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

READ STEVE'S BIO

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Updated, Monday, September 16, 2019, 10:14 AM (Pacific)

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LTC E-ALERT #19-036: LTC NEWS AND COMMENT

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

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

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

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

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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"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, September 9, 2019, 10:02 AM (Pacific)

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LTC E-ALERT #19-035: LTC NEWS AND COMMENT

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

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)

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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. ***

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

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)

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LTC E-ALERT #19-034: LTC NEWS AND COMMENT

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

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)

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LTC E-ALERT #19-033: LTC NEWS AND COMMENT

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

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)

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LTC BULLET: STILL 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 for 21 years. Here’s how, after the ***news.***

*** 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

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

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)

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, and David C. Grabowski.

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: 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.

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Updated, Monday, August 19, 2019, 10:20 AM (Pacific)

Seattle—

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LTC E-ALERT #19-032: LTC NEWS AND COMMENT

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

HHS Office of Inspector General plans assisted living report
GE shares tank more than 13% after Madoff whistleblower calls it a ‘bigger fraud than Enron’
ObamaCare’s Medicaid Deception
CalPERS faces ‘very serious risk’ in $1.2 billion long-term care case, judge warns
Seniors have more household debt now than they did during the financial crisis
How Frail Elders Will Pay For Trump’s New Anti-Immigrant Rules
Genworth Finds Buyer for Canadian Mortgage Insurance Unit
More Seniors with Dementia Living at Home: What You Need to Know
Class-Action Lawsuit Seeks To Let Medicare Patients Appeal Gap in Nursing Home Coverage
Alzheimer’s and dementia leading cause of death in England and Wales
To Save Money, American Patients And Surgeons Meet In Cancun

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Updated, Monday, August 12, 2019, 10:17 AM (Pacific)

Seattle—

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LTC E-ALERT #19-031: LTC NEWS AND COMMENT

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

When to Move From Independent Living to Assisted Living
Designing for dementia: Long-term memory care, from the Ground up
4 Hard Truths We're Seeing After The Fed's Rate Cuts
How Assisted Living Improves Quality of Life
Long-Term Caregiving Realities Hit Home for Boomers
Nine Charts about the Future of Retirement
5 Cheapest Countries for Retirement (Some of Which May Surprise You)
Eating more meat and eggs lowers dementia risk in men
Financial Performance of Medicare Advantage, Individual, and Group Health Insurance Markets
‘Awakenings’ in Advanced Dementia Patients Hint at Untapped Brain Reserves
Report Sounds Alarm on Medication Overload Among Older Americans
US seniors fulfill dreams, fight depression with virtual reality
Frailty a growing threat, but not inevitable, in older adults, caregivers advised
The Benefits of Hiring a Companion for an Older Adult
American seniors employed at record-high levels

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Updated, Friday, August 9, 2019, 9:00 AM (Pacific)

Seattle—

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LTC BULLET: THE POST-MEDICAID HISTORY OF LONG-TERM CARE

LTC Comment: We published the pre-Medicaid history of long-term care on March 1. The fascinating saga continues post-Medicaid today.

*** 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. ***

LTC BULLET: THE POST-MEDICAID HISTORY OF LONG-TERM CARE

LTC Comment: In “LTC Bullet: The Pre-Medicaid History of Long-Term Care,” we identified several developments that paved the way for Medicaid’s peculiar approach to long-term care financing. In summary, and …

Setting the Stage for Medicaid

In the late 18^th century, “outdoor relief,” cash payments to paupers, gave way to “indoor relief,” or poor houses for the indigent elderly. The 19^th century saw basic principles evolve away from the notion grounded in British “poor laws” that help for the needy should be disagreeable in order to discourage indolence. Gradually, public attitudes distinguished between the “deserving poor,” needy through no fault of their own, and the undeserving poor, alcoholics or the shiftless. Throughout the 20^th century, starting with the Progressive Era, the mostly voluntary, non-profit, non-governmental approach to old age support and care gave way to heavy federal and state government involvement. The Great Depression expanded and consolidated that change. In 1935, Old Age Assistance (OAA) and Social Security put money in the hands of elderly people which they often spent on non-profit or for-profit residential care facilities. Poor houses disappeared and nursing homes thrived.

By 1960, with passage of the Medical Assistance for the Aged (MAA) program, the basic structures were in place that Medicaid institutionalized in 1965: (1) virtually unlimited financing for nursing home care shared by the state and federal governments and (2) nursing home eligibility for 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.”[1] Those two characteristics guaranteed that the new Medicaid program would rapidly increase in cost, favor nursing homes over less expensive home care, and incentivize states to expand Medicaid services and reimbursement levels at drastically reduced cost by taking advantage of federal matching funds. One cost-controlling feature of earlier programs--strict eligibility criteria, transfer of assets restrictions, and mandatory liens--disappeared with the start of Medicaid.

What happened in 1965?

In 1965, America was just starting to have a serious problem with long-term care. People were living longer, but dying slower often with chronic illnesses that caused frailty and cognitive impairment. Older Americans needed more and more long-term care at the very time when women, the traditional caregivers, were entering the formal workforce in much greater numbers. This was a time when a prosperous private market for low-cost home- and community-based services, geriatric care management, and long-term care insurance might have developed in the United States. It did not.

Instead, the new federal Medicaid program offered publicly-financed long-term nursing-home care. This benefit--initially unencumbered by transfer of assets, liens or estate recovery requirements--confronted families with a difficult choice. They could pay out-of-pocket for the home care and community-based services seniors prefer or they could accept nursing-home care paid for by the government. Most people chose the safety and financial benefits of the government's Medicaid option. Therefore, Medicaid-financed nursing-home care flourished, the market for home care withered, and private long-term care insurance failed to develop. Here’s how that process unfolded.

Key Themes

Several key themes characterize the post-Medicaid history of long-term care. We list these themes here; emphasize them in the narrative; and revisit them when we sum up.

Theme #1: Government involvement in the long-term care services and financing markets is pervasive. The market for long-term care services was never allowed to function freely, based on consumers’ preferences and providers’ ability to satisfy them.

Theme #2: Government involvement in long-term care services and financing invariably addressed symptoms, never the causes of problems. Legislation, regulations and policies tackled explosive costs, poor quality, continuum-of-care imbalances, etc., but not the common cause or source of those problems, government funding itself.

Theme #3: Government involvement in long-term care services and financing was always crisis-driven, responding to budget shortfalls resulting from national economic recessions. Cost controls followed recessions, but heavy spending returned with recovery. That trend changed after the Great Recession of December 2007 – June 2009, presaging potentially catastrophic consequences as baby boomers age into senescence.

Let us see how these themes manifested in the post-Medicaid history of long-term care and what they portend for the future.

The Post-Medicaid History of Long-Term Care

On July 30, 1965, President Lyndon Johnson signed Medicaid into law providing “medical assistance on behalf of . . . aged, blind, or permanently and totally disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.” The new program’s costs exploded immediately for several reasons.[2]

States had no real choice but to participate or lose lucrative federal matching funds.[3]
Medical prices increased rapidly because Medicaid and Medicare contributed “large sums of money to the demand for medical care without substantially increasing or efficiently organizing the supply of medical services available.”[4]
Expensive hospital and nursing home expenditures absorbed the bulk of Medicaid money.[5]
From Medicaid’s inception in 1965 until 1980, federal law explicitly permitted asset transfers for the purpose of qualifying for long-term care benefits. Anyone could give away everything and qualify for benefits immediately.[6]

Bottom line, Medicaid gave everyone--states, families, and long-term care providers--strong incentives to participate with few effective limits on expenditures.

The nursing-home industry took full advantage of this new public financing source by building many new facilities. As fast as the industry could build them, the new nursing-home beds filled with Medicaid residents. Roemer's law--in paraphrase, "a built bed is a filled bed"--became a nursing home industry standby.^{^[7]} Stunned by the cost crisis, Medicaid attempted to control the construction of new beds with Certificate of Need (CON) programs based on the principle that "we cannot pay for a bed that does not exist." By the mid-1970s, health planning for nursing homes was in full swing. It worked. Fewer new beds were built.

Addressing Symptoms, Avoiding Causes

The CON laws restricting nursing home bed supply to control Medicaid costs were an early example of government attacking a symptom not the cause of high long-term care expenditures. Costs were not increasing because there were too many nursing homes. There were too many nursing homes because Medicaid long-term care funding was virtually unlimited. That was the neglected cause that government would have had to address to solve the solution.

Instead, capping bed supply predictably drove up price and demand even further. The nursing-home industry raised charges to compensate for the limitation on new beds. What the government saved by restricting bed supply, it lost to nursing-home rate increases. Consequently, Medicaid nursing-home costs grew faster than ever. In response, Medicaid capped reimbursement rates. This move impelled the nursing-home industry to increase private-pay rates to compensate. The more the government pushed Medicaid rates down, the more the industry pushed private-pay rates up. So began the highly problematic differential between low Medicaid rates and much-higher private-pay rates. Today, on average nationally, Medicaid pays only 70 percent of private-pay market rates.

So again, addressing the symptom (high nursing home charges) instead of the cause (easy access to unlimited Medicaid funds) led to an unintended consequence. It created a strong incentive for former private payers to convert to Medicaid in order to escape higher private-pay rates which were caused by nursing homes counterbalancing the rate caps imposed by Medicaid. When prices, and hence incentives, are set by markets, instead of politicians and bureaucrats, this kind of thing cannot happen. But once begun under political control, it can and did build on itself through generation after generation of public policy interventions as future developments will show.

How did long-term care evolve in the 1980s?

Higher private-pay rates made Medicaid eligibility more attractive than ever to private payers. With no limits on asset transfers to qualify, easy access to Medicaid drove up expenditures and drove out higher paying private patients. In 1970, when Medicaid was only five years old, out-of-pocket spending still contributed 49.2 percent of national nursing home costs. Medicaid paid 23.3 percent and Medicare, only 3.5 percent. By 2017, out-of-pocket spending had declined by nearly half to 26.7 percent, while Medicaid and Medicare climbed to 30.2 percent and 22.7 percent respectively.[8]

The problem of nursing homes’ declining private-pay revenue and greater dependency on Medicaid is worse than these numbers suggest. In 2011, the Centers for Medicare and Medicaid Services began reporting nursing home and Continuing Care Retirement Community (CCRC) expenditures together. CCRCs are much more likely to have private-payers than are nursing homes. So the 26.7 percent private-pay figure above is higher than it would be if nursing homes only were measured. Evidence of this is that nursing homes’ private revenue mix declined from 12 percent in 2012 to 7.9 percent in the first quarter of 2019, whereas Medicaid’s share of nursing home revenue has continued to increase from 47 percent to 49.2 percent.[9]

Because Medicaid pays nursing homes notoriously low reimbursement rates, arguably the cause of nursing home quality problems, it is even more important to understand the proportion of patient days that Medicaid pays for at its low rates as compared to the proportion of days paid by private payers at their higher rates. Based on data through March 2019, Medicaid paid for 65.8 percent of patient days, whereas private payers contributed only 8.2 percent of patient days. Clearly, private payers in nursing homes have declined radically whereas Medicaid’s role has increased substantially. So, while nursing homes get only 49.2 percent of their revenue from Medicaid, the welfare program’s low rates touch 65.8 percent of patient days. This, forces nursing homes to attract as much revenue as possible from higher paying sources such as Medicare and private pay, both of which sources are highly vulnerable.[10]

The Crisis Theme: The Role of Recessions

An economic downturn in the late 1970s led to a recession in early and mid-1980 which aggravated Medicaid’s financial distress.[11] Finally, Congress acted to discourage the overuse and abuse of Medicaid long-term care eligibility by passing the Boren-Long Amendment of 1980. For the first time, it prohibited the transfer of assets solely to qualify for Medicaid benefits.[12] But this new rule expressly excluded otherwise exempt assets, such as seniors’ largest resource, their homes. The strong incentive to take advantage of Medicaid nursing home benefits rather than paying out of pocket for non-institutional home or community-based care continued nearly as strong as ever. Medicaid costs kept rising as even upper-middle class people took advantage of the program.

Origins of Medicaid Planning

As soon as Congress began to restrict asset transfers for the purpose of qualifying for Medicaid, lawyers started finding ways to circumvent the new eligibility constraints. A whole sub-practice of law—Medicaid estate planning—developed to take advantage of this new opportunity. Qualifying affluent clients for Medicaid was and remains its main source of billable hours.

Artificial self-impoverishment, touted frequently in the national media and in local financial planning ads, became a clever solution to the long-term care financing problem for more and more people. The first known article on Medicaid planning was published in 1981 immediately after Boren-Long imposed the first limit on asset transfers.[13] 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.”[14]

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.[15]

Scores of similar law journal articles soon followed.[16]

In 1987, 23 lawyers founded the National Academy of Elder Law Attorneys (NAELA) to represent their professional interests. Today, the NAELA has grown to a membership of 4,500 with an annual budget of $2 million.[17] It functions as the Medicaid planners’ trade association, frequently advocating for looser Medicaid eligibility rules and more public spending on long-term care.

A 2003 survey of NAELA lawyers in 30 states found that 40 percent of Medicaid planning clients transferred more than $75,000 of wealth and 63 percent involved estates of more than $100,000.[18] Most clients transferred more than $50,000 in order to qualify for Medicaid benefits.[19] The rule of thumb for Medicaid planners’ compensation is that fees to qualify someone for Medicaid long-term care benefits roughly average one month’s cost of nursing home care as a private payer. According to one source, such fees “can range from $2,500 for individuals with relatively simple estates to $10,000 for individuals with significant assets.”[20]

The Federal Government Tried to Restrain Medicaid Eligibility Bracket Creep

The federal government did not sit idly by and allow Medicaid long-term care benefits to spread to the upper middle class without a fight. As usual, however, public policy makers had one foot on the accelerator, generously expanding Medicaid benefits to more and more groups, even as they pressed down on the brake with the other. Four presidents and twelve Congresses struggled to discourage the growing practice of Medicaid estate planning from the early 1980s on even as program expansions continued.

Stress on Medicaid budgets worsened as the nation suffered another and longer economic recession in 1981 and 1982. With budget ends harder and harder to meet, Congress responded with the Tax Equity and Fiscal Responsibility Act of 1982. TEFRA ’82 authorized states voluntarily to place restrictions on asset transfers for the purpose of qualifying for Medicaid, to place liens on real property and to recover benefits correctly paid from recipients' estates. Because its provisions were not mandatory and the economy soon recovered relieving the pressure on state and federal budgets, TEFRA ’82 did little to lessen the underlying problem, excessive utilization of Medicaid long-term care benefits.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA ’85) tried to control Medicaid qualifying trusts with only marginal success.

The Medicare Catastrophic Coverage Act of 1988 (MCCA ’88) made transfer of assets restrictions mandatory and lengthened the look-back period for asset transfers from two years to 30 months. None of these measures had much effect on controlling the explosion of Medicaid long-term care eligibility. Endlessly creative Medicaid planners found new legal gambits to circumvent every loophole closed.

Nursing Home Occupancy Balloons While Quality Plummets

With the supply and price of nursing-home beds capped by government fiat and with Medicaid eligibility extremely generous, nursing-home occupancy skyrocketed to an average of 95 percent nationally in the mid-1980s. Given high demand and severely limited supply, nursing-home operators could fill their beds easily with low-paying Medicaid patients regardless of the care quality they offered. To achieve adequate operating margins, however, nursing homes had to attract a sufficient supply of higher-paying private patients or cut costs drastically. Yet, if they tried to attract more lucrative private payers with preferred treatment or accommodations, the nursing homes were deemed guilty of discrimination against Medicaid patients. If they tried to cut costs instead, they came under fire for technical violations or quality problems.

In response, Congress and state governments pressured the industry to provide higher quality care without discriminating against low-paying Medicaid recipients. The Omnibus Budget Reconciliation Act of 1987 (OBRA ’87) mandated extra staff, training, and quality improvements but without appropriating extra funds to pay for them. Given the program's fiscal duress, Medicaid could not offer higher reimbursement rates to achieve the legislation’s goals. That put nursing homes in a severe bind.

What happened to long-term care in the 1990s?

Caught between the rock of inadequate reimbursement and the hard place of quality mandates, the nursing-home industry put up a strong fight. Armed with another provision from the Boren Amendment,[21] a federal law that required Medicaid to provide reimbursement “reasonable and adequate” for “efficiently and economically operated facilities,” many state nursing-home associations took the battle to court and they usually won.

By this time, however, state and federal Medicaid expenditures were increasing so quickly and taxpayers had become so reluctant to pay for growing public spending that large increases in Medicaid nursing-home reimbursements were out of the question, regardless of which side won the lawsuits. The issue became moot when Congress repealed the Boren Amendment in the Balanced Budget Act of 1997. Since then there has been no legal floor on how low Medicaid nursing home reimbursement rates can fall. Consequently, quality of Medicaid-financed nursing home care remains a large and growing concern.

But note again that instead of addressing the cause of nursing home quality problems, i.e. inadequate reimbursements, politicians attacked the symptoms by simply demanding better quality without paying for the extra hiring, training and improvements it would require.

Back to the Battle Against Medicaid Planning

Responding to state and federal budget problems incidental to the July 1990 to March 1991 recession and its slow recovery, Congress picked up the gauntlet of Medicaid planning again in the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). This legislation made the mandatory transfer of assets restrictions longer and stronger, extending the look-back period from thirty months to three full years for most transfers and five years for transfers to trusts. It also replaced the 30-month limit on the eligibility penalty for asset transfers with no time limit whatsoever and made recoveries from the estates of deceased recipients mandatory.

This OBRA ’93 package implemented many of the recommendations in a 1988 report by the Department of Health and Human Resources Office of Inspector General titled Medicaid Estate Recoveries: National Program Inspection. That report and OBRA ’93 encouraged families to retain exempt assets while relying on Medicaid for long-term care, strongly discouraged asset transfers with serious penalties, and allowed liens to hold real property in recipients’ possession until the cost of their care could be recovered from their estates. It was a government-sponsored home equity conversion program to fund long-term care, relieve the financial pressure on Medicaid, and incentivize families to plan and insure for long-term care in order to avoid Medicaid dependency and resulting estate recovery.

Unfortunately, states didn’t implement the law’s provisions aggressively; the federal government did not require them to do so; the media didn’t report the new liability of relying on Medicaid, the liens and estate recoveries; and so the public remained unaware and continued to drift onto Medicaid dependency by default. Once again, as the recession which led to OBRA ’93 abated, tax receipts increased and welfare rolls declined. Pressure was off to control Medicaid spending.

The Throw Granny and Her Layer in Jail Laws

When the OBRA ‘93 measures failed to constrain the growth of Medicaid planning and its explosive incidental costs, President Clinton joined the newly Republican-dominated Congress to try a radical solution in the Health Insurance Portability and Accountability Act of 1996 (HIPAA ’96). They criminalized asset transfers to qualify for Medicaid, assessing a $10,000 fine and a jail sentence on offenders. When senior advocacy groups exploded in opposition to this "throw granny in jail law," Congress repealed it one year later.

Undaunted, President Clinton joined Congress again in the Balanced Budget Act of 1997 (BBA ’97) to pass the "throw granny's lawyer in jail" law, which made it a crime to advise a client, in exchange for a fee, to transfer assets in order to qualify for Medicaid. This rule came to naught also. It was deemed unconstitutional, and therefore unenforceable, to hold an attorney legally culpable for recommending a practice to a client that was legal again after the criminalization of asset transfers was repealed.

After 17 years of trying to control Medicaid planning, the federal government gave up until 2006. The Medicaid planning bar prevailed. And Medicaid continued to sink into red ink making adequate reimbursement for nursing homes and home health benefits harder than ever to provide.

Promoting LTC Insurance

Worth noting is that at the same time these efforts to discourage Medicaid planning were underway, state and federal governments were encouraging citizens to buy private long-term care insurance. If people had private insurance to cover their long-term care costs, so the reasoning went, they would relieve the burden on Medicaid and help the long-term care providers, who desperately needed more private payers at rates half again as high as Medicaid's.

An experiment with "Long-Term Care Partnerships" allowed people to reduce their Medicaid spend-down liability dollar for dollar by purchasing and using private insurance. Several states adopted the early partnership program, but it languished when Congress refused to exempt any new partnership programs from the estate recovery mandate imposed by OBRA '93.[22]

HIPAA '96, besides briefly criminalizing abusive asset transfers, also granted a half-hearted tax deduction for private long-term care insurance. Because the deduction only applied to limited premium costs after total health care costs exceeded 7.5 percent of adjusted gross income, this measure helped few people afford the coverage and fizzled as an incentive to buy.

The main problem with marketing long-term care insurance, however, was the simple reality that Medicaid benefits were easy to obtain even after the insurable had occurred, without preplanning and without paying any premiums. That obstacle remains firmly in place.

Home- and Community-Based Services: A Panacea for Public Financing?

In the meantime, a wave of academic speculation beginning in the late 1970s suggested that paying for home- and community-based services (HCBS) instead of nursing-home care could save Medicaid a lot of money. Congress authorized HCBS waivers in the Omnibus Budget Reconciliation Act of 1981 (OBRA ’81), enabling states to spend Medicaid money on services other than nursing home care for the first time.

