limited CMS Block Grant Program Draws Attention of LT/PAC [Long-Term and Post-Acute Care] Profession
Strategies for Long-Distance Caregivers

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Updated, Monday, February 3, 2020, 7:06 AM (Pacific)

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LTC E-ALERT #20-005: LTC NEWS AND COMMENT

Many Adults Are Helping Their Parents Financially Despite Strain
2019 Novel Coronavirus (2019-nCoV) Situation Summary
Staffing woes threaten shift standards, OnShift survey says
Rising rates of obesity, diabetes may reverse heart disease gains
FIVE TROUBLING TAKEAWAYS FROM THE LATEST CBO REPORT
A Closer Look At The Democratic Presidential Candidates’ Long-Term Care Plans
Supreme Court OKs rule that could limit immigrants’ access to long-term care services, jobs
Living near major roads linked to risk of dementia, Parkinson's, Alzheimer's and MS
New tool predicts life expectancy of dementia patients

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Updated, Friday, January 31, 2020, 9:00 AM (Pacific)

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LTC Comment: The full Medicaid and Long-Term Care monograph is 78 pages, so we’re going to bring it to you in bite-sized pieces. Here’s the first one.

LTC BULLET: MEDICAID AND LONG-TERM CARE, THE SERIAL, PART 1

LTC Comment: It is a mystery for many why markets work for autos, groceries, and plastic surgery, but not for health or long-term care. We set out to solve that conundrum in Medicaid and Long-Term Care. But at 78 pages, this monograph is a big chunk for busy professionals to consume at a sitting. So here are the first seven pages. We’ll bring you the next installment in a couple weeks.

In this opening section, Steve explains the long-term care financing problem, describes the current method of providing and paying for long-term care, and shows how heavily dependent the existing dysfunctional system is on public, especially Medicaid financing. In the next installment, he’ll explain how and why its problems of access, quality, low reimbursement, institutional bias, caregiver shortages and welfare dependency developed. Later sections address and correct most analysts’ misconceptions of the long-term care problem concluding with a better market-based solution than the compulsory social insurance options those analysts invariably propose.

Steve Moses challenges any scholar whose work is cited and critiqued in Medicaid and Long-Term Care to discuss and publicly debate this analysis. Contact him at smoses@centerltc.com or 425-891-3640.

Here’s the first episode of Medicaid and Long-Term Care, by Stephen A. Moses, Center for Long-Term Care Reform, Seattle, Washington, January 17, 2020. This paper was presented to The Libertarian Scholars Conference on September 28, 2019 in New York City and to The Cato Institute’s State Health Policy Summit on January 3, 2020 in Orlando, Florida.

Abstract

How to provide and finance long-term care for a burgeoning elderly population bedevils scholars and policy makers. The existing service delivery and financing system, dominated by public funding, is highly dysfunctional, fraught with problems of access, quality, reimbursement, discrimination and institutional bias. Most long-term care scholarship analyzes these symptoms, without explaining their cause, and recommends expanding government’s role, usually by means of a new or expanded mandatory, tax-funded social insurance program. This paper takes a different tack, first explaining why the long-term care market has the problems it does and then suggesting how to remove their causes. At the root of all long-term care problems is Medicaid, the dominant payer. By providing only nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds, Medicaid (1) exploded in cost, (2) created institutional bias, (3) caused access and quality problems by paying providers too little, (4) enriched plaintiff’s attorneys with the resulting tort liability cases, (5) crowded out private markets for home care and long-term care insurance, and (6) kept poor people poor with punishing spend down rules, while (7) letting the affluent save and benefit through eligibility loopholes. The key to fixing the problems that plague long-term care is to make Medicaid a better safety net for the poor while diverting the general public to private financing alternatives. This paper explains how to do that while reducing government funding and regulation, which arguably caused the long-term care problems in the first place.

Introduction

Like the drunk seeking car keys only under a streetlight, most scholars narrow their search for long-term care solutions to the funding source they know best, government. Countless special commissions (Pepper Commission, 1990) (Medicaid Commission, 2006) (Commission on Long-Term Care, 2013),¹ studies, reports and articles have explored the same ground. Most made the same recommendation, more obligatory social insurance. Voluntary private sector solutions receive scant consideration. This paper identifies a missing link in conventional scholarly research, draws the logical inferences, and reaches a different conclusion.

Long-term care, also called long-term services and supports (LTSS²), includes health care and social services to help people with physical or cognitive disabilities to perform activities of daily living over an extended period (Thach and Wiener, 2018, p. 1). The probability of needing long-term care is high. Seventy percent of people who reach age 65 “develop severe LTSS needs before they die and 48 percent receive some paid care over their lifetime (Johnson, 2019, p. 3)” incurring average lifetime expenses of $138,100 (Favreault, Gleckman, and Johnson, 2015, p. 2181).Monthly paid care is expensive whether provided in a nursing home ($7,513 for a semi-private room; $8,517 for a private room), assisted living facility ($4,051), or at home ($4,385) (Genworth, 2019). The need for long-term care increases with age. The U.S. 85+ population with the highest need will triple between 2015 and 2050 (Houser, Fox-Grage and Ujvari, 2018, p. 3). The United States spent $366.0 billion on long-term care in 2016 (Colello, 2018, p. 1), not counting half-a-trillion dollars in unpaid caregiving value provided at enormous financial and emotional distress by family and friends (Chari, Engberg, Ray, and Mehrotra, 2015, p. 871). The strain of providing and financing seniors housing and long-term care is huge already, bodes ill for the future, and attracts increasing scholarly and political attention, nearly all leaning toward a larger government role (Pearson, et al., 2019, p. 851³).

Yet, the current structure of long-term care service delivery and financing, dominated by 70.3 percent government funding (Colello, 2018, p. 1), is dysfunctional. Problems include high and rapidly increasing costs (Eiken, et al., 2018, p. 1⁴); persistent nursing home bias (Gleckman, 2013⁵); limited access to the home care consumers prefer (Johnson and Wang, 2019, p. 1000⁶); provider reimbursements too low to ensure quality care (Hansen Hunter, 2018, p. 2⁷); doubtful quality in nursing homes (Wood, 2019⁸)(Ameriks, 2007, p. 22⁹) and home care (Gorges, Sanghavi, and Konetzka, 2019, p. 1110¹⁰) and the tort liability that comes with deficient quality (Aon, 2018¹¹); worsening shortages among both paid (Bryant, 2019¹²) and unpaid caregivers (Schulz and Eden, 2016¹³); and dwindling private financing sources exemplified by declining private payers in nursing homes (NIC, 2019, September¹⁴), the near absence of home equity conversion to fund care (Bell, 2018¹⁵), and poor long-term care insurance take up (Favreault and Dey, 2016, p. 8¹⁶). To understand why this market performs so badly, we can follow the money.

Who Pays for Long-Term Care?

Government financing dominates the long-term care market covering $257.4 billion of total $366.0 billion 2016 expenditures. Medicaid, a means-tested public assistance program jointly funded by the federal and state governments, is the largest contributor at $154.4 billion (Colello, 2018, p. 1). But Medicaid’s contribution of only 42.2 percent of long-term care dollars understates its influence. The program covers 62 percent of all nursing home residents (Harrington, Carrillo, Garfield, and Squires, 2018¹⁷), 19 percent of assisted living residents (AHCA/NCAL¹⁸) and makes a rapidly growing contribution to home and community based care (Landers, et al., p. 265¹⁹).

How can Medicaid pay only two-fifths of long-term care costs, but cover three-fifths of the most expensive, i.e., nursing home, patients? Three factors principally account for this incongruity. First, cost shifting from private patients makes up part of the difference. Medicaid provider reimbursements are notoriously low, roughly 80 percent of private-pay rates (Liberman, 2018²⁰) and often less than the cost of the care (Ibid.²¹ and Hansen Hunter, 2018²²). Second, Medicaid long-term care recipients are required to contribute most of their income to offset the program’s cost for their care (Musumeci, Chidambaram and O’Malley Watts, 2019, p. 15²³). Third, Medicare, which pays far more generously than Medicaid for nursing home and home care (MedPAC, 2018, p. 206²⁴), enables long-term care providers to survive financially while most of their patients’ care is reimbursed at meager Medicaid rates. (Liberman, 2018²⁵).

These facts matter because the impact of public financing on long-term care is substantially greater than the raw numbers suggest in ways almost never acknowledged in the literature. Most of the income Medicaid recipients contribute to offset Medicaid’s cost for their care comes from Social Security. Although Social Security is not usually considered to be a financing source for nursing home care, the fact is that it contributes very significantly, albeit indirectly as “spend-through.” Social Security spend-through refers to income most seniors collect in the form of Social Security benefits which they must contribute toward their cost of care when they receive long-term care services paid for by Medicaid. There is very little in the literature about this source of long-term care financing even though research from 20 to 30 years ago indicated it accounts for nearly half of reported out-of-pocket nursing home costs. The amount is substantial, nearly half of the $57.0 billion (15.6 percent) total otherwise reported as “out-of-pocket” costs in 2016 as inferred based on (Lazenby and Letsch, 1989, p. 8²⁶; McCall, 2001, p. 19²⁷).

Thus, in addition to the 70.3 percent of long-term care financing contributed directly by Medicaid, Medicare and other public sources, the public funding role is enhanced by spend-through of Social Security and other private income and by Medicare’s more generous reimbursement rates offsetting providers’ losses from Medicaid. This added dependency on two financially vulnerable social insurance entitlement programs contributes to the fragility of the long-term care financing system. If Social Security and Medicare trust funds expire as expected in 2035 (Board of Trustees [Social Security], 2019, p. 5²⁸) and 2026, (Board of Trustees [Medicare], 2019, p. 6²⁹) respectively, resulting in substantial cuts to those programs, Medicaid and the long-term care providers dependent upon it will be hard-pressed to make up the loss.

Medicaid Long-Term Care Financing in Perspective

U.S. national health expenditures (NHE) increased 4.6 percent to $3.6 trillion in 2018 or 17.7 percent of Gross Domestic Product (GDP) (Hartman, et al., 2020, p. 8). Medicaid spending grew 3.0 percent to $597.4 billion, 16 percent of total NHE or 2.9 percent of GDP (CMS, 2019). Combined institutional and non-institutional Medicaid long-term care spending was $167 billion in 2016, 30 percent of total Medicaid expenditures (Eiken, et al., 2018, pp. 2, 5). This 4.5 percent increase over the $159 billion spent in 2015 (Ibid., p. 2) was over half again as much as the 2.9 percent increase in GDP for that year (Duffin, 2019).

Medicaid spending is not evenly proportioned among enrollment groups. The program is constantly in the news because of controversy over expanding the program under the Affordable Care Act. But the ACA, or “ObamaCare,” principally addresses acute health care for young mothers, children and working age adults. While these groups comprise 77 percent of Medicaid enrollees (Kaiser Family Foundation [KFF], enrollees), they consume only 38 percent of Medicaid spending (KFF, spending). The aged and disabled who are most likely to use long-term services and supports are 23 percent of enrollees (KFF, enrollees), but they account for 61 percent of Medicaid expenditures (KFF, spending). Likewise, long-term care users, who are 5.9 percent of enrollees, consumed 41.8 percent of total Medicaid benefit spending for both institutional and non-institutional long-term services and supports (Thach and Wiener, 2018, p. 8). Its long-term care tail wags the Medicaid dog.

Medicaid spending on institutional (largely nursing home) care, which most people prefer to avoid (Riley, 2017³⁰), has abated in recent years remaining close to the amount spent in 2010 and actually declining two percent in 2016 (Eiken, 2018, p. i). Spending for home and community based care, which people greatly prefer (Lampkin and Barrett, 2015³¹), has accounted for almost all Medicaid long-term care spending growth in recent years, increasing 10 percent in 2016 alone (Ibid.). In fact, Medicaid home care spending for older adults and people with physical disabilities reached 45.2 percent, up from 40.2 percent in 2013 (Eiken, 2018, p. 13 and Table AS).

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Updated, Monday, January 27, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-004: LTC NEWS AND COMMENT

CMS to Merge Nursing Home Compare into Single, Cross-Continuum Database
Trump says he'd take 'take a look' at changing entitlements such as Medicare
Senior Living Faces Aggressive Litigation, Rising Insurance Costs in 2020
Some LTCI Issuers May Be Too Optimistic About Interest Rates: Fitch
How The Democratic Presidential Candidates Would Address Long-Term Care
Join Us for the Nuts & Bolts of Medicaid Planning Training
Burnout generation gap: Gen X healthcare workers fare worse than millennials, boomers
39% of adults in their 70s view Social Security as ‘a lifeline’
How to Survive as a Caregiver: Six Essential Tips
Long-Term Care Insurance Benefits Payments Rise: AALTCI
Understanding the Nursing Shortage

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Updated, Monday, January 20, 2020, 3:40 PM (Pacific)

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LTC E-ALERT #20-003: LTC NEWS AND COMMENT

What The 2020s Have In Store For Aging Boomers
NAIC Prepares to Collect State-by-State LTCI Rate Data
There are at least 4 different ways of aging, scientists say
Two moments on health care from the Democratic debate
40% of Older Americans Rely Solely on Social Security for Retirement Income
Families sending relatives with dementia to Thailand for care
Growing gap between what insurers and Medicare spend on hospital stays
New 'smart diaper' unveiled at CES 2020 alerts parents when their baby goes to the bathroom, monitors body temperature and urine content - and can even be used for seniors
Plan to Revamp Medicaid-Eligibility Checks Draws Criticism
The Many Ways of Coping With Alzheimer’s

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Updated, Monday, January 17, 2020, 9:00 AM (Pacific)

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LTC BULLET: MEDICAID AND LONG-TERM CARE

LTC Comment: We publish today the Center for Long-Term Care’s new flagship report titled “Medicaid and Long-Term Care.” Read it here after the ***news.***

*** We are aware of formatting problems in the new report, especially missing spaces. These occurred converting from Word to a .pdf. We’ll fix them, but in the meantime, the report is readable and we want to abide by the previously announced publication schedule. ***

*** ILTCI CONFERENCE NEWS: The 2020 Intercompany Long-Term Care Insurance Conference, scheduled for March 29 to April 1 in Denver, Colorado, has named its keynote speaker: Anders Sörman-Nilsson. He is a “global futurist and innovation strategist who helps leaders decode trends, decipher what’s next and turn provocative questions into proactive strategies.” That definitely sounds like something the private LTCI industry can use. Register for the conference here. Book your hotel before February 22. Early registration discounts ended January 16, but “sponsor applications” are still being accepted. ***

*** ILTCI CONFERENCE BACKGROUND: Organizers expect the highest attendance ever for this year’s conference. They have a new, semi-permanent byline for the annual meeting: “Inspire | Lead | Trust | Collaborate | Innovate.” The ILTCI conference has a long and distinguished history. Read all about it in our History of LTC Insurance Conferences with year-by-year summaries of each meeting, some with pictures and links to the more detailed contemporaneous reports. ***

LTC BULLET: MEDICAID AND LONG-TERM CARE

LTC Comment: So many questions plague the issue of long-term care. Our new report answers them all:

If long-term care is such a big risk and cost, why don’t people worry about it enough to prepare?
How did nursing homes become the main care venue when most people prefer home care?
Why does America fund long-term care through a welfare program?
Does Medicaid long-term care eligibility really require impoverishment?
How much income and how many assets can someone keep and still have Medicaid pay for long-term care?
Why do most analysts completely ignore the vast popular and legal literature on qualifying for Medicaid without spending down?
Is another compulsory government entitlement program our only option as most analysts and their studies insist?
Or could private LTC financing predominate if Medicaid became a better safety net for the poor?
Does anyone care anymore about America’s exploding deficit and debt? If not, why not, and so what?

Steve Moses answers all these questions in “Medicaid and Long-Term Care.” We provide the paper’s “Abstract” below and urge you to read the full paper here: http://www.centerltc.com/pubs/Medicaid_and_Long-Term_Care.pdf.

Abstract

Most long-term care scholarship analyzes these symptoms, without explaining their cause, and recommends expanding government’s role, usually by means of a new or expanded mandatory, tax-funded social insurance program. This paper takes a different tack, first explaining why the long-term care market has the problems it does and then suggesting how to remove their causes.

At the root of all long-term care problems is Medicaid, the dominant payer. By providing only nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds, Medicaid (1) exploded in cost, (2) created institutional bias, (3) caused access and quality problems by paying providers too little, (4) enriched plaintiff’s attorneys with the resulting tort liability cases, (5) crowded out private markets for home care and long-term care insurance, and (6) kept poor people poor with punishing spend down rules, while (7) letting the affluent save and benefit through eligibility loopholes.

The key to fixing the problems that plague long-term care is to make Medicaid a better safety net for the poor while diverting the general public to private financing alternatives. This paper explains how to do that while reducing government funding and regulation, which arguably caused the long-term care problems in the first place.

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Updated, Monday, January 13, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-002: LTC NEWS AND COMMENT

Losing one night's sleep may increase risk factor for Alzheimer's, study says
Anticholinergic Drug Exposure and the Risk of Dementia
Health Savings Account Balances Show Continued Growth
US cancer death rate sees largest-ever single-year drop, report says
The Longevity Economy® Outlook: How people age 50 and older are fueling economic growth, stimulating jobs, and creating opportunities for all
FLTCIP 3.0: The Federal Long Term Care Insurance Program Benefit Booklet
Long-Term Care Protection Without Additional Cost
Senior living trends: Prepare for historic changes in 2020
Bundles cut spending on joint replacements, but not for other conditions
How Much Do Medicare Beneficiaries Spend Out of Pocket on Health Care?
The Health Care Promises We Cannot Keep
Older People Need Geriatricians. Where Will They Come From?
VA pilot program aims to cut nursing home care costs

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Updated, Monday, January 6, 2020, 9:00 AM (Pacific)

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LTC E-ALERT #20-001: LTC NEWS AND COMMENT

“Traveling the loneliest road,” by Eli Saslow, Washington Post
“7 Rules For Wealth: #3 Long-Term Care End Run,” by William Baldwin, Forbes
“HCBS, caregivers focus of presidential candidate Cory Booker’s long-term care plan,” by Lois A. Bowers, McKnight’s Senior Living
“New York slashing Medicaid payments by 1% as state faces massive $6 billion budget deficit,” by Dennis Slattery, New York Post
“The 2020s Will Be A Tipping Point For Elder Care In The US,” by Howard Gleckman, Forbes
“More Doubt That Plaques in the Brain Cause Alzheimer's,” by E.J. Mundell, HealthDay
“Opinion: Numbers that older workers and retirees need to know in 2020,” by Paul Brandus, MarketWatch
“Americans smoking less, but diabetes and obesity are increasing,” by Scott Wooldridge, BenefitsPRO
“2020 SSI and Spousal Impoverishment Standards,” Centers for Medicare and Medicaid Services
“Medicaid financing scheme endangers federal-state partnership,” by Red Jahncke, The Hill
“Big senior living stories of 2019,” by Lois A. Bowers, McKnight’s Senior Living
“Genworth and Oceanwide Extend Merger Agreement,” Cision PRNewswire
“LTCi: Bringing It All Back Home,” by Gordon Saunders, Advisor Magazine
“Alzheimer’s Tests Soon May Be Common. Should You Get One?,” by Gina Kolata, New York Times

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Updated, Friday, January 3, 2020, 9:00 AM (Pacific)

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LTC Comment: Officials and analysts attack the symptoms of long-term care dysfunction (exploding costs, nursing home bias, and poor quality) without addressing the cause (easy access to Medicaid for consumers and strong incentives for states to maximize federal Medicaid matching funds). Everything follows from that observation after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, whose revolutionary “Range of Exposure” tool projects clients’ likelihood (joint for a couple) of spending $100,000; $250K; $500K or over $1,000,000 on LTC, based on their personal characteristics, and estimates how much of their cost in each range would be covered by various traditional or linked insurance designs. He also offers other ways to educate and help clients make informed final decisions in 15-20 minutes! Change work-site LTCi from a series of proposal deliveries to an interactive consultation! Claude is the lead author of Milliman’s annual Broker World LTCi Survey & a past Chair of the Center for Long-Term Care Financing. You can reach him at 913-403-5824 or claude.thau@gmail.com. ***

*** MEDICAID AND LONG-TERM CARE: Our monograph of that title will be published later this month. It fully develops and documents the argument I make in the following speech. Stay tuned. Pre-publication copies of the monograph are available now to Center members upon request. Just email smoses@centerltc.com. ***

LTC BULLET: WHERE LONG-TERM CARE WENT WRONG AND HOW TO FIX IT

LTC Comment: I’m in Orlando today speaking at the Cato Institute’s State Health Policy Summit. My topic is “How to Provide Long-Term Care to a Burgeoning Elderly Population.” The first point I make about that subject is that providing long-term care isn’t the problem. Paying for it is. If it were not for our thoroughly dysfunctional long-term care financing system, we’d have plenty of money and willing providers to render top quality care.

So, what’s wrong with long-term care financing? How did it get that way? And what has to change to fix it? That’s the gist of my talk. Here’s the text:

“How to Provide Long-Term Care to a Burgeoning Elderly Population”
by
Stephen A. Moses, Center for Long-Term Care Reform
for
The Cato Institute’s State Health Policy Summit,
in Orlando, Florida, January 3, 2020

First of all, providing long-term care isn’t the problem. Paying for it is.

So, I’m going to define the long-term care financing problem. Then I will explain how and why it exists with some historical background. Finally I will identify and explain the fundamental obstacle to solving the problem, which is: both government and scholars have focused corrective action on symptoms of the problem instead of its causes.

If we change our focus to causes instead of symptoms, the long-term care problem is easily solved. You’ll see what I mean.

When we’re finished today, especially if you go on to read the monograph “Medicaid and Long-Term Care,” you will understand the long-term care financing crisis and what has to change to resolve it.

Long-term care includes a broad range of social, medical and custodial services that caregivers provide for three months or longer to help disabled people of any age perform activities of daily living such as eating, bathing, and toileting. Our focus is long-term care for the aged.

Let’s stipulate to the magnitude of the problem to save time. You know we have an aging baby boom generation. They’re already stressing Medicare and Social Security. They’ll overwhelm Medicaid, the dominant long-term care payer, when they start turning 85 in 2031. The U.S. age 85+ population, the cohort with the highest long-term care need, will triple between 2015 and 2050.

After age 65, people have a 70% probability of needing extended care, a 48% chance of needing paid care at an average lifetime cost of $138,100, but a 2% probability for everyone and a 5% probability for long-term care users of needing ten years or more costing hundreds of thousands, even millions of dollars. This disproportion makes the risk highly insurable, though insurance has been minimal so far, for reasons I’ll explain.

Care is very expensive wherever received: Nursing homes average $7,500 to $8,500 per month; Assisted Living costs $4,000 or more per month; home care runs about $4,195.

The U.S. spent $366.0 billion on long-term care in 2016. Families and friends provided an additional half-a-trillion dollars’ worth of unpaid care, at huge financial and emotional distress.

Clearly the juxtaposition of these risks with the demographic Age Wave makes the future of long-term care financing highly problematical.

So far, the U.S. has limped along with a severely dysfunctional long-term care service delivery and financing system.

Government pays for over 70% of long-term care, mostly through Medicaid, a means-tested public welfare program. Costs are high and rapidly increasing. The system has a strong nursing home bias even though everyone dislikes nursing homes. Access to preferred home care is very limited. Low reimbursements from Medicaid prevail, often below the cost of providing the care. Quality is dubious in all care venues. The resultant tort liability is astronomical. Private payers at market rates have dwindled as Medicaid has expanded to pay for 2/3 of nursing home residents. Neither home equity conversion nor private long-term care insurance pays for much long-term care. It really is a mess!

What went wrong? Here’s some history.

Long ago, we had indoor relief, that is, poor houses, in the U.S. But that system gave way by the 20^th century to cash benefits for the elderly from Old Age Assistance and Social Security. With government cash in hand, seniors had money to purchase residential care. So nursing homes profited and proliferated.

In 1960, the Medical Assistance for the Aged (MAA) program made health care available to people sixty-five and older who had low or moderate incomes. It also required states to match available federal funds. That was a huge new source of funding for long-term care, further subsidizing the nursing home business.

The same Kerr Mills statute radically changed eligibility for nursing home care by adding people who “were not sufficiently needy to qualify for cash assistance to cover their ordinary expenses, but who were unable to pay their medical expenses.” Those are the so-called medically needy recipients.

In 1965, the Medicaid program institutionalized these features but also eliminated strict eligibility criteria, transfer of assets restrictions, and mandatory liens which had been commonplace before. Medicaid had no restrictions on asset transfers to qualify until 1980. Anyone could give away everything and qualify immediately.

These features—to wit, medically needy eligibility exclusively for nursing home care, which included normal costs of living as well as health care, funded with virtually unlimited federal and state matching funds and with no limits on asset transfers to qualify—guaranteed Medicaid would explode in cost from the outset, perpetrate a nursing home bias in long-term care services, discourage development of a private home and community-based care market, and crowd out private long-term care financing sources. That’s exactly what it did.

The government responded by attacking the symptoms (exploding costs, nursing home bias, and poor quality), instead of the causes (i.e., strong financial incentives for states to maximize Medicaid spending and the perverse incentives encouraging consumers to rely on Medicaid rather than pay privately for long-term care.) For example:

State governments capped nursing home supply by requiring Certificates of Need on the principle “they can’t charge us for a bed that doesn’t exist.”

But capping supply, just made nursing homes charge more. So Medicaid capped reimbursement driving the Medicaid rate down to only 70% of the private pay rate on average.

But higher private-pay rates drove private payers to find ways to qualify for Medicaid. Consequently, private-pay nursing home revenue plummeted from 49% in 1970 to 27% in 2017.

Nursing home occupancy skyrocketed to 95% in the 1980s because beds were easy to fill if owners were willing to accept Medicaid’s low reimbursement rates.

But low rates and heavy demand led to poor quality. So Congress passed the Omnibus Budget Reconciliation Act of 1987 demanding better care, more caregivers and added training, but without providing more funding.

Caught between the rock of inadequate reimbursement and the hard place of mandatory quality, nursing homes sued under the 1980 Boren Amendment, which ensured at least minimal reimbursement levels. They usually won. So Congress repealed the Boren Amendment leaving no floor under Medicaid reimbursements.

Several congresses and presidents tried to control exploding Medicaid eligibility by closing eligibility loopholes and requiring estate recoveries. When nothing worked, Speaker Gingrich and President Clinton backed legislation in 1996 making it a crime to transfer assets to qualify for Medicaid. But opposition to this “Throw Granny in Jail” law got it replaced one year later by the “Throw Granny’s Lawyer in Jail” law. Neither approach succeeded; easy access to Medicaid long-term care continued.

Next Medicaid tried to save money by “rebalancing” from expensive nursing home care to presumably cheaper home care but they eventually learned home care tends only to delay institutionalization and ends up costing more in the long run. Government funding for combined institutional and home care continued to increase year after year.

Government policy tried to encourage private long-term care insurance but failed at that too. Long-Term Care Partnerships, designed to forgive spend down liability equal to the amount of insurance purchased and used, didn’t work because there was no real spend down requirement in the first place. A tax deduction for premiums when total medical expenses exceeded 7.5% of adjusted gross income didn’t work because people who qualified financially were too sick to qualify medically for long-term care insurance.

The 2010 ObamaCare law introduced the CLASS Act designed to entice people into voluntary public long-term care insurance, but that turned out to be another unfundable debacle, quickly repealed.

The latest government interference in the long-term care financing market is centrally planned reimbursement reform. They’re trying to convert from traditional fee-for-service to so-called value-based reimbursement. Managed care, prospective payment and bundling are the watch words of the day. They add an extra middleman and more regulations between providers and patients who are already severed by the Medicaid bureaucracy.

Why does this heavy dependency on Medicaid matter? Medicaid is the sine qua non of the long-term care financing problem.

Medicaid spending is not equally proportioned among recipients. Women, children and working age adults comprise 77% of Medicaid enrollees, but consume only 38% of spending while the aged and disabled are 23% of enrollees and consume 61% of expenditures.

Long-term care users, who are only 6% of enrollees, consumed 42% of total Medicaid benefit spending for both institutional and non-institutional long-term care.

Clearly, Medicaid is the tail that wags the long-term care dog.

What do scholars and analysts have to say about Medicaid and the long-term care financing crisis? They’ve approached these topics in the same way government did. They bewail the symptoms of the problem (high cost, nursing home bias and poor care) without analyzing or addressing the causes, which are easy access for consumers to Medicaid and strong incentives for states to maximize federal Medicaid matching payments.

I cite many examples of this analytical irresponsibility in the “Medicaid and Long-Term Care” monograph. These include studies, commission reports, and articles from the Pepper Commission in the 1990s to a barrage of publications by think tanks, advocacy organizations and Health Affairs articles over the past few years.

Besides focusing on symptoms and ignoring causes, this scholarship also has in common a misunderstanding and underestimation of the impact of Medicaid long-term care eligibility. That is the missing link we must understand to crack this issue wide open.

Nearly all scholars, not to mention politicians and bureaucrats, assume Medicaid long-term care eligibility requires impoverishment. They cite rules that seem to say eligibility requires retention of no more than $2,000 in assets and $723 per month of income. That’s literally true, but it almost never applies because of other more generous rules that supersede.

The rule of thumb is that anyone with income below the cost of a nursing home can qualify for Medicaid long-term care benefits based on income. That’s because most states apply “medically needy” rules allowing people to deduct their actual medical and long-term care expenses from their income in order to qualify. As nursing homes are very expensive, most middle class people qualify easily based on income.

On the asset side, retainable wealth is virtually unlimited. Besides the $2,000 everyone can keep, federal Medicaid rules allow recipients to retain home equity of at least $595,000 and up to $893,000 in some states. Also, regardless of value, recipients may retain one income-producing business, their Individual Retirement Accounts, one automobile, personal effects including heirlooms, term life insurance, and prepaid burial plans. Mandatory estate recovery, introduced in 1993, is easy to dodge.

Married couples get special consideration. At-home spouses may retain a Community Spouse Resource Allowance of half the couple's joint assets up to $128,640. The Minimum Monthly Maintenance Needs Allowance allows the community spouse to receive up to $3,216 of the Medicaid spouse’s income. These allowances increase annually with inflation.

Self-help books and articles on how to take advantage of Medicaid’s generous long-term care eligibility rules abound. State Medicaid eligibility workers are often eager to help applicants find ways to qualify while minimizing spend down for their care.

Beyond the ubiquitous consumer information on Medicaid planning, there is a large and always expanding professional legal literature on the topic. I give many examples of the popular and legal literature on qualifying for Medicaid in the “Medicaid and Long-Term Care” monograph and in dozens of national and state-level studies available at www.centerltc.com.

Strangely, however, most long-term care analysts ignore these easy pathways to Medicaid long-term care eligibility. Why?

An easy explanation is ideological bias. As they ignore causes and focus on symptoms, analysts invariably recommend more government funding and regulations to solve problems that, as we’ve shown, were actually caused by excessive government funding and regulations.

How and why they do this is highly nuanced. They evade and equivocate on key concepts and facts. For example:

Impoverishment: They say things like “Medicaid only covers the long-term care costs of the indigent.” Synonyms for “indigent” include “poor, impecunious, destitute, penniless, poverty-stricken, down and out, pauperized, and without a penny to one's name.” Given Medicaid’s generous income and asset eligibility allowances described above, saying Medicaid requires indigence is obviously false.

Spend down: Analysts routinely claim applicants must spend down their assets to qualify for Medicaid. But there is no requirement to spend down assets for care. Applicants can spend down unlimited amounts for any good or service for which they receive market value, including a lavish birthday party or world travel. Applicants can also purchase unlimited exempt assets, like a new car or more expensive home. I give many examples in the monograph. Spend down studies from 30 years ago and more recently purport to document spend down, but they only prove people have transitioned to Medicaid eligibility, not that they spent down for care.

Asset decumulation: Research shows asset decumulation in old age is much less than economic models predict. People hold on to their assets tenaciously until just before death. Medicaid’s generous income and asset rules enable them to do this even if they need long-term care. The fact that Medicaid offsets upwards of one quarter of the lifetime medical and long-term care expenses of high income households is staggering and belies the common presumption that people must spend down into impoverishment to obtain benefits.

Median wealth: Analysts focus on people with median or less income and assets, but they routinely evade the more interesting questions of whether and how people with much higher wealth qualify for Medicaid. I show in the paper how most Medicare beneficiaries with income and assets above the median qualify for Medicaid if they need long-term care without spending down assets significantly.

Medicaid planning: While most analysts ignore the role of sophisticated legal self-impoverishment to qualify for Medicaid, if they do mention this common practice, they focus only on “asset transfers.” Asset transfers are not insignificant as they cost Medicaid as much as $1.7 billion per year. But they are not nearly as common as other Medicaid planning techniques such as purchasing exempt assets like a car or house, setting up a Medicaid Asset Protection Trust, or creating a Medicaid-friendly annuity. Medicaid planning is far more important than most analysts acknowledge but formal Medicaid planning itself pales in significance compared to the basic eligibility rules that allow most middle class people to qualify without employing sophisticated legal machinations.

Out-of-Pocket Expenditures: Many analysts overestimate out-of-pocket expenditures in order to promote the need for more government spending. They claim half the cost of long-term care is paid out of pocket. They make that claim by including room and board expenses in residential care settings—costs that people would incur whether they need long-term care or not—and by excluding Medicare post-acute care expenditures, which are critical to sustain Medicaid’s viability as the dominant long-term care financing source. Actual out-of-pocket expenditures are closer to 25% and half of those are spend-through of Social Security income by people already on Medicaid.

Faulty data: When economists and health policy analysts claim that older people approaching the need for long-term care retain few assets and spend down rapidly, they generally draw their evidence from survey data provided by the Health and Retirement Study (HRS) and its auxiliary, the Asset and Health Dynamics among the Oldest Old (AHEAD) study. But these data sources do not include actual assets spent for care. They are based on self-reported information that people have very strong incentives to misrepresent. I explain in the monograph why the HRS and AHEAD data cannot be trusted.

So what evidence can I adduce that Medicaid long-term care eligibility is routinely achieved without significant spend down of assets either because of Medicaid’s basic eligibility rules or with the help of sophisticated Medicaid planning?

Anecdotal evidence abounds, but hard empirical evidence is very limited, because analysts and think tanks avoid the research that needs to be done to establish the facts.

I recount such anecdotal and empirical evidence as does exist in the monograph. I’ve also personally conducted many national and state-level studies available at www.centerltc.com that estimate the incidence of Medicaid planning. I also quote state Medicaid eligibility workers in these studies about their anger and frustration because it’s hard for them to qualify poor people for care, while the middle class and affluent qualify easily, often with flawless applications and documentation prepared by their law firms.

Only one promising empirical study has been done so far. But GAO downplayed its findings and completely missed their significance.

In 2014, the Government Accountability Office analyzed a random, but non-generalizable, sample of 294 Medicaid nursing home applications in two counties in each of three states: Florida, New York, and South Carolina. The summary results are telling:

“GAO identified four main methods used by applicants to reduce their countable assets—income or resources—and qualify for Medicaid coverage: 1. spending countable resources on goods and services that are not countable towards financial eligibility …; 2. converting countable resources into noncountable resources that generate an income stream for the applicant, such as an annuity or promissory note; 3. giving away countable assets as a gift to another individual …; and 4. for married applicants, increasing the amount of assets a spouse remaining in the community can retain, such as through the purchase of an annuity.” (GAO, 2014, unnumbered “GAO Highlights” page).

This is exactly what we would expect, but when GAO recounts the magnitude of these practices, they largely miss their significance.

For example, nearly 75% of applicants owned non-countable resources; the median amount of which was $12,530. If generalizable nationally, which it’s not, 665,700 Medicaid nursing home residents sheltered over $8.3 billion in non-countable resources or 42.4 percent of the $19.7 billion Medicaid paid for their nursing home care.

39% of GAO’s sample owned burial contracts and prepaid funeral arrangements with a median value of $9,311. If generalizable nationally, $3.2 billion or 6.3% of total Medicaid nursing home expenditures are diverted from funding long-term care to relieving families of the final expenses for their loved ones. This is a bonanza for the funeral industry and for heirs.

GAO found 44% of approved applicants had between $2,501 and $100,000 in total resources, and 14% had over $100,000 in total resources. 887,598 nursing home residents receive Medicaid. If generalizable nationwide and 14% of them, or 124,264 recipients, possessed $100,000 or more in non-countable resources, that is at least $12.4 billion or 3.4 times the $3.7 billion Medicaid spent for their nursing facility care.

GAO found median home equity to be $50,000, ranging from $0 to $700,000, among the 51 applicants (out of 91 total homeowners or 31 percent of the sample) for whom they were able to determine it. Most home equity is non-countable, up to as much as $893,000 in some states as of 2020. Thus 100 percent of their sample’s home equity was non-countable.

If 31% of 887,598 Medicaid nursing home recipients nationwide or 275,155 recipients own homes with a median equity value of $50,000, then at least $13.8 billion worth of their home equity is non-countable, a figure that is 1.7 times the annual $8.1 billion cost of their care.