For the next four decades, Medicaid experimented with HCBS waivers as a cost-saving measure. Before long, however, hard empirical research compelled the conclusion that (desirable as they are) home- and community-based services do not save money overall.[23] Community-based care usually only delays institutional care. Between them, expanded home care plus eventual nursing home care end up costing more in the long run than nursing home care alone. There are many reasons for this. One is the economy of scale that comes from taking care of a larger number of people in an institutional setting. Another reason is that people who are enabled to remain at home and maintain their independence and control, tend to be happier. They live longer and die slower, ending up in a nursing home sooner or later anyway.

Not a single state has reduced the overall cost of nursing home and home health care by diverting more people to home care. The combined costs continue to rise everywhere, year after year. This is not to say we shouldn't find a way to fund home and community-based care. It only means that to think funding home care instead of nursing home care will save money is unreasonable. Medicaid expenditures for long-term personal and home care increased disproportionately even as nursing-home expenditures abated somewhat.

Reported HCBS spending increased 10 percent in FY 2016, greater than the five percent average annual growth from FY 2011 through 2015. Reported institutional service spending decreased two percent in FY 2016 following an average annual increase of 0.3 percent over the previous five years.[24]

Olmstead

The Supreme Court added to the pressure on Medicaid to offer home and community-based care in 1999. In Olmstead v. L.C., 119 S. Ct. 2176, the Court interpreted Title II of the Americans with Disabilities Act (ADA) to require states to serve people with disabilities in community settings rather than in institutions (such as nursing homes) when appropriate and reasonable. The Department of Health and Human Services took up the mantle of HCBS in 2001, spending millions to encourage state Medicaid waivers of the Social Security Act to promote more home and community-based care.

Despite these intensive measures to shift Medicaid away from its "institutional bias," roughly two-thirds of the program's long-term care expenditures continued to go for nursing home care by the year 2000. By 2016, overall Medicaid nursing home expenditures were down to 43 percent, while 57 percent went to HCBS. But HCBS programs primarily supporting older adults and people with physical disabilities have not kept pace. They are only 45 percent with over half, 55 percent, still going toward nursing home care.[25]

States remain afraid to shift too much of their long-term care spending toward popular home and community-based services because of the danger they will attract too many additional applicants, recipients and costs. As one analysis concluded: "Financially strapped states need massive sources of new revenues to comply with the Supreme Court's Olmstead ruling to house the elderly and disabled, if possible, in the community."[26]

It remains true, ironically, that because of the public's aversion to Medicaid nursing homes, institutional bias is Medicaid's strongest cost containment tool, one of its gravest deficiencies, and the biggest single obstacle to the expansion of privately-financed home- and community-based long-term care services.

The Interface Between HCBS and Medicaid Planning

For every person in a nursing home in America today, there are two or three of equal or greater disability, half of whom are bedbound, incontinent or both, who remain at home.[27] They are able to stay home because their families, mostly wives, daughters and daughters-in-law, struggle heroically to keep them out of a nursing home. When government starts providing long-term care that they want (home care) instead of long-term care that they don't want (nursing home care), people come out of the woodwork to take advantage of it. That drives up Medicaid long-term care expenditures.

Furthermore, if all it gets you is into a nursing home, one might be reluctant to seek the advice of an attorney to self-impoverish in order to qualify for Medicaid. But when Medicaid planning will get you access to home care services, adult day care, respite care, and even assisted living, you will be much more likely to seek out an elderlaw attorney. Medicaid financed home and community-based care encourages the practice of Medicaid estate planning.

Furthermore, Medicaid financed home and community-based care is deadly to the marketability of private long-term care financing alternatives, such as reverse mortgages or long-term care insurance. The big benefit of being able to pay privately for long-term care is the ability to command red-carpet access to top-quality long-term care at the most appropriate level and in the private marketplace. To the extent the government conveys to the American public that consumers can achieve the same benefits financed by Medicaid, Medicaid will continue to explode in cost. Reverse mortgages to fund long-term care in the short-term and LTC insurance to fund long-term care in the long run will remain stunted.

Long-Term Care in the New Millennium: Late 1990s to the Present

Reimbursement Revolution

When Medicare changed to a prospective payment system (PPS) for hospital care in 1983, patients moved out of acute care "quicker and sicker." Combined with liberalization of Medicare coverage criteria in the Medicare Catastrophic Coverage Act of 1988, this was a financial bonanza for nursing facilities and home care agencies because it augmented their census of higher-paying Medicare patients.[28]

By 1997, one-quarter of Medicare acute care discharges used postacute services within one day of leaving the hospital. . . . Skilled nursing facilities were used for more than half this time (53%), home health agencies for about one-third of the time (32%), and rehabilitation facilities about one-tenth of the time (11%), with psychiatric facilities and long-term hospitals accounting for the remainder.[29]

The long-term care industry mobilized to make the most of this opportunity. Providers grew, consolidated, and expanded into many auxiliary services to take advantage of the new, generous funding source. Wall Street caught the fever and sent long-term care stock prices way up. Private capital flowed into long-term care projects. Big money chased high hopes based on promising aging demographics in a way similar to the contemporaneous levitation of internet equities based on expectations of a "new economy." Nursing home chains prospered. The home health care industry exploded. Luxurious assisted living facilities popped up everywhere. High hopes veiled ominous possibilities.

This rosy scenario prevailed until the late 1990s. Then, having started the party by pouring vast amounts of new money into long-term care, the government removed the financial punch bowl. It replaced the generous cost plus reimbursement method, which had prevailed since the beginning of Medicaid and Medicare in 1965, with more parsimonious prospective payment systems (PPS).

The Balanced Budget Act of 1997 brought skilled nursing facilities into the prospective payment system and home health agencies were added soon thereafter. As a direct consequence, by 2000 "more than 10 percent of [skilled nursing] facilities nationwide filed Chapter 11 bankruptcy, including many of the largest chains (e.g., Vencor, Genesis Health Ventures, Mariner Post-Acute Network, Integrated Health Services, Sun Healthcare Group)."[30]

Utilization and cost of Medicare's home health benefit dropped by half the year after prospective payment was implemented.[31] Hundreds of home health agencies went bankrupt as a consequence. Providers received some reimbursement relief in the Balanced Budget Refinement Act of 1999 (BBRA '99) and the Benefits Improvement and Patient Protection Act of 2000 (BIPA '00), but the profession never has recovered its former prosperity.

How Medicaid Depends on Medicare

To this day, nursing homes rely heavily on relatively higher reimbursements from Medicare to offset Medicaid's meager rates. Yet fiscal pressure on both programs constantly threatens long-term care providers' solvency. The Medicare Payment Advisory Commission (MedPAC)[32] "continues to focus solely on data detailing the [long-term care] sector’s Medicare-only profits – without also looking at Medicaid losses," complained Mary Ousley, past chairman of the American Health Care Association (AHCA) to the House Ways and Means Committee.[33]

On December 8, 2005, MedPAC staff recommended that Congress deny an inflation increase in Medicare reimbursement rates for skilled nursing facilities for Fiscal Year 2007 and on January 10, 2006, the Medicare Payment Advisory Commission (MedPAC) so voted.[34] As of 2019, MedPAC continues to do so even as Congress continues to ignore the recommendation.

The nation’s more than 15,000 skilled nursing facilities should not receive a scheduled 2.6% Medicare market basket update in fiscal 2020, MedPAC wrote in its twice-annual report to Congress, citing a variety of positive benchmarks for the industry.[35]

Medicaid reimbursement for nursing homes is demonstrably deficient, falling in the early 2000s $12.58 per patient day below allowable costs, as studies by the accounting firm BDO Seidman for AHCA repeatedly established.[36] If that were all, it would be bad enough. But low reimbursements drag down quality and quality problems invite lawsuits.

Tort Liability

A wit remarked once that “Medicaid demands Ritz Carlton care at Motel 6 rates while imposing a regulatory jihad.” But laws and regulations cannot command quality care without paying for it. OBRA’ 87’s failure proved that. Tort liability has become a huge problem for long-term care facilities. A study by the actuarial firm Aon for the American Health Care Association found that claim frequency doubled and severity tripled between 1996 and 2005 and "the annual patient care liability cost for each occupied bed in a long term care facility has grown from $430 in 1993 to $2,310 in 2004."[37] Malpractice insurance costs have surged.[38] In Florida, the state worst hit, "the high liability costs were so dramatic that they entirely offset the average $28 per day increase in Medicaid reimbursement for nursing homes implemented over a five-year period, from $86 in 1995 to $114 in 2000."[39] All of these pressures continue to weigh heavily on the ability of long-term care providers to remain financially solvent while providing care of acceptable quality.

The sixteenth published edition of the Aon General and Professional Liability Benchmark for Long Term Care Providers estimates ultimate loss rates, or the cost of liability for skilled nursing providers on a per-bed basis. The projected national 2019 loss rate is estimated to be $2,410. This means that a skilled nursing facility with 100 occupied beds can expect approximately $241,000 in liability expenses in 2019.[40]

What Have the 2000s Wrought For Long-Term Care?

Following the recession from March to November, 2001, the escalating cost of Medicaid returned as an important budget issue for states and the federal government. Policy makers turned again to the question of how to restrain the overuse of Medicaid’s most expensive benefit, long-term care.

On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 (DRA '05.) It passed by a single vote, supplied by Vice President Cheney who had to be transported back from the Middle East to cast the deciding vote in the Senate. As soon as the law was signed, senior advocacy organizations and Medicaid planning attorneys filed lawsuits against it, but all of this litigation was thrown out of court.

The DRA '05 took some giant steps in the direction of controlling Medicaid eligibility. For the first time ever, it put a limit on the amount of equity that can be exempted in a home and contiguous property. The limit was placed between $500,000 and $750,000 at the option of each state legislature. Pegged to inflation, the limits have increased to $585,000 and $878,000, respectively, as of 2019. Capping the home equity exemption was a step in the right direction, but the half-million dollar limit actually imposed was not enough to solve the problem. At the current levels inflated over time, people can shelter assets many times the average $79,200 home equity of elderly persons and still qualify for Medicaid.[41]

When state governments were under severe budgetary constraint, the National Governors Association advocated in writing for a limit on the Medicaid home equity exemption of only $50,000. That might have been an effective deterrent to Medicaid long-term care overuse. Unfortunately, the estate recovery requirement from OBRA '93, which was supposed to ensure that exempt assets are eventually used to reimburse Medicaid for the home owners care, is itself easy to avoid. So without lower limits on the home equity exemption or stronger estate recovery enforcement, Medicaid will continue to be the dominant source of long-term care financing for aging Americans.

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

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

Another Bust and Boom Story

America’s post-Internet-boom, early-2000s recession led to passage of the DRA ’05 with its new constraints on Medicaid LTC financial eligibility. As so often happened in the past, however, by the time the new legislation passed, the economy had improved considerably, welfare rolls went down, tax receipts improved and public officials at the state and federal levels lost their enthusiasm for enforcing the new restrictions. In California, for example, Medi-Cal (California’s name for Medicaid) didn’t implement, much less enforce, the mandatory changes required by the DRA ’05, such as the longer look-back period for asset transfers and the cap on home equity. Nor did the federal government enforce the law, allowing California to flout it with impunity and other states to get by with only half-hearted enforcement.[42]

Medicaid planners found new ways to circumvent the DRA’s stronger spend-down rules, replacing for example the newly proscribed “half-a-loaf” strategy with a clever “reverse half-a-loaf” gimmick whereby their affluent clients could use promissory notes or annuities to “cure” an asset transfer penalty and achieve the same objective to preserve half the assets. Medicaid-compliant annuities re-emerged in popularity allowing “millionaires” to qualify easily for LTC benefits according to MaineCare[43] eligibility workers.[44]

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

The Broken Rhythm of Reform

Historically, progress toward making Medicaid a better long-term care safety for the poor tended 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 and fiscal 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 was not signed into law until February of 2006, nearly five years after the start of the previous recession. Ultimately, economic recovery did come and, true to form, enforcement of DRA ‘05 declined.

The resulting boom ended when the housing bubble burst, causing the Great Recession of December 2007 to June 2009. Again, economic recovery came very slowly and meagerly.[45] By 2016, seven years after the end of the last recession, we had seen neither a full economic recovery nor 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 government program funded by taxpayers to expand public financing of long-term care for all.

What might explain slower recoveries in recent years and less attention to the cost of Medicaid long-term care benefits? The Federal Reserve forced interest rates to almost zero 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.

How Washington Learned to Love Debt and Deficits

By enabling politicians to spend more without facing the normal fiscal 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 abated 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 mid-decade 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 nearing $23 trillion and total unfunded entitlement liabilities around $125 trillion, a return to economically realistic market-based interest rates would render the federal government immediately insolvent.[46]

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. By age 66 in 2012, they had turned the Social Security and Medicare programs 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, around the time Social Security and Medicare 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 a former Center 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.”[47] In a sentence, 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.

As fiscal and monetary pressure on government spending abated, other factors also combined to discourage controls on Medicaid long-term care benefit expansion.

Maintenance of Effort

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

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

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

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

Thus, faced with widespread budget shortfalls and doubtful new revenues sufficient to close the gaps, states had only two ways to constrain costs: cut benefits or cut reimbursements. With eligibility cuts out of bounds due to MOE, the states’ only options, besides shifting funds from education or some other budget category, were to eliminate desperately needed services or to reduce provider reimbursements. Cutting services hurts the needy most. Provider reimbursements were already minimal and further cuts could lead to facility closures and other long-term care provider shortages. By the beginning of the second decade of the new millennium, the maintenance of effort requirement was a major obstacle to Medicaid long-term care reform, which remained stymied so long as MOE remained in effect.

ObamaCare

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

The other way ObamaCare addressed long-term care was with several special programs and pilots designed to encourage more public financing of home and community-based services (HCBS). These are described in an October 2011 report by the Kaiser Family Foundation titled “State Options That Expand Access to Medicaid Home and Community-Based Services.” They need not concern us here, because, as explained earlier, publicly financed home- and community-based services on a wide scale are not financially sustainable, impede a private market for home-based care, and discourage responsible long-term care planning. Striving to make Medicaid long-term care services more attractive without limiting eligibility to those truly in need drives up the program’s cost while reducing the potential private resources that might improve the long-term care service delivery system.

Value-Based Care and Reimbursement

Huge changes in how the government pays for post-acute and long-term care are under way today, building steam, and about to revolutionize long-term care service delivery. The system's transformation to "managed care," whereby state Medicaid programs turn over responsibility for providing and paying for LTC to the highest bidders, has long been sweeping the country. The Obama Administration, including the Centers for Medicare and Medicaid Services, pushed headlong into managed long-term care. The Trump Administration has followed suit.

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, will come between the payer (Medicaid) and the provider, which already stands between the patient and access to quality care. Long-term care providers complain vehemently that their already meager Medicaid reimbursements, often less than the cost of the care, will be further attenuated with potentially dire consequences for care access and quality.

The government's latest move toward centralized control of the long-term care market is even more significant. The federal bureaucracy is replacing traditional fee-for-service reimbursement with new, experimental financing schemes based on value-based payments. 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," “value-based” reimbursement and, most recently PDPM, or the Patient Directed Payment Model, are on every health care bureaucrat's lips.

The idea behind the value-based revolution is to reward long-term care providers for quality instead of quantity, for performance and results, instead of for the number of services they provide. It sounds like a great idea. Who doesn’t want higher quality, better outcomes, at the same or lower cost? The problem comes from having politicians and bureaucrats define quality and outcomes, instead of doctors and patients deciding and choosing. Such an approach is highly susceptible to improper influence, abuse and rationing.[48] 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.

Attacking Symptoms Again While Ignoring Causes

In a free market, devoid of government interference, people would purchase health care services the same way they buy other products and services. Using their own funds, or an insurance company’s in catastrophic circumstances, patients would choose their doctors, caregivers, and long-term care providers based on price and reputation. If they were not happy with the care they received, they would change providers. Over time the market would sort out the providers, with the best ones surviving and prospering while the poor ones would decline or disappear. No need for central planners to decide what is good care and reward or punish providers. That just adds an expensive and unnecessary layer of bureaucracy.

The right questions to ask about value-based payments are these: why does government pay for most long-term care in the first place? Why does it have to revolutionize its reimbursement methods to ensure quality? Why can't people simply choose the long-term care services and providers they prefer without the long arm of the law needing to intervene? The answer to all these questions is the same. This latest push by government to manage the long-term care service delivery and financing system is designed to fix problems that were caused by earlier government interventions, as we’ve explained in the foregoing history of Medicaid and long-term care financing.

As always before, these new value-based interventions address symptoms—high costs, low quality and public-policy-induced market dysfunction—instead of the real causes, perverse incentives created by earlier government intercessions that turn patients and long-term care recipients into financial pawns instead of customers. The risk is that further interference in an already fragile long-term care market will turn everything topsy-turvy just as the age wave begins to crest and the entitlement programs’ unfunded liabilities begin to come due.

So What Is the Bottom Line on the Post-Medicaid History of Long-Term Care?

In a nutshell, just as heavy demand was building for a privately financed senior services market in the 1960s, Medicaid co-opted the trend by providing easy access to subsidized nursing-home care.

Confronted with a choice between paying out-of-pocket for a lower level of care or receiving a higher level of care at much less expense, seniors and their families made the predictable economic choice. They closed Medicaid-funded nursing home care. Naturally, the potential market for long-term care insurance and privately-financed home- and community-based services languished.

Medicaid nursing-home caseloads and expenditures increased rapidly and drastically. In response, Medicaid capped bed supply and reimbursement rates, which led inevitably to excessively high occupancy, private-pay rate inflation, discrimination against low-paying Medicaid patients, and serious quality of care issues.

Over time, Medicaid nursing-home care acquired a national reputation for impeded access, dubious quality, inadequate reimbursement, widespread discrimination, pervasive institutional bias, and excessive cost.

Medicaid remains, nonetheless, the only way middle-class people can pay for long-term care without selling their homes nor, if they are clever, liquidating their savings. That is why so many otherwise independent and responsible Americans fail to buy private insurance while they are young and healthy enough to qualify for it and afford it. It is why they end up looking to Medicaid planning as the only way to save their estates or their inheritances. It is the reason why a huge proportion of America's proud World War II generation has died on welfare in nursing homes.

Today, these historical trends have almost run their course. We are on the verge of a promising, but perilous, new world of long-term care. We are floundering forward, compelled by necessity to change the system somehow.

Both the private marketplace and public policy are pushing long-term care in a more consumer-friendly direction. Nursing-home occupancy has declined. The trend toward privately-financed assisted living is growing. New buzz words dominate our professional jargon. Policy makers look to concepts like capitation, managed care, dual eligibles, and integration of acute and long-term care for new hope.

Is our dream of a seamless long-term care delivery and financing system just around the next bend in public policy? Or are we at risk of making the same mistakes as in the past, but on a wider scale and with more disastrous consequences? To answer these questions, we need to find a fresh perspective on the past, present, and future of long-term care financing.

Applying Themes

We identified three predominant themes in the post-Medicaid history of long-term care: (1) generous government financing aimed at (2) ameliorating symptoms instead of removing causes while (3) acting in response to budget crises incidental to national economic recessions. We showed how Medicaid provided a huge funding source directed to nursing home care, tried to control symptoms like excessive supply, utilization, and eligibility when costs exploded, but ignored the cause, perverse incentives created by the virtually unlimited funding. Medicaid became the principal payer of long-term care in the United States for poor and rich alike and that led directly to the dysfunctional system we struggle with today.

If Medicaid is not the catastrophic poverty-maker its long-term care critics make it out to be, what is it? Simply put, it has become an entitlement for middle-class and affluent families. By making nursing home care virtually free in the mid-1960s, Medicaid locked an institutional bias into the long-term care system, crowded out a privately financed market for home care, and trapped the World War II generation in sterile, welfare-financed nursing facilities.[49]

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.[50]

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.

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.[51]

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.[52]

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.[53]

Medicaid is the cause of most of the dysfunction in America’s long-term care service delivery and financing system. But blame should not fall on a mythical Medicaid program imagined by advocates of a new compulsory government program. Rather, blame must fall on the real Medicaid program that has operated by funding long-term care after people require expensive care while allowing them both time and the means to preserve most of their wealth.

Notes

[1] “History of Senior Living: 1960 - 1969,” https://www.seniorliving.org/history/1960-1969/.

[2] Columbia Journal of Law and Social Problems, “Medicaid: The Patchwork Crazy Quilt,” Columbia Journal of Law and Social Problems, 5 Colum. J.L. & Soc. Probs. 62 1969, https://heinonline.org

[3] Sydney E. Bernard and Eugene Feingold, “The Impact of Medicaid,” Wisconsin Law Review, Wis. L. Rev. 726 1970, p. 743.

[4] Ibid., p. 745.

[5] Ibid., p. 747.

[6] “Prior to an amendment to the SSI program in 1980, applicants were expressly permitted to transfer resources that otherwise would have disqualified them from receiving any benefits. A number of decisions confirmed that states were not permitted to deny Medicaid eligibility to an applicant who had divested himself of resources for less than fair market value.” Timothy N. Carlucci, “The Asset Transfer Dilemma: Disposal of Resources and Qualification for Medicaid Assistance,” Drake Law Review, 36 Drake L. Rev. 369 1986-1987, p. 372, https://lawreviewdrake.files.wordpress.com/2016/09/carlucci.pdf.