Did it not behoove GAO to dig a little deeper? How much money could Medicaid save by making nursing facility care available only after home equity is spent down by means of private or commercial home equity conversion methods?

GAO also failed to develop the implications of similar findings for other Medicaid planning techniques such as personal care contracts, spousal refusal, annuities, and reverse half-a-loaf strategies.

Finally, GAO acknowledged their analysis was based entirely on case records. No further verification was done. This totally discredits their limited findings because state and federal re-reviews of welfare cases historically have shown substantial error rates in case records when they are verified externally and thoroughly.

Bottom line, this kind of study should be done on a nationally generalizable basis with complete external verification of case records by checking bank records, property ownership, property transfer and IRS records. Until we conduct such a study, the true financial impact of easy access to Medicaid long-term care will remain unknown.

Ramifications: What does all this mean? If it’s not a catastrophic poverty-maker, what is Medicaid?

1.     By making nursing homes virtually free in the mid-1960s, Medicaid locked institutional bias into the long-term care system, crowded out a private market for the home care seniors prefer, and trapped the WW II generation in sterile, welfare-financed nursing facilities.

2.     By reimbursing nursing homes less than the cost of care, Medicaid guaranteed America’s long-term care service delivery system would suffer serious access and quality problems.

3.     By underfunding most long-term care providers—leading to doubtful quality—Medicaid incentivized plaintiffs’ lawyers to launch giant tort liability lawsuits, extract massive financial penalties, and further undercut providers’ ability to offer quality care.

4.     By making public financing of expensive long-term care available after the insurable event occurred, Medicaid discouraged early and responsible long-term care planning and crowded out the market for private long-term care insurance.

5.     By compelling impoverished citizens to spend down what little income and savings they possessed in order to qualify for long-term care benefits, Medicaid discouraged accumulation and growth of savings among the poor, reducing their incentives to improve their stations in life.

6.     By allowing affluent people to access subsidized long-term care benefits late in life, Medicaid encouraged accumulation and growth of savings among the rich who could pass their estates to their heirs whether they were stricken by high long-term care expenditures or not, contributing to inequality.

Policy recommendations: The cause of long-term care problems is easy and elastic Medicaid financial eligibility combined with generous federal matching funds that induce greater Medicaid spending by states. Corrective action must address those causes if it is to effect improvements in the symptoms of exploding costs, institutional bias and poor quality. The solution is not complicated:

1.     Cap federal Medicaid long-term care matching funds for states.

2.     Allow states more control of Medicaid long-term care financial eligibility so they can target resources to the truly needy and encourage others to save, invest or insure for long-term care

3.     Eliminate or greatly reduce Medicaid’s home equity exemption. Let people keep and live in their homes, but when the last exempt surviving relative dies, recover all costs from estates so Medicaid does not continue giving windfalls to heirs for ignoring long-term care planning. Finally …

4.     We should redefine the problem: Recent research suggests how we might reconceptualize the quandary we are in so that it is not such a huge challenge and may in fact be amenable to a market-based solution.

a.     For example, 52% of Americans turning 65 today will develop a disability serious enough to require long-term care, although most will need assistance for less than two years. On average, an American turning 65 today will incur $138,100 in future long-term care costs, which could be financed by setting aside $70,000 today, given the time-value of money. That’s not so daunting. Home equity conversion could cover that cost for many if Medicaid didn’t exempt so much home equity.

b.     In June 2019, Johnson and Wang found that 74% of seniors could fund at least two years of a moderate amount of paid home care if they liquidated all of their assets, and 58% could fund at least two years of an extensive amount of paid home care. Furthermore: “Nearly nine in ten older adults have enough resources, including income and wealth, to cover assisted living expenses for two years.” So, the problem is much more manageable than we thought. All we have to do is persuade people to liquidate all their assets. That obviously won’t happen until we eliminate Medicaid’s perverse incentives that discourage paying privately and encourage denial of long-term care risk and cost.

c.     The National Investment Center (NIC) recently reported that reducing the annual cost of seniors housing by $15,000, from $60,000 to $45,000 per year, would expand the middle market for seniors housing by 3.6 million individuals enabling 71% of middle-income seniors to afford the product. Consumers could find that extra $15,000 in very inexpensive private LTCI if public policy didn’t choke the long-term care insurance market.

d.     Finally, a Cato Institute Policy Analysis reports that only about 2% of today’s population lives in poverty, well below the 11% to 15% that has been reported during the past five decades.

How can that be? “By design, the official estimates of income inequality and poverty omit significant government transfer payments to low-income households; they also ignore taxes paid by households.”

What is the bottom line? “The net effect is that pretax data overstate the true income of upper-income households by as much as 50 percent, and missing transfers understate the true income of lower-income households by a factor of two or more” (Ibid., p. 4).

The rich are poorer and the poor, richer than we thought. “More than 50 years after the United States declared the War on Poverty, poverty is almost entirely gone.”

Broken rhythm of reform: If this is all so obvious, why aren’t the necessary reforms being implemented?

Progress toward improving Medicaid long-term care for the poor while diverting others to private pay options usually occurs when state and federal budgets are tight as in recessions. That’s when we got mandatory estate recovery and closed some eligibility loopholes in the Omnibus Budget Reconciliation Act of 1993. The same happened after the recession of the early 2000s when the Deficit Reduction Act of 2005 passed putting the first cap ever on the home equity exemption.

But we’ve had no further progress since the DRA ’05, despite the Great Recession of 2008. Why?

We’ve experienced much slower, steadier economic recovery this time than before. The Federal Reserve forced interest rates artificially to near zero, which encouraged more deficit spending. Irresponsible fiscal policy sustained excessive Medicaid long-term care spending and promoted private mal-investment. Nowadays, no one cares about burgeoning debt. We’ve blown up a huge economic bubble that could burst at any time.

Simultaneously the Age Wave is cresting and about to crash, making the situation truly ominous as the second third of this century approaches.
a.     Boomers started taking Social Security at age 62 in 2008
b.     At age 65 in 2011 they sent Social Security cash flow negative
c.     Boomers started taking Required Minimum Distributions from their retirement accounts in 2016, depleting private investment capital
d.     Boomers reach the critical age (85 years plus) of rising long-term care needs in 2031, around the time Medicare (2026) and Social Security (2035) are expected to deplete their trust funds, forcing them to reduce benefits.

This whole house of cards is going to come crashing down by 2031.

My Conclusion: The best course is to reduce states’ dependency on federal funds, target scarce public resources to people who need them most, and let free market incentives and products take care of the rest.

The prospects of that happening at present are nil. So the single most important thing we can do for now is conduct generalizable studies of Medicaid long-term care cases at the state and national levels to demonstrate exactly how much damage Medicaid does to the long-term care system and to show how much could be saved by fixing it.

Then, when the current asset bubble bursts and state and federal budgets need relief, we’ll have the data to demonstrate where Medicaid went wrong and how to fix its most expensive component, long-term care.

Thank you.

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Updated, Monday, December 23, 2019, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #19-047: LTC NEWS AND COMMENT

A Free Market Solution Within Medicare
Parenting Your Aging Parents When They Don’t Want Help
More payers jump into value-based Medicare Advantage plans in 2020
Continued Uncertainty As Fifth Circuit Strikes Mandate, Remands On Rest Of ACA
Projected U.S. State-Level Prevalence of Adult Obesity and Severe Obesity
Election 2020: How Pete Buttigieg’s Plan Could Help Family Caregivers
MedPAC Commissioner: Underfunding Turns Medicaid-Heavy SNFs into ‘7th Circle of Hell’
Out-of-Pocket Costs for Medicare Recipients Will Rise in New Year
More Americans dying at home, and ‘home’ may include assisted living
The Hidden Drug Epidemic Among Older People
Frail Older Patients Struggle After Even Minor Operations

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Updated, Friday, December 20, 2019, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC, 2018 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 2018 statistics on its website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical. Click on “NHE Tables.” Then click on the data tables of interest, Tables 14 and 15 for our purposes to “unzip” them.

Health Affairs has published a summary and analysis of the new data titled “National Health Care Spending in 2018: Growth Driven by Accelerations in Medicare and Private Insurance Spending." Health Affairs subscribers can access the full text of that article here. Others can purchase it. The “Abstract” is available free.

Following is our annual analysis of the latest nursing home and home health care data.*

Heads Up: This may be the most important LTC Bullet we publish all year. It is the seventeenth in a row we’ve done annually to analyze the federal government’s enormous, and we argue, often detrimental, impact on long-term care financing. If you'd like to see the earlier versions, go here and search for “So What if the Government Pays for Most LTC.” You’ll find our yearly analyses of the data going all the way back to "So What If the Government Pays for Most LTC, 2002 Data Update."

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"So What If the Government Pays for Most LTC, 2018 Data Update"
by
Stephen A. Moses

Nursing Homes

America spent $168.5 billion on nursing facilities and continuing care retirement communities in 2018. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 48 years (from 26.8% in 1970 to 52.2% in 2018, up 25.4 % of the total) while out-of-pocket costs have declined (from 49.2% in 1970 to 26.6% in 2018, down 22.6% 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 1970-2018.

So What? Consumers' liability for nursing home and CCRC costs has declined by nearly half, down 45.9% in the past almost five decades while the share paid by Medicaid and Medicare has nearly doubled, up 94.8%.

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 $585,000 and in some states up to $878,000 of home equity (as of 1/1/19). 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 (29.6% of the dollars in 2018), it covers over two-thirds (67.6%) of all nursing home patient days.

No wonder the public is not as worried about nursing home costs as they would be if they were more at risk for the cost of their care. No wonder nursing homes risk insolvency when so much of their revenue comes from Medicaid, often at reimbursement rates less than the cost of providing the care. “With states setting the Medicaid rates paid to nursing centers, there is a wide variation in the percentage of costs covered by the rates. In 2015, the coverage ranged from a low of 73.5 percent to a high of 100 percent. A similar range exists with the 2017 projected shortfall across the states.” Source: A Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Private Health Insurance

Don't be fooled by the 10.1% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2018. That category does not include private long-term care insurance. (See category definitions here.) No one knows how much LTC insurance pays toward nursing home care, because many LTCI policies pay beneficiaries who then pay the nursing homes. Thus, a large proportion of insurance payments for nursing home care gets reported as if it were "out-of-pocket" payments. This fact further inflates the out-of-pocket figure artificially.

Assisted Living

How does all this affect assisted living facilities? ALFs are 81% private pay, 19% Medicaid (Source: AHCA/NCAL Data) and they cost an average of $48,612 per year (Source: Genworth Cost of Care Survey 2019). 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 $585,000 or $878,000 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.

Home Health Care

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $102.2 billion on home health care in 2018. Medicare (39.4%) and Medicaid (35.1%) paid 74.5% of this total and private insurance paid 11.9%. Only 9.9% 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 1970-2018.

So What? Only one out of every ten dollars spent on home health care comes out of the pockets of patients and a large portion of that comes from the income (not assets) of people already on Medicaid.

No wonder the public does not feel the sense of urgency about this risk that they would if they were more at risk for the cost of their care.

Note especially:

“How to Fix Long-Term Care Financing” (2017), at http://www.centerltc.com/pubs/How-To-Fix-Long-Term-Care-Financing.pdf

“CASSANDRA’S QUANDARY: The Future of Long-Term Care” (2016), at http://www.centerltc.com/pubs/FIA-Cassandra-Quandry.pdf.

“How to Fix Long-Term Care,” at http://www.centerltc.com/BriefingPapers/Overview.htm;

"Medi-Cal Long-Term Care: Safety Net or Hammock?" at http://www.centerltc.com/pubs/Medi-Cal_LTC--Safety_Net_or_Hammock.pdf;

"The LTC Graduate Seminar Transcript" here (requires password, contact smoses@centerltc.com);

"Aging America's Achilles' Heel: Medicaid Long-Term Care" at http://www.centerltc.com/AgingAmericasAchillesHeel.pdf; and

"The Realist's Guide to Medicaid and Long-Term Care" at http://www.centerltc.org/realistsguide.pdf.

In the Deficit Reduction Act of 2005, Congress took some significant steps toward addressing these problems. A cap was placed for the first time on Medicaid's home equity exemption and several of the more egregious Medicaid planning abuses were ended. But much more remains to be done. With the Age Wave starting to crest and threatening to crash over the next two decades, we can only hope it isn't too late already.

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Updated, Monday, December 16, 2019, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-046: LTC NEWS AND COMMENT

Federal Watchdog Questions Billions of Dollars Paid to Private Medicare Plans
LTCG to Deliver Fall Prevention Services to CalPERS Long Term Care Policyholders
Medicaid’s Share of Nursing Home Revenue, Resident Days Hits Record High as Medicare Drops to Historic Low
CIPR Fall Program: The State of Long-Term Care Insurance
An 'Epidemic of Loneliness' in America? Maybe Not
Canada Throws China Oceanwide-Genworth Deal a Lifeline
Move from fee-for-service to managed care ‘a disaster’ for long-term care, Parkinson says
The Medicare Change That Could Cost Your Clients Thousands of Dollars
Alzheimer's incidence varies significantly by location
Stop coming up with ideas to raid retirement savings
Spending Growth on Nursing Home Care Drops to Slowest Rate Since 2013 — Even as Overall Health Outlays Accelerate
Silver wave’ will affect some real estate markets more than others as older adults move to senior living, analysis suggests
The Unending Indignities of Alzheimer’s
Bill would let people tap retirement accounts for long-term care insurance
Assisted living threatened by looming federal expirations
Medicaid initiatives that push long-term home, community care over nursing homes could end this year

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Updated, Friday, December 6, 2019, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: PETE FOR LTC?

LTC Comment: Give Mayor Pete credit for publishing the most comprehensive long-term care plan of all the presidential candidates, but it could do more harm than good as we explain after the ***news.***

*** ILTCI 2020 registration is now open! Register here. Organizers report: “On your registration confirmation page/email you will see a link to book your hotel room. If you use that link some info will be prefilled for you. Please book your hotel as soon as possible. Our room block rate of $129/night is only available through Feb 22, 2020 or when our block fills up.” Jump on this so you won’t find “no room at the inn.” Not sure this conference is for you? Read our next item. ***

*** HISTORY OF LTC INSURANCE CONFERENCES published. The report we promised in “LTC Bullet: History of LTC Insurance Conferences,” November 22, 2019, is up. Read the 65-page History of LTC Insurance Conferences (2019) or just browse. Find pictures of LTCI’s leading lights from a couple decades ago. Compare what people thought then with objective circumstances now. It was a real re-education for me compiling this material and I hope others enjoy, and maybe even learn, from it as I did. Some of the links in the report go the Center for Long-Term Care Reform’s members-only site, The Zone. To access one of these, you’ll need your user name and password. To get a UN and PW if you’re not yet a member, join. We’ll have you in The Zone immediately. Call or email 425-891-3640 or smoses@centerltc.com to begin. ***

*** MEDICAD AND LONG-TERM CARE. Around the end of the year, the Center for Long-Term Care Reform will publish a new report titled “Medicaid and Long-Term Care.” This study will explain what is wrong with the favored government takeover plan for long-term care including the one proposed by Mayor Pete described in today’s LTC Bullet. Our study will describe a far less onerous voluntary solution. For a pre-publication copy of “Medicaid and Long-Term Care,” join the Center here and contact the author at smoses@centerltc.com. You’ll have your copy by email within minutes of joining our campaign to fix long-term care. For a preview of what to expect see “LTC Bullet: The Battle Lines Are Drawn,” October 25, 2019.

LTC BULLET: PETE FOR LTC?

LTC Comment: Pete’s LTC plan is Section I of his overall prescription for “Dignity and Security in Retirement.” We’ll keep our focus on long-term care. But consider briefly “Section II: Economic Security for America’s Retirees” in which “Pete believes every American has the right to a secure retirement with a dignified standard of living.” That is a very dangerous principle, because for every positive good to which everyone has a “right,” others are obligated involuntarily to provide it. That’s the definition of slavery. True rights are only negative. You have the right to be secure in your person and property from force or fraud. Protecting that right is the proper role for government, not guaranteeing benefits for some while extorting others to pay for them.

Back to long-term care.

Pete: “Pete is proposing a new, historic long-term services and supports program to help cover the costs of long-term care for older Americans with a high level of need. To provide financial protection for those who have shorter-term needs or are in the early stages of long-term needs, Pete will strengthen the private long-term care insurance market and make Medicaid benefits more accessible.”

LTC Comment: Not a good start. He wants to pawn off short-term care to the insurance industry and make Medicaid even easier to get. The proper role of private insurance is to replace the small risk of catastrophic loss with the certainty of an affordable premium, not to help people save for an almost inevitable, but smaller care need. Easy access to Medicaid LTC benefits is the main reason consumers have been desensitized to LTC risk and remain unprepared for care costs. Making Medicaid even more “accessible” to middle class and affluent people would make this problem worse.

Pete: “Pete’s Long-Term Care America proposal would create a long-term care program to protect people over age 65 who require assistance with two or more activities of daily living, such as bathing or eating. Benefits would be worth $90 per day for as long as they need care, and kick in after an income-related waiting period. The cash benefit would come with requirements attached to ensure it is being used for high quality long-term services and supports and that the money isn’t perpetuating or undermining worker standards. This benefit will become ‘first payer,’ and can be used to cover the cost of hiring a home health aide for several hours a day, or offset the cost of assisted living or nursing home facilities. It will be inflation-adjusted and regionally-adjusted. Similar programs have been supported by the Long-Term Care Financing Collaborative (a diverse group of policy experts), and the Bipartisan Policy Center.”

LTC Comment: Ah-ha, Pete’s adopting the latest progressive scheme to replace CLASS. We critiqued this plan from the LTC Collaborative, Leading Age and the Bipartisan Policy Center in LTC Bullet: LTC at a Crossroads, June 3, 2016. Unlike CLASS, which was voluntary, and financially unsustainable, this new plan is compulsory and financially unsustainable. Pete has nothing to say about how to pay for it.

Pete: “Only a handful of insurers offer meaningful coverage policies, and the market has shrunk considerably in the last decade. The private long-term care insurance market is failing people. But because our government can set the rules by which private players operate, the government can change the rules.”

LTC Comment: Ominous. First government destroys the demand for LTC insurance by giving away what the industry is trying to sell for half a century. Then government forces interest rates to zero for a decade ruining the product’s profitability. Now government is here to help us by changing the rules and commandeering “private players” options. No thanks.

Pete: “Home care workers are often paid poverty wages. Last year, home care workers made an average of under $12 an hour.” So: “Set a $15 per hour minimum wage for everyone, including direct care workers.”