[7] Milton I. Roemer first posited Roemer's law around 1960. In 1993, he reiterated this observation in National Health Systems of the World, Volume Two (Oxford University Press): "The optimal supply of hospital beds needed by each country, for planning purposes, has been a subject of study and debate everywhere. If there is an assured payment system, it seems that almost any additional hospital beds provided will tend to be used, up to a ceiling not yet determined." The Dartmouth Atlas of Health Care 1999, "The Quality of Medical Care in the United States: A Report on the Medicare Program," The Center for the Evaluative Clinical Sciences, Dartmouth Medical School, Hanover, New Hampshire, 1999, p. 309.

[8] Source: [LINK]. For analysis, see “LTC Bullet: So What If the Government Pays for Most LTC?, 2017 Data Update,” December 13, 2018.

[9] Skilled Nursing Data Report Key Occupancy & Revenue Trends Based on Data from January 2012 through March 2019, National Investment Center (NIC), https://info.nic.org.

[10] Ibid.

[11] For a list of all U.S. economic recessions, see https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States

[12] Shawn Patrick Regan, “Medicaid Estate Planning: Congress’ Ersatz Solution for Long-Term Health Care,” Catholic University Law Review, 44 Cath. U. L. Rev. 1217, 1227 (1995), p. 1228, https://scholarship.law.edu.

[13] William G. Talis, “Medicaid as an Estate Planning Tool,” Massachusetts Law Review, Spring 1981, pps. 89-90

[14] Ibid., p. 90

[15] Ibid.

[16] Find many examples of Medicaid planning articles in Stephen A. Moses, How to Fix Long-Term Care Financing, “Appendix A: Supplemental Bibliography,” Center for Long-Term Care Reform and Foundation for Government Accountability, 2017, pps. 34-63.

[17] Cited July 25, 2019 from the “History” of NAELA on the organization’s website: https://www.naela.org

[18] ElderLaw News, “Survey Finds Rich Are Not Engaging in Medicaid Planning,” ElderLaw News, September 2, 2003; http://www. elderlawanswers.com/survey-finds-rich-are-not-engaging-in-medicaid-planning-2697, cited June 19, 2019. Critiqued in S. Moses, “LTC Bullet: Medicaid Planners Confess,” October 2, 2003; http://www.centerltc.com/bullets/archives2003/464.htm.

[19] Ibid.

[20] Milan Markovic, “Lawyers and the Secret Welfare State,” Fordham Law Review, 84 Fordham L. Rev. 1845 2015-2016, p. 1857, footnote 88; http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=5184&context=flr

[21] "As part of the Omnibus Reconciliation Act of 1980, the 'Boren amendment' required that Medicaid nursing home rates be 'reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities in order to provide care and services in conformity with applicable state and federal laws, regulations, and quality and safety standards' (Section 1902(a)(13) of the Social Security Act)." Joshua M. Wiener and David G. Stevenson, "Repeal of the 'Boren Amendment': Implications for Quality of Care in Nursing Homes," The Urban Institute, Series A, No. A-30, December 1998, http://www.urban.org/url.cfm?ID=308020&renderforprint=1, p. 1.

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

[23] "Evaluations of community care programs...tend to show not only that expansion of community care has little effect on nursing home use, but that it raises, rather than lowers, total expenditures." Alice M. Rivlin and Joshua M. Wiener, Caring for the Disabled Elderly: Who Will Pay?, The Brookings Institution, Washington, D.C., 1988, p. 190.

[24] Steve Eiken, Kate Sredl, Brian Burwell and Angie Amos, “Medicaid Expenditures for Long-Term Services and Supports in FY 2016,” IBM Watson Health, May 2018, https://www.medicaid.gov/medicaid/ltss/downloads/reports-and-evaluations/ltssexpenditures2016.pdf.

[25] Ibid., p.2

[26] _______, "Massive New Spending Needed to Comply with Olmstead Ruling," Aging News Alert, January 14, 2002.

[27] William E. Oriol, The Complex Cube of Long-Term Care, American Health Planning Association, Washington, D.C., 1985. An old source, but undoubtedly still a correct statistic.

[28] Although many provisions of MCCA '88 were repealed the following year, home health care and nursing home services remained much easier to obtain than before and utilization and costs of those services increased rapidly.

[29] Gerben Dejong, et al., "The Organization and Financing of Health Services for People with Disabilities," The Milbank Quarterly, Vol. 80, No. 2, 2002, p. 282.

[30] R. Konetzka, et al., "Effects of Medicare Payment Changes on Nursing Home Staffing and Deficiencies," American College of Healthcare Executives, Vol. 39, No. 3, June 1, 2004, p. 463.

[31] Harriet L. Komisar, "Rolling Back Medicare Home Health," Health Care Financing Review, U.S. Department of Health and Human Services, Vol. 24, No. 2, Pg. 33.

[32] "The Medicare Payment Advisory Commission is a nonpartisan legislative branch agency that provides the U.S. Congress with analysis and policy advice on the Medicare program.” Source: www.medpac.gov, cited June 20, 2019.

[33] "AHCA to Ways and Means Health Subcommittee: MedPAC Recommendations on Nursing Home Funding Illogical, Hurts Seniors," March 6, 2003.

[34] AHCA President's Memo Number 57, December 9, 2005.

[35] Alex Spanko, “MedPAC Again Calls for $2B in SNF Cuts, But Also Urges Caution Amid PDPM Shift,” Skilled Nursing News, March 15, 2019.

[36] "The daily reimbursement shortfall increased by about 9% from 2001 to 2002 (about 39% in the 4 years from 1999 to 2002). Unreimbursed Medicaid allowable costs were estimated at $4.5 billion nationally in 2002. Since 1999, cost increases have exceeded rate increases by 2%." BDO Seidman, LLP, "A Report on Shortfalls in Medicaid Funding for Nursing Home Care," prepared for the American Health Care Association, April 2005, p. ii.

[37] "Aon Study Finds Liability Cost Increases of 182 Percent in the Long Term Care Sector Since 1996," AHCA News, May 5, 2005.

[38] "The cost of malpractice insurance for nursing homes has jumped an average 51%, according to a study funded by a long-term-care trade group to be released today. The situation is particularly severe in several states with large populations of seniors, including Texas, Arkansas and Florida." Andrea Petersen, "Nursing Homes Face Insurance Crunch: Wave of Consumer Lawsuits Pushes Cost of Malpractice Policies Higher; Some Doctors Stop Seeing Seniors, The Wall Street Journal, June 3, 2004, Page D1. For the full report, see Theresa W. Bourdon and Sharon C. Dubin, "Long Term Care General Liability and Professional Liability, 2004 Actuarial Analysis," Aon Risk Consultants, Inc., American Health Care Association, June 2004.

[39] Elizabeth Devore, "Nursing Homes: The Escalating Liability Crisis," National Conference of State Legislatures, Health Policy Tracking Service, February 2002, p. 1.

[40] “2018 Aon General and Professional Liability Benchmark for Long Term Care Providers,” AON, October 16, 2018, https://www.aon.com/risk-services/thought-leadership/report-2018-long-term-care.jsp.

[41] For the average home equity of elderly people, see the table citing U.S. Census Bureau, Survey of Income and Program Participation, 2014 Panel, Wave 2, in Teresa Ghilarducci, “Reverse Mortgages Are A Bust Partly Because Average Home Equity Is $80,000,” Forbes, January 17, 2019, https://www.forbes.com.

[42] Stephen A. Moses, “Medi-Cal Long-Term Care: Safety Net or Hammock?,” Center for Long-Term Care Reform and Pacific Research Institute, January 2011, p. 25.

[43] MaineCare is Maine’s name for Medicaid.

[44] Stephen A. Moses, “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net,” Center for Long-Term Care Reform and the Maine Health Care Association, November 2012, p. 10.

[45] According to the Wall Street Journal, we are experiencing “the weakest pace of any expansion since at least 1949.” Eric Morath and Jeffrey Sparshott, “U.S. GDP Grew a Disappointing 1.2% in Second Quarter,” Wall Street Journal, July 29, 2016; http://www.wsj.com/articles/u-s-economy-grew-at-a-disappointing-1-2-in-2nd-quarter-1469795649.

“Even seven years after the recession ended, the current stretch of economic gains has yielded less growth than much shorter business cycles.” Eric Morath, “Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era,” Wall Street Journal, July 29, 2016; http://blogs.wsj.com/economics/2016/07/29/seven-years-later-recovery-remains-the-weakest-of-the-post-world-war-ii-era/.

[46] The “National Debt Clock” (http://www.usdebtclock.org/) places U.S. national debt at $22.5 trillion and unfunded liabilities at $125.0 trillion, a little over $1 million per taxpayer (cited July 25, 2019).

[47] Christopher J. Truffer, Christian J. Wolfe, and Kathryn E. Rennie, “Report to Congress: 2016 Actuarial Report on the Financial Outlook for Medicaid,” Office of the Actuary, Centers for Medicare & Medicaid Services, United States Department of Health & Human Services, Sylvia Mathews Burwell, Secretary of Health and Human Services, 2016, p. 3, https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/MedicaidReport2016.pdf. This identical quote was in the 2013 version of the “Actuarial Report” and was critiqued in S. Moses, “LTC Bullet: Does Medicaid Solvency Matter?,” Friday, October 31, 2014; http://www.centerltc.com/bullets/archives2014/1062.htm.

[48] “[W]atchdogs say the efforts to give providers more control over quality through value-based payment initiatives may actually create new avenues for fraud or corruption,” Kimberly Marselas, “Value-based care focus could erode regulatory safeguards, critics argue,” McKnight’s LTC News, June 20, 2019.

[49] One Medicaid planner promised and advertised nursing home care “virtually free for life.” Read about his program in Stephen Moses, “LTC Bullet: ‘Nursing Home Care Virtually Free For Life,’ May 7, 2002; http://www.centerltc.com/bullets/archives2002/361.htm.

[50] “Unreimbursed allowable Medicaid costs for 2015 are projected to exceed $7.0 billion. Expressed as a shortfall in reimbursement per Medicaid patient day, the estimated average Medicaid shortfall for 2015 is projected to be $22.46, which is a 6.0 percent increase over the preceding year’s projected shortfall of $21.20.” ELJAY, LLC & Hansen Hunter & Company, PC, “A Report on Shortfalls in Medicaid Funding for Nursing Center Care,” American Health Care Association, Washington, D.C., April 2016, p. 1; https://www.ahcancal.org.

[51] “Private insurance could be made more attractive to consumers by . . . taking steps to remove or lessen what is sometimes termed Medicaid crowd-out--the dampening effect that the availability of Medicaid’s LTC benefits has on sales of private LTC insurance policies.” The United States Congress, Congressional Budget Office, “Financing Long-Term Care for the Elderly,” April 2004, p. xiii; https://www.cbo.gov/sites/default/files/108th-congress-2003-2004/reports/04-26-longtermcare.pdf.

“Given the current structure of Medicaid, we estimate that even if (contrary to fact) comprehensive private insurance policies were available at actuarially fair prices, about two-thirds of the wealth distribution still would not want to buy this insurance. This suggests that fundamental Medicaid reform is necessary for the private insurance market to expand considerably.” (p. 1084) and “At actuarially fair prices, simple expected utility theory says that in our model all individuals would purchase insurance in the absence of Medicaid.” (p. 1095) Jeffrey R. Brown and Amy Finkelstein, “The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market,” American Economic Review, 98:3, 20081083–1102; http://www.aeaweb.org/articles.php?doi=10.1257/aer.98.3.1083

[52] “We demonstrate theoretically that social insurance programs with means tests based on assets discourage saving by households with low expected lifetime income.” R. Glenn Hubbard, Jonathan Skinner, and Stephen P. Zeldes, “Precautionary Saving and Social Insurance,” The Journal of Political Economy, Vol. 103, No. 2, April 1995; https://www0.gsb.columbia.edu

[53] “For many elderly people the risk of living long and requiring expensive medical care is a more important driver of old age saving than the desire to leave bequests. Social insurance programs such as Medicaid rationalize the low asset holdings of the poorest. These government programs, however, also benefit the rich because they insure them against their worst nightmares about their very old age: either not being able to afford the medical care that they need, or being left destitute by huge medical bills.” Mariacristina De Nardi, Eric French, and John Bailey Jones, “Why Do the Elderly Save? The Role of Medical Expenses,” NBER Working Paper No. 15149, July 2009, p. 2; http://www.nber.org/papers/w15149.pdf.

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Updated, Monday, August 5, 2019, 10:21 AM (Pacific)

Seattle—

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LTC E-ALERT #19-030: LTC NEWS AND COMMENT

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

New NAIC Long-Term Care Insurance Squad May Keep Some Work Private
New Active Adult Communities Adopt Modern, Flexible Designs
Things I Think: Good, Bad news
Secret shoppers in LTC
Medicare Advantage Hasn’t Always Prioritized Skilled Nursing — But That’s Changing
Advisor Alert: Learning Medicaid Planning Can Keep You From Getting Sued
Genworth Says It's Seeking Buyers for Canadian Unit
As Democrats Debate Single Payer, Humana's Medicare Advantage Enrollment Soars
Current estimates fail to account for ‘hidden’ costs of Alzheimer’s, researchers say
Does Long-Term Care Insurance Cover Assisted Living?
Average LTC policy claim amounts for assisted living top other settings
LTC leads hot healthcare market in first half of 2019

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Updated, Monday, July 29, 2019, 9:56 AM (Pacific)

Seattle—

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LTC E-ALERT #19-029: LTC NEWS AND COMMENT

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

The wave after the silver one
The downside of low interest rates
‘Brain Safe’ App Helping Elderly Patients Avoid Dementia-Linked Drugs
Spicy diet linked to dementia, study says
The Problematic Law And Policy Of Medicaid Block Grants
With Trump’s Blessing, Some States Aim to Cap Medicaid Rolls
Regulators Brainstorm About Medigap LTC Benefits
Survey: Where assisted living is most expensive, least expensive
HHS Administrator Verma Issues Remarks at Better Medicare Alliance Medicare Advantage Summit
Life-LTC Hybrid Sales Level Off: LIMRA
New standards aim to improve surgery for the oldest patients
Frequent Sleeping Pill Use Linked to Increased Dementia Risk
Apathy: The forgotten symptom of dementia

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Updated, Friday, July 26, 2019, 9:58 AM (Pacific)

Seattle—

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LTC BULLET: STATE OF THE LTCI INDUSTRY—2019

LTC Comment: Read highlights from the Broker World’s annual long-term care statistical tour d’ force below.

LTC BULLET: STATE OF THE LTCI INDUSTRY--2019

LTC Comment: “The 2019 Milliman Long Term Care Insurance Survey is the 21st consecutive annual review of stand-alone long-term care insurance (LTCI) published by Broker World magazine. It analyzes the marketplace, reports sales distributions, and describes available products including group insurance.”

Subscribers can find this article, authored by actuaries Claude Thau, Allen Schmitz, and Chris Giese, in Broker World’s July 2019 issue here. To whet your appetite for more, here are a few items that stood out to us:

“Eleven carriers participated broadly in this survey. Four others provided sales information so we could report more accurate aggregate industry individual and multi-life sales. From these submissions, we estimated total industry production.”
“The 15 carriers reported sales of 56,288 policies and certificates (“policies” henceforth) with new annualized premium of $171,537,644 (including exercised FPOs [Future Purchase Options) in 2018, compared to 2017 restated sales of 64,800 policies ($181,506,770 of new annualized premium), a 13.1 percent drop in the number of policies and a 5.5 percent drop in the amount of new annualized premium. As noted in the Market Perspective section, sales of policies combining LTCI with other risks continue to increase.”
“With FPO elections included in new premium, Northwestern garnered the number one spot in new sales. Mutual of Omaha was a strong second and had a large lead in annualized premium from new policies sold. Together, they combined for 57 percent of new premium including FPOs and 52 percent of new premium excluding FPOs.”
“Participants’ individual claims rose 5.9 percent. Overall, the stand-alone LTCI industry incurred $11.0 billion in claims in 2017 based on companies’ statutory annual filings, raising total incurred claims from 1991 through 2017 to $129.9 billion.”
“The average processing time in the industry was eight percent faster in 2018 than in 2017. Nonetheless, active policies resulted from only 58.8 percent of applications, even lower than 2017’s record low of 59.0 percent.”
“The stability of current prices bears no resemblance to the past instability because today’s prices reflect much more conservative assumptions based on far more credible data and low investment yields. Unfortunately, many financial advisors presume that new policies will face steep price increases. It is likely to take a long time before the market becomes comfortable that prices are stable.”
“Looking at the total LTCI market, stand-alone policies accounted for 20.0 percent of the 2017 policies sold, policies with extensions of benefits (EOB) accounted for 11.2 percent and policies with accelerated death benefits but no EOB accounted for 68.8 percent.”
“Claimants rarely challenge insurer claim adjudications. Since 2009 (varies by jurisdiction), if an insurer concludes that a claimant is not chronically ill, the insurer must inform the claimant of his/her right to appeal the decision to independent third-party review (IR). The IR determination is binding on insurers. As shown in our Product Exhibit, most participants have extended IR beyond statutory requirements, most commonly to policies issued prior to the effective date of IR. At least four participating insurers report never having a request for IR. Four other insurers have reported a total of 72 IR requests resulting in the insurers’ denials being upheld more than 90 percent of the time.”
“The average premium per new life ($2,544) is 18 percent less than we would have quoted including FPOs in the numerator. Three insurers reported average premiums for new insureds below $1,700, while five insurers were over $2,800. The average premium per new buying unit (counts a couple only once) was $3,598. The lowest average new premium (including FPOs) was in Puerto Rico ($1,960), followed by Kansas ($2,448), while the highest was in New York ($4,243), followed by Connecticut ($3,886). Due to rate increases, FPO elections and termination of older policies, the average inforce premium jumped to $2,168, 3.0 percent more than our restated 2017 figure.”
“The average issue age was 56.6.”
“The average notional benefit period slightly increased from 3.73 to 3.74. Because of Shared Care benefits, total coverage was higher than the 3.74 average suggests. For the first time, a single benefit period (3-year) accounted for half the sales.”
“Five percent compounded for life, which represented 56 percent of sales in 2003 and more than 47.5 percent of sales each year from 2006 to 2008, now accounts for only two percent of sales. Simple five percent increases for life were 19 percent of 2003 sales but are now only 0.4 percent of sales.”
“The 77.8 percent of accepted applicants who purchased coverage when their partners were declined was the highest over that time period.”
“Fifty-five percent (55.1 percent) of all buyers were female, the lowest percentage since 2012.”
“Partnership sales were reported in 44 jurisdictions in 2018, all but Alaska, District of Columbia, Hawaii, Massachusetts, Mississippi, Utah, and Vermont, where Partnership programs do not exist. Massachusetts has a somewhat similar program (MassHealth).”
“Ten insurers contributed application case disposition data to Table 21. In 2018, 58.8 percent of applications were placed, including those that were modified, a new low slightly below 2017’s previous record low of 59.0 percent.”

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Updated, Monday, July 22, 2019, 10:35 AM (Pacific)

Seattle—

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LTC E-ALERT #19-028: LTC NEWS AND COMMENT

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

With I-SNPs, Nursing Homes Can Thrive Under ‘the Godfather’ of Value-Based Care
In the Lingering Light
Researchers call providers’ discharge habits into doubt
What You Don’t Know About Your Parents’ Finances Could Ruin Yours
Integrity Marketing Acquires Another Senior Products Distributor
Scientists offer new clues on why Alzheimer’s risk differs for women and men
Scientists close in on blood test for Alzheimer’s
Long-term care gets candidate Klobuchar’s attention
Liz Weston: 3 steps to keep ‘solo agers’ happier and safer
How Cory Booker would address long-term care
Providers fight back against accusations of denied access due to payment ability
Can Alzheimer's be stopped? Five lifestyle behaviors are key, new research suggests

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Updated, Monday, July 15, 2019, 9:48 AM (Pacific)

Seattle—

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LTC E-ALERT #19-027: LTC NEWS AND COMMENT

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

Do you have enough home equity to pay for long-term care in retirement?
The unpaid caregiver crisis is landing on employers’ doorsteps
How Amy Klobuchar would improve care for seniors
How Trump Is Reforming Medicare, Part II
How to Pay for Nursing Home Costs
CCRC line workers receive good news in new salary and benefits survey
2020 Election: Analyzing the Sanders Plan for Long-Term Care
Dementia Patients and the Emergency Department
The Strange Political Silence On Elder Care
How Trump Is Reforming Medicare, Part I

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Updated, Friday, July 12, 2019, 10:14 AM (Pacific)

Seattle—

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LTC BULLET: LONG-TERM CARE AND MEDICAID

LTC Comment: How has Medicaid financing affected long-term care? Some thoughts after the ***news.***

*** TWO LTC CLIPPINGS this week touch on long-term care as a political issue … or non-issue. Subscribe to LTC Clippings by contacting Damon at 206-283-7036 or damon@centerltc.com. We’ll scan all the published articles, speeches, reports and data to find what you most need to know. We’ll send them to you in neat little email nuggets like these, so you can spend more of your time doing what you do best and less time searching online.