LTC Comment: The vast majority of home care workers making $12 an hour are dependent on Medicaid’s impecunious reimbursement levels. Artificially forcing the minimum wage up will only make the burden on nursing homes, assisted living facilities and home care agencies greater. They’ll be able to hire fewer caregivers so access and quality of care will suffer. Why is it that the last thing anyone considers about the caregiver problem is its cause, Medicaid?

Pete: “Reduce the financial burden of unpaid caregiving, including by ensuring working Americans have access to 12 weeks of comprehensive paid leave to take care of loved ones.”

LTC Comment: In other words, government can’t figure out how to fix this problem, so they pawn it off on the private sector.

Pete: “Medicaid accounts for a majority of national long-term services and supports spending—over $150 billion a year. Yet Medicaid services are generally only available to people with low incomes and assets, requiring middle-income people to impoverish themselves in order to access the benefit.”

LTC Comment: That is a preposterous statement. Medicaid’s generous LTC eligibility rules allow very high incomes (up to the cost of a nursing home) and virtually unlimited exempt assets. We’ve developed these facts in numerous national and state-level studies over the years. Find them here. If it were true that Medicaid required impoverishment for LTC, consumers would not be desensitized to the risk and cost of long-term care and they would be far more likely to plan responsibly for that risk much earlier. So, what would Pete do?

Pete: “Raise the asset and income limits for long-term services and supports through Medicaid. To qualify for Medicaid’s long-term care benefits, individuals can’t own more than about $2,000 in assets and need an income below $771 per month. This means that to access public long-term care services, older people often must push themselves into poverty. Pete will alleviate this burden on families by raising Medicaid’s asset limit for people who need long-term care to $10,000, and increasing the income limit by 300 percent, or $2,313 per month for an individual in 2019.”

LTC Comment: Smoke and mirrors. The $2,000 asset limit excludes exempt assets that are virtually unlimited. The $771 income limit ignores how virtually everyone can qualify for Medicaid LTC benefits based on income if most of their income is going to pay for their long-term care. So $8,000 per month of income is not disqualifying where nursing home costs are that high or higher. Raising these limits would only exacerbate the problem. The real problem that Medicaid co-opted long-term care demand by providing an easy pathway to care after the insurable event has already occurred. Using public funds to subsidize even further the LTC costs of people who should, could and would have planned responsibly for their own care if left to their own devices only further rewards the irresponsibility Medicaid has subsidized for decades.

Pete: “Make protections against spousal impoverishment permanent for individuals seeking longterm care through Medicaid. Spousal impoverishment rules protect a spouse from losing their home or income when their partner needs long-term care. Pete will permanently extend these protections so families can live with independence and dignity.”

LTC Comment: Spousal impoverishment protections for community spouses of institutionalized Medicaid recipients are already permanent. What Pete refers to here is the new benefit slipped into ObamaCare that is about to expire. It’s meant to encourage home care by allowing spouses to keep more of their Medicaid spouses’ income even if they’re living together at home. It is this benefit that has enabled Medicaid census in assisted living facilities to increase to 20 percent. It is one more way government makes it easier for people to ignore the risk of long-term care, avoid the premiums for private insurance, and still get radically subsidized care even at home or in assisted living.

Pete: “Bar Medicaid from taking families’ homes to pay for their long-term care. Under current law, states are required to seek repayment of Medicaid costs from the estates of individuals who received long-term care benefits prior to their deaths. This policy overwhelmingly punishes working- and middle-income Americans. Pete’s administration will eliminate estate recovery rules.”

LTC Comment: Medicaid does not take “families’ homes to pay for their long-term care.” Medicaid guarantees the right to retain a home even if the recipient is medically unable ever to return but expresses a subjective intent to return. Estate recovery occurs after the recipient dies and only after a non-Medicaid spouse dies later. The purpose of this policy was to prevent families who fail to help their parents prepare for long-term care risk and cost from reaping a windfall of tax-payer subsidized long-term care. How can we ever hope to engage young people in their own and their parents’ long-term care planning if we allow them to ignore the risk, take advantage of Medicaid, and receive large inheritances at public expense?

Pete: “Ensure everyone has the choice of receiving long-term care at home or in their community, including by eliminating Medicaid’s institutional bias.”

LTC Comment: I don’t think Pete understands just how hypocritical that statement is. Medicaid’s institutional bias is what caused the private home care market to remain stunted. The only way to get most people access to home care is to remove their dependency on Medicaid. In fact most of the problems our long-term care system faces are caused by excessive dependency on Medicaid for so long. Our new monograph “Medicaid and Long-Term Care” (prepublication copies available to Center members now) explains it this way

By providing only nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds, Medicaid (1) exploded in cost, (2) created institutional bias, (3) caused access and quality problems by paying providers too little, (4) enriched plaintiff’s attorneys with the resulting tort liability cases, (5) crowded out private markets for home care and long-term care insurance, and (6) kept poor people poor with punishing spend down rules, while (7) letting the affluent save and benefit through eligibility loopholes. The key to fixing the problems that plague long-term care is to make Medicaid a better safety net for the poor while diverting the general public to private financing alternatives. This paper explains how to do that while reducing government funding and regulation, which arguably caused the long-term care problems in the first place.

Ironically, government caused most of the problems Mayor Pete seeks to solve … with even more, very much more government intervention, regulation and funding. It’s the same primrose path that led us into the current mess and it spirals dangerously downward from here.

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Updated, Monday, December 2, 2019, 7:10 PM (Pacific)

Seattle—

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LTC E-ALERT #19-045: LTC NEWS AND COMMENT

Some nursing homes are illegally evicting elderly and disabled residents who can't afford to pay
Jeffrey Brown: Saving for Retirement 'Only Half the Puzzle'
About the Certification for Long-Term Care (CLTC)
Presidential candidate’s long-term care proposal calls for increased wages, minimum staffing requirements
60 Seconds with Steve Monroe
Wash. State Continues Public LTCI Effort, in Spite of Ballot Measure Results
Must-Know Statistics About Long-Term Care: 2019 Edition
Buttigieg Proposes An Ambitious—And Much Needed— Long-Term Care Reform Plan
Ransomware attack prevents 110 nursing homes from paying employees, ordering meds
Free Long-Term Care for All?
Why the Median Skilled Nursing Margin Fell Below 0% — and How Operators Can Come Up from Underwater
Higher Debt in U.S. Health Insurance Segment Recognizes Lower Interest Rates
10 Misconceptions About Middle Age
State Faces $6.1 Billion Deficit Amid Medicaid Woes

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Updated, Monday, November 25, 2019, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-044: LTC NEWS AND COMMENT

OK Boomer
Opinion: How far off are the actuarial adjustments of Social Security benefits?
5 Facts About the Senate Finance Long-Term Care Hearing
The typical American heir is now a middle-class 50-something who puts the money toward retirement
Improper Medicaid payments exceed $57 billion for fiscal year, CMS says
Memory care approach cuts antipsychotic med use in more than 50% of residents: study
Why Obama Stopped Auditing Medicaid
Can We Tolerate Millions of Elderly People Living in Cars?
Medicaid payment rates blamed as rural nursing home closures pick up pace in Nebraska
Dementia care planning benefit largely untapped: testimony

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Updated, Monday, November 22, 2019, 11:00 AM (Pacific)

Seattle—

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LTC Comment: To anticipate and celebrate the 20^th annual Intercompany Long-Term Care Insurance Conference, coming up late March, 2020 in Denver, we offer this history of that annual event, after the ***news.***

*** ILTCI NEWS: Organizers of the 2020 Intercompany Long-Term Care Insurance Conference, scheduled for Denver March 29 to April 1, invite you to check out their newly redesigned website at iltciconf.org. All details related to venue, dates, exhibitor/sponsor opportunities, and more can be found on the site. Registration launch is just around the. Here are some recent newsletter highlights:

Stay tuned! (ILTCInews.com) ***

*** THE ZONE: Most of what the Center for Long-Term Care Reform does and publishes is available to the public at our website: www.centerltc.com. But we also have a “members-only” website, nicknamed “The Zone,” where we archive our content of most interest to LTC insurance producers, distributors and carriers. Dues paying members of the Center have access to The Zone using their user name and password. Some of the content linked in the following history is only available in The Zone. That content includes many of the contemporaneous pictures of and interviews with attendees of the earliest meetings. They’re a hoot to see. If you’re not yet a member of the Center for Long-Term Care Reform nor have access to The Zone through our corporate members, please consider joining. We’ll have you in The Zone with access to all its content even before we receive your dues payment. To join or recover your UN and PW, contact Steve Moses at 425-891-3640 or smoses@centerltc.com. Thanks for your support. ***

LTC BULLET: HISTORY OF LTC INSURANCE CONFERENCES

LTC Comment: Consider today’s Bullet a tickler. We are preparing the full report described below for publication on the Center’s website, www.centerltc.com. For now, what you’ll find below is the report’s introduction and the highlights of each of the conferences it covers. As soon as the full report is posted, we’ll let you know.

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History of LTC Insurance Conferences

Background

We congratulate Jim Glickman and everyone associated with the Intercompany Long-Term Care Insurance Conference on the meeting’s 20^th iteration, which will convene March 29 to April 1 in Denver, Colorado. To celebrate that exceptional achievement, we offer the following “History of LTC Insurance Conferences.”

The Society of Actuaries sponsored its first long-term care insurance conference in 2001. Representatives of the Center for Long-Term Care Reform (“Financing” at that time) attended. Starting with the third SOA-sponsored conference in 2003, we published detailed summaries of the annual events. What follows are the highlights (from our point of view) of all 19 SOA (later renamed the Intercompany Long-Term Care Insurance Conference) so far.

After these highlights, you’ll find more detailed summaries of each year’s convocation. At the end of each of those summaries will be a link to the even-more-detailed report(s) we published contemporaneously with the conferences. By homing in on the account of each event, we think you can patch together a pretty comprehensive history of private long-term care insurance and the political/economic context in which it evolved over the past two decades.

While this history mostly covers the Intercompany Long-Term Care Insurance Conferences, we intersperse, especially in the very early years, a few summaries we published of other LTCI conferences. These include the ironically named “Private Long-Term Care Insurance Conference” which ran for 17 years until ILTCI replaced it, after running concurrently for a couple years. “Ironically named” because it was co-sponsored by AARP and focused as much on public financing options as on private insurance. LTCI old-timers will also remember “The Forum,” an annual conference for producers sponsored by Greg Luque and the longer-running “LTCI Producers Summit,” sponsored by American Association for Long-Term Care Insurance president Jesse Slome.

[You will find that some of the links in this history lead to material in the Center for Long-Term Care Reform’s members-only website—The Zone. You will need your user name and password to access those materials. For a reminder of your UN and PW or to join the Center and receive a UN and PW, contact Steve Moses at 425-891-3640 or smoses@centerltc.com.]

Highlights

2001, Miami, FL: ILTCI #1, which convened Jan. 21-23, 2001 at the Hyatt Regency in Miami, Florida, was a big success as documented in a Broker World article which reported: “John Hancock featured a guest celebrity, knuckleball pitcher Phil Niekro, signing baseballs for a line of fans stretching all the way out into the hallway. CHCS had perhaps the most unique hospitality suite. They created the illusion for each participant of an old age infirmity, such as smeared glasses to imitate cataracts, and then in true Florida style, let them try their luck at completing a punch card voter ballot with the correct answers to a delayed word recall test.” Steve Moses gave this talk: Long-Term Care's Race for Survival. Check out the picture below of George Sherman, long-time editor of the LTC News & Comment newsletter, who passed away later the same year, Sally Leimbach and Claude Thau.
Source: LTC Bullet: LTCI Conference Focuses on Industry, Wednesday, November 22, 2000

2002, Beverly Hills, CA: The conference convened January 27-30, 2002 at The Beverly Hilton. According to conference organizers: “A LONG, HARD LOOK at long-term care insurance reveals a product on the cusp of widespread acceptance. However, as LTCI has come of age, so too have the challenges facing insurers: the internet's effect on underwriting, claims practices, pricing assumptions, population eligibility, profitability management, and legislative initiatives, to name a few.” Oh boy, if we’d known then what we know now! Check out these pictures below: Ron and Curt Hagelman with Jim Glickman and the exhibit hall at the 2^nd annual SOA ILTCI conference.
Source: LTC Bullet: 2002 SOA LTC Insurance Conference Coming Up

2003, Las Vegas, NV: “After only three years in existence (previous meetings were in Miami in 2001 and Beverly Hills in 2002), the SOA-LTCI meeting now promotes itself as ‘The Premier Conference for the LTCI Industry.’ That's a verbal thumb in the eye of the other major industry meeting, which convenes February 12, 2003 in San Antonio, Texas: ‘The 16th Private Long Term Care Insurance Conference.’ This long-standing industry meeting was sponsored by a consortium of organizations, including AARP, ACLI, HIAA, and the Partnership for Long-Term Care.” Check out pictures below of Peter Goldstein, Jim Glickman, Marc Cohen, Barry Fisher and Phyllis Shelton at ILTCI #3.
Source: A Virtual Visit to the SOA-LTCI Conference in Las Vegas with many contemporaneous pictures of participants.

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We interrupt this summary of ILTCI conferences to bring you reviews of three other industry conferences that took place in 2003.

The 16th Private Long-Term Care Insurance Conference: "Shaping the Future." This meeting convened at the Marriott Rivercenter Hotel in San Antonio, Texas from February 12 to 14, 2003. The Private Long-Term Care Insurance Conference was the grand-daddy of industry meetings in the LTCI field. Some say its name is a misnomer, because this conference catered as much to advocates of government long-term care financing as to manufacturers and purveyors of private LTC insurance. People still complain about its 1993 conference in Baltimore (during an ice storm) when Congressman Pete Stark bashed long-term care insurance agents and insulted the industry in an over-the-top "keynote" address. Check out all the details including many contemporaneous pictures of LTCI’s leading lights in The Zone here.

Our second non-ILTCI conference to feature is the 5^th Annual National Long-Term Care Forum, held in Las Vegas, May 2003. This Virtual Visit takes you there. According to organizer Greg Luque, President of G.J. Luque and Company, the producers of the Long-Term Care Forum: "We're in our eighth year. This is our fifth annual national LTC Forum. We consistently draw agents from over 40 states with 25 insurance carriers sponsoring the program. This year's attendance of 730, including 200 exhibitors, is a record for the Forum." Having attended several of the National Long-Term Care Forums and spoken at two, Center for Long-Term Care Financing [now Reform] President Steve Moses says "This is one of the premier professional training events for long-term care insurance producers. Its relatively low cost and high-quality content should make it goal for agents and brokers to seek to attain and maintain the highest proficiency in sales and substantive knowledge."

The third non-ILTCI conference we’ll mention is The National LTCi Producers Summit convened November 16-18, 2003 in the Astor Crowne Plaza Hotel located at the corner of Bourbon Street and Canal in the French Quarter of New Orleans, LA. This Virtual Visit takes you there. Presented by LTCi Sales Strategies magazine, this 2½-day conference boasted a sold-out attendance of over 700 people, and featured 25 sessions, 50 LTC expert speakers, ample networking opportunities, over 100 exhibitors, cocktail receptions, breakfasts and lunches, the LTCI Sales Idol contest, the top 10 producers contest, and even optional sight-seeing tours. To read interviews with attendees and see their pictures, check out our Virtual Visit to this conference.

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Back to the ILTCI conferences:

2004, Houston, TX: According to our Virtual Visits here and here, over 700 of the movers and shakers of the long-term care insurance industry attended ILTCI #4. Here's a little sampling of scuttlebutt heard in the hallways: “A nationally well-known actuary said ‘Business is excellent, but it's not nearly as much fun as it used to be. We're helping companies to raise rates on in-place business and protect their blocks. I'd much rather be designing and pricing new products like in the good old days.” A long-term care producer with insight into the back-office aspects of the LTCi business opined that “This industry has seen some hard times, but the worst is behind us. Pricing is improving; public awareness is increasing; and the same promising demographics are still out there. Industry consolidation and belt tightening will prove to have been healthy and beneficial in the long run.” “Pollyannaish wishful thinking?,” I asked at the time. Now we know. Steve Moses made the case for private LTC financing while Dr. Judith Feder, then Professor and Dean of Public Policy at Georgetown University appealed for public financing in a session at the Fourth Annual Society of Actuaries Long-Term Care Insurance Conference in Houston, Texas on February 10, 2004.
Source: LTC E-Alert #4-008--SOA LTCI Embed--Report from the Front--Part I
Source: LTC E-Alert #4-009--SOA LTCI Embed--Report from the Front--Part II
Source: LTC Bullet--Changing LTC Public Policy: Why-What-When?

2005, Orlando, FL: No fault of the organizers, but the fifth annual Society of Actuaries Long-Term Care Insurance Conference in Orlando, Florida got off to a frustrating start on January 23, 2005. Blame Mother Nature. Of the 800 registrants--a hugely successful turnout--less than half were present for the opening reception Sunday night. [All but 100 arrived later.] By Monday morning, the keynote speaker, Dr. Joseph Coughlin, Director of MIT's ‘Age Lab,’ was still unable to get out of snowbound Boston. Read all about it in LTC Bullet: Clueless in Orlando.

2006, Anaheim, CA: Attendees heard a report on the "Medicaid Commission’s” findings. Like most commissions, it achieved nothing of consequence. Steve Moses delivered a speech titled "What I Believe About Long-Term Care." The Center's Vice President for Administration, Damon Moses, circulated at the conference interviewing attendees. Interview Question: What effect do you think the new Deficit Reduction Act will have on the marketability of private long-term care insurance? Can you put a percentage on that? Check out our Virtual Visit for answers. The CEO Forum was the biggest draw of the conference. Everyone wants to hear what the big shots have to say about the LTCi industry. But every year, it turns out to be the same thing. The audience asks difficult, penetrating questions like: Why are sales going down when objective need for LTC insurance is going up? The CEOs then give long complicated answers which, when translated into simple straight-forward language mean: "The only thing we know for sure is that it isn't our fault."

2007, Dallas, TX: ILTCI #7 opened to a body blow from the New York Times: “Aged, Frail and Denied Care by Their Insurers,” by Charles Duhigg, March 26, 2007. We responded immediately. Read our response and more about this conference in our virtual visit titled LTC Bullet: Sucker Punched in Dallas, Tuesday, April 10, 2007.

2008, Jacksonville, FL: More than 800 long-term care insurance leaders met March 16-19 at the riverfront Hyatt Hotel in Jacksonville, Florida. The 8^th Annual Intercompany Long-Term Care Insurance Conference achieved its customary high standard. Best of all, this year's meeting wasn't greeted by a fusillade of negative coverage in the national media. Maybe our return fire, correcting the more egregious shortcomings in past published attacks, is making a difference. A distinctive feature of this year’s conference was the presence, at the venue’s front door, of a small Airstream trailer emblazoned with the decals of companies sponsoring the Center for Long-Term Care Reform’s 2008 “National Long-Term Care Consciousness Tour.” Read all about it in LTC Bullet: The Jacksonville LTCI Conference. Enjoy this musical reminder of tour highlights.