July/August, 2019, “The Strange Political Silence on Elder Care,” by Grace Gedye, Washington Monthly

Quote: “You might expect that a problem that affects so many people so profoundly would become a major political issue. Recent years have seen other issues, including ones that disproportionately affect women in their personal lives, become highly politically salient—from sexual harassment and pay equity to the push for universal pre-K education and improved access to child care. Yet even though American women today are politically organized and running for office in record numbers, elder care remains widely viewed as a purely personal matter. You could be a news junkie, following the 2020 race closely, and have heard nothing about it. Why is that? And could long-term care go from being a sleeper issue to one that boosts a candidate out of the 2020 pack?”

LTC Comment: Ain’t gonna happen. The false premise here is that politicians seek out sensitive controversial issues. Just the opposite is true. Nothing is more important politically than the impending collapse of the entitlement programs before or during the 2030s, just when the boomer generation arrives at their age of greatest need. Yet not a single question was asked on the subject during the Democrats’ circular-firing-squad debates last week. National somnolence on the LTC issue will prevail until the crisis occurs and that reckoning is nearer every day.

7/11/2019, “2020 Election: Analyzing the Sanders Plan for Long-Term Care,” by Chris Farrell, Next Avenue

Quote: “His new federal universal health insurance program would cover long-term care services and supports in homes and in communities for people of any age. Under the Sanders version of Medicare for All, Medicaid would continue covering institutional services, such as care in skilled nursing homes. … Of course, the big controversial question for Sanders is how he’d pay for his overhaul of the health care system, including long-term care. Sanders consistently says that most people would pay more in taxes to fund Medicare for All but would come out ahead overall after eliminating health insurance co-pays, out-of-pocket expenses and premiums. That claim has been met with skepticism by policy analysts crunching the numbers.”

LTC Comment: What a plan! Solve the mess created by government interference in the private LTC market by eliminating the private LTC market altogether.

LTC BULLET: LONG-TERM CARE AND MEDICAID

LTC Comment: Long-term care is the “poor relative” of social issues. Politicians don’t want to talk about it, as the first article above indicates. When one does, like Bernie Sanders in the second article, his wishful thinking is completely disconnected from financial reality.

When it comes to long-term care financing, the elephant in the room is Medicaid. Unless and until people come to grips with the effect previous government funding of long-term care, mostly through Medicaid, has had, there will be no hope of reforming long-term care services or financing for the better.

I’m working on a paper about the impact of Medicaid financing on long-term care in the United States. Following is the abstract. I’d welcome any comments, suggestions, or examples.
Steve Moses

Abstract: Medicaid is constantly in the news because of controversy over expanding the program under the Affordable Care Act. But the ACA, or “ObamaCare,” primarily addresses acute health care for young mothers, children and working age adults. While these groups comprise 77 percent of Medicaid recipients, they account for only 38 percent of the program’s expenditures. The remaining 23 percent of recipients are aged, blind or disabled and they account for 61 percent of Medicaid expenditures, mostly to pay for their long-term care. Medicaid funds more than half of all long-term care costs nationally and long-term care is the sleeping giant of America’s social problems. Yet, long-term care receives much less media and scholarly attention than health policy in general. Why?

Medicaid and long-term care have been inextricably linked since the program’s inception in 1965. The story of how Medicaid eligibility and funding influenced the markets for long-term care services and financing is fascinating. Step by step, government efforts to make critically needed extended health care available to people otherwise unable to afford it led to a long list of seemingly intractable problems. These include high costs, nursing home bias, access and quality problems, caregiver shortages, consumer indifference to long-term care risk, and the resultant failure of the public to plan, save, invest or insure privately for likely future long-term care costs.

The key to understanding how and why this happened is to comprehend and refute the fallacy of impoverishment. Conventional and scholarly wisdom hold that eligibility for Medicaid’s long-term care benefits requires impoverishment. This is objectively false. Financial eligibility for Medicaid is determined based on income and assets. Anyone with income below the cost of a nursing home, averaging $7,441 per month, hardly low-income, qualifies based on income. Countable assets are limited to $2,000, but most large assets are exempt, including home equity up to $585,000, and with no limit on value, IRA’s paying out periodically, one business including the capital and cash flow, one automobile, prepaid burial plans, home furnishings, personal belongings including heirlooms, and more. Medicaid planning attorneys help affluent clients with even more wealth qualify quickly and easily by means of special trusts, qualified annuities, planned gifting, etc.

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.

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 sterile, welfare-financed nursing facilities.

These conditions have prevailed for Medicaid’s 54 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 and explains why long-term care dominates Medicaid expenditures but remains impervious to reform.

This is the story I will tell with recommendations for reforms that would remove the perverse incentives causing the problems.

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Updated, Monday, July 8, 2019, 10:14 AM (Pacific)

Seattle—

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LTC E-ALERT #19-026: LTC NEWS AND COMMENT

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

Seeking Savings, NY Tries to Remove Long-Term SNF Residents from Managed Medicaid
Nursing homes happy to be left out of CON repeal
Bonnie Kraham: What you can and can’t do with a Medicaid Asset Protection Trust
Sales Of Traditional Long-Term Care Insurance Policies Continue To Fall
Medicare Advantage And The Future Of Value-Based Care
Minority groups and sicker patients in long-term care most affected, study finds
Boomers, not millennials, may be the most active generation in the gig economy
Americans Lose Trillions Claiming Social Security at the Wrong Time
Caring for Individuals with Alzheimer’s Disease or Related Dementias (ADRD)
State doubles support for Medicaid-dependent nursing homes
‘Staggering’ 75% of nursing homes almost never meet expected RN staffing levels, study finds

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Updated, Monday, July 1, 2019, 10:00 AM (Pacific)

Seattle—

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LTC E-ALERT #19-025: LTC NEWS AND COMMENT

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

Bonnie Kraham: Avoiding the Medicaid asset spend down for nursing home costs
Private Equity Firms Are Acquiring Long-Term Care Insurance Policies. What Will It Mean For Policyholders?
Medigap changes coming next year for future 65-year-olds
The Boomers Ruined Everything
Older Americans Seek Meaning and New Experiences in Retirement Years
The First 2020 Democratic Primary Debate Will Almost Certainly Skip A Key Healthcare Issue
Americans aren’t financially prepared for retirement, surveys show
The Future Looks Terrible for U.S. Nursing Home Costs
An Ambitious State-Based Plan For Universal Family Care That Falls Just Short On Long-Term Care
Broad class of drug linked to 50% higher risk of dementia in older adults
The Big, Feminist Policy Idea America’s Families Have Been Waiting For
Cancer Survivors May Have Lower Odds for Dementia
Where the Democratic presidential candidates stand on health insurance and long-term care

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Updated, Friday, June 28, 2019, 10:38 AM (Pacific)

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LTC BULLET: WHY TOO LITTLE HOME CARE?

LTC Comment: Why is home care so unaffordable and hence unavailable to so many? Two views after the ***news.***

*** PULITANO NEWS: LTC Global, Inc. has formed LTC Agency Operations LLC (LTCAO), a new intermediate holding company, with Joseph G. Pulitano. LTC Global and Pulitano have contributed their Long Term Care insurance (LTCi) distribution businesses to LTCAO, including ACSIA Partners, LTC Global Agency and Joseph G. Pulitano Insurance Agency, Inc. d/b/a Advanced Resources Marketing (ARM). The combined businesses make up the largest independent LTCi marketing operation in the industry with over 500 career LTCi specialists. Mr. Pulitano will serve as LTCAO’s Chief Executive Officer, and Henrik Larsen will serve as LTCAO’s Chief Operating Officer.” Read all about it here: “LTC Global and ARM Combine LTCi Distribution Businesses Under Pulitano.” Hearty congratulations on this big news to Center-corporate-member Advanced Resources Marketing and our long-time friends and supporters, Joe Pulitano and Henrik Larsen.

*** LTC CLIPPINGS: Here’s why to subscribe to the Center for Long-Term Care Reform’s LTC Clippings service. Steve Moses reads or scans hundreds of articles, reports, speeches and other sources to pick the dozen or so you really need to see each week. That saves you the wasted time and hassle of sifting through mountains of digital chaff. Contact Damon at 206-283-7036 or damon@centerltc.com to subscribe. Here are two examples of recent clippings:

6/23/2019, “The Big, Feminist Policy Idea America’s Families Have Been Waiting For,” by Ai-jen Poo and Benjamin W. Veghte, New York Times

Quote: “Our organization will unveil a new social insurance program on Monday called Universal Family Care that could fix this social crisis. It would provide affordable early child care, paid leave, assistance for people with disabilities and elder care for people of all incomes. We need an integrated approach because no one experiences needs in isolation: We might need help right after an injury, or over the course of our lives to help a disabled family member thrive. To pay for this, people would contribute small amounts out of every paycheck, from their first job onward, instead of scrambling during an expensive moment of crisis. And they could sign up for benefits when they first need them. Everyone would contribute and be eligible.”

LTC Comment: What’s that they say about doing the same thing over and over again (like Social Security and Medicare), but expecting a different result (avoiding insolvency)? Oh yeah, this is nuts.

6/24/2019, “Broad class of drug linked to 50% higher risk of dementia in older adults,” by Alicia Lasek, McKnight’s LTC News

Quote: “A class of drug commonly prescribed to treat everything from depression to Parkinson’s disease may raise long-term risk of dementia by as much as 50%, according to researchers at the University of Nottingham. The drugs, anticholinergics, help to relax and contract muscles by blocking messages to the nervous system. They are known in some cases to have short-term side effects including confusion and memory loss, but the effects of long-term use have been unclear, wrote the researchers, led by Carol Coupland, Ph.D.”

LTC Comment: Can’t win for losing. This class of drugs includes common sleep aids like Benadryl and Ambien. ***

LTC BULLET: WHY TOO LITTLE HOME CARE?

LTC Comment: The June 2019 issue of Health Affairs focuses on problems with home health care for the aging, including caregiver shortages and inadequate financing. This month’s issue has several “open access” articles of interest that you can read without paying for a subscription. One of those accessible articles is “The Financial Burden of Paid Home Care on Older Adults: Oldest and Sickest Are Least Likely to Have Enough Income,” by Richard W. Johnson and Claire Xiaozhi Wang. This article argues that home care is desirable; too few people can afford enough of it; so a government program should pay for more of it. Below, we pull quotes from the article (footnotes omitted, find them in the original) and offer our comments in counterpoise.

Johnson/Wang: “The vast majority of elders who receive home care rely on unpaid family caregivers for help with activities of daily living (such as bathing, dressing, and eating) and instrumental activities of daily living (such as preparing hot meals and shopping for groceries). … Paid home care can relieve stressed family caregivers and allow frail older adults to remain at home longer. … Rising labor costs could soon make home care more expensive. There is a mounting shortage of high-quality workers to provide paid hands-on care to the nation’s rapidly growing older population. … Policy makers, advocates, and researchers have tried unsuccessfully for decades to expand financing mechanisms to make home care more accessible and affordable, often by promoting social or private insurance to cover expenses.” (pps. 994-5)

LTC Comment: Sadly, all true already, and the age wave is only beginning to crest. We have to do something. So what’s the problem? Is it simply that people can’t afford the home care they prefer?

Johnson/Wang: “We simulated the financial burden of paid home care for a nationally representative sample of non-Medicaid community-dwelling adults ages sixty-five and older. We found that 74 percent could fund at least two years of a moderate amount of paid home care [‘the median duration among recipients’ (p. 999)] if they liquidated all of their assets, and 58 percent could fund at least two years of an extensive amount of paid home care. Among older adults with significant disabilities, however, only 57 percent could fund at least two years of moderate paid home care by liquidating all of their assets, and 40 percent could fund at least two years of extensive paid home care.” (Abstract, p. 994)

LTC Comment: Well, that doesn’t sound so bad. Most people can afford a substantial amount of home care. All they have to do is liquidate all of their assets. Hmmm, that doesn’t seem like a very attractive option. I wonder how many people actually do that. This article offers no answer to that question. But stay tuned to our comments. You’ll find more on the subject in our concluding LTC comment.

Johnson/Wang: “People with significant LTSS needs are especially likely to need paid care, and they tend to have fewer financial resources than people in better health do.” (p. 996)

LTC Comment: Who’d have guessed? People who already need long-term care are less likely to be able to afford it than people who don’t need it yet? Of course, that is exactly why getting people’s attention about the risk and cost of long-term care many years ahead of when they need it is so critical.

Johnson/Wang: “Nearly nine in ten older adults have enough resources, including income and wealth, to cover assisted living expenses for two years.” (p. 1000)

LTC Comment: Great news. Maybe long-term care financing isn’t the crisis we thought it was. But keep reading.

Johnson/Wang: “Our findings have important implications for policy debates about alternative LTSS financing mechanisms.” (p. 1000)

LTC Comment: Do you get the feeling these authors are about to cash in on their findings with policy recommendations?

Johnson/Wang: “Better financing options might enable more people to obtain paid home care and remain at home longer, where most prefer to live, instead of moving into assisted living or entering nursing homes and qualifying for Medicaid after their financial resources run out.” (p. 1000)

LTC Comment: What are these better financing options, pray tell?

Johnson/Wang: “Government programs could be launched that cover LTSS expenses for the entire duration of an enrollee’s LTSS needs.” (p. 1000)

LTC Comment: The Green New Deal, Medicare for All, and now unlimited long-term care financing. If you’re going to dream, why not dream big?

Johnson/Wang: “Because such comprehensive coverage would be expensive, many recent proposals would instead provide an up-front benefit for a limited time or a back-end catastrophic benefit that would not begin until after enrollees had experienced significant LTSS needs or received care for an extended period.”

LTC Comment: Right, we’re very familiar with those proposals to turn more long-term care financing over to the government. We’ve critiqued proposals by the Bipartisan Policy Center, the Long-Term Care Financing Collaborative, Feder/Cohen and many others over the years. Find a list of our articles about those proposals with links here: LTC Bullet: Standing Guard.

Johnson/Wang: “Our findings suggest that a moderate share of the at-risk population would not benefit much from catastrophic insurance that did not provide benefits for the first year or two of a severe LTSS episode, because they would not be able to fund expenses during the waiting period.” (p. 1000)

LTC Comment: Wait, didn’t you just tell us that most people can afford a substantial amount of home care for a couple years? Wouldn’t that take care of the waiting period?

Johnson/Wang: “Those who depleted their financial resources before qualifying for insurance benefits would have to turn to Medicaid, which offers limited home and community-based services to older adults with severe disabilities. However, beneficiaries often face long waiting lists for such services financed by Medicaid, and the income allowances that state Medicaid programs grant to home care beneficiaries are often too low to support community living. Consequently, some people who could no longer afford paid home care on their own might have to enter a nursing home to receive subsidized care.” (p. 1000)

LTC Comment: Well, we certainly wouldn’t want that, but how would giving people even more upfront government home care funding solve the underlying problem of explosive government long-term care expenditures? We’ll unravel this confusion in a “closing LTC comment” below, but first a few words on the source of the Johnson/Wang data.

Johnson/Wang: “Our data came from the Health and Retirement Study (HRS), a nationally representative survey of older adults conducted by the University of Michigan’s Institute for Social Research.” (p. 995)

LTC Comment: Here’s the problem with HRS data as we explained in How to Fix Long-Term Care Financing (find footnotes in the original). “While the HRS and AHEAD surveys provide the most reliable longitudinal data currently available, they are far from foolproof. 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.’ He concluded that the survey data make it ‘difficult to reach consensus among research studies’ because ‘each author must arbitrarily decide whether to exclude, censor, or impute particular observations.’ Other researchers have noted similar limitations, explaining that ‘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.’ Given these facts, these surveys provide a dubious foundation on which to generalize about long-term care financing policy.

“Furthermore, 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.” (pps. 16-17)

Closing LTC Comment: Here’s what I think Johnson/Wang are saying in this article. The long-term care financing problem is not as serious as we thought it was. Most people can afford the home care they prefer using their income and, if necessary, liquidating all their assets. So we don’t need a big back end, catastrophic public or private insurance program or product. All we need is a little more help from the government on the front end for the minority of people who can’t manage the cost of home care on their own. Then everyone can ride out old age, getting the help they need at home, and staying off Medicaid and out of a nursing home for as long as possible.

Here’s what’s wrong with that wishful thinking. In reality, most people do not and will not liquidate all their assets in order to close the home care gap by purchasing services privately. They have every perverse incentive in public policy not to do so. What these and most other analysts miss is the ease with which people can shelter or divest income and assets to qualify for Medicaid. You will rarely find anything in their research or reporting about the widespread practice of Medicaid planning, artificial self-impoverishment with the help of a lawyer or CPA to qualify for public assistance. But “millionaires on Medicaid” aren’t the big problem. Rather, the nuances of Medicaid LTC eligibility are the culprit.

These authors do understand the letter of the law on Medicaid long-term care eligibility. Richard Johnson has done yeoman’s work on that topic. See “The Adequacy of Income Allowances for Medicaid Home and Community-Based Services,” May 2017. But the letter of the law on Medicaid eligibility makes it sound like it is hard to obtain. It is not. The problem is that Johnson, Wang and others of their ilk do not understand how Medicaid long-term care eligibility works in practice. In the real world, Medicaid eligibility workers (not all but most) bend over backwards to help people manipulate their income and assets to qualify. Books, articles, and online advice abound about ways to convert countable assets into exempt resources, the single most common planning technique. Bottom line, income below the cost of a nursing home, several thousands of dollars per month, does not disqualify. Virtually unlimited assets are exempt. Anything still disqualifying is easily divested or sheltered with or without the help of a Medicaid planner. In the real world, people drift easily onto Medicaid, especially more affluent people who have the benefit of professional financial advice.

The Johnson/Wang proposal to supply more government home care assistance so that more people can afford home care addresses a symptom, not the cause of the long-term care financing crisis. The cause is that too much government financing of nursing home care, and increasingly of home care and assisted living, have desensitized the public to long-term care risk and costs. It has caused institutional bias, impeded the private market for home care, and crowded out huge potential sources of private financing, such as home equity conversion and private insurance. If you want to put out a fire (skyrocketing government LTC costs), don’t douse it with gasoline (more of the same.)

Final thought: the good news in this paper--that most people can afford a lot of home care and others only need some help closing the gap--is further evidence for the point we made in LTC Bullet: Middle Market Mayhem, June 7, 2019. To wit, as little as $15,000 of annual private long-term care insurance coverage could close the middle-market senior housing gap for many choosing to remain in their chosen housing when the need for long-term care occurs.

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Updated, Monday, June 24, 2019, 10:38 AM (Pacific)

Seattle—

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LTC E-ALERT #19-024: LTC NEWS AND COMMENT

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

· Medicaid estate recovery program (MERP)

· When the Long-Term Care Insurer Refuses to Pay

· On Average, Retirees Are More Financially Secure Than Ever. Unfortunately, Most Of Us Are Not Average

· Value-based care focus could erode regulatory safeguards, critics argue

· Nursing home costs significantly outpace inflation

· Private Medicare Advantage Could Hit 70% Market Share

· Many U.S. retirees outlive their savings by more than a decade, report says

· Deal Combines Long-Term Care Insurance Distributor

· Excessive Napping Linked to Cognitive Decline in Older Men

· Wall Street takes on long-term care payouts as insurers balk at costs

· Providers Need to Get into the Real Estate Game

· Will My Mother's Jewelry Count as an Asset for Medicaid Eligibility Purposes?

· What if We Don't Shore Up Social Security?

· Investors see demand for SNF properties steady or growing this year

· Assisted living gaining in investor interest: survey

· Fast Food Linked To Dementia, ‘Irreversible’ Brain Damage

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Updated, Monday, June 17, 2019, 10:52 AM (Pacific)

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LTC E-ALERT #19-023: LTC NEWS AND COMMENT

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

LTC Global and ARM Combine LTCi Distribution Businesses Under Pulitano
Walk this way: Wearable artificial ‘muscles’ for functional disabilities are in the works
Medicaid Financial Eligibility for Seniors and People with Disabilities: Findings from a 50-State Survey
Trump's new rule will give businesses and workers better health care options
Certain Factors Tied to Suicide for Older Adults in Long-Term Care
A 21st Century Job Description For Family Caregiving
Social Security Is Staring at Its First Real Shortfall in Decades
Uber Has Changed the World. Now it's Changing Aging, Too
New Resource on Parkinson's Provides a Comprehensive Look at the Human and Economic Burden of the Disease
Caring for a Family Member Can Take a Toll on One’s Career
Early-Onset AD Linked With LDL Cholesterol
Brookdale Senior Living poll: 36% open to a move to senior living
Did CalPERS mislead policyholders on long-term care insurance? Trial begins on a $1.2 billion lawsuit
Hawaii, Mississippi bookend new list of healthiest states for older adults
Community Care For High-Need Patients

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Updated, Friday, June 14, 2019, 10:29 AM (Pacific)

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LTC BULLET: LTCI POOL OF MONEY CALCULATOR

LTC Comment: The LTCi Pool of Money Calculator, designed by Ralph Leisle, is an important tool for advisers to help prospects and clients understand the risk and cost of long-term care. The latest after our ***news.***

*** LTC CLIPPINGS bring you one or two daily updates on 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 Damon at 206-283-7036 or damon@centerltc.com to subscribe or learn more. Two sample clippings from this week:

6/13/2019, “New Resource on Parkinson's Provides a Comprehensive Look at the Human and Economic Burden of the Disease,” Alliance for Aging Research

Quote: “The latest in the Silver Book® series, this factsheet features new data from a study commissioned by The Michael J. Fox Foundation and conducted by the Lewin Group. The study provides the most comprehensive assessment of the economic burden of Parkinson’s to date, nearly doubling previous estimates and for the first time, includes the various ways Parkinson’s affects a person’s finances and their ability to participate in the labor market. … You can find these, as well as additional statistics and sources, online at www.silverbook.org. This data will join the more than 3,000 facts and figures from more than 800 reliable references on a number of chronic diseases that disproportionately impact older Americans.”

LTC Comment: Excellent new source of data and analysis on Parkinson’s Disease.

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. We’ll make this case in detail in a forthcoming LTC Bullet.

LTC BULLET: LTCI POOL OF MONEY CALCULATOR

LTC Comment: We received the following message from an old friend and colleague, Ralph Leisle, regarding an important product he developed and marketed. The good news is the LTCi Pool of Money Calculator is still/again available, newly under the auspices of LTC insurance expert Susan Blais.

We had this to say about software Ralph designed in an LTC Bullet 19 years ago: “By the way, when it comes to calculating the true risk and cost of long-term care, don't depend on the kind of ‘back-of-the-envelope’ analysis offered in the WSJ article. Rather, consult the extraordinary software developed by Ralph Leisle that we covered in ‘LTC Bullet: Handy New Tool,’ November 17, 2000, http://www.centerltc.com/bullets/archives2000/handy_tool.htm.”

We’re happy to honor Mr. Leisle’s retirement announcement by encouraging readers to review and consider this product of his career. Here’s the latest:

To: Former LTCi Pool of Money (POM) Subscribers
From: Ralph Leisle, Retired President, LTCi Decision Systems, Inc.

Thank you for your past use or support of the LTCia Pool of Money (POM) software program!

As a former subscriber you know through experience that the LTC Pool of Money Calculator can be a great help in enhancing sales of long-term care insurance (“LTCi”). It does this by simply demonstrating the true value of LTCI: the money the client will have available when they’re most likely to need care. It also places the premium in relationship to the benefits available, both now and in the future, and shows the client the wisdom of purchasing insurance for this risk as opposed to investing their way out of the problem using their own savings.

As the proud creator of this program, I happily supported it for 15 years, and recently decided I’d like to retire. Susan Blais, a long-time expert in the long-term care field, took over ownership of the calculator as she didn’t want to see it retired as well. She has set the same calculator program into a simple website with enhancements like tutorial videos, and has reduced the monthly subscription from $14.95 to $9.95 per month.

One of the tutorials, on the Demos page, shows how useful the calculator is when helping existing clients determine the best renewal option when they get a premium increase at renewal. This use of the calculator alone is worth the price of admission, as it makes evaluating renewal options simple, and allows you to request additional options from the carrier to create just the right combo of benefits and premiums for your existing clients’ protection.

To check out the new website and the demos, go to this page: https://www.ltcpomcalculator.com/.

Thank you again for your support throughout the years, and I trust you will continue to help your clients obtain the essential protection offered by long-term care insurance. The risk isn’t going away, and the costs of care are not going down!

All my best,

Ralph Leisle

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Updated, Monday, June 10, 2019, 10:25 AM (Pacific)

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LTC E-ALERT #19-022: LTC NEWS AND COMMENT

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

How to make an insurance company pay what it owes your mom [Opinion]
Japan scraps ambitious plan to decrease dementia
Views: A retirement readiness benefit that addresses the financial challenges of aging
The use and misuse of income data and extreme poverty in the United States
A Dozen Facts About Medicare Advantage in 2019
It’s time to address California’s long term care crisis
Questions to Ask When You're Diagnosed With Dementia
10 Things to Know About Medicare Part D Coverage and Costs in 2019
Deaths from falls almost tripled from 2000 to 2016
Rising demand for long-term home care signals looming crisis
Can Medicaid handle another recession?
Brushing and flossing teeth may be key to reducing Alzheimer’s risk
House committee eyes expanding Medigap long-term care benefit
Study: Immigrants account for 25.7% of workforce in long-term care sector that includes senior living
How to Pick Your Retirement Home When There Are More Choices Than Ever

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Updated, Friday, June 7, 2019, 11:20 AM (Pacific)

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LTC BULLET: MIDDLE MARKET MAYHEM

LTC Comment: LTC analysts, advocates, and providers are wringing their hands about the middle market’s future inability to afford seniors living. We mitigate the problem and re-offer a 25-year-old solution after the ***news.***

*** MOVIE NEWS: On March 13, 2019, My Million Dollar Mom writer producer Ross Schriftman and Kevin Jameson from the Dementia Society of America were invited to the State Capital where Rep. Thomas Murt declared May as Dementia Awareness Month in Pennsylvania. Here’s a clip of the15-minute press conference: https://www.mymilliondollarmom.com/news-051319.cfm. ***

LTC BULLET: MIDDLE MARKET MAYHEM

LTC Comment: All of a sudden, everyone is worried about the middle market for seniors housing.

An article in the May print issue of Health Affairs reported that in just 10 years we’ll have 14.4 million middle-income seniors, three in five with mobility limitations and one in five with high health care and functional needs, over half of whom will have insufficient financial resources to pay for seniors housing.

This finding set off an onslaught of national media coverage, lamenting the problem and urging action, usually more government spending. We critiqued the Health Affairs piece in LTC Bullet: Remember the Middle, pointing out that its proposed solution, i.e. more government spending, would only make the problem worse.

The National Investment Center (NIC) took a deeper dive into the issue with “The Forgotten Middle: Middle Market Seniors Housing Study.” They found 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.

My, that sounds much more manageable than the scary numbers purveyed by alarmists seeking more government largesse. Still, lowering the cost of seniors housing by 25 percent is probably unrealistic. But how about putting an extra $15,000 per year in the pockets of seniors housing customers? That would achieve the same objective.

How can we do that? Well, an annual long-term care insurance benefit of $15,000 would only cost a fraction of the premium required for the full coverage that consumers find so daunting. Although such limited coverage wouldn’t help much with the cost of a nursing home, it would be a huge benefit for the middle-income seniors who need care, helping them remain at home or in assisted living and off Medicaid nursing home rolls for longer.

Unfortunately, current laws and regulations place a minimum on long-term care insurance coverage of $18,000. Companies are not allowed to sell less. That problem is easily solvable. The goal should be to make inexpensive LTC insurance coverage available that is sufficient, when added to consumers’ other resources, to enable them to afford more seniors housing and delay their dependency on Medicaid for nursing home care.

But given the public’s reluctance to purchase long-term care insurance, would people buy even this more affordable protection? Now we’re right back to the same old questions that have perplexed analysts for decades: why don’t people who can afford long-term care insurance buy it and what could be done to persuade them to do so?

Nearly a quarter century ago, I wrote a paper published by the American Seniors Housing Association titled “Long-Term Care Public Policy & the Future of Seniors Housing.” Although currently out of print, it proposed “a strategy for the seniors housing industry to serve beneficially and profitably the enormous lower-middle and middle-class market segment currently lost to Medicaid nursing homes.” Here’s the conclusion of that paper, which I believe remains as apt an analysis and solution today as it was then for the same perennial problem.

Excerpt from “Long-Term Care Public Policy & the Future of Seniors Housing,” by Stephen A. Moses

VI. Conclusions and Public Policy Recommendations

The 1970's should have been the golden age of seniors housing in America. The gerontological wedge pushed into American demographics during that decade could have opened an era of unprecedented entrepreneurial problem solving. By now [1995], we would have a market-driven continuum of care seamlessly covering everything from chore services to assisted living to sub-acute care. We would also have an infrastructure of long-term care insurance and home equity conversion to finance it. Public welfare might still have a role to play in long-term care, but that role would not be the tragedy of today's perverse incentives and unsatisfactory outcomes.

Instead, with every benevolent intent, Medicaid co-opted long-term care by the late 1960's. It impeded the private market for low-cost seniors services and housing by providing free and subsidized nursing home care. It stifled competition, thereby impairing access and quality by artificially constricting bed supply and reimbursement rates. It drove the middle-income consumer out of the private long-term care marketplace by creating a ponderous, publicly-financed monopsony.

In time, Medicaid overwhelmed the nursing home industry with regulations intended to correct the very problems that the program itself engendered. Nevertheless, in the absence of affordable alternatives and the means to pay for them, middle class Americans in the hundreds of thousands are still being herded into Medicaid-financed nursing homes by well-intentioned public administrators and Medicaid estate planning attorneys.

What is the solution? The general profile of a solution is easy to discern. We need a private and public long-term care financing system that (1) educates the public about the enormous financial risk of long-term care, (2) provides incentives for people to plan early and insure fully, (3) offers a broad range of highly affordable seniors housing alternatives, and (4) supports a fiscally viable social safety net for people who cannot pay for their own care. The far tougher issue is how we get from here (the current, failed, publicly financed system) to there (a new, rational, market-based system).

One way is to eliminate all public financing for long-term care. This would immediately compel all Americans to take the risk of long-term care seriously. Consumers would rush to seniors housing, home equity conversion, and long-term care insurance like passengers on a sinking ship to the lifeboats. This approach, however, is anathema to most Americans and politically infeasible.

There is a more benevolent way. We could eliminate the perverse incentives in the current system that discourage long-term care planning and leave seniors dependent on Medicaid by default. This strategy would insure that the truly needy still have access to care while giving the middle class (and their heirs) a big incentive to avoid public assistance.

One such approach would be to embrace and vigorously enforce the authorities in OBRA '93 that empower state Medicaid programs to close eligibility loopholes and increase estate recoveries. The problem with building on OBRA '93, however, is that Medicaid estate planners have already found ways around most of its provisions. A better plan is to start fresh with a comprehensive program and save enhancements on OBRA '93 as a fall-back position if a stronger approach fails.

Political circumstances and events are gelling this year [1995] in such a way as to make major changes in the long-term care financing system highly likely. Compelled by fiscal necessity, Congress is moving almost inescapably toward radical reform of Medicaid. Whether long-term care remains a federal responsibility or is sent to the states in the form of a block grant, it will probably lose its entitlement status soon and much of its federal financing will disappear over time. [Ironically, we’re on this brink again in 2019.]

The best strategy for advocates of a market-based, long-term care solution today is to show public policy makers how to maximize Medicaid savings while minimizing political sensitivity. The following six-part proposal, based on numerous studies conducted over the past 12 years,¹ would save at least 20 percent of Medicaid nursing home costs (more than $5 billion per year nationally) while improving access to and quality of long-term care. Model legislation to implement this plan is already being developed for the American Legislative Exchange Council.²

First, retain a public long-term care program with eligibility criteria at least as generous as Medicaid's. This strategy is necessary to deflect political attacks and guarantee protection for seniors who are already too old, too sick, or too impoverished to obtain care in any other way.

Second, eliminate asset divestiture altogether as a means to qualify for public long-term care assistance. Seniors who struggled through the Depression, fought WWII, and scrimped and saved to put aside a nest egg should not be pressured by public policy (and greedy heirs) to give away their life savings to qualify for welfare.

Third, require security as a condition of eligibility for anyone who receives public long-term care benefits while retaining exempt assets. No other financial institution in America will loan someone $200,000 or $300,000 (the cost of a long nursing home stay) without security. The government can no longer afford to do so either.

Fourth, implement and enforce a strong estate recovery program to assure that people who receive publicly financed long-term care will have to pay it back either out of their own estates or from the estates of their last surviving, exempt, dependent relatives. This will restore the dignity of middle-class seniors who are currently being trapped on public assistance. It is not welfare if you pay it back.

Fifth, encourage the public to avoid the risk of estate recoveries by planning ahead to stay off the public long-term care program. Seniors are the richest cohort in American society. With the proper incentives, far more of them can afford private long-term care insurance and seniors housing than are purchasing these products now.

Sixth, channel ten percent of the proceeds from estate recoveries into a program to educate the public on (1) the risks and costs of long-term care, (2) the availability of insurance and seniors housing options, (3) the disadvantages of public financing such as strict eligibility constraints and mandatory estate recovery, and (4) the importance of planning many years before long-term care is needed.

Implementing this program will change consumer behavior radically. To avoid estate recovery and other problems of public financing, consumers will be far more likely to explore private long-term care options first. They will discover, for example, that the average cost of congregate seniors housing and assisted living is only $1,300 and $1,900 respectively [in 1995]. This will no longer seem expensive when they compare it to paying for less desirable, publicly-financed nursing home care out of their estates.

Instead of encouraging their parents to visit Medicaid estate planners, heirs will have an incentive to help their parents purchase private long-term care insurance and pay for seniors housing. Their choice is to pay a little bit now or a lot more later out of their inheritances. Today's seniors are about to bequeath $10.4 trillion to the baby boom generation.³ [Today the big bequest is about to pass from baby boomers to their Gen X and Millennial heirs.] The old folks have the assets and their adult children have the cash flow. With the right public policy incentives in place, these two generations will work together to protect their legacies.

Finally, with appropriate incentives, seniors will tap their biggest financial resource to pay for long-term care. Seventy-seven percent of seniors own their homes. Of these, 83 percent own them free and clear. Today, fully $1.5 trillion dollars lies fallow in the elderly's home equity.⁴ With the value of the house at risk of estate recovery, seniors and their heirs will finally seek out home equity conversion to generate the cash flow to pay for seniors housing, purchase long-term care insurance, and avoid welfare dependency.

Adoption and aggressive enforcement of these public policy initiatives will

save the taxpayers billions of dollars every year,
protect public long-term care financing from its impending collapse,
unleash the seniors housing, home equity conversion, and long-term care insurance industries to achieve their true potential,
empower more members of the proud WWII generation to avoid the indignity of welfare, and
improve access to quality long-term care for rich and poor Americans alike.

All that is required is the vision to see the way, the courage to embrace the change, and the will to stay the course.

¹ [Most of these references can still be found at www.centerltc.com/reports] Chronological list of research studies and publications by Stephen A. Moses on which this paper is based: The Magic Bullet: How to Pay for Universal Long-Term Care, A Case Study in Illinois, LTC, Incorporated, Seattle, Washington, 1995; The Perils of Medicaid: A New Perspective on Public and Private Long-Term Care Financing, LTC, Incorporated, Kirkland, Washington, 1995; The Florida Fulcrum: A Cost-Saving Strategy to Pay for Long-Term Care, LTC, Incorporated, Seattle, Washington, 1994; Long-Term Care in Montana: A Blueprint for Cost-Effective Reform, LTC, Incorporated, Kirkland, Washington, 1993; Medicaid Estate Recoveries in Maine: Planning to Increase Non-Tax Revenue and Program Fairness, LTC, Incorporated, Kirkland, Washington, 1993; Medicaid Estate Planning: Analysis of GAO's Massachusetts Report and Senate/House Conference Language, LTC, Incorporated, Kirkland, Washington, 1993; Medicaid Estate Planning in Kentucky: How to Identify, Measure and Eliminate Legal Excesses, LTC, Incorporated, Kirkland, Washington, 1993; "Planning for Long-Term Care Without Public Assistance," Journal of Accountancy, Vol. 175, No. 2, February 1993, pps. 40-44; "Health and Long-Term Care Insurance," chapter in Louis A. Mezzullo and Mark Woolpert, editors, Advising the Elderly Client, Clark Boardman Callaghan, New York, 1992; A Minnesota Prospectus for the Senior Financial Security Program LTC, Incorporated, Kirkland, Washington, 1992; The Senior Financial Security Program: A Plan for Long-Term Care Reform in Wisconsin, LTC, Incorporated, Kirkland, Washington, 1992; Medicaid Loopholes: A Statutory Analysis with Recommendations, LTC, Incorporated, Kirkland, Washington, 1991; The Myth of Medicaid Spend-Down, LTC, Incorporated, Kirkland, Washington, 1991; "The Fallacy of Impoverishment," The Gerontologist, Vol. 30, No. 1, February 1990, pps. 21-25; Medicaid Estate Recoveries in Massachusetts: How to Increase Non-Tax Revenue and Program Fairness, LTC, Incorporated, Kirkland, Washington, 1990; Transfer of Assets in the Medicaid Program: A Case Study in Washington State, Office of Inspector General, OAI-09-88-01340, Washington, DC, 1989; Medicaid Estate Recoveries: A Management Advisory Report, Office of Inspector General, Office of Analysis and Inspections, OAI-09-89-89190, Washington, DC, December 1988; Medicaid Estate Recoveries, Office of Inspector General, Office of Analysis and Inspections, OAI-09-86-00078, San Francisco, California, June 1988.

² Stephen A. Moses, Long-Term Care Financing Under a Medicaid Block Grant: Notes Toward a Model State Statute, presented to The American Legislative Exchange Council on August 1, 1995 by LTC, Incorporated, Seattle, Washington.

³ "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, 9/12/94, p. 64)

⁴ American Housing Survey for the United States in 1991, Bureau of the Census.

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Updated, Monday, June 3, 2019, 10:07 AM (Pacific)

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LTC E-ALERT #19-021: LTC NEWS AND COMMENT

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

Skilled nursing chain’s collapse leaves HUD holding the bag on $146M
2018 Profile of Older Americans
Some Parental and Spousal Caregivers Face Financial Risks
12 Reasons LTC Planning Matters to Women Year-Round
TCI Issuer Gets New President
Alzheimer’s drugs cost seven times more than cancer drugs to develop
Most older adults feel at least 20 years younger than they are
Skilled Nursing Facility Discharges Spike When Medicare Copayments Kick In
Retirement saving delay is biggest financial regret
ADL, cognitive needs higher for home health recipients in assisted living than in other settings
TONI KING: Is Medicaid a good long-term care option?
Palliative Care Beyond Hospice Is Spreading to More States
60+ population will outnumber population under 20 in 18 states next year
The Trump Administration Is Looking At Tax Breaks And Other Ways To Boost Private Long-Term Care Insurance
Billing Peter to Pay Paul

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Updated, Tuesday, May 28, 2019, 10:32 AM (Pacific)

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LTC E-ALERT #19-020: LTC NEWS AND COMMENT

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

May a Medicaid Applicant Freely Transfer Assets to a Disabled Child of Any Age?
Washington is 1st state to allow composting of human bodies
Hip Fractures Are Deadly For Seniors
Adult foster care homes need more oversight, HHS OIG says
5 insights from NIC’s Middle Market Investor Summit
What's new in the quest for Alzheimer's drugs
5.9 million more could afford senior living if annual costs were cut by $15,000
Advisors create a game plan to prepare clients for this retirement expense
Older Americans risking their retirement to help young homebuyers
Elder care homes rake in profits as workers earn a pittance
LTC insurer offering co-pays to blunt soaring premium increases
Social Security just ran a $9 trillion deficit, and nobody noticed

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Updated, Friday, May 23, 2019, 9:44 AM (Pacific)

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LTC BULLET: THE DEMENTIA OF POLITICAL ECONOMY

LTC Comment: If you think the political economy of dementia is a problem, consider the dementia of political economy, after the ***news.***

5/22/2019, “5 insights from NIC’s Middle Market Investor Summit,” by Lois A. Bowers, McKnight’s Senior Living

Quote: “Several panelists shared insights about current and potential efforts to meet middle-income older adults’ senior housing and care needs on Tuesday at the National Investment Center for Seniors Housing & Care’s Middle Market Investor Summit in New York City. The event came as NIC released an analysis showing that reducing the annual cost of senior living by $10,000 could enable 2.3 million more older Americans to afford it, and reducing it by an additional $5,000 on top of that would enable 3.6 million more people to afford it. Here are a few insights that caught our attention.”

LTC Comment: Click through to see their insights. But here’s a key insight from Center member and LTCI producer Romeo Raabe: “This shows that many people only need a small (affordable) LTCi policy to be able to pay for their care!”

5/6/2019, “5 unexpected trends in today’s long-term care,” by Karen Christopher

Quote: “The words ‘nursing home’ often bring to mind thoughts of colorless, sterile and depressing environments. This stereotype couldn’t be further from the truth — especially when you consider the emergence of a new model of long-term care designed to maximize independence, dignity and personal choice among residents. How, specifically, are senior living communities raising the bar when it comes to positive aging?”

LTC Comment: Wouldn’t prospects and clients be more likely to buy or retain LTCI knowing this information? ***

LTC BULLET: THE DEMENTIA OF POLITICAL ECONOMY

LTC Comment: Political economy “is the study of production and trade and their relations with law, custom and government; and with the distribution of national income and wealth.”

Much could be and has been written about the political economy of dementia. A rising wave of aging Americans will succumb to cognitive decline raising difficult questions about their long-term care and how to pay for it. But that’s not my topic today.

Rather, I’m thinking about the dementia of political economy. It seems to me we can discern symptoms of dementia in political economy itself. Especially as applies to long-term care financing. Common symptoms of various forms of dementia include memory loss, delusions, agitation, indifference, impulsivity, disinhibition, and severe depression. So, consider these observations:

Memory loss: How else to explain widespread failure to remember what caused the Great Depression, the Great Recession, currency collapses in Weimar Germany, Argentina and Venezuela, and just about all remaining economic misery in the world after centuries of industrial progress? Want something you can’t afford? Charge it. Or if you’re a country, tax, borrow, or print more money. Damn the consequences until they overwhelm you.
LTC Corollary: Grandpa and Grandma ended up in welfare-financed nursing homes because Medicaid is the dominant payer for most expensive long-term care? Forget that. Why worry?