2009, Reno, NV: The Silver Bullet of Long-Term Care again graced the entrance to the 9^th Annual Inter-Company Long-Term Care Insurance Conference. We published one LTC Bullet and three LTC E-Alerts (here, here, and here) about the meeting. The first "break out" session I attended was called "Luck of the Draw: Where Will LTC/LTCI Be in 5, 10, 15 Years?" Industry leading lights Paul Forte of the Federal LTCi program, Malcolm Cheung of Prudential and Gary Jacobs of Universal American prognosticated about what lies ahead for LTC insurance. Live polling results:
Question: If you were the CEO of an LTCI insurer, which of the following would best represent your views on the LTCI line of business?Possible Answers: Audience Response
A. LTCI has excellent prospects for profitable growth; I will raise the stakes 52
B. LTCI has moderate prospects for profitable growth; I’ll call the bet (i.e., do just enough to stay in the game) 32
C. I don’t know what to do about LTCI; I’ll check the pot & see what happens 7
D. This hand has no real chance; I’m folding when it’s my turn to bet 9

Such a positive response from an industry that's struggled to grow is encouraging. I was surprised by the level of optimism. [I wonder how the same people would answer the same question today.]

I delivered my conference remarks on the Actuarial Track, answering the question "Can LTCi Really Work?" Read what I said here.

2010, New Orleans: The Tenth Annual Intercompany Long-Term Care Insurance Conference opened in New Orleans on March 15, 2010. The Ides of March! An ominous day to begin the conference formerly known as the Society of Actuaries LTCI conference. Gail Sheehy keynoted the conference, but later dissed LTCI on NPR. Despite some very strong panelists speaking on behalf of logic, evidence and actuarial sanity (Steve Schoonveld of LifePlans; Malcolm Cheung of Prudential; and Al Schmitz of Milliman), everyone seemed to be bending over backwards to give CLASS the benefit of the (clearly overwhelming) doubt. Howard Gleckman of the Urban Institute represented the Obama Administration's latest talking points: "99.5% sure health insurance reform will pass and 100% sure it will include CLASS." We'll see. “I still hold out a 50/50 chance cooler heads and sound reasoning will prevail.” Well, in the end PPACA passed and it included CLASS, but I was right CLASS came to an ignominious end. Read our detailed session summaries here: LTC Bullet: LTCI Conference Wrap.

2011, Atlanta, GA: "Energize Our Industry" was the theme of The Eleventh Annual Intercompany Long Term Care Insurance Conference, which convened March 6 to 9, 2011 at the Marriott Marquis in Atlanta, Georgia. Four breakout sessions focused on the CLASS Act including Steve Moses and John Greene debating CLASS with Connie Harner and Rhonda Richards (AARP). Find summaries of all four CLASS sessions and several other sessions in our Virtual Visit to the conference here. During the lunch break on the second day, the 3in4 Need More campaign had a press conference to introduce the LTCI industry's answer to dairy's "Got Milk" message. Spotted at the 3in4 Need More event and throughout the ILTCI conference was Glenn Ruffenach of the Wall Street Journal. Maybe there's hope for some good publicity for LTCI now.

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Here’s another non-ILTCI conference to remember. The 9^th LTC Insurance Producers Summit, held April 3-5, 2011 in Las Vegas, had the theme "Get Over It!" Get over lagging sales, disappearing carriers, premium increases, and bad publicity. Get over it and, one might add based on the content of the conference: Get On With It! Proceedings got underway with a standing-room-only crowd for the "3 in 4 Need More" campaign's second press conference. Cameron Truesdell, CEO of Long-Term Care Financial Partners, delivered the "Keynote Address." He pointed out the desperate need for responsible long-term care planning and insisted: It's up to us to make it happen. Echoing a patriotic appeal, he asked "If not us, who? If not now, when?" Award ceremonies recognized people and companies who have contributed most to the LTC insurance market including the first annual "Long-Term Care Insurance Industry Lifetime Achievement Award" to Jesse R. Slome in recognition of his outstanding contributions (well deserved and overdue in LTC Bullets' opinion) and the first annual "Bright Idea" award by John Hancock to Jonas Roeser for the "3 in 4 Need More" campaign. For my detailed summaries of several sessions including a long interview of Bob Yee by Jesse Slome about then-prospects for the CLASS Act, check out our Virtual Visit to this conference.

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Back to the ILTCI conferences again:

2012, Las Vegas, NV: Day one opened with a keynote address by “futurologist” David Smith, who pooh-poohed the use of focus groups to learn what consumers want, citing Steve Jobs: “People don’t know what they want until you show them.” So much for the research value of asking people why they don’t buy LTC insurance. Jonas Roeser provided an update on the “3in4 Need More” campaign. Day two of the conference began with an excellent overview of the likely impact of health reform (“ObamaCare” to many) on long-term care. The last session I attended was a post-mortem on CLASS titled “Meeting the Needs that CLASS Intended,” moderated by Prudential’s Malcolm Cheung with presentations by Bob Yee, lately CLASS’s actuary; Yair Babab from the University of Illinois, Chicago; and Mark Meiners, the father of the LTC Partnership Program. For a full account of the conference’s highlight event, the “Clash of Titans” debate between Harley Gordon and Steve Moses, check out LTC Bullet: LTC Embed Report from the ILTCI Conference in Las Vegas.

2013, Dallas, TX: With Steve Moses unable to attend, we engaged LTCI producers to share their impressions of the conference: Sally Leimbach, Honey Leveen, Steve Forman and Claude Thau. Overall, the mood of the conference was one of optimism and motivation. Many conference attendees in Dallas expressed high satisfaction with the value of networking opportunities with industry professionals as well as the quality of educational content. Honey Leveen, the self-styled “Queen of LTCI,” said: “For marketing people like me, the SOA [ILTCI conference] is valuable. I gain insight into the LTCi product, its actuarial, underwriting, and other elements I would otherwise not learn about.” First-time ILTCI conference attendee, Stephen Forman, acknowledged challenges inherent to providing educational sessions that would appeal to such a diverse group of attendees: “How can you appeal to the interests of hundreds of individual attendees when scheduling so many diverse topics? You can’t. Overall, the workshops I attended were terrific, both in educational value and quality of presenters.” One aspect of the conference that caused a buzz was the keynote speaker, Frank Abagnale. Recognized as “one of the world’s most respected authorities on forgery, embezzlement and secure documents,” Mr. Abagnale engendered polarized reactions to his selection as keynote speaker; nevertheless, attendees raved about his presentation. Here’s Claude Thau’s take: “Frank Abagnale’s key-note presentation was excellent. It was an unexpected, yet strong, call for ethical behavior and training. BRAVO! We should show the DVD to our families, friends, associates and politicians.”
Source: LTC Bullet: Virtual Visit to the 13th Annual Intercompany LTCI Conference in Dallas, Texas

2014, Orlando, FL: The 14^th Annual Inter-Company Long-Term Care Insurance Conference convened in Orlando, Florida at the Rosen Centre Hotel from March 16-19, 2014. Conference founder Jim Glickman said highlights included (1) over 900 attendees, an all-time record; (2) for the first time in several years there were attendees from multiple insurance companies not currently participating in the LTCi marketplace; and (3) also in attendance were several reinsurers not currently in the LTCi marketplace together with several representatives of the private equity world, apparently looking for new opportunities to consider. Two highlights we observed were a report on the “Land this Plane” project and a debate between Judith Feder and Mark Warshawsky. Pre-conference activities included Harley Gordon’s CLTC Master Class, always an important contribution to LTCI marketing and professionalism. For session details, read LTC Bullet: LTC Embed Report from the Policy Front at ILTCI ’14 Orlando.

2015, Colorado Springs, CO: The 15^th annual Intercompany Long-Term Care Insurance Conference convened March 22-25, 2015 at The Broadmoor resort in Colorado Springs, Colorado. The annual Inter-Company Long-Term Care Insurance Conferences are always something special. But this year’s meeting exceeded all that came before. It exceeded by breaking past records: over 1100 attendees, up from the 900s; 72 vendors, up from 56; 44 sponsors and 170 speakers. It exceeded by offering new programs including: demonstration rooms where exhibitors could make scheduled presentations; a “social media” room with Twitter feeds; a “future leaders” program; a new Sales and Distribution combination track; and a new “Alternative Solutions” track, honchoed by Eileen Tell and John O’Leary, which replaced Policy and Providers, and captured me for all seven break-out sessions on the agenda. (See the write-ups that follow.) It exceeded with an expanded and improved mobile app, which replaced the thick and awkward hard copy agenda of the past; and numerous drawings with excellent prizes. It exceeded by the venue (the five-star Broadmoor resort in Colorado Springs) and the quality and variety of the free food and drink. It exceeded by raising over $5,000 for the USO. For details on conference sessions, read LTC Bullet: The 15^th Annual ILTCI Conference: A Virtual Visit, Friday, March 27, 2015.

2016, San Antonio, TX: The 16th Annual Intercompany LTCI Conference convened at The Grand Hyatt in San Antonio, Texas, March 13th to 16^th, 2016. This year’s keynote speaker, sponsored by Agent Review, was Ken Schmidt, brand visionary and former communications strategist for the Harley-Davidson Motor Company. Two breakout sessions provided a review and summary of work recently reported by the SCAN Foundation, Leading Age, the LTC Collaborative, and the Bipartisan Policy Center, which work reached a consensus in favor of a new publicly financed LTC program covering the catastrophic back-end risk. In another session, Susan Coronel and Marc Cohen shared insights coming out of two important new studies, one of which looked at 25 years of buyer and nonbuyer research and general population surveys on LTCI. The other updated critical work on claimant satisfaction, needs, experiences and the role of insurance. The conference’s closing general session was It's Not Me, It's You; A Consumer View on LTCI. Behavioral economist Jeremy Pincus and consumer insight expert Luisa Uriarte delivered new information about how our current approach and sales and marketing techniques are actually standing in the way a broader appeal for long-term care insurance. For more on these highlights and other sessions at the conference, read LTC Bullet: The 16^th Annual Inter-Company Long-Term Care Insurance Conference: A Virtual Visit.

2017, Jacksonville, FL: The 17^th ILTCI conference convened March 26-29, 2017 at the Hyatt Regency in Jacksonville, Florida, with the theme “Navigating the Future.” This year’s keynote speaker, sponsored by Genworth, was Anat Baron, former head of Mike's Hard Lemonade, a change strategist and “disruptor.” Ms. Baron’s session was entertaining and interesting, but would have benefited from more effort to apply her observations and analysis to the LTC insurance business and its challenges. A perennial favorite ILTCI conference session was “Who Buys LTC Insurance?... Why? (or Why Not)?” with the latest findings and reflections from 25 years of quinquennial [occurring every five years] analyses of the subject. Presenters Marc Cohen, Susan Coronel, and Eileen Tell recounted and opined about “changes in the LTC insurance market from the consumer perspective, and an empirical basis for projecting future trends.” Other sessions included “Washington State Initiative,” “Finding LTSS: New Options or New Confusions for Consumers Alternative Solutions,” “A Public Private Partnership: Catastrophic Public and Front-End Private LTC Insurance,” “LTC Think Tank Innovations-Exploring Possibilities for Improving LTC Financing,” and a closing general session called “New President and Congress: Implications for Aging and LTC Finance.” See our session summaries and critiques in LTC Bullet: The 17^th Annual Inter-Company Long-Term Care Insurance Conference: A Virtual Visit.

2018, Las Vegas, NV: The 18^th Annual Intercompany Long-Term Care Insurance Conference was held March 18-21, 2018 at the Paris Hotel & Casino in Las Vegas, NV. Attendance was high at over 1,000 attendees, 60+ exhibitors and nearly 40 sponsors. An ample 45+ breakout sessions covered a diverse array of topics. “A Matrix of Opportunities” was the tagline for this year’s conference and optimism filled the agenda. The conference opened with keynote speaker, Vinh Giang, a business person and magician. Examples of breakout sessions: The Case for Variable LTC Insurance; Consumer View of New Long Term Care Combination Products; Home as a Strategic Asset for Retirement and Long Term Care Needs; Return of the Jedi: Best Practices of the Masters; and Building YOUR Brand. The closing session was The Coming Revolution in Long Term Caregiving: The Future is Now! Speakers, Jeremy Pincus, PhD and Marjorie Skubic, PhD described the current technological advances in robotics and how they will fill the “caregiver void.” Read all about the conference in LTC Bullet: Virtual Visit to the 18th Annual ILTCI Conference in Las Vegas, Nevada.

2019, Chicago, IL: The 19^th Annual Intercompany Long-Term Care Insurance Conference, the biggest of its nearly two-decade history with the theme “Imagine the Possibilities,” convened at the Sheraton Grand Hotel in Chicago, Illinois from March 24 to 27, 2019. Conference Director Peggy Hauser kicked off the proceedings by presenting the “ILTCI Recognition Award” to Steve Moses, president of the Center for Long-Term Care Reform. Carroll Golden announced the creation of a new organization she’ll lead, the NAIFA Limited & Extended Care Planning Center, intended to keep LTC issues at the forefront and to bring together LTCI producers and general financial advisors more effectively. Some of the breakout sessions we attended and reviewed in LTC Bullet: Virtual Visit to the 19^th Annual ILTCI Conference included Medicare Advantage Expansion into Personal & LTSS; Demo - My Million Dollar Mom, about Ross Schriftman’s movie he wrote and produced about caring for his mother through her Alzheimer’s Disease; Become an LTCI Super Hero: Integrating Asset-Based into Traditional LTCI Presentation; State Initiatives for LTC Financing Reform; What’s up Doc? Geriatric Neurology and the Implications for LTC Insurance; Evidence-Based Nutrition for Healthier Futures; and Political Pundits Pontificate: The Political/Policy Environment in 2019. The Alzheimer's Association offered a closing session, the highlight of which was Tom Doyle, a member of the National Early-Stage Advisory Group (ESAG), speaking about his life coping with dementia. The conference closed with “Whirled News Tonight,” an improv show.

We turn now to more detailed summaries of each of the conferences highlighted above.

[You will find this content in the full report when posted.]

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Updated, Monday, November 18, 2019, 9:00 AM (Pacific)

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LTC E-ALERT #19-043: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Original Medicare Tops Advantage
Welcome to 'Unretirement': Most Older Americans Say They'll Keep Working
‘Replace denial with proposal’ on long-term care, House committee told
The health care system isn't ready to replace aging caregivers
Citing eagerness from states, CMS announces plans to issue guidance on Medicaid block grants
Comfort feeding OK for those with advanced dementia, regardless of advance directives: AMDA
Medicaid supplemental payments could be harmed by newly-proposed federal rule
Improved cardiorespiratory fitness helps lower dementia risk: study
Three Ways to Protect Yourself from the Cost of Nursing Home Care
Boomers Want to Stay Home. Senior Housing Now Faces a Budding Glut

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Updated, Monday, November 11, 2019, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #19-042: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Medicare Part B Premiums Rise 7% In 2020, With Premiums For Highest-Income Couples Nearing $12,000 A Year
A Retirement Community That Comes to You
Does waist size predict dementia risk?
IRS Seeks to Adjust RMDs for Longer Lives
Even If You Have Medicare, You’ll Still Pay Thousands Out-Of-Pocket For Health Care
Millennials earn 20% less than baby boomers did—despite being better educated
Long-term care resident Medicare beneficiaries spend $22,384 out of pocket for healthcare annually: study
12% of Medicare Advantage Plans Will Offer Expanded Supplemental Benefits in 2020
How Much Do Medicare Beneficiaries Spend Out of Pocket on Health Care?
Wearable activity trackers a reliable tool for predicting death risk in older adults
What Retirement? People Over 65 Are Launching Encore Careers and Finding Fulfillment Like Never Before
The Truth About Income Inequality

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Updated, Friday, November 8, 2019, 8:36 PM (Pacific)

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LTC BULLET: SOA TECH SUMMIT DAZZLES

LTC Comment: LTC techies convened in Silicon Valley yesterday with dazzling results. We give you a taste of the event after the ***news.***

*** ILTCI NEWS: Check out the latest news about the 2020 Inter-Company Long-Term Care Insurance Conference here, including

EXTRA, EXTRA: To celebrate the upcoming 20^th iteration of the ILTCI conference in March, Steve Moses is preparing a history of the annual industry convocation. You’ll get details on each year’s event and even some pictures of early attendees. This walk down memory lane will double as a pretty good history of the LTCI business itself. Stay tuned. For access to a pre-publication copy of this report as soon as it’s available, be sure you’re a paid-up individual member or you work with a corporate member of the Center for Long-Term Care Reform. Join here or contact Steve at smoses@centerltc.com or 425-891-3640 to get all the benefits of Center membership. ***

LTC BULLET: SOA TECH SUMMIT DAZZLES

LTC Comment: Who’d have thought 50 years ago that we’d live in the electronic world of omnipresent information we inhabit now? Will the relatively technologically stodgy realm of long-term care services and financing transform alike in the next five decades … or five years? Man, it sure looks like it if you consider the transformative ideas conveyed in yesterday’s Society of Actuaries Technology Summit.

The SOA Tech Summit convened at the Plug and Play Tech Center in Silicon Valley on November 7, 2019. We watched the whole program by livestream and we’ll give you a little flavor here of what it was like. But keep an eye open in the weeks ahead for the opportunity to purchase the program on the SOA website for your personal viewing.

The idea to explore how technology can transform long-term care was the brainchild of actuary Vince Bodnar of Oliver Wyman, ably assisted by LTC thought leaders Eileen Tell and John O’Leary as co-chairs. Maria Ferrante-Schepis from Maddock Douglas was a key partner in the effort and she ably emceed yesterday’s program.

For starters, scan the Tech Summit’s agenda here. (Go to the first “Agenda” link at the top, not the briefer “Event Agenda” under “Event Overview.”) There, you can click through to thumbnail descriptions of each of the sessions. What’s more, you can actually download each presenter’s detailed presentation to review at your leisure. We only have room to touch briefly on these sessions, but they’re all worth your careful review and consideration.

Mike Maddock gave the opening keynote address titled “The Disruptors Mindset,” advising disruptors to change focus from just generating more ideas to operationalizing empathy. See Maddock’s best-selling book, Plan D: Why the Future Belongs to the Disruptors and How to Dream, Drive and Deliver Like the Crazy Ones, for all the details.