Delusions: How else to describe the attitude of people, especially politicians, that you can have something for nothing, the proverbial free lunch? Health care and housing are rights that others must give you? That works until the professionals you’ve enslaved rebel. Or paraphrasing Margaret Thatcher: “Socialism works until you run out of other people’s money.”
LTC Corollary: More and more old people, including our own parents and grandparents need expensive long-term care? So what? It won’t happen to me. I’d never go to a nursing home. Shoot myself first. Anyhow, somebody must pay. You don’t see Alzheimer’s patients dying in the gutter. AKA denial.

Agitation: How else to account for the anger and frustration in today’s politics? Politicians don’t just disagree and argue, they dig in and cast aspersions. The dialogue is demented.
LTC Corollary: Too few caregivers? Not enough free services? Too many nursing homes; too little home and community-based care? Don’t like what is available? Demand more. At the top of your lungs. Politicians won’t provide? Throw the bums out and elect ones that will give you what you want.

Indifference: How else to comprehend the lack of concern about a national debt of $22.3 trillion and unfunded liabilities of $124 trillion, exceeding $1 million per tax payer? Government insolvency? Who cares?
LTC Corollary: Medicaid pays for most LTC at less than the cost of care while heavily dependent on income offsets from recipients’ Social Security and higher provider reimbursements from Medicare to make up the difference. Yet Social Security and Medicare cuts are coming when their trust funds run out in 2035 and 2026 respectively. Who will make up the difference? Who knows or cares?

Impulsivity: How else to explain the automatic reflex to rely on government? Have a problem of any kind? Don’t ask why or how. Ignore the cause. Attack the symptoms. Ask the government to fix what government interference itself caused.
LTC Corollary: Too many old people needing too much housing and long-term care with too little savings and no private insurance? Call for more government financing as the knee-jerk solution. Don’t ask why we’ve ignored the problem for decades. Don’t ask how government funding crowded out a private market for home and community based care and private insurance to pay for it. Just do more of the same and expect a different result. That’s not just demented; it’s the definition of crazy.

Disinhibition: How else to explain the disinclination to think twice before demanding someone else solve your problem? Eighty-four years of Social Security and 54 years of Medicare and Medicaid have eroded self-reliance to the point where relying on government is uninhibited.
LTC Corollary: Don’t think about long-term care. Don’t worry. Just wait and see what happens.

Severe Depression: How else to explain the mood of a country enjoying unparalleled prosperity but sunk in despair because everyone doesn’t yet have everything anyone wants paid for by somebody else.
LTC Corollary: Eat, drink and be merry for tomorrow we … check into a nursing home.

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Updated, Monday, May 20, 2019, 9:44 AM (Pacific)

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LTC E-ALERT #19-019: LTC NEWS AND COMMENT

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

Study: Long-term stroke rate down 50 percent for older adults
Older adults expect to lose brain power, but most don't ask doctors how to prevent dementia
‘A Slice’ of the 2019 ILTCI Conference
Skew 10 Years Younger Than Independent Living
Health Affairs Events
What You Need To Know About Washington State's Public Long-Term Care Insurance Program
Nationwide Adds Life-LTC Hybrid
New Tax Will Help Washington Residents Pay for Long-Term Care
Initial-stage Alzheimer’s caught by AI in a population-level sample
Boomer Bequest Is Millennial Misery: Saddled with student and public debt, today’s young adults will long pay the price for our elders’ folly
The Two Biggest Mistakes In Retirement Planning
People Over 50 Are Avid Tech Users - So Why Are They Ignored?
Marc Hebert: NH among states with Long-term Care Partnership policies
I Spent 30 Years Advising Families On Senior Care -- And I Still Wasn't Ready To Take Care Of My Mom

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Updated, Monday, May 13, 2019, 10:14 AM (Pacific)

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LTC E-ALERT #19-018: LTC NEWS AND COMMENT

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

· How To Help Middle-Income Seniors Pay For Their Long-Term Care Needs

· Many Americans Will Need Long-Term Care. Most Won’t be Able to Afford It

· Almost Half of Americans Take Prescription Drugs: CDC

· Older Americans are relying too much on Social Security as a main source of income

· States approving bigger rate increases for long-term care policies

· Two Ways Medicare Could Save Billions

· Federal government paying insurers billions more than necessary: Kaiser

· Putting an aging parent on a senior living waitlist avoids crisis decision-making

· ‘My dad died at their hands’: WWII vet fatally injured in VA nursing home

· Minimum wage increase would cripple state’s nursing homes, advocates say

· Five Ways to Help Protect Retirement Income

· 5 unexpected trends in today’s long-term care

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Updated, Friday, May 10, 2019, 10:45 AM (Pacific)

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LTC BULLET: REMEMBER THE MIDDLE

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. We explain after the ***news.***

*** MOVIE UPDATE: Ross Schriftman announces his “Million Dollar Mom” film is now available for purchase on I-Tunes, Google Play, Amazon and Vimeo. Here is the link: https://www.mymilliondollarmom.com/buynow.cfm. A great gift for Mother's Day, he adds. ***

LTC BULLET: REMEMBER THE MIDDLE

LTC Comment: The May print issue of Health Affairs contains an article published earlier online titled “The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources For Housing And Health Care.” In it, authors Caroline F. Pearson, Charlene C. Quinn, Sai Loganathan, A. Rupa Datta, Beth Burnham Mace, and David C. Grabowski

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. (Abstract, p. 1)

The new private sector role these authors propose is to cut senior living providers’ profits and subsidize “lower-income residents with higher-paying residents.” The new role they propose for public policy is to add long-term care coverage to Medicare and loosen eligibility for Medicaid benefits so that long-term care recipients don’t have to “impoverish” themselves. The irony in these proposals is that government financing and other political interference in the long-term care market is what caused the problems these authors seek to solve … with more of the same.

What are those problems? What caused them in the first place? And what public and private sector measures would truly correct them?

The Health Affairs article correctly identifies critical problems with senior living and long-term care financing. To wit: middle-income seniors face a high risk they will need assistance with activities of daily living as they age. The most desirable, least institutional venues in which to live and receive care, such as their homes, independent or assisted living, are beyond the financial means of many. This situation will get worse over time as fewer unpaid caregivers are available and more middle-income seniors with greater needs overwhelm the current safety net. Medicaid and Medicare are severely challenged financially already. Neither personal savings nor private long-term-care insurance are adequate now or promising.

The litany of senior living and long-term care challenges middle-income seniors face screams out for answers to these questions: How did long-term care service delivery and financing in the United States become so dysfunctional? Why are we still unprepared at the crest of an age wave we’ve known was coming for decades? Where did the nursing home bias in our system come from despite consumers’ preference for aging in place? Why do we only now finally have attractive senior housing options? What caused non-institutional alternatives like assisted living and home and community based care to be out of reach for so many middle-income seniors? Why are public long-term care financing sources like Medicaid, Medicare and the VA stretched to the breaking point, but private financing options like saving, investment and insurance languish? It is folly to bewail the long-term care system’s problems and to propose solutions without first answering those questions. But that is exactly what the Health Affairs article does.

Let us instead answer those questions, explain why the problems exist, challenge some of the mistaken assumptions in the article, and see if we’re led to different corrective actions.

As life spans extended through the first half of the 20^th century, the chronic illnesses of old age struck rapidly growing numbers of aging Americans. It was obvious shortly after mid-century that a post-war baby-boom would one day require expensive long-term care. Government tried to get in front of that need by creating Medicaid for long-term care in 1965. But originally and for decades thereafter Medicaid paid only for nursing home care. Until 1985, no limits restricted transferring assets to qualify for Medicaid benefits. Easy access to government-financed long-term care after care was needed had profound effects on the long-term care market.

The nursing home industry prospered and grew. Government-subsidized institutional care crowded out a market for home and community-based care. With most expensive long-term care funded by Medicaid, consumers had little incentive to worry about the future financial consequences of long-term care risk and cost. In time, however, Medicaid’s low reimbursements made nursing home care so undesirable that by the 1980s the private sector began making more attractive assisted living facilities available. But home care and assisted living were slow to catch on because they required consumers to pay privately.

In a nutshell, easy access to free or subsidized nursing home care desensitized the public to long-term care risk leaving many unprotected by savings or insurance when faced with this terrible choice: put aging loved ones in a nursing home on public assistance and preserve their wealth for inheritance or spend it on access to private-pay home care or assisted living? The first option was too tempting for too many families who could, should and would have funded a private market for home and community based care, including assisted living, decades earlier if it were not for competition with the government-funded nursing home leviathan.

So, this is the real reason we have middle-income seniors facing a growing need for non-institutional senior living and long-term care which they cannot afford. To fix the problem, we need to eliminate competition from Medicaid nursing home care so that more desirable senior living options can prosper in the private market and so that people will understand the need to save, invest or insure privately for long-term care. The worst possible interventions would be to limit senior living industry profitability and expand government financing. To stifle the source of high quality non-institutional care while supplementing the source of institutional bias makes no sense. Yet these are the options the Health Affairs article proposes.

What prevents scholars like the authors of this paper from understanding the real problem and proposing viable solutions? Mistaken assumptions they do not question.

For example, they say in the article “The current [Medicaid] program requires people to impoverish themselves (‘spend down’) to qualify for coverage.” (p. 8) This statement is objectively false. Income below the cost of a nursing home rarely prevents Medicaid LTC eligibility. Virtually unlimited assets listed below are exempt from Medicaid spend down. Even wealthier individuals qualify with the help of special “Medicaid planning” attorneys. Mandatory estate recovery is easily evaded. The truth is most seniors qualify quickly and easily for Medicaid long-term care benefits with little or no spend down. There is no wonder so many of their families choose preserving inheritances using Medicaid over spending privately for home care or assisted living.

This is another mistaken assumption: “Our definition of middle income was motivated in part by the seniors housing options that exist in the market today. We conservatively selected a definition that identified seniors who would be unlikely to qualify for Medicaid long-term care.” (p. 6) How do they define middle income? “In 2029, for people ages 75–84, that middle-income definition corresponds to annuitized financial resources of $25,001–$74,298 in 2014 dollars. For those ages 85 and older, middle income is $24,450– $95,051.” (p. 3) Would people with those asset levels be “unlikely to qualify for Medicaid long-term care?”

Hardly. By doing little more than speaking with a state Medicaid eligibility worker, applicants or their families can learn of Medicaid’s virtually unlimited asset exemptions, including $585,000 to $878,000 in home equity and, without dollar limits, one income-producing business, including the capital and cash flow, IRAs generating periodic income, prepaid burial funds for the immediate family, one automobile, home furnishings, personal belongings including heirlooms, and more. Medicaid eligibility workers often suggest to applicants or their representatives that they purchase exempt assets, especially prepaid burial plans, to avoid spending their remaining resources on private long-term care. People with asset levels in the range identified in the article as “middle-income” have no need to consult a Medicaid planner. They can qualify doing nothing more than converting from countable to exempt assets.

Ironically, the real problems America’s long-term care financing system faces are that it already funds most expensive long-term care for most people, that its primary funding source Medicaid is already hopelessly over-extended, and that unless eligibility is somehow restricted so that more middle-income seniors prepare privately for the cost, the coming onslaught of aging boomers will sink the whole convoluted scheme.

For evidence and details beyond what can be delivered in this brief article, see my monograph How to Fix Long-Term Care Financing, published jointly by the Center for Long-Term Care Reform and the Foundation for Government Accountability in 2017.

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Updated, Monday, May 6, 2019, 10:29 AM (Pacific)

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LTC E-ALERT #19-017: LTC NEWS AND COMMENT

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

7 Public Reactions to Virginia LTCI Rate Increases
Short-Staffed Nursing Homes See Drop In Medicare Ratings
Genworth Reports Higher Earnings
How The Trump Administration Is Reforming Medicare
Insurance Agents Bullish On Long-Term-Care Policies
Genworth Says It Needs $6 Billion in Additional LTCI Rate Hikes
Seniors owe billions in student loan debt: “This will follow me to the grave”
Nursing home, home health payments need addressed
Dementia: How to Find the Right Fit for Long-Term Care
Poor sense of smell linked to higher risk of early death in older adults
Assisted Death and Dementia
Serving The Forgotten Middle: The Need For Financing And Innovation
Better Care For People Dually Eligible For Medicare And Medicaid

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Updated, Monday, April 29, 10:39 AM (Pacific)

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LTC E-ALERT #19-016: LTC NEWS AND COMMENT

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

The U.S. in 2050 Will Be Very Different Than it Is Today
Rise of Managed Medicaid Could Deepen Skilled Nursing Financial Woes
Washington Becomes First State to Approve Publicly Funded Long-Term Care
Is most home care paid by government programs?
In 10 Years, Half Of Middle-Income Elders Won’t Be Able To Afford Housing, Medical Care
36% of Skilled Nursing Facilities See Star-Rating Declines After CMS Changes Take Effect
Untrained Caregivers Bear Burden of Care for Families: Report
Full Medicare Part A Funding Will Run Out in 2026, Two-Thirds of SNFs in the Red by 2040
Medicaid Could Save $2.6 Billion a Year With Dip in Smoking
America’s elderly are twice as likely to work now than in 1985
Medicare Will Be Insolvent by 2026, Government Report Warns
Is 75 the new 65? Wealthy countries need to rethink what it means to be old

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Updated, Wednesday, April 24, 2019, 10:05 AM (Pacific)

Seattle—

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LTC BULLET: THE BLIND MEN OF LONG-TERM CARE

LTC Comment: “There are none so blind as those who will not see” applies to long-term care in many ways. See how after the ***news.***

*** MOVIE UPDATE: Ross Schriftman’s “My Million Dollar Mom” movie continues to attract media attention. Check out this clip of TV news coverage. More information about his presentation-in-a-box community events program can be found here. Ross and his movie are helping people put a human face on long-term care risk, an otherwise easy-to-evade future possibility. ***

*** WHY SUBSCRIBE TO LTC CLIPPINGS?: To counsel prospects and clients responsibly, financial advisors--including insurance agents--need to know more than basic demographic facts and product knowledge. Good LTC planning requires understanding the “blind men” of long-term care and how they interact: government, consumers, advocates, elder lawyers, providers, financiers and insurers. For details on that observation, read my original 2003 article published in National Underwriter's LTC Online Edition titled “The Elephant, The Blind Men and LTC” here and check out the updated version below.

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

We’ll send you an average of two tips per day to crucial articles, reports and data you need to know before your prospects and clients confront you with them. We’ll give you the title, the author, the source, the date of publication, a representative quote, and our “LTC comment” on the item’s significance in a sentence or two.

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

LTC BULLET: THE ELEPHANT, THE BLIND MEN AND LONG-TERM CARE

LTC Bullet: The Elephant, the Blind Men and Long-Term Care (updated)*
by
Stephen A. Moses

Who are the blind men of long-term care and why can't they see how to solve the long-term care financing crisis?

Some blind men approached an elephant. One touched the elephant's trunk and exclaimed, "a hose." The second grasped the elephant's leg and said, "a telephone pole." The third reached for the elephant's tail and concluded, "a rope." The allegory of the blind men and the elephant teaches us the folly of reaching conclusions about any complex thing without first comprehending its entirety and the interrelationships between its parts. What can we learn about long-term care from this ancient parable?

Long-term care is a complex subject comprised of many interrelated subtopics. When people, even experts, analyze one facet of long-term care without taking into consideration all of its aspects and their relationships, they often reach wrong, incomplete or misleading conclusions. Who are the "blind men" of long-term care? What mistaken suppositions do they tend to make? And what can we learn if we remove our blindfolds and observe long-term care in its fullness and complexity?

Government

To the government, long-term care is a major fiscal problem. Medicaid and Medicare pay for most formal nursing home and home care services in the United States. The proportion of long-term care costs paid by government has increased, while the share paid by consumers has declined, for decades. Medicaid rivals education as a burden on state budgets and long-term care is often a third to half the program's cost. Although government officials recognize the public's preference for home and community-based care, laws and policies still push many long-term patients into nursing homes. The public's aversion toward institutionalization discourages utilization and limits cost. Financing long-term care for an aging baby-boom generation is a daunting prospect for state and federal governments that are already facing crisis-level budget shortfalls.

Consumers

To the public, long-term care is usually a non-issue. At any given time, only a small percentage of Americans give or receive long-term care. These caregivers and their patients suffer emotionally and financially. But their numbers are small and when their situation becomes dire, Medicare home care and Medicaid nursing home benefits mitigate consequences that might otherwise become catastrophic. Medicare has no means test and Medicaid is readily available to anyone unable to afford private nursing home care with little or no asset spend down. Thus, most Americans, who are not currently in the throes of a crisis, are barely conscious of long-term care as a health and financial risk. They are in denial, but their denial is understandable. If they ignore the risk, avoid the premiums for private insurance, but someday need long-term care, the government will pay. Most people do not choose this course of action consciously, but that is the point. They have been desensitized to the risk of long-term care so they fail to plan or insure by default.

Senior Advocates

To senior advocates, long-term care is a benefit-seeking enterprise. Groups like AARP, Families USA and the Alzheimer's Association examine the deficient status quo and conclude we need more government financing for long-term care. Among other things, they want tax credits for caregivers and more money for home and community-based services. They miss or ignore the irony that the more money government spends on long-term care, especially for desirable benefits like tax credits and home care, the less motivated the public becomes to save, invest or insure personally against the risk. Consequently, these groups advocate policies and programs that compound the underlying problem which is excessive dependency on perpetually inadequate government financing. Thus do well-intentioned senior advocates compound the long-term care problem by promoting counterproductive public policies that serve their intensely felt, but narrow, short-term interests.

The Elder Law Bar

Even worse is the impact of Medicaid estate planning attorneys who artificially impoverish their affluent clients to qualify them for welfare-financed nursing home benefits while dodging Medicaid’s toothless spend-down rules. This practice sends a disastrous message to the next generation that long-term care is a second-tier risk that can be safely ignored thanks to an elastic social safety net which protects not only the needy, but also the well-to-do,.

Long-Term Care Providers

To service providers, long-term care is a race for survival. Nursing homes and home health agencies, once flush with cash flow when Medicaid and Medicare were more generous, are now public utilities starved for revenue by parsimonious and inadequate government reimbursements. Assisted living facilities, attractive private-pay alternatives to nursing home institutionalization, fill too slowly because most people cannot afford them, few have insurance, and Medicaid nursing home care is a cheaper alternative for most families. Thus, America's long-term care service delivery system is steadily declining with increasing bankruptcies, diminishing revenues, scarce capital, dire staff shortages, deteriorating quality, and high liability insurance premiums. Yet, addicted to public financing, the nursing home industry begs hopelessly for ever higher government reimbursements instead of demanding public policy to encourage private financing of long-term care. Even the assisted living industry looks greedily at Medicaid, tempted by the same false promise of easy money that led nursing homes down a fifty-year primrose path of constricting reimbursements and tightening regulations.

LTC Financiers

Financiers are the people and companies who provide the debt and equity capital to build and operate long-term care facilities. They seek profitable investments. To them, long-term care means "show me the money." Financiers shun businesses that do not produce adequate financial returns. In the 1990s, they over-invested in long-term care anticipating that aging demographics would make home care, assisted living and nursing homes into hugely profitable growth industries. They financed and built myriad long-term care facilities. Wall Street followed suit, pumping up long-term care stocks in anticipation of big future gains. When Medicare cut back on reimbursements for home health, skilled nursing facility, and auxiliary services in the Balanced Budget Act of 1997, the bottom fell out. Long-term care stocks collapsed, major nursing home and home health chains went bankrupt, and investors lost interest in the long-term care industry. Capital will always migrate to its highest and best use. When investors cannot safely anticipate a healthy profit, they take their money elsewhere. At a time when America should be building up its long-term care infrastructure, our heavy dependency on inadequate government financing is driving profit-minded investors away from the business.

LTC Insurers

Finally, to insurers, long-term care was a golden opportunity tempered by disappointing results. Many carriers entered the long-term care market lured by promising demographics only to depart a few years later discouraged by disappointing sales. Likewise, most insurance agents and brokers join the long-term care insurance market with stars in their eyes only to find the product too difficult to sell profitably. The insurance industry completely missed the point that America already has a national social insurance program for long-term care that finances the vast majority of all professional home care and nursing home services. Focused traditionally on selling asset protection to prospects who do not feel, and are not in fact, at risk of asset spend down, long-term care insurance companies failed to penetrate the senior or baby-boomer markets significantly. The primary benefit of long-term care insurance is not asset protection, which can be purchased from a Medicaid planning attorney after the insurable event occurs for a fraction of the cost of private insurance premiums. Rather, the major value added by private long-term care insurance is to empower consumers to purchase quality care in the private market at the most appropriate level, i.e. home care, assisted living, and when necessary, red-carpet access to top-quality nursing home care.

Understanding The Blind Men of Long-Term Care

Those are the blind men of long-term care. We've now taken the elephant of long-term care apart. Here's what we found.

• The government funds most long-term care but can't afford to do so in the future.

• The public is asleep about the risk of long-term care because the government has paid for most of it since 1965. So the public is about to get a rude awakening as government is forced to withdraw slowly from widespread LTC funding.

• Senior advocacy organizations, instead of working to wake the public up to the need for long-term care planning, have put all their lobbying energy and resources into promoting more government financing of long-term care. But that's a dead end.

• And ironically, at least for the time being, the easiest money of all to be made in long-term care is made by Medicaid planning attorneys who wave a magic legal wand and make the financial liability for long-term care disappear for their affluent clients--after the insurable event has occurred.

• Long-term care providers are hooked on "LTC crack." They invest all of their energy, resources and money into squeezing more revenue out of the government. But again, that's beating a dead horse, drilling a dry hole.

• Nursing homes remain a powerful lobby because they get and have gotten so much government financing for so long. Home and community-based services providers have little clout, because the government co-opted a private market for their services by paying mostly for nursing home care for over five decades.

• Long-term care financiers are few and far between, because they can make more money for their investors in other sectors of the economy. Hence, we have a shortage of debt and equity capital to build, operate and maintain long-term care facilities in the United States at the very time the demand for long-term care is about to explode.

• And finally, long-term care insurance remains a stunted market, because the government has paid for most long-term care since 1965, the public is therefore asleep about the risk, and the long-term care providers are hooked on public funding.

Get the picture? What a mess! When you look at the whole elephant of long-term care and take it apart, what you see is a very complicated interrelationship between many interconnected parts resulting in a totally dysfunctional whole.

Putting the Elephant of Long-Term Care Back Together

A brief article like this one cannot present or develop all of the viewpoints and perspectives necessary to comprehend long-term care in its full intricacy. Nevertheless, "in the land of the blind, the one-eyed man is king." If we only keep a few critical facts in mind about the elephantine complexity of long-term care, we will be far better prepared to plot rational public policy to solve these problems.

The public has been anesthetized to the risk of long-term care by decades of easy access to government-financed nursing home care. To awaken Americans to the risk of long-term care before it's too late, we must target publicly financed long-term care more effectively to the genuinely needy and create strong incentives for everyone else to save, invest or insure for this risk. By reducing government financing and increasing private financing of long-term care, America can (1) reduce the fiscal burden on Medicaid and taxpayers, (2) improve access to and quality of care for poor and rich alike, (3) breathe financial oxygen into the service delivery system, (4) build a strong home and community-based services infrastructure and (5) begin to attract new capital into the field of long-term care. All we need is the vision to see long-term care in its full complexity and the will to change public policy accordingly.

For a more comprehensive analysis of and prescription for the long-term care financing problem, see the Center for Long-Term Care Reform’s many national and state-level reports at http://www.centerltc.com/reports.htm.

Stephen A. Moses is president of the Center for Long-Term Care Reform in Seattle, WA and recipient of the 2019 ILTCI Recognition Award. Reach him at smoses@centerltc.com or 206-283-7036. Check out the Center’s website at www.centerltc.com.

* The original version of this article was published in National Underwriter's LTC Online Edition in February 2003.

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Updated, Monday, April 22, 2019, 11:10 AM (Pacific)

Seattle—

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LTC E-ALERT #19-015: LTC NEWS AND COMMENT

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

Feds investigating Medicaid managed care
The Villages is fastest-growing U.S. metro area
Washington State's Public Long-Term Care Program Is On The Verge Of Becoming Law
Midwest is best, when it comes to the 30 best cities for older Americans in retirement
Bill Gates says there could be a way to predict Alzheimer’s using a voice app that listens for 'warning signs'
Alzheimer's Dementia Predicted by Low 'Scam Awareness'
Baby boomers may have no one to care for them in old age
'Generation Alpha' Babies Arrive With Caregiving Obligations
Agenda For Seniors
House budget adds $30M to help nursing homes stay open
More than 50% of dual-eligibles end up in low-rated SNFs, study finds

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Updated, Monday, April 15, 2019, 10:58 AM (Pacific)

Seattle—

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LTC E-ALERT #19-014: LTC NEWS AND COMMENT

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

CMS may start cracking down on dual-eligible 'look-alike' plans
NAIC Forms Top-Level Long-Term Care Insurance Task Force
‘Headwinds’ cause assisted living per-unit price to fall 16% to $186,400: Report
Few family caregivers get formal training
More Than Half of Americans Want To Live To 100...
Lethal Plans: When Seniors Turn To Suicide In Long-Term Care
The Diagnosis Is Alzheimer’s. But That’s Probably Not the Only Problem
Study: Older Adults Often Don't Report Adverse Drug Effects
Older Americans Are Awash in Antibiotics
Analysis: State’s nursing home Medicaid funding gap reaches $631M
Grandparents Are a Major Economic Force: AARP
5 Design Don’ts for Senior Living Communities

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Updated, Monday, April 8, 2019, 10:47 AM (Pacific)

Seattle—

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LTC E-ALERT #19-013: LTC NEWS AND COMMENT

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

What the VA is doing to our veterans is an absolute disgrace
4 Ways Researchers Are Still Fighting Alzheimer's
Republican governor seeks for Alaska to be first state to get Medicaid as a block grant
Alzheimer's Diagnoses Change With Amyloid PET Scans
Caring for Aging Parents is Not a Family Affair
Medicare Advantage is nudging aside ‘old Medicare’ with a free ride, a warm meal, and a handyman
Fear and health care: Gallup survey finds Americans skipped treatment, borrowed $88B to pay for costs
One hour a week of physical activity can hold off disability, study says
Medicare Advantage Managers Give 2020 LTC Sample Details
Another Shock To The Long-Term Care Insurance Industry
Reverse Mortgage: Types and Examples

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Updated, Thursday, April 4, 2019, 11:00 AM (Pacific)

Seattle—

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LTC BULLET: VIRTUAL VISIT TO THE 19^TH ANNUAL ILTCI CONFERENCE

LTC Comment: Whether you were able to attend or not, we hope you’ll enjoy this coverage of LTCI’s premier professional conference, after the ***news.***

*** CLARIFICATION: LTCI expert Bill Comfort replied to our recent “LTC Bullet: Treasure Trove of LTC Provider and User Data” with a good point. He observed: “It’s also important to note that the ‘Home Health Care’ data is almost exclusively Medicare or Medicaid-funded, short-term, post-acute, home health care delivered in one-hour visits a few days a week. It does NOT include ‘private duty,’ non-medical, ‘home care’ for multi-hour shifts which is effectively private-pay and only loosely regulated when it is by states. The exclusion of private-duty, non-medical, custodial home care also artificially shortens the average lengths reported as well as the number of people needing care. Of course it also excludes all of the private caregiving provided by families/others. Overall this is a very good, rich treasure-trove of data … but it’s not the full picture, and it’s certainly not the full picture of the types of care and services that need to be planned for with LTC insurance.” Points well taken. ***

*** HAPPY BIRTHDAY to your Center for Long-Term Care Reform. The Center turned 21 years old on April 1, 2019. Now it can tip a glass with you to celebrate. Thanks for a great and on-going run! ***

LTC BULLET: VIRTUAL VISIT TO THE 19^TH ANNUAL ILTCI CONFERENCE

LTC Comment: The 19^th Annual Intercompany Long-Term Care Insurance Conference convened at the Sheraton Grand Hotel in Chicago, Illinois from March 24 to 27, 2019. Today’s LTC Bullet offers you a virtual visit to that event, the biggest of its nearly two-decade history.

The meeting’s overall theme was “Imagine the Possibilities.” With nearly 1100 attendees, 52 exhibitors, 36 sponsors (15 Diamond, 4 Platinum, 6 Gold, and 11 Silver), some very interesting food choices, ample adult beverages, and scores of excellent general and breakout sessions, ILTCI was a big success again this year.

Best of all, especially if you couldn’t attend, you can explore the whole program here. Check out the list of sessions. Choose those that interest you. Then click through to the list of presenters and finally to their presentation materials. It’s not the same as being there, but it is the next best thing.

Recognizing high quality professional conferences like this one do not happen without the generosity of numerous sponsors, we encourage you to check them out here.

Opening General Session: Monday, March 25, 2019

Conference Director Peggy Hauser kicked off the proceedings by welcoming the attendees. She thanked and recognized the organizing committee, the speakers and the producers of 165 sessions. She announced the conference charity, the USO, and encouraged everyone to attend a special program by the Alzheimer’s Association. She tickled everyone’s curiosity about the entertainment to be provided by a team of improvisational actors. Finally, Peggy introduced Robert Eaton who will chair next year’s program to be held in Denver, Colorado, March 29 to April 1, 2020. Get it on your calendar!

First order of business was presentation of the “ILTCI Recognition Award” to “a person(s) or organization that has made a significant, long-term contribution towards the attainment of the ILTCI vision” which 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.” Steve Moses, president of the Center for Long-Term Care Reform, acknowledged the honor saying

I like to think my stuff is kind of edgy, so I was afraid the ‘boos’ might overwhelm the cheers after this announcement, but they didn’t, so thank you. I want to thank the nominators, the board for selecting me, all our wonderful friends and financial supporters. There are too many to list, so I’ll only mention one by name, my son, Damon, whom many of you know. I’ve heard this honor called a “lifetime achievement” award. That sounds like you’re putting me out to pasture. So, to my friends, let me assure you I’m not going anywhere. To those who disagree with me, don’t think this will stop me. Thanks again to all.”

Next, Carroll Golden announced the creation of a new organization she’ll lead intended to keep LTC issues at the forefront and to bring together LTCI producers and general financial advisors more effectively. The new NAIFA Limited & Extended Care Planning Center will offer professional designation programs and other resources for insurance agents and financial advisors, NAIFA said in a center launch announcement. Read more about it here.

Dennis Martin, president of OneAmerica, introduced the conference keynote speaker whom his company sponsored. Jamie Clarke, hockey star and mountain climber extraordinaire, delivered a humorous, self-effacing, and inspirational address urging all to “be of service.”

From the 2018 Stanley Cup Champion Washington Capitals to the heights of the Seven Summits to the peaks of business success, Jamie Clarke draws from his unique position as a winning performance coach and an accomplished adventurer turned acclaimed entrepreneur to help you develop your team, establish your purpose and succeed in any endeavor. One of a handful of people in the world who have climbed the Seven Summits—including two summits of Mt. Everest—Jamie is the creator of the successful outdoor retail company, LiveOutThere.com, which has been named one of Canada’s fastest growing businesses.

Read more about Jamie Clarke here.

Breakout Sessions

We’ll give you brief summaries of the sessions I attended, but my focus was on the “Public Policy & Alternative Solutions” track. So if your main interests lie elsewhere, be sure to look up these other tracks:

Actuarial & Finance
Claims & Underwriting
Legal, Compliance & Regulatory
Management & Operations
Marketing & Distribution
Producers & Sales

To check those sessions out, go to https://event.crowdcompass.com/iltci19/activities. Once there, click on one of the conference days, March 25 or 26. Scroll through the sessions, which are listed by their track name. Pick a session that interests you. Click on its title. You’ll find a session description and a list of presenters. Scroll down to the bottom of the page and you will find a link to a .pdf with the session’s presentation materials. For example, the first session I attended was this one:

Mon, March 25th, 10:45 AM - 12:00 PM
Medicare Advantage Expansion into Personal & LTSS
Public Policy & Alternative Financing Solutions Track

Description: Under new federal guidelines, Medical Advantage (MA) plans have more flexibility to expand the benefits and services they offer to include supplemental benefits for members with chronic conditions. This means that the more than 20 million Medicare beneficiaries (representing one-third of the market) potentially have access to an expanded set of LTC services through their MA plan. As of 2019, just under 600 of the more than 2,000 MA plans are offering some type of LTC benefit including personal care services, supportive care, dementia care support, caregiver support programs, and others. This session explores the specifics of what MA plans are providing in LTC, the types of care needs they are serving and what this means for the LTC insurance industry and the consumers we serve.

Session Producer: Eileen Tell, MPH, Independent Consultant, ET Consulting, LLC

Speakers:
Dr. Larry Atkins, Ph.D., Executive Director, National MLTSS Health Plan Association
Howard Gleckman, Resident Fellow, The Urban Institute
Jay Greenberg, ScD, CEO , NCO Services
Anne Tumlinson, Founder, Anne Tumlinson Innovations, LLC

Find this session’s presentation materials here.

LTC Comment: Bottom line, there isn’t enough money in the system to make this a significant benefit, but it could convey the idea to the public that they have a meaningful new benefit, which they do not. The importance of the change is that it removes the traditional requirement that Medicare benefits must be medical in nature and universal (available to everyone). Offering non-medical benefits that can be targeted to certain individuals and groups but not others is a major, and some might say worrisome, departure from long-standing Medicare policy. Camel’s nose under the tent?

Mon, March 25th, 12:15 PM - 12:45 PM
Demo - My Million Dollar Mom
During the lunch break, Ross Schriftman showed and discussed the movie he wrote and produced about caring for his mother through her Alzheimer’s Disease. Check it out here. Ross is using the movie to make people aware of the personal and financial risks of dementia and the importance of planning ahead.

Mon, March 25th, 2:00 PM - 3:15 PM
Become an LTCI Super Hero: Integrating Asset-Based into Traditional LTCI Presentation
Producers & Sales Track

Description: Learn from a panel of top producers how they have successfully merged the two product types to provide a comprehensive and effective client presentation and experience. This team of presenters – LTC Wonder Women and Supermen – will share proven approaches and techniques you can adapt to boost your sales.

Session Producer: Andrew Herman, FSA, MAAA, President, AH Insurance Services, Inc.

Speakers:
Alecia Barnette, SVP - LTC, Fig Marketing
Margie Barrie, LTCP, CLTC, Senior LTC Consultant, ACSIA Partners
Steven Cain, CLTC, CSA, Director, LTCI Partners, LLC
Mary Ann DeKing, Long Term Care Specialist, Plan and Care
Zach Derryberry, Director of Hybrid LTC Planning, ACSIA Partners
Find this session’s presentation materials here.

LTC Comment: This session addressed ways to integrate the sale of traditional and hybrid products. Key take-aways: don’t badmouth one kind of LTC insurance to sell the other. Treat them as complementary. Assess clients’ needs and propose the best options. Help the client navigate through the inherent complexity of the product. Be the expert.

Mon, March 25th, 3:45 PM - 5:00 PM
State Initiatives for LTC Financing Reform
Public Policy & Alternative Financing Solutions Track

Description: The National Academy of Social Insurance (NASI), as part of a larger project will soon release a comprehensive study on models for guiding states interested in social insurance initiatives for LTC finance reform. The report identifies the considerations states must evaluate including how various approaches would best enhance a private market role. Actuarial projections for various sample programs are included. This session will explore the analytic framework presented in the NASI report. It will also provide a brief update on the state-based initiatives underway in Washington, Maine, Michigan, California, Minnesota and others.

Session Producer: Eileen Tell, MPH, Independent Consultant, ET Consulting, LLC

Speakers:
Eddie Armentraut, Consulting Actuary, Actuarial Research Corporation
Dr. Marc Cohen, PhD, Clinical Professor of Gerontology, University of Massachusetts
Allen Schmitz, FSA, MAAA, Principal and Consulting Actuary, Milliman, Inc.
Ben Veghte, Research Director, Caring Across Generations

Find this session’s presentation materials here.

LTC Comment: The wonderful thing about federalism is that individual states can try experimental programs (like these) and fail without causing a huge national waste of time and money like CLASS. This project’s goal of changing long-term care financing from a welfare-based system to social insurance, however, is highly problematical. First, the major social insurance programs we already have—Social Security and Medicare—are bankrupt. They face the inevitable economic outcome of all such Ponzi schemes. But even more fundamentally, social insurance undermines key personal values like independence and personal responsibility by spreading, but not pricing risk, thus rewarding poor behavior and punishing good behavior. After many decades of social insurance, we now see its inevitable consequences: too few people prepared to face retirement financially and the social insurance programs on which they’ve been taught to rely approaching insolvency. Ironically, the welfare approach to long-term care financing that this project aspires to replace has never been tried. The elephant in the room remains easy access to Medicaid by middle class and affluent people which is the real cause of the system’s dysfunction and LTCI’s low take-up. Pushing social insurance instead means trading the frying pan for the fire.

Tue, March 26th, 9:00 AM - 10:15 AM
What’s up Doc? Geriatric Neurology and the Implications for LTC Insurance
Public Policy & Alternative Financing Solutions Track

Description: A conversation with two of the nation’s leaders in geriatric neurology.

Key discussion topics will include:

Limitations in access to healthcare and current health provider attitudes that impact cognitive claims incidence
Issues with the cognitive diagnostic process
The dementia knowledge gap among healthcare professionals
The impact of dementia on fiduciary risks
The role of the family caregiver in cognitive situations
Current and new methods to assess cognition
The opportunity for recoverable cognitive claims including the use of technology to flag recoverable claims and help insureds age in place
De-risking dementia: opportunities for new products and services

Session Producer: John O'Leary, President, O'Leary Marketing Associates

Speakers:
Neelum Aggarwal, MD, Associate Professor, Rush Medical Center
Dr. Anitha Rao, MD, MA, Chief Executive Officer and Founder, Neurocern
Lindsay Resnick, Wunderman

LTC Comment: This session was a fascinating discussion of dementia, what it is, what causes it, why drug development has been stymied, and the broadening research perspective on its relationship with nutrition, exercise and behavior. The link between heart and brain health; why women are more prone to Alzheimer’s Disease; inadequate geriatric training for physicians; the difference between dementia and delirium; a new approach to research that drops unpromising trials sooner; why patients are seeking help from insurers because they’re not getting it from harried health care providers.

Tue, March 26th, 10:45 AM - 12:00 PM
Evidence-Based Nutrition for Healthier Futures
Public Policy & Alternative Financing Solutions

Description: This session will feature three medical experts discussing how nutrition and healthy eating can help consumers, including long-term care insureds, lead healthier lives, and potentially mitigate conditions that lead to the need for long-term care. Lauren Biscotti, Director of External Development, Harvard Medical School, Dr. Monique Tello, primary care physician, author and healthy lifestyle advocate from Massachusetts General Hospital, and Dr. Neelum Aggarwal, a neurologist at Rush University Medical Center in Chicago and one of the nation’s pre-eminent experts on diagnosing and treating Alzheimer’s patients, will discuss their perspectives on evidenced-based nutrition practices their impact on future health.

Session Producer: John O'Leary, President, O'Leary Marketing Associates

Speakers:

Neelum Aggarwal, MD, Associate Professor, Rush Medical Center will discuss the status of several current nutritional studies that are underway including the MIND diet and their preliminary findings on changes that may positively impact cognition.

Lauren Biscotti, Director of Strategic Development, Harvard Medical School will discuss the new Harvard Medical School e-learning program- “6 weeks to Healthy Eating” and how it can help change consumer’s eating behaviors.

Dr. Monique Tello, MD, MPH, FACP, Instructor, Harvard Medical School, will provide a set of practical, easy to follow steps for both what to include and exclude from a healthy diet to prevent chronic diseases and also provide recipes that are both healthy and easy to make.

Find this session’s presentation materials here, here and here.

LTC Comment: Dementia and Alzheimer’s research are moving away from narrowly focusing on a single cause toward considering the effects of lifestyle, including diet, exercise, sleep, etc., on associated cognitive problems. Overall theme of the presentation: what is good for the heart is good for the brain. The goal is to turn risk factors into protective factors. It is ironic that healthy behavior leads to longer life which makes having a long-term chronic illness including dementia more likely over time. But if healthy living diminishes the risk of dementia, as this session argued, that irony is somewhat mitigated. This shotgun approach seems to me far more promising than the failed efforts to find and fix a single cause.

Tue, March 26th, 2:00 PM - 3:15 PM
Political Pundits Pontificate: The Political/Policy Environment in 2019
Public Policy & Alternative Financing Solutions Track

Description: After two plus years of a Trump White House and a Republican Congress, the situation changed dramatically last November. This session brings together some of the nation’s leading health, aging, and long-term care political and policy pundits to provide an update on the current political/policy situation in Washington. They will shed light on what the new landscape means for legislative and regulatory initiatives in financing and program delivery, for both public and private programs in long-term care and aging.

This session takes an interactive and entertaining approach to these challenging political topics by engaging the audience and putting our pundits on the spot to address a wide range of critical issues without sugar-coating or wishful thinking. This is a “tell-it-like-it-is” session designed to give us some strategic insights into the political realities within which we will be living for this year and next. There may even be some predictions for the 2020 elections.

Key topics will include what changed in terms of players and committee assignments and what that might mean for initiatives like the Chronic Care Act, Medicare for all, Medicaid re-structuring, caregiver support and the future of other aging, disability and long-term care programs.

Session Producer: John O'Leary, President, O'Leary Marketing Associates

Speakers:
Bob Blancato, President, Matz, Blancato & Associates, Inc.
Richard Browdie, President/CEO, Benjamin Rose Institute on Aging
Joel White, Founder and President, Horizon Government Affairs
Tamera Luzzatto, Senior Vice President, The Pew Charitable Trusts

Find this session’s presentation materials here.

LTC Comment: Dominant conclusion of the panel: “Medicare for All” will go nowhere. No one in Washington wants to consider “pay fors.” State governors don’t have the luxury to ignore costs. They’re under pressure from constituents to fix things and that takes money. So they have to negotiate and compromise. Little of that happens in DC where the usual restraints on spending no longer seem to apply and the policy conversation is caustic. All panelists agreed the Mueller report made Trump stronger as a 2020 candidate, at least temporarily. Long-term care is America’s “denial issue.” Such focus as there is addresses “little pieces” of the problem. There’s no momentum and won’t be until the public demands attention to long-term care.