Laurie M. Orlov of the Aging in Place Technology Watch delivered the 2^nd opening keynote address presenting a roadmap for the technology and long-term services and support marketplace covering where it has been, what it does best, where it is going, and the challenges it faces. Her presentation is here.

The first panel session was “Information Overlord,” covering how to gather and leverage information to bend the cost curve. Meet the presenters and review their presentations here.

Session #2 was “Alzheimer’s and Dementia Tech” about employing technology to enable better care, mood management and even slowing and reversing memory loss for Alzheimer's and dementia care. Meet the presenters and review their presentations here.

The third 50-minute panel session was “Family Caregiver Empowerment” covering support systems and new solutions to enable caregivers to deliver better care and reduce personal stress. Meet the presenters and review their presentations here.

After a 10-minute (strictly adhered to) “refreshment break,” the Tech Summit changed pace. Matt Capell of LTCG introduced a session titled “Social Challenges: Addressing Cost Transparency.” He explained how LTC costs are rising for families, providers, government and private payors creating a desperate need for disruptive solutions. Then emcee Maria led the attendees in a “mind-mapping” exercise to brainstorm ideas for later review and evaluation.

With a 45-minute lunch break behind them--allowing less time for lunch than for the panel discussions indicates the organizers’ priorities--participants returned to another series of panel discussions.

Session #4: “Using Predictive Analytics to Prevent and Manage Care Needs” explored the new tools and technologies that can change the way we evaluate, manage and expand access to care expertise and empathy.

Session #5: “Whole Person” covered the complex interactions between care providers, medicines and behavior. Meet the presenters and review their presentations here.

Session #6: “Smart Home - Smarter Care” covered the interplay between technology and design to create safe, comfortable and thriving environments for aging in place and managing care costs. Meet the presenters and review their presentations here.

The SOA Tech Summit’s “Closing Discussion: Innovating in a High Stakes/High Barrier Industry and Where to Go From here?” featured Mary Furlong of Mary Furlong & Associates talking about investment in the “longevity market.”

Finally, after a long, fully packed, and fast-paced day, participants retreated to a “Cocktail Hour and Networking Reception,” again showing the organizers got their priorities right, allowing more time for this critical closing activity than for either lunch or each panel.

Watch for future Tech Summits and don’t miss the next one.

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Updated, Monday, November 4, 2019, 9:00 AM (Pacific)

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LTC E-ALERT #19-041: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

CDC: U.S. life expectancy rises slightly, mortality rates fall compared to ’07
Long-Term Care Planning Is Still a Great Way to Connect With Clients: Kristi Rodriguez
Report Finds Americans' Health Is Flagging
Lifestyle changes improved cognition in people at risk for Alzheimer’s, study shows
Early retirement can accelerate cognitive decline among the elderly
Many views on aging based on misconceptions, survey finds
New ‘Co-Care’ Concept Offers Design for Middle-Market Senior Living
Frail nursing home patients told to relocate as their Medi-Cal plans cut off payment
Burned in 2008, Americans are refusing to tap their home equity
The Next Generation of Long Term Care Insurance
Bracelet may help predict dementia-related agitation

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Updated, Monday, October 28, 2019, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-040: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Medicare Advantage 2020 Spotlight: First Look
The path to beating Alzheimer's before it beats us
Dementia patients' adult kids diagnosed earlier than their parents
Value-Based Payment Models Should Account for Higher-Acuity LTC Residents, Leaders Argue
FLTCIP Adds Premium Stabilization Feature for New Enrollees
House Ways & Means OKs Medicare Dental, Vision and Hearing Bills
Study: Educated financial institution employees save seniors from exploitation
Institutional Investors Identify Aging Population as Top Trend Affecting Global Investment Allocations Over the Next 30 Years
Middle Muddle
STDs Rise Sharply Among Older Americans
10 Trends Driving Markets for the Next 3 Decades
5 takeaways from Harvard’s ‘Housing America’s Older Adults 2019’ study
Providers look to foreign-born caregivers to ease LTC staffing shortages
Families Face 'Boomerang' Kid Planning Challenge: Nationwide
Genworth Cost of Care Survey 2019: Skyrocketing care costs may make the dream of aging at home more challenging
Measuring Quality in the Long-Term Care Setting
What Your Long Term Care Insurance Won't Cover And How To Prepare For It
Amenities, social opportunities drawing residents to active adult communities: survey
4 surgeons general call for annual cognitive assessments
Alzheimer's Can Hit People in Their 30sThe Costs of Aging

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Updated, Friday, October 25, 2019, 9:00 AM (Pacific)

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LTC BULLET: THE BATTLE LINES ARE DRAWN

LTC Comment: Two sides advocate diametrically opposite solutions for the long-term care crisis. Who are they? What do they want? Which will win? Answers follow the ***news*** with details in our forthcoming report. Learn how to get a pre-publication copy now!

*** SOA TECH SUMMIT: On November 7, the Society of Actuaries, in partnership with Maddock Douglas, will host its first LTC Tech Summit at the Plug and Play Tech Center in the heart of innovation, Silicon Valley. Join leading innovators, payors, providers and investors to learn about emerging LTC technologies and participate in an intimate discussion to assemble the pieces that will address this crisis. Due to limited space, individuals wishing to attend the in-person event should register as soon as possible. Unable to attend in person? Select the live stream option during registration to take part in all the meeting sessions from the convenience of your computer. That’s what Steve Moses will do so he can report on this creative new program in an LTC Bullet soon after. ***

*** GENWORTH 2019 cost of care survey shows dramatic flip in rising costs from skilled nursing to home care. Read the press release here. Find the map and summary here. Dramatic new findings in the redesigned 2019 Genworth Cost of Care Survey will surely help sell new LTCI policies. This year, a single link takes you to one internet page with further links to both the national summary of costs by venue and a map of the U.S. where you can home in on individual states. The new design also has a slider that allows you to see estimated increases in costs for future decades. You can select hourly, daily, monthly and annual costs by venue and by state. I like this new design and believe you will too. Check it out now, but know you’ll be able to find it quickly in the future by accessing The Zone, our members-only website chock-a-bloc with all kinds of critical data and information. ***

*** FLIGHT OR FIGHT, that’s your choice. Either give up, go home, and let the opposition win. Or you can stand up to the perennial pessimists who say private long-term care insurance is a dead letter. You can read today’s LTC Bullet, get a pre-publication copy of our new report on “Medicaid and Long-Term Care,” and join the Resistance, AKA the Center for Long-Term Care Reform. Learn why the opposition’s concerted campaign to turn long-term care completely over to the government—the same government that ruined long-term care in the first place—is doomed either to fail or to make the system’s problems even worse. All current individual and corporate members of the Center should already have received your pre-publication copy of “Medicaid and Long-Term Care.” (If not, let us know at smoses@centerltc.com.) Everyone else: join the Center here, email smoses@centerltc.com to let us know you’re in, and the new report will be in your hands post haste. We can’t do this alone. We need your help. Carpe diem! ***

LTC BULLET: THE BATTLE LINES ARE DRAWN

LTC Comment: On one side are the analysts and advocates who insist fixing long-term care is hopeless without greater government involvement. They want a new, compulsory social insurance program, like Medicare and Social Security, to sweep away problems of access, quality, low funding, and caregiver shortages. Their side is the Favorite.

On the other side are the lonely voices who favor a freer market approach. We want to redirect scarce public resources to the truly needy and create stronger incentives for everyone else to save, invest or insure for long-term care. Let people and the market choose the best way to provide and finance long-term care. Our side is the Underdog.

Around the end of the year, the Center for Long-Term Care Reform will publish a new report titled “Medicaid and Long-Term Care.” This study will explain what is wrong with the favored government takeover plan for long-term care. It will describe a far less onerous voluntary solution. For a pre-publication copy of “Medicaid and Long-Term Care,” join the Center here and contact the author at smoses@centerltc.com. You’ll have your copy by email within minutes of joining our campaign to fix long-term care.

Here’s a preview of both sides of the long-term care debate, the Favorite vs. the Underdog, as developed in “Medicaid and Long-Term Care.”

Favorite: Long-term care is a mess. Access and quality are doubtful. Caregivers are in short supply. Free, family caregivers are over-stressed financially and emotionally. Medicaid pays too little. Private insurance failed. The coming age wave will explode costs. Institutional bias prevails; home care is inadequate. Woe is us. Please, Uncle Sam, take over and save the day.

Underdog: Whoa! All those symptoms are true. The existing system is terribly dysfunctional. But turning to government financing and control is not the place to start. Rather, the place to start is to ask why such problems exist. How did we get into this mess? What caused those symptoms of dysfunction in the first place?

Favorite: Blank out. Nothing in the favorite’s literature, which we list and summarize in our new report, even attempts to explain why long-term care is failing so badly. Search their Health Affairs’ articles we cite and the SCAN, Leading Age, and LTC Collaborative reports those spawned and you will find nothing to account for the causes, as opposed to the symptoms, of long-term care problems.

Underdog: That’s why our new report briefly traces the history of long-term care services and financing from the 18^th century until today. We show how increasing government regulation and financing of long-term care actually caused the problems that plague the long-term care system now. Given that history, you will see very clearly that adding more government regulation and financing, which caused the problems in the first place, can only make those problems worse.

Favorite: What do you mean government caused long-term care’s problems? How about some examples?

Underdog: OK, sure. Here’s a direct quote from our paper: “At the root of all long-term care problems is Medicaid, the dominant payer. By providing only nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds, Medicaid (1) exploded in cost, (2) created institutional bias, (3) caused access and quality problems by paying providers too little, (4) enriched plaintiff’s attorneys with the resulting tort liability cases, (5) crowded out private markets for home care and long-term care insurance, and (6) kept poor people poor with punishing spend down rules, while (7) letting the affluent save and benefit through eligibility loopholes.”

Favorite: Wait a minute? That can’t be true. Everyone knows Medicaid requires impoverishment and people all across America are spending down their life’s savings catastrophically to pay for long-term care. Medicaid only helps after they’ve been devastated financially. Our side’s articles and reports make that claim over and over again.

Underdog: True, and our report cites your claims and rebuts each one. There is no evidence of widespread catastrophic spend down for long-term care. In fact all the evidence proves the contrary as we explain and document in our report.

Favorite: But, but, but … sputter, sputter. How can that be?

Underdog: Our report explains, with citations to federal law and regulations, precisely why and how access to Medicaid long-term care benefits requires neither low income nor significantly depleted assets. Are you dubious? Then get and read our report. If you disagree, speak up. We challenge anyone willing to engage publicly to debate these issues in a forum of your choice.

Favorite: So, you’re saying people don’t plan for long-term care nor do they buy much private LTC insurance because they intend to rely on this mediocre welfare program? Hrumpf!

Underdog: No, not at all. People don’t know who pays for long-term care. They don’t think about it until they need expensive care at which point Medicaid is the path of least resistance. The simple fact that Medicaid has paid for most expensive LTC since 1965 enabled consumers’ denial of this risk and cost leaving generations dependent on questionable care mostly in welfare-financed nursing homes. Our report covers all that in detail.

Favorite: Well, if that’s true, where’s the proof?

Underdog: Our report cites an extensive popular and legal literature on how to qualify for Medicaid without spending down. We also explain how and why the other side—the advocates of expanded government interference—totally ignores that literature. Furthermore, we cite in detail a Government Accountability Office study that documents easy and commonplace Medicaid planning, but fails to draw the obvious conclusions, which we do draw and explain in our report. We propose a nationally generalizable study to establish once and for all the level and impact of unnecessary and counterproductive Medicaid long-term care dependency.

Favorite: We just don’t think Medicaid is that easy to get so we focus on other things.

Underdog: Right, that’s why our report has a whole section about your “Evasion of and Equivocation on Critical Concepts and Facts.” We explain how you misunderstand and misrepresent key ideas like “impoverishment,” “spend down,” “asset decumulation,” “median wealth,” “Medicaid planning,” and “out-of-pocket expenditures.” You also use and depend on highly dubious data sources which we identify and critique.

Favorite: “If Medicaid is not the catastrophic poverty-maker it is commonly made out to be, what is it?”

Underdog: That is exactly the question we ask and answer in the report’s “Ramifications” section. There we summarize how Medicaid caused institutional bias, impeded a private market for home care, exacerbated access and quality problems, created huge tort liability, impoverished poor people, enriched affluent people, and stultified private long-term care financing sources like home equity conversion and insurance.

Favorite: So, what would you do differently?

Underdog: That’s where our report shines in a section called “Policy Recommendations.” You just have to read it to believe how manageable our problems really are once you realize what caused them and how easy they will be to fix once we address their causes and not just their symptoms. In fact, we include a section called “Redefine the Problem,” which relies on the other sides’ studies and findings to prove the long-term care challenge is much more manageable than anyone previously believed, if and only if, correctly analyzed and addressed.

Favorite: So fixing what ails long-term care is a slam dunk if we just follow what you say?

Underdog: No, not at all, there is one huge obstacle that is beyond our ability to address by changing long-term care financing policy. It has to do again with government interference, but this time, interference in fiscal and monetary policy. Our report explains why our side made huge steps in the right direction, i.e. targeting Medicaid to the needy and encouraging private financing alternatives, in 1993 and again in 2005, but we’ve been stymied ever since. That will change by 2030 with catastrophic economic consequences, which we predict and summarize.

Favorite: So give up and go home?

Underdog: Not at all. Our message is “get ready.” Understand why we have the problems we have. Think clearly about what we have to change to fix them. When the crisis really hits, follow where the evidence and logic lead. Rebuild.

Favorite: We’re intrigued. Where can we get this report?

Underdog: Join the Center here and contact the author at smoses@centerltc.com. You’ll have your copy by email (and all the other benefits of membership summarized here) within minutes of committing to join the Center for Long-Term Care Reform. Otherwise, you’ll need to wait for the report’s public release early in 2020.

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Updated, Monday, October 14, 2019, 10:40 AM (Pacific)

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LTC E-ALERT #19-039: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

‘An Alarming Metric’: Median Skilled Nursing Operating Margin Falls Below Zero
Social Security COLA Is 1.6% for 2020
Shopping For Medicare? What To Know About The New Plan Finder
How Do Older Workers Use Nontraditional Jobs?
The government can giveth, or taketh away
With baby boomers aging, the cost of long-term care is set to triple in the next 30 years. What’s our plan for dealing with this?
CMS to label cited nursing homes with ‘Do not proceed’ icon on Nursing Home Compare website
Managing care of residents with dementia? There’s an app for that
EDITORIAL: Financing long-term care sustainably
Why Hospitals Are Getting Into The Housing Business
Proposed ‘excessive lobbying tax’ would hit some provider groups hard

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Updated, Friday, October 11, 2019, 9:00 AM (Pacific)

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LTC BULLET: LONG-TERM CARE FOR LIBERTARIANS (AND AUSTRIAN ECONOMISTS)

LTC Comment: For unique insights into Medicaid and long-term care, read and/or listen to this speech and watch for the paper it presents, after the ***news.***

*** ILTCI NEWS: The Intercompany Long-Term Care Insurance Conference, celebrating its 20^th anniversary, will be held March 29 to April 1, 2020 at the Sheraton Downtown Denver. The premier LTCI conference now has a newsletter to keep us all up to date on every detail of the program. Check it out here: ILTCInews.com. Follow along as they lock in important details like the keynote speaker, Diamond Sponsors, and session offerings. Bookmark the page, and check back often for “lots of great content coming up, especially in November which is 'Long-Term Care Month.'” Preliminary conference info and hotel details can be found at www.iltciconf.org. Attendee registration will open online in November. Exhibitor and Sponsor applications are being accepted now. Early Bird Discounted rates are available until November 20th, and then will increase in price. Check out the 2020 Exhibitor & Sponsor Prospectus for full details and options. Organizers say “This year's individual attendee rate is $1,095 per person, making exhibitor and sponsor discounts even more valuable and cost effective.” ***

*** THE LTC TECH SUMMIT sponsored by the Society of Actuaries in collaboration with Maddock Douglas convenes November 7, 2019 in Sunnyvale, California at the Plug and Play Tech Center. Get all the details here. Great news: you don’t even have to be present to participate as livestream registration is available. Organizers say “Join leading innovators, payors, providers and investors to learn about emerging LTC technologies and participate in an intimate discussion to assemble the pieces that will address this crisis. Due to limited space, individuals wishing to attend the in-person event should register as soon as possible.” Don’t miss this exciting, cutting-edge program. ***

LTC BULLET: LONG-TERM CARE FOR LIBERTARIANS (AND AUSTRIAN ECONOMISTS)

LTC Comment: Steve Moses delivered the following speech at the Libertarian Scholars Conference, sponsored by the Mises Institute, on September 28, 2019 in New York City. In it he recounts the development of long-term care financing policy since the early 1980s, including his personal involvement in that process. He references the Center for Long-Term Care Reform’s new policy paper, also titled Medicaid and Long-Term Care, which the Center will summarize in our next LTC Bullet and publish soon. We hope this speech will encourage you to read the full paper when it is officially released.

Listen to Steve’s speech on SoundCloud here.

“Medicaid and Long-Term Care”
by
Stephen A. Moses
presented to the
Libertarian Scholars Conference
September 28, 2019
New York City

Good morning. I’m going to speak with you today about long-term care and Medicaid.

Long-term care includes a broad range of social, medical and custodial services that caregivers provide for three months or longer to help disabled people perform activities of daily living such as eating, bathing, and toileting.

Now, how many of you think long-term care sounds like a scintillating topic for a speech? You just can’t wait to hear what I have to say?

Right, I have my work cut out for me.

So, let me frame this topic with a personal story that I hope will engage your interest and cover the main themes of my paper.

In the early 1980s, I was working for the federal Department of HEW, predecessor of the current HHS. I’d landed in the Seattle regional office of the HCFA, predecessor of CMS.

Federal agencies just kept going defunct after I worked there.

Anyway, I was the Medicaid state representative for Oregon. That’s the liaison job between the federal government, which partially funds and oversees Medicaid and the state, which partially funds and administers the program.

My job was to make sure Oregon administered Medicaid in accordance with federal laws and regulations.

In the course of a routine annual review, I discovered a program in Oregon that surprised me.

The state Medicaid agency was filing claims on the estates of deceased Medicaid recipients to recover the cost of benefits correctly paid for eligible recipients in order to reimburse the program (and taxpayers) for the cost of their care.

That was a shock. It contradicted everything I thought I knew about Medicaid. Isn’t it welfare? Doesn’t it require impoverishment to qualify?

If so, how was it possible that people spent years in nursing homes on Medicaid at enormous state and federal expense, but when they died, they still had significant wealth to be recovered from their estates?

So I did some research. What I found blew me away.