Tue, March 26th, 3:30 PM - 5:00 PM

Alzheimer's Association Closing Session
General Conference Session

Description: Attendees will hear from Tom Doyle a member of the National Early-Stage Advisory Group (ESAG) helping to bring the voice of individuals living with dementia to the national forefront. Keith Fargo the Director of Scientific Programs & Outreach for the Alzheimer's Association will discuss the breadth of Association-led research initiatives that span the mission. He will also address how science and programs intersect around research including POINTER and LEADS. Sam Fazio, Senior Director of Quality Care and Psychological Research for the Alzheimer's Association will report on the financial literacy research that is currently being done as a result of a grant program. This Session Sponsored by OneAmerica.

Speakers:
Tom Doyle, National Early Stage Advisor, Alzheimer's Association
Keith Fargo, Ph. D., Director of Scientific Programs & Outreach, Alzheimer's Association
Sam Fazio, PhD, Senior Director of Quality Care and Psychosocial Research, Alzheimer's Association

LTC Comment: The highlight of this session was the opening speaker, Tom Doyle. Tom has both Alzheimer’s Disease and Parkinson’s. He recounted how his life was turned upside down by these ailments as he could no longer carry on his work as a college professor and he felt like he was losing all reason for living. But now, with the help of his husband, Levi, and having been given new purpose as a spokesman for the Alzheimer’s Association, Tom is thriving with a new sense of purpose and personal satisfaction. Presentations like Tom’s help an audience imagine what having dementia would be like and hopefully awaken people to the need to prepare for this eventuality for themselves and for their loved ones. The remainder of the session addressed the status of Alzheimer’s and dementia research with all the material presented mentioned, accessible at the Alzheimer’s Association’s website.

Tue, March 26th, 7:30 PM - 9:00 PM
Whirled News Tonight Improv Show
General Conference Session

Description: Cocktails begin at 7:30 - Show begins at 7:45pm.
Our Tuesday evening entertainment will feature performers from Chicago’s Best Improv Comedy Theater – Improv Olympic! Improv Olympic will be bringing a seven person cast of performers to entertain the attendees of the ILTCI. The performance will be approximately 60 – 80 minutes in length. “ iO” is recognized as the birthplace of “long-form” improv and is home to some of the best improv comedy shows in the country. They have helped to train and develop an entire generation of America’s best and brightest comedic entertainers for over 30 years. Alumni include past and present cast members of Saturday Night Live and stars of some of your favorite small screen prime-time comedy and late-night shows – along with others who have gone on to write, direct and produce blockbuster Hollywood movies. This interactive show will include performance pieces including musical games, scenes that solve the audience’s problems and their signature piece, THE DREAM, based on the day in the life of one of the audience members. To learn more about iO, visit https://www.ioimprov.com/ It will be a improve show of Olympic proportions…we hope to see you there!

LTC Comment: And a good time was had by all at this closing session of the conference. Stay tuned to LTC Bullets for information about the 20the ILTCI Conference in Denver, Colorado March 29 to April 1, 2020 as it becomes available.

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Updated, Tuesday, April 2, 2019, 9:43 AM (Pacific)

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LTC E-ALERT #19-012: LTC NEWS AND COMMENT

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

5 Medicare Advantage Sample Size LTC Benefits Reactions
Veterans harmed at VA nursing homes in 25 states, inspections find
Not All Medicare Cuts Are Bad
Transamerica Announces Agreement With LTCG for Administration of Long Term Care Insurance
Members of ‘sandwich generation’ stealing from their futures to pay for care for aging parents
ILTCI Conference Attendees Soldier On
NAIFA Launches Long-Term Care Planning Center
Majority of Americans think government should pay for long-term care
Where Alzheimer’s Research Is Pushing Ahead
LTC Hybrid Experience Looks Great: Milliman Actuaries
Survey Identifies Long-Term Care Planning Resisters
Private LTC insurers say fewer beneficiaries using plans for nursing homes than believed
Biogen halts studies of closely watched Alzheimer’s drug, a blow to hopes for new treatment
Mind-blowing research that all skilled nursing providers can use
Finding and keeping qualified talent a top concern for administrators
Video game may help slow dementia progression, address workforce issues
Medicaid Squeeze Hurts Nursing Home Quality: Witnesses
Avoiding Million-Dollar Medicaid Eligibility Mistakes in Nursing Facilities
NAIC Developing Executive-Level Committee to Harmonize LTCI Rates
Many baby boomers willing to receive long-term care outside the home, LeadingAge poll finds
Heart Attacks Fall One-Third Among Older Americans

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Updated, Wednesday, March 20, 2019, 10:16 AM (Pacific)

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LTC BULLET: TREASURE TROVE OF LTC PROVIDER AND USER DATA

LTC Comment: Who’s getting what long-term care where? Answers after the ***news.***

*** THE 19^TH ANNUAL INTER-COMPANY LONG-TERM CARE INSURANCE CONFERENCE convenes next week (March 24-27) in Chicago. Check out the program here. Damon and I will be there. Our next LTC Bullet will be a virtual visit to the conference giving those of you who do not attend a sense of what it was like, a summary of the sessions we attend, and some analysis. ***

*** More ILTCI news: This just in from Claude Thau: “I hope you can attend our Range of Exposure (ROE) session (Sunday, 2 to 3:30 pm) at ILTCi. Our ROE tool helps advisors more easily engage clients in productive long-term care planning.” Click for more information. ***

*** MY MILLION DOLLAR MOM: A showing of Ross Schriftman’s film is on the ILTCI’s agenda for March 25^th. Well worth a viewing. Contact Ross Schriftman, Author, Screenwriter, Producer, LTCi "Producer" and Dementia Advocate at 215-682-7075 or mymilliondollarmom@gmail.com. ***

LTC BULLET: TREASURE TROVE OF LTC PROVIDER AND USER DATA

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.

NCHS Report: “In 2016, about 65,600 paid, regulated long-term care services providers in five major sectors served over 8.3 million people in the United States.” (p. 1)

LTC Comment: Wow, that’s 2.5% of the U.S. population of all ages receiving LTC services already. Where?

NCHS Report: “Long-term care services were provided by 4,600 adult day services centers, 12,200 home health agencies, 4,300 hospices, 15,600 nursing homes, and 28,900 assisted living and similar residential care communities (Appendix III, Table V).” (p. 1)

LTC Comment: So, there are nearly twice as many ALFs and RCFs as SNFs. Assisted living came out of nowhere starting in the 1980s to offer a more desirable care venue than Medicaid-financed nursing homes, but only for people able to pay privately. Who goes where?

NCHS Report: “In 2016, there were an estimated 286,300 current participants enrolled in adult day services centers, 1,347,600 current residents in nursing homes, and 811,500 current residents living in residential care communities. In 2015, about 4,455,700 patients were discharged from home health agencies, and 1,426,000 patients received services from hospices (Appendix III, Table VIII).” (p. 1)

LTC Comment: Interesting, while there are around twice as many ALFs as SNFS, the assisted living facilities (and other residential care facilities) have only about 60 percent as many residents as nursing homes do.

NCHS Report: “The majority of home health agencies, hospices, nursing homes, and residential care communities were for profit, while a minority of adult day services centers were for profit (Figure 4). The majority of nursing homes and residential care communities and a minority of adult day services centers were chain-affiliated (Figure 5).” (p. 2)

LTC Comment: Evidently, it’s hard to make a profit offering adult day services. Otherwise, we’d see more companies and chains doing so. Conclusion: adult day services are available because government pays for them and not because consumer demand insists on them.

We often see claims that chain-affiliated, for-profit care facilities provide deficient care compared to non-profit facilities. But that’s not because they are for-profit or non-profit. It’s because for-profit facilities serve more Medicaid recipients for whom they receive reimbursement at less than the cost of providing the care. You can’t expect Ritz Carlton care at Motel 6 rates.

NCHS Report: “At least one-quarter of services users in each of the five sectors had Alzheimer disease or other dementias, arthritis, heart disease, or hypertension (Figure 24). However, the prevalence of these and six other reported diagnosed chronic conditions varied widely between sectors.” (p. 2)

LTC Comment: Check out the detail in Figure 24 and you’ll find Alzheimer’s Disease and depression are most common in nursing homes whereas arthritis, heart disease, and especially hypertension prevail in home health agencies. Residential care communities have relatively high occupancy by people with each of those ailments.

NCHS Report: “Fewer adult day services center participants needed assistance with four of six activities of daily living (ADLs; bathing, dressing, toileting, and walking or locomotion) than services users in other sectors (Figure 25).” (p. 2)

LTC Comment: Well, yeah! How many adult day care centers would be equipped to handle visitors needing help with four or more ADLs?

NCHS Report: “More residential care residents had falls compared with adult day participants and nursing home residents.” (p. 2)

LTC Comment: Makes sense. You’re less likely to fall out of a wheel chair or bed than from walking, which residential care residents are more apt to be able to do than nursing home residents.

NCHS Report: “Short-stay (less than 100 days) [nursing home] residents differed from long-stay (100 days or more) residents by age and sex, and in the prevalence of numerous diagnosed conditions, overnight hospital stays, and falls (Appendix III, Table IX).”

LTC Comment: There are more long-stay nursing home users (794,000) than short-stay (606,800) users. Short-stay users are more likely to be under age 65 compared to long-stay users (18.6% vs. 14.9%); less likely to be women (60.3% vs. 67.9%); less likely to have Alzheimer’s Disease (36.7% vs. 58.9%); more likely to have an overnight hospital stay (23.8% vs. 8.7%); but less likely to fall (13.5% vs. 19.1%). Unfortunately, Appendix III, Table IX doesn’t tell us the short vs. long stay break out for “Medicaid as payer source,” the cell for which is blank.

NCHS Report: “Average length of stay among all residents is 485 days; 43% of residents are short-stay and 57% are long-stay.” (Footnote 1 of Appendix III, Table IX, p. 78)

LTC Comment: Now this is fascinating. The average length of stay is 1.3 years (485 days) but with 43 percent of residents staying less than 100 days dragging the average way down, we must conclude that the 57 percent of residents staying 100 days or longer must be staying much, much longer than 485 days in order to bring the average up to that level.

Why does this matter? First, long-stayers in nursing homes tend to be older women with Alzheimer’s who are prone to fall and who mostly rely on Medicaid. They are among the most expensive recipients of Medicare and Medicaid, the so-called “dual eligibles.” CMS reports that 61.8 percent of nursing home residents rely on Medicaid as their “primary” funding source. But that includes both short and long stayers. So when you consider that there are more long-stayers than short-stayers and that long-stayers stay much longer than short-stayers, you must conclude that long-stayers account for a far greater proportion of total patient days than the percentage of all residents with Medicaid as primary payer.

So what? Well, it’s bad enough that over 3/5 (61.8 percent) of nursing home residents generate Medicaid reimbursements at less than the cost of care, but when you realize that nursing homes receive less than the cost of care for an even higher percentage of total patient days, you can fully recognize just how damaging Medicaid dependency is to the ability of nursing homes to provide quality care.

What proportion of total patient days does Medicaid touch with its low reimbursements? The National Investment Center’s latest “Skilled Nursing Data Report” for Q4 2018, covering data from January 2012 through December 2018, says the figure is 66.6 percent. That’s higher than 61.8 percent of residents with Medicaid as primary funding source, but not nearly as high as one would expect it to be based on the analysis immediately above. That’s a paradox that needs to be researched.

Why? Because the same NIC report indicates that Medicaid reimbursement as a proportion of total nursing home revenue has increased from around 47 percent in 2012 to 50 percent in 2016 whereas private-pay revenue has declined from 12 percent to 8.2 percent. Inasmuch as private payers pay half again as much as Medicaid on average, this trend toward Medicaid and away from private pay, which has been going on since private-pay was around 50 percent in 1970, is potentially devastating for the financial viability of nursing homes.

Closing LTC Comment: Kudos to the National Center for Health Statistics (NCHS) for producing the National Study of Long-Term Care Providers (NSLTCP) and publishing this report. As disclosed to the aforementioned meeting of the LTC Discussion Group, NCHS plans to expand and refine this survey and the report in the future. We’ll stay tuned.

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Updated, Monday, March 18, 2019, 10:09 AM (Pacific)

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LTC E-ALERT #19-011: LTC NEWS AND COMMENT

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

Genworth move could signal big shift in distribution of long-term-care insurance
Alzheimer's Risk Linked to Extended Family
Could Alzheimer's Be a Reaction to Infection
Tips to share with prospective residents about paying for senior living
A Legacy on the Land: For Donna Lien, protecting a cherished family property meant rethinking later-life finances
Should genetic test results be used to determine insurance coverage? Debate is on
More Consumers Are Counting on Help From LTCI: Bankers Life Arm
Wi-Fi Joins Location, Price as Top Housing Concern for Seniors
White House proposes deep cuts to HHS and Medicaid in new budget
Making the Most of a Health Savings Account Once You Turn Age 65
Sanders’ ‘Medicare for All’ expands long-term care benefits

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Updated, Monday, March 11, 2019, 10:20 AM (Pacific)

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LTC E-ALERT #19-010: LTC NEWS AND COMMENT

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

Genworth to Suspend LTCI and Annuity Sales Through BGAs
GE’s Fix-It Plan for Insurance: Raise Rates, Boost Returns
Top Workplaces 2019: Penn Treaty Network America workers help set the company's focus, direction
Why the number of Americans with Alzheimer’s could more than double by 2050
Americans Cite Healthcare Expenses as No. 1 Barrier to Early Retirement
CDC updates report on assisted living community characteristics
Will $14.5 billion plug GE's long-term care insurance hole? Some experts say 'No'
Report finds few seniors are getting routine memory checkup
Medicare Advantage Eats Into Margin Gains for Skilled Nursing Facilities
Cost of nursing home care makes planning ahead crucial for financial security
Nursing Homes Are Closing Across Rural America, Scattering Residents

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Updated, Monday, March 4, 11:29 AM (Pacific)

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LTC E-ALERT #19-009: LTC NEWS AND COMMENT

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

Is Washington State About To Okay Public Long-Term Care Insurance?
Ages When Long-Term Care Insurance Claims Begin
A CLASSy Proposal?
High-Need Medicare Advantage Members Disenroll at Higher Rates: Study
5 Trends That Could Reshape Retirement
Operators should emphasize lifestyle in marketing efforts: study
Universal long-term care coverage included in House Democrats’ new Medicare-for-all plan
AHCA study: Facilities with higher Medicaid populations have poorer quality outcomes
Hip fractures may serve as first sign of undiagnosed Alzheimer’s disease
Managed Medicaid Poised to Threaten Skilled Nursing Facility Payments, Census
Dwindling reimbursement, occupancy numbers chipping away at skilled nursing margins, new analysis finds
How To Plan The Legal And Financial Needs Of A Loved One With Dementia
House passes measure to create long-term care program

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Updated, Friday, March 1, 2019, 10:44 AM (Pacific)

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LTC BULLET: THE PRE-MEDICAID HISTORY OF LONG-TERM CARE

LTC Comment: How did we end up paying for the WWII generation’s long-term care in poorly financed welfare nursing homes and why is long-term care service delivery and financing still such an awful mess? The answer after the ***news.***

*** ILTCI RECOGNITION AWARD: Organizers of the 2019 Intercompany Long-Term Care Insurance Conference, which is due to convene on March 24 at the Sheraton Grand in Chicago, inform us that “The ILTCI Recognition Award is back for its second year and we need your help. Now is your chance to nominate a person(s) or organization that has made a significant, long-term contribution towards the attainment of the ILTCI vision.” We confirmed that nominations are open to anyone, not just conference attendees, so click through to the details about the award and submit your nomination. ***

*** MORE LTCI CONFERENCE NEWS: The ILTCI executive planning committee informs us of its partnership with Creighton University Health Sciences Continuing Education to offer continuing education for several break-out sessions at this year’s conference. Nurses, Doctors, and Social Workers can pay a flat $50 reporting fee and earn CEUs for accredited session participation. A complete CEU accredited session list is available online. To sign up for CEU reporting you will need to log into your registration online to add it to your activities and pay the $50 fee. Your password to login is: 35043.

“We still have slots available in our Future Leaders program if you have anyone from your company that would benefit from attending their Sunday noon workshop and attending the conference at a discounted rate!” ***

LTC BULLET: THE PRE-MEDICAID HISTORY OF LONG-TERM CARE

LTC Comment: I’ve written a lot about the history of long-term care services and financing. But I’ve always begun such accounts with the sea change that occurred when Medicaid became the principal LTC payer in 1965. That revolutionary development increased nursing home bias, stifled the private market for home care, impaired care quality with notoriously low reimbursement rates, relieved Americans from the necessity to plan ahead for long-term care, and hence ruined the potential for non-governmental sources of funding such as home equity conversion and private LTC insurance.

That is still the big news, but Medicaid didn’t just appear out of nowhere. It had roots in decades of earlier government intervention in long-term care services and financing. In fact, long-term care has been a challenging problem from America’s earliest days, long before government assumed a major role. For insights on the pre-Medicaid history of long-term care, I refer you to an interesting website which traces that story from 1776 to 1969. I’ve culled highlights from that source below followed by our “LTC Comments” on each entry, but for all the details, check out https://www.seniorliving.org/history/. You will find that the damage done by Medicaid starting in 1965 has deep historical roots.

1776-1799: America was a young, rural society. Life expectancy was short. "Old age security" meant having children or private wealth. Adult children were expected to care for their parents or pay for their care by surrogate families. The earliest welfare and pension programs developed. Paupers received cash, so-called “outdoor relief,” paid by city or county taxpayers until costs quickly grew too high. Poorhouses, “indoor relief,” became homes for the indigent elderly, which they shared with impoverished miscreants. Government pensions went only to veterans.

LTC Comment: Key principles, inherited from the British “poor laws,” prevailed from the beginning of U.S. history. People were individually responsible both for themselves and their parents. Government’s safety net role was local and made intentionally unattractive. “A common concern of the public at that time was that the opportunity to get free room and board would be so attractive that people would deliberately pretend to be poor so they could live an ‘indolent life’ in the almshouse at the expense of the taxpayers. Consequently, poorhouse life was made as unappealing as possible.” The idea was unheard of that people have a “right” to a living wage, much less to “free” health care or housing.

1800-1899: Families dispersed with the young moving to cities or the west. Single elderly, especially women, lived with adult children. The poorhouse system, with conditions between “barely tolerable to horrific,” came under scrutiny. “Boards of Charities,” precursors to today’s Departments of Welfare, developed in the mid-1800s to oversee local poorhouse operations.

There was a lot of debate about society’s role in caring for the poor, but by the mid-1800’s, many felt that the ‘deserving’ poor, like children, the insane, and the elderly, should get better treatment than the “undeserving” poor, like alcoholics and those who were healthy but shiftless or lazy.

Benevolent societies and fraternal organizations built old age homes to alleviate problems with the poorhouses.

[T]he benevolent societies created one of the earliest organized old-age assistance programs. Members paid monthly dues to the Society while they were young and healthy, then received help when they were elderly, infirm, or in need.

Private and non-profit developers created some approaches that became modern such as planned communities, retirement campuses, and “lifecare” whereby residents “turn over their pensions and any other income or assets they had to the facility, in exchange for a guarantee that they would have a home as long as they needed it.” Private nursing homes began:

A small number of the non-indigent frail elderly people lived in early “proprietary,” privately-owned facilities called “rest houses,” “convalescent homes,” or “medical boardinghouses,” generally just rented rooms in a family home.” Home health care services began to evolve “directed to the poor” and “supported by philanthropy.”

Veterans’ benefits expanded after the Civil War beyond cash assistance. “[T]he federal government started building hospitals and homes to provide long-term care to disabled soldiers and sailors, where many lived into their old age.” By the end of the 19^th century some private companies started providing pensions and some states began providing cash assistance to the poor elderly.

LTC Comment: The 1900s saw the United States emerge as a world economic powerhouse with government interfering very little in the free market or to improve conditions for the poor elderly. Voluntary organizations took the lead to provide alternatives to poor houses and insane asylums for the deserving poor. State and federal government roles in support of the elderly and long-term care remained minimal.

1900-1929: Many non-profit old-age homes were built. People were living longer. “The average life expectancy at birth increased by 10 years from 1900 to 1930, and increased by another 15 years from 1930 to 1990.” Urbanization increased care needs. Home health care exploded with the Metropolitan Life Insurance Company providing visiting nurses for a “modest fee per policy.” More cash benefits were available from states and employers. A tuberculosis epidemic spurred “the development of public institutions designed to provide chronic care ….” More states began offering very limited, means-tested cash assistance to the poor. Many elderly were shunted into facilities for the mentally ill.

LTC Comment: In the dawn of the progressive era, little had changed yet, but the stage was being set for huge developments. The mostly voluntary, non-profit, non-governmental approach to old age support and care was about to be uprooted by heavy federal and state government involvement. The coming Depression tipped the balance toward government financing and control.

1930-1939: The Great Depression worsened poverty and destroyed family supports. State assistance was restricted.

All but Arizona and Hawaii refused to make payments to older people who had children or relatives who could support them. … Many required that the beneficiary must transfer to the pension authority any property they possessed before any payment would be made. … Most required that benefits would be denied to anyone who gave away property in order to qualify for public assistance. Most