Despite the conventional wisdom that Medicaid eligibility required low income and virtually no assets, I learned that for people over the age of 65 who needed nursing-home level of care, income rarely blocked eligibility and the vast majority of all assets were not counted for purposes of determining their eligibility.

That’s still true today and if you want to know the details of how it works, please read my paper. I could easily use up all my time today just explaining the complexities of Medicaid financial eligibility.

Anyway, it made sense that people on Medicaid retain substantial wealth and that Oregon could recover large amounts from their estates. But that got me wondering about the viability of such a system.

Demographically, the baby boomer generation was moving through social history like a pig through a python shaking up everything along the way. School shortages in the 1950’s; drugs, sex, Rock‘n’Roll in the 60’s; stagflation in the 70s; and so on. What would the boomers do to America’s entitlement programs when they retired in 3 or 4 decades?

Already, long-term care services and financing, dominated by Medicaid regulation and funding, were a mess, fraught with problems of access, quality, low reimbursement, discrimination and institutional bias. On top of that, Medicaid long-term care was exploding in cost.

I concluded that as long as Medicaid was easily available to everyone while allowing them to retain their biggest asset, home equity, no one would plan ahead privately for the risk and cost of long-term care. Sooner or later, everyone would end up on Medicaid.

Clearly, something had to be done and my little state of Oregon was doing it. They’d made a deal with the public:

OK, you need long-term care now and you can’t afford it, fine, Medicaid will pay but we’ll make sure your heirs pay it all back from your estate. If you and they don’t like that, then pay your own way by spending down your savings, using your home equity or buying private insurance.

Interesting, I thought. Are other states doing this? A quick review showed most were not. In fact, from its founding in 1965 until 1980, Medicaid law explicitly permitted asset transfers to qualify for long-term care benefits. Anyone could give away everything and qualify overnight.

I learned that in 1982, the Tax Equity and Fiscal Responsibility Act allowed, but did not require state Medicaid programs to penalize asset transfers done for the purpose of qualifying for Medicaid, to place liens on real property to prevent its divestiture, and to recover from estates.

So I did a study. I asked: What if every state in the country made the same deal with its citizens as Oregon? The findings were dramatic, showing widespread overuse of Medicaid by the middle class and affluent as well as substantial potential savings by discouraging that practice and recovering from estates.

But my federal supervisors did not think a regional staffer should be doing a national study, so they suppressed my work threatening me with negative personnel actions if I distributed my report. But I’d already sent my draft to GAO and the IG of DHHS.

Both of those agencies began national studies of the subject. The Inspector General hired me away from HCFA to direct its study and write the report, which was published in June 1988.

That study found that if every state recovered from estates at the same rate as Oregon, estate recoveries could increase by over half a billion dollars, saving about five percent of Medicaid long-term care expenditures. That was three decades ago when a billion dollars was still “real money.”

But we also found that the extra estate recoveries could be much higher and overall savings far greater if people couldn’t divest assets before becoming eligible for Medicaid.

So the report also recommended stronger transfer of assets restrictions and mandatory liens on real property to ensure that wealth would remain available to recover later.

The next question to ask was Qui Bono? If these recommendations became law, who would benefit? Of course, Medicaid would spend less, relieving taxpayers. The public would have a better safety net and the poor, who really need Medicaid’s help, could be better served if the affluent weren’t diverting scarce welfare resources to their own benefit.

But if Medicaid weren’t paying for long-term care for the middle class and affluent, who would?

There were two sources of private financing that might mitigate dependency on Medicaid for long-term care: home equity conversion and private long-term care insurance.

Why home equity? Same reason Willie Sutton robbed banks. That’s where the money is. Literally trillions of dollars were being exempted from long-term care cost by Medicaid’s unlimited home equity exemption.

And private long-term care insurance? Maybe people would actually buy the struggling new, very expensive product, if they couldn’t ignore long-term care risk, wait to see if they ever need expensive care, and then shift the cost to taxpayers if necessary.

By this time I was convinced I couldn’t get the policies I was recommending into law while working within government. So I left the Inspector General in 1989 to become Research Director for a small long-term care insurance marketing firm called LTC, Inc.

Free of the constraints of government employment, I aggressively promoted my analysis and recommendations. I published articles, contacted journalists, buttonholed Congressmen and staff, spoke at industry conferences for insurance, nursing homes, CPAs, financial planners, and many others. I conducted and published state-level studies in Massachusetts, Minnesota, Wisconsin, Kentucky and Montana.

And then, Success! We got most of what we wanted in the Omnibus Budget Reconciliation Act of 1993. It made estate recovery mandatory, extended the look back period on asset transfers to three years, removed the 30-month cap on the eligibility penalty, ended pyramid divestment and closed other financial eligibility loopholes.

The plan was to keep Medicaid long-term care eligibility relatively easy to get, but to ensure that anyone sheltering wealth who relied on Medicaid, would pay it back out of their estates.

We figured that would wake up boomer heirs to the risk and cost of long-term care and get them to prepare with private insurance. If they didn’t, they and their aging parents would have to use their home equity either directly with reverse mortgages or indirectly by going on Medicaid and paying it back.

We sought to eliminate Medicaid’s perverse incentives that discouraged responsible long-term care planning and left people dependent on a financially struggling program for the poor.

Unfortunately, states didn’t implement the new rules consistently; the feds didn’t enforce them; the media didn’t publicize; and consumer behavior didn’t change.

But we continued to make progress awakening the powers that be to the waste and inefficiency of Medicaid long-term care policy. Every time a recession drove welfare rolls up and tax receipts down, bureaucrats and politicians took an interest in ways to cut costs while improving care.

I attended national conferences of the lawyers who specialize in artificially impoverishing affluent clients to qualify them for Medicaid. I publicized their most egregious methods and attracted national media attention to the problem.

I reached out to journalists like Jane Bryant Quinn who took up the issue in numerous nationally syndicated columns excoriating Medicaid planning attorneys and asking “Do Only the Suckers Pay?” for long-term care.

I did more state-level studies throughout the 1990s and 2000s in Florida, Maryland, South Dakota, and New Jersey. I interviewed Medicaid eligibility workers and quoted their complaints about wealthy people getting Medicaid more easily than the poor.

By the mid-1990s scholars favoring a government takeover of long-term care through social insurance—and that’s nearly all of them—began criticizing the effort to target Medicaid to the needy, debunking our argument that Medicaid had become an entitlement program for the middle class and affluent.

They made Strawman arguments against us saying our only complaint was millionaires transferring assets to qualify for Medicaid. That was happening, and the Wall Street Journal highlighted the practice, but it wasn’t the big problem, nor one we emphasized.

The real problem was that the basic eligibility rules allowed most people to qualify easily and the many loopholes, besides asset transfers, let even the affluent qualify.

When the Republicans took Congress in 1994 and President Clinton was under the gun to control government growth, the issue got traction because of renewed concern about controlling budgets.

Frustrated by the inability to control Medicaid costs, Democrats and Republicans passed the Health Insurance Portability and Accountability Act of 1996 making it a crime to transfer assets to qualify for Medicaid.

That was not a policy I promoted and it blew up in their faces. The “Throw Granny in Jail” law was replaced a year later by the “Throw Granny’s Lawyer in Jail” law, which was quickly deemed unenforceable. They couldn’t hold lawyers culpable for offering services that were legal again after “throw granny in jail” was repealed.

Toward the end of the century, the economy improved; the internet boomed; tax revenues poured in. There was no real interest in controlling costs. It was easier to buy off the public and long-term care providers with generous eligibility and higher reimbursements.

But then the 2001 recession hit and interest in controlling costs returned. I’d left LTC, Inc., when General Electric bought the company, and formed the Center for Long-Term Care Reform in 1998, the organization I still manage, dedicated to ensuring quality long-term care for all Americans.

We produced several national studies explaining and promoting our plan to save Medicaid by diverting non-poor people to personally responsible private means of paying for long term care.

We did more state-level studies in Nebraska, Washington State, Kansas, Texas, North Carolina, Rhode Island, California, New York, Georgia, and Virginia.

By this time, opposition became quite virulent from scholars advocating more government financing of long-term care. They could see momentum building for another federal law supporting our position.

They pulled out all the stops, writing articles and conducting studies, mostly searching big data bases for nonexistent evidence that people were spending down their life savings on long-term care all across America.

My co-founder of the Center for Long-Term Care Reform had moved on to become Chief Health Counsel for the U.S. House Committee on Oversight and Reform. He drafted legislation to strengthen transfer of assets rules further, to cap Medicaid’s home equity exemption for the first time, and to close other loopholes.

I testified before Congress and secured a contract with the American Health Care Association to work half time in DC for six months promoting our analysis and recommendations.

Success again! The Deficit Reduction Act of 2005 capped the home equity exemption at half a million dollars, moved the asset transfer look back from three to five years, closed the half-a-loaf loophole, and unleashed the Long-Term Care Partnership program to encourage the purchase of private long-term care insurance.

Nothing has happened since that legislation to give Medicaid back to the poor and encourage everyone else to plan, save, invest or insure for long-term care. Even the Great Recession of 2007-09 didn’t prompt policy makers to revisit these issues.

While some loopholes have been closed and some reforms enacted, it remains easy for middle class and affluent people to qualify for Medicaid long-term care benefits, home equity is rarely used to purchase quality long-term care for home owners, and the market for private long-term care insurance remains stunted.

Why is it so hard to get good long-term care policy accepted and implemented?

Most scholars and policy makers address the symptoms of long-term care—high cost, poor access and quality—and they ignore the cause, excessive government funding and interference in the market.

So they slavishly advocate more government financing and regulation in the form of obligatory social insurance to cover long-term care by expanding Medicare or imposing a new program.

I’ve tried to show in my paper for this conference why long-term care problems exist, and how to fix them by removing policy incentives that discourage responsible long-term care planning and leave people dependent on the welfare program.

Today the boomer Age Wave is shaking things up one last time. Instead of paying into the entitlement programs, they’re withdrawing. They began retiring and taking Social Security at age 62 in 2008. At age 65 in 2011, they turned the Social Security program cash-flow negative.

Boomers began taking Required Minimum Distributions (RMDs) from their tax-deferred retirement accounts in 2016, depleting the supply of private investment capital.

They will reach the critical age (85 years plus) of rising long-term care needs in 2031, right around the time Medicare (2026) and Social Security (2035) are expected to deplete their trust funds, forcing them to reduce benefits.

It is beginning to look like everything I worried might happen, back in 1982, will happen and soon.

Let me conclude by listing some questions I’ve raised today that I’ve tried to answer in the paper.

Why does Medicaid allow people with substantial wealth to take advantage of a financially struggling welfare program?

Why do economists and long-term care analysts ignore the ample evidence that overreliance on government funding caused most of the problems with long-term care services and financing?

Why are long-term care scholars fixated on recommending only new compulsory government funding programs for long-term care?

Why did the progress toward fixing Medicaid slow down after 2001 and stop altogether after 2005?

Can Austrian economic theory answer or at least elucidate these questions?

I hope you will read the paper, consider my analysis, and give me your feedback and advice.

In the meantime, do give serious thought to how you and your family will prepare for the risk and cost of long-term care and become part of the solution instead of the problem.

Thank you.

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Updated, Monday, October 7, 2019, 9:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-038: LTC NEWS AND COMMENT

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Administration intensifies push to Medicare Advantage, other private plans
How the Man Who Nailed Madoff Got GE Wrong
Poll: Most Older Adults Wary of Telemedicine
Trends in Stroke Incidence Rates in Older US Adults
8 in 10 Older Americans Believe They Are Prepared to Age
Well, But Need Help Understanding Their Benefits and Navigating the Health Care System
States Focus on Rise of Elderly Populations
State of Long-Term Care Insurance
‘We Need Each Other’: Seniors Are Drawn to New Housing Arrangements
Difference between Medicare, and Medicaid for nursing home costs
27% Support Medicare for All, Though Most Need More Info
Newspaper series critical of assisted living ‘paints inaccurate picture,’ industry group says
People in need of care in Germany have to pay more and more themselves
The 2020 Medicare Advantage Plan Atlas, for Agents
Private Medicare Plans’ Premium Rates Hit 13 Year Low

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Updated, Friday, September 27, 2019, 10:23 AM (Pacific)

Seattle—

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LTC BULLET: TO FIX LONG-TERM CARE, REDEFINE THE PROBLEM

LTC Comment: Recent research suggests long-term care is not the gargantuan crisis previously thought. So, private sector solutions, including LTC insurance, may be far more effective than commonly believed. Details after the ***news.***

LTC BULLET: TO FIX LONG-TERM CARE, REDEFINE THE PROBLEM

Albert Einstein said “We can't solve problems by using the same kind of thinking we used when we created them.” The kind of thinking that created the long-term care problem is that markets cannot provide the services people need without massive compulsory government regulation and financing. No other way of thinking about the problem has been seriously considered heretofore. But some recent research suggests how we might re-conceptualize the quandary we are in so that it is not such a huge challenge and may in fact be amenable to a market-based solution.

What’s the evidence long-term care may not be the titanic crisis it has been assumed to be? In February 2016, the Department of Health and Human Services Assistant Secretary for Planning and Evaluation (ASPE) reported this:

The extractable home equity of 19.4 million senior households (age 65 plus) at a conservative Combined Loan to Value (CLTV) of 75 percent was $3.1 trillion in 2015, averaging $160,000 per household (Kaul and Goodman, 2017, pp. 2-3 and Tables 1 and 2). If Medicaid did not exempt a minimum of $585,000, more than triple the average extractable home equity amount, a way could be found to earmark enough of it to cover the total cost of long-term care for most older homeowners. By diverting people with sufficient home equity from Medicaid dependency to financing their own care privately, the fiscal burden on Medicaid could be substantially reduced and the program’s dismal access and quality improved.

Obviously, there is no incentive for them to do that as long as Medicaid long-term care financial eligibility works the way it does. But if Medicaid’s perverse incentives were changed to encourage responsible long-term care planning and private payment, how would people respond? Home equity conversion could handle much of the financial burden for the majority of home-owning elders. Reverse mortgages would free up cash flow to cover home care expenses or, for people who plan ahead as many more would, the extra revenue could be used to fund long-term care insurance premiums.

Then there is this. A Cato Institute Policy Analysis reports that “Improved estimates of poverty show that only about 2 percent of today’s population lives in poverty, well below the 11 percent to 15 percent that has been reported during the past five decades” (Early, 2018, p. 1). How can that be? “By design, the official estimates of income inequality and poverty omit significant government transfer payments to low-income households; they also ignore taxes paid by households.” (Ibid., p. 2) What is the bottom line? “The net effect is that pretax data overstate the true income of upper-income households by as much as 50 percent, and missing transfers understate the true income of lower-income households by a factor of two or more.” (Ibid., p. 4) The rich are poorer and the poor, richer than we thought. “More than 50 years after the United States declared the War on Poverty, poverty is almost entirely gone. … Public policy debate should begin with the realization that only about 2 percent of the population—not 13.5 percent—live in poverty.” (Ibid., p. 21)

References

Early, John F. 2018. Reassessing the Facts about Inequality, Poverty, and Redistribution. Cato Institute Policy Analysis No. 839. April 24.

Favreault, Melissa and Judith Dey. 2016. “Long-Term Services and Supports for Older Americans: Risks and Financing.” USDHHS Assistant Secretary for Planning and Evaluation (ASPE) Issue Brief. Revised February.

Johnson, Richard W. and Claire Xiaozhi Wang. 2019. “The Financial Burden Of Paid Home Care On Older Adults: Oldest And Sickest Are Least Likely To Have Enough Income.” Health Affairs. 38 (6)

Kaul, Karan and Laurie Goodman. 2017. Seniors’ Access to Home Equity Identifying Existing Mechanisms and Impediments to Broader Adoption. Urban Institute Housing Finance Policy Center.

National Investment Center (NIC). 2019. “Middle Market Seniors Housing Study: Executive Summary.” April.

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Updated, Tuesday, September 24, 2019, 10:40 AM (Pacific)

Seattle—

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LTC E-ALERT #19-037: LTC NEWS AND COMMENT

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.

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

Medicare quality measures need improvement, says government watchdog
What Could Help ‘The Forgotten Middle’ Afford Retirement Housing?
Tickle me, Earmo
Seniors will soon have their own IRS tax form
Investors Spending More on Adult Relatives Than They Can Afford: Survey
Take Control of Your Brain’s Destiny
3 Top Democratic Presidential Contenders' Retirement Income Proposals
The High Cost of Long-Term Care Insurance (and What to Use Instead)
Protect Your Family From Taxes And Long-Term Care Costs
What’s the Best Age to Move Into a CCRC?
Nursing homes could lose $67B if Alzheimer’s cure is found soon, researcher says

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Updated, Monday, September 16, 2019, 10:14 AM (Pacific)

Seattle—

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LTC E-ALERT #19-036: LTC NEWS AND COMMENT

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.

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

LTCI Policyholders Should Try to Put Up With Rate Hikes: Jesse Slome
Medicaid’s Dark Secret
Opportunities await beyond near-term challenges
Industry will need to get creative to address middle market needs, groups suggest at NIC meeting
Brief bursts of intense exercise normalizes blood pressure in older adults
U.S. News and Caring.com Launch Assisted Living Directory
Scientists rethink Alzheimer’s, diversifying the drug search
Where the top Democratic U.S. presidential candidates stand on 'Medicare for All'
Artificial Intelligence Models Identify Alzheimer’s Cognitive Decline
How to mitigate risk when a resident needs a higher level of care
Recorded Webcast: Long-term Care Insurance with Expert Bonnie Burns
Phishers Are Using the NAIC Logo to Hook Producers
Elderly should consider residential care before health crisis hits: study
SCAN Survey Reveals Majority of Seniors Are Not Adequately Prepared to Age in Place

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Updated, Monday, September 9, 2019, 10:02 AM (Pacific)

Seattle—

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LTC E-ALERT #19-035: LTC NEWS AND COMMENT

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.

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

How to Fix the Global Retirement Crisis
10 Things to Know about Medicaid Managed Care
Medicare Advantage home healthcare may not be best quality
Medicare reform can no longer be ignored: Warnings from the 2019 Medicare trustees report
Long-term care cuts harming seniors
GE’s Long-Term Care Exposure Magnifies Counterparty Risk for Several Insurers
Medicare overpaying for post-acute care, researchers imply
Specialty care is out of reach for most dementia patients: study
What You Need to Know About Long-Term Care Insurance
Interest Grows In Social Insurance For Long-Term Care. What Should It Look Like?
AHIP Backs Four Options for Long Term Care Reform
Older Foreigners May Be a Quarter of U.S. Seniors in 50 Years
Retirement Trends Of Baby Boomers
New Bombshell Report Reveals Obamacare's Epic Medicaid Waste
On the Job, 24 Hours a Day, 27 Days a Month

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Updated, Friday, September 6, 10:23 AM (Pacific)

Seattle—

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LTC Bullet: LTC Almanac Update

LTC Comment: We’ve updated the “Almanac of Long-Term Care” in The Zone. More on the LTC Almanac and today’s update after the ***news.***

*** SUBSCRIBE to LTC Clippings and Steve Moses—2019 ILTCI Recognition Award Honoree—will become your research assistant. Steve will tip you twice a day (on average) with news and views on things you need to know to stay at the forefront of professional expertise. You’ll see the latest articles, reports, data, and op-eds before your clients confront you with them. You’ll get trenchant analysis and valuable ideas on how to address objections and complaints. Contact Damon at 206-283-7036 or damon@centerltc.com for details or subscribe directly here: http://www.centerltc.com/newonlinepaymentspage.htm. Choose “Premium Membership” to receive our LTC Clippings. For example, here are some recent LTC Clippings.

8/27/2019, “The elderly aren’t so poor after all,” by Robert J. Samuelson, Washington Post
Quote: “It was probably inevitable that we would have a ‘retirement crisis’ as hordes of baby boomers (people born between 1946 and 1964) sprint and stumble into their ‘golden years.’ But it’s a fake crisis, even though it’s already becoming a staple of journalism and politics. It presumes that most Americans can’t afford to retire comfortably. Not so.”
LTC Comment: Read this and wonder why we still provide Medicaid long-term care to people with big incomes and unlimited assets.

8/29/2019, “Alzheimer’s care isn’t working; here’s what is,” by Pamela Reese, McKnight’s Senior Living
Quote: “If you don’t work in memory care, then take it from me, a former nurse, chief officer of clinical operations and partner within the skilled nursing industry: The current state of Alzheimer’s care is a rosy portrayal of a diminishing standard. It is the unfortunate truth. … Despite having the power to make constructive change in the field, when it came time to care for my own mother, who received an Alzheimer’s diagnosis, I did not want her living in one of my own facilities. Why, you may ask? There are several reasons that I don’t believe Alzheimer’s care is where it should be. Here are six:”
LTC Comment: Click through to read this sad commentary on the state of Alzheimer’s care.

8/27/2019, “'Medicare Advantage for All’,” by Ken Janda and Vivian Ho, The Hill
Quote: “We are already on our way to Medicare Advantage for All, but we are not doing it systematically or thoughtfully. A move to Medicare Advantage for All is achievable in a relatively short time frame, without the disruption and risk of Medicare for All, or without the confusion of even more options and funding mechanisms. The majority of Americans who have employer-sponsored insurance would still have it. And Medicaid becomes mainstream.”
LTC Comment: Medicaid becomes mainstream? No thanks. ***

LTC BULLET: LTC ALMANAC UPDATE

LTC Comment: Center members know and appreciate our "Almanac of Long-Term Care" in The Zone, our password-protected website.

*** SPECIAL: We are making access to The Zone, including the "Almanac of Long-Term Care," free for two weeks—today through Friday, September 20, 2019. To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password: UN: IntrotoZone / PW: FreeTrial. Like what you see? Then join the Center for Long-Term Care Reform here. Or contact Damon at 206-283-7036 or damon@centerltc.com. ***

The LTC Almanac is divided into 11 sections:

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.

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Chapter 1: Aging Demographics

United States

General Stats

2018OlderAmericansProfile 0519 URL: https://acl.gov/aging-and-disability-in-america/data-and-research/profile-older-americans

5/31/2019, “2018 Profile of Older Americans,” Administration for Community Living

Quote: “In the United States, the population age 65 and over numbered 50.9 million in 2017 (the most recent year for which data are available). They represented 15.6% of the population, more than one in every seven Americans. The number of older Americans increased by 13 million or 34% since 2007, compared to an increase of 4% for the under-65 population.”

LTC Comment: This annual report is the best statistical snapshot you’ll find of aging in America.

Chapter 6: Long-Term Care Financing

Nursing Home and Home Care Expenditure Data from CMS and Health Affairs

NHE Projections 2018-27 Health Affairs 0219 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2018.05499

2/20/2019, “National Health Expenditure Projections, 2018–27: Economic And Demographic Trends Drive Spending And Enrollment Growth,” by Andrea M. Sisko, et al., Health Affairs
Quote: “ABSTRACT: National health expenditures are projected to grow at an average annual rate of 5.5 percent for 2018–27 and represent 19.4 percent of gross domestic product in 2027. Following a ten-year period largely influenced by the Great Recession and major health reform, national health spending growth during 2018–27 is expected to be driven primarily by long-observed demographic and economic factors fundamental to the health sector. Prices for health care goods and services are projected to grow 2.5 percent per year, on average, for 2018–27—faster than the average price growth experienced over the last decade—and to account for nearly half of projected personal health care spending growth. Among the major payers, average annual spending growth in Medicare (7.4 percent) is expected to exceed that in Medicaid (5.5 percent) and private health insurance (4.8 percent) over the projection period, mostly as a result of comparatively higher projected enrollment growth. The insured share of the population is expected to remain stable at around 90 percent throughout the period, as net gains in health coverage from all sources are projected to keep pace with population growth.”
LTC Comment: The Age Wave cometh.

Who Will Pay for LTC? (includes "Not the VA")

Forgotten Middle 0419 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2018.05233

Pearson, Caroline F., Charlene C. Quinn, Sai Loganathan, A. Rupa Datta, Beth Burnham Mace, and David C. Grabowski. 2019. The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources For Housing And Health Care. Health Affairs. 38 (5)

“ABSTRACT As people age and require more assistance with daily living and health needs, a range of housing and care options is available. Over the past four decades the market for seniors housing and care—including assisted living and independent living communities—has greatly expanded to accommodate people with more complex needs. These settings provide housing in a community environment that often includes personal care assistance services. Unfortunately, these settings are often out of the financial reach of many of this country’s eight million middle-income seniors (those ages seventy-five and older). The private seniors housing industry has generally focused on higher-income people instead. We project that by 2029 there will be 14.4 million middle-income seniors, 60 percent of whom will have mobility limitations and 20 percent of whom will have high health care and functional needs. While many of these seniors will likely need the level of care provided in seniors housing, we project that 54 percent of seniors will not have sufficient financial resources to pay for it. This gap suggests a role for public policy and the private sector in meeting future long-term care and housing needs for middle-income seniors.” (p. 1)

Critiqued in LTC Bullet: Remember the Middle: https://www.centerltc.com/bullets/latest/1252.htm

LTC Costs and Risk

Johnson on Paid Home Care in Health Affairs 0619 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2019.00025

Johnson, Richard W. and Claire Xiaozhi Wang. 2019. “The Financial Burden Of Paid Home Care On Older Adults: Oldest And Sickest Are Least Likely To Have Enough Income.” Health Affairs. 38 (6)

6/2019, “Community Care For High-Need Patients,” by Alan R. Weil, Health Affairs
Quote: “Almost everyone wants to live in their own home and community as they age. Yet for many, later age brings frailty and the accumulation of chronic conditions. This month’s issue of Health Affairs examines how we can best provide care in the community for people with advanced illness.”
LTC Comment: The June issue of Health Affairs focuses on problems with home health care for the aging, including caregiver shortages and financing. This month’s issue has several “open access” articles of interest that you can read without paying for a subscription. Check them out, but be skeptical. As usual, Health Affairs predilection is to lament the LTC service delivery and financing systems’ shortcomings without analyzing their cause and to recommend more government spending to address them, ironically doubling down on the unexamined cause of the shortcomings itself.

Johnson on Lifetime Risk 0419 URL: https://aspe.hhs.gov/system/files/pdf/261036/LifetimeRisk.pdf

Johnson, Richard W. 2019. “What Is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?” Research Brief. Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. Washington, D.C. (April)

“Medicaid covers LTSS costs for people with limited income and assets, but many people incur substantial out-of-pocket costs until they deplete their financial resources and qualify for benefits (Wiener et al. 2013). Medicaid covers many nursing homes residents (Spillman and Waidmann 2015), but very few recipients of residential care or home care (National Center for Health Statistics 2016). Relatively few home care recipients receive Medicaid benefits because there are long waiting lists for Medicaid home and community-based services (HCBS), especially in such states as Texas, Florida, Ohio, and Louisiana (Ng et al. 2015; Peterson et al. 2014). Moreover, the Medicaid income allowances for HCBS enrollees are often too low to cover reasonable living expenses (Johnson and Lindner 2016). Inadequate reimbursement rates may also make residential care communities reluctant to admit Medicaid beneficiaries (O’Keeffe, O’Keeffe, and Bernard 2003).”

LTC Comment: Good source for the latest on LTC risk.

Chapter 9: Long-Term Care Providers

General

NCHS Provider Data 2015-16 URL: https://www.cdc.gov/nchs/data/series/sr_03/sr03_43-508.pdf

Lauren Harris-Kojetin, Ph.D., Manisha Sengupta, Ph.D., Jessica Penn Lendon, Ph.D., Vincent Rome, M.P.H., Roberto Valverde, M.P.H., and Christine Caffrey, Ph.D., Long-term Care Providers and Services Users in the United States, 2015–2016 Analytical and Epidemiological Studies.

For more about this excellent resource, see 032019 LTC Bullet #1249--Treasure Trove of LTC Provider and User Data and excerpt from which follows:

LTC Comment: Ever wonder exactly how many people are receiving what kind of long-term care in which venues? We refer you today to Long-term Care Providers and Services Users in the United States, 2015–2016 by Lauren Harris-Kojetin, Ph.D., Manisha Sengupta, Ph.D., Jessica Penn Lendon, Ph.D., Vincent Rome, M.P.H., Roberto Valverde, M.P.H., and Christine Caffrey, Ph.D.
According to its Abstract: “This report presents the most current national results from the National Study of Long-Term Care Providers (NSLTCP) conducted by the National Center for Health Statistics (NCHS) to describe providers and services users in five major sectors of paid, regulated long-term care services in the United States.”
We’ll share some highlights followed by our comments below, but if you would like to see how two of its authors summarized the report’s findings, with charts and tables, check out this slide deck from a presentation by Harris-Kojetin and Lendon to the LTC Discussion Group on February 21, 2019.

Chapter 10: Medicaid

Medicaid Financing and Burwell Data

Burwell on 2016 Medicaid Expenditures 0518 URL: https://www.medicaid.gov/medicaid/ltss/downloads/reports-and-evaluations/ltssexpenditures2016.pdf

Eiken, Steve, Kate Sredl, Brian Burwell, and Angie Amos. 2018. “Medicaid Expenditures for Long-Term Services and Supports in FY 2016.” May. Official report from the Centers for Medicare & Medicaid Services, prepared by IBM Watson Health.

“The percentage of LTSS expenditures for HCBS continued to vary across population groups. HCBS accounted for 78 percent of spending in programs primarily supporting people with developmental disabilities, compared to 46 percent for behavioral health services provided to people with mental health and substance use disorders and 45 percent for programs primarily supporting older adults and people with physical disabilities.” (pps. i-ii)

This is your go-to source for data on Medicaid expenditures for institutional and HCBS. We regret to report the passing of Steve Eiken, the lead researcher on this annual resource. He was an always eager and helpful source.

Medicaid Eligibility

KFF on Medicaid LTC Elig 0619 URL: http://files.kff.org/attachment/Issue-Brief-Medicaid-Financial-Eligibility-for-Seniors-and-People-with-Disabilities-Findings-from-a-50-State-Survey

Musumeci, MaryBeth, Priya Chidambaram and Molly O’Malley Watts. 2019. Medicaid Financial Eligibility for Seniors and People with Disabilities: Findings from a 50-State Survey. Kaiser Family Foundation. June 14

LTC Comment: Latest and best source for Medicaid LTC eligibility variations by state. Dip in for a good sense of the mind-bending complexity of the subject.

Johnson on HCBS Income Limits 0517 URL

Richard W. Johnson and Stephan Lindner. 2017. The Adequacy of Income Allowances for Medicaid Home and Community-Based Services. Urban Institute. May.

“Medicaid has always covered nursing home care for people with disabilities and few financial resources who are unable to live independently. Over the past decade, Medicaid spending on home and community-based services (HCBS) for people with disabilities living outside nursing homes has increased sharply, spurred partly by the US Supreme Court’s 1999 Olmstead decision that requires states to provide alternatives to institutional care when they are appropriate and can be reasonably accommodated.1 However, the rebalancing of Medicaid expenditures on long-term services and supports (LTSS) away from institutions toward HCBS has been much slower for older adults—those ages 65 and older—than for younger people with disabilities. Medicaid’s financial eligibility rules for HCBS help explain why Medicaid’s institutional bias in the provision of LTSS has persisted for older Americans after having been largely overcome for younger people with disabilities.” (p. 1)

LTC Comment: This article explains why rebalancing from nursing homes to home care had occurred more and faster for younger people with disabilities than for the elderly.

ASPE (Thach and Wiener) on LTSS and Medicaid 0518: https://aspe.hhs.gov/system/files/pdf/259521/LTSSMedicaid.pdf

Thach, Nga T., and Joshua M. Wiener. 2018. “An Overview of Long-Term Services and Supports and Medicaid Final Report.” Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. Washington, D.C. (May)

You will not find a better description and explanation of Medicaid’s role in long-term care than this one. Alas it is one of the last works to come from Josh Wiener, an icon in the field of long-term care research, who sadly passed away January 9, 2018.

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Updated, Tuesday, September 3, 2019, 10:23 AM (Pacific)

Seattle—

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LTC E-ALERT #19-034: LTC NEWS AND COMMENT

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.

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:

Bipartisan effort probes federal oversight of Medicaid LTSS programs
Murder for Hire; Nursing Home Deaths Bring Charges; 'Fright Study'
The elderly aren’t so poor after all
Eldercare: How Does the United States Stack Up?
Verma: CMS Should Reduce Survey Frequency for Top Nursing Homes, Look Beyond Monetary Penalties
Alzheimer’s care isn’t working; here’s what is
'Medicare Advantage for All’
Missed opportunity: Patients fare poorly in long-term acute care hospitals
Economic Impact: The Senior Living Effect White Paper
Many LTCI Companies Leave Antiselection Out of Rate Hike Analyses: Milliman
Fitch: Some LTCI Issuers Look a Lot Better Than Others

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Updated, Monday, August 26, 2019, 9:56 AM (Pacific)

Seattle—

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LTC E-ALERT #19-033: LTC NEWS AND COMMENT

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.

We no longer post our LTC E-Alerts on the Center’s public access website, but here’s what today’s LTC E-Alert contained: links, quotes and comments on the following articles, reports, or data:

A nursing home crisis is brewing
Your Long-Term Care Insurance Rate Spiked. Now What?
‘Immigrant sponsors' assets will factor into Medicaid eligibility
5 Things for Agents to Know About the Big New Accounting Thing
64% would prefer assisted living to a family caregiver: poll
Dementia Care in Assisted Living Homes
Money, Data and Backup Plans: Why In-Home Medicare Advantage Benefits Are Rolling Out Slowly
Long-Term Care Insurance Policyholders Ask for Relief
GE Responds to Markopolos LTCI Reinsurance Reserving Criticisms
The looming crisis in long-term care
Medicare decides a cost-saving strategy costs too much
Training Webcast: Long-term Care Insurance with Expert Bonnie Burns
5 Markopolos GE Long-Term Care Insurance Report Highlights, for Agents

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Updated, Friday, August 23, 2019, 10:20 AM (Pacific)

Seattle—

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LTC BULLET: STILL STANDING GUARD

*** NEW MIDDLE CLASS ENTITLEMENT? Medicaid for long-term care has operated as a middle-class entitlement for half a century. Now add acute care to the mix. We can fix both if policymakers heed this groundbreaking research reported in the Wall Street Journal on August 14: “ObamaCare’s Medicaid Deception,” by Brian Blase and Aaron Yelowitz

Excerpt: “ObamaCare wasn’t supposed to give free health insurance to everybody. The Affordable Care Act’s authors expected the poor would enroll in Medicaid, while those with higher incomes would buy coverage through the new insurance exchanges, with subsidies that decrease as income rises. It isn’t working. A study published this week by the National Bureau of Economic Research finds that in several Medicaid-expansion states most people who gained coverage have enrolled in Medicaid regardless of their income. In practice, ObamaCare has turned Medicaid into an entitlement program for the middle class. … These findings should alarm Americans across the political spectrum. They show that complicated government programs often bear little resemblance to planners’ designs. ObamaCare has turned out to be a giant welfare program, with millions of working- and middle-class Americans improperly receiving Medicaid—a reflection of the unpopularity of the exchange policies and incompetence of government oversight.”

Sound familiar?

LTC BULLET: STILL STANDING GUARD

LTC Comment: The Center for Long-Term Care Reform celebrated our 21^th year last April. In those two decades, we’ve analyzed, criticized and rebutted just about every study, report, article or commission that attacked private funding or promoted compulsory government financing of long-term care. We’ve identified ideological bias by scholars, think tanks, government agencies, advocacy organizations and the media. We’ve denounced their confirmation bias when they ignore evidence contradicting their preconceptions. We’ve refuted fallacies in their logic. Today’s LTC Bullet includes links to 87 LTC Bullets we’ve published taking these groups and individuals to task:

Media: Consumer Reports, National Public Radio (NPR), Public Broadcasting System (PBS), New York Times, Wall Street Journal, Washington Post, Dow Jones MarketWatch, Health Affairs

Speaking truth to power is a mostly thankless job. Please review the efforts we’ve made to correct attacks on you for supporting responsible long-term care planning. Browse the following LTC Bullets’ titles and teasers. Pick a few to download and read in full. Then, if you find value in our work, please support the Center for Long-Term Care Reform by becoming a member or making a contribution. Contact Damon at 206-283-7036 or damon@centerltc.com to join our fight for rational long-term care financing policy.

LTC Bullets Standing Guard

LTC Bullet: Medicaid Planners Confess, October 2, 2003
LTC Comment: A survey intended to exonerate Medicaid planners is actually the strongest indictment of artificial impoverishment yet.

LTC Bullet: GAO on LTCI Partnerships, June 20, 2007
LTC Comment: GAO drops the ball again on the issues of Medicaid, long-term care financing and private insurance.

LTC Bullet: We Critique WSJ on Medicaid Planning, January 16, 2009
LTC Comment: Within 24 hours, we replied to a Wall Street Journal column that promoted Medicaid planning for long-term care.

LTC Bullet: New LTC Financing Study Uninterpreted or Misinterpreted, March 24, 2009
LTC Comment: A new report on LTC financing by Avalere Health was reported uncritically by many and mistakenly by one source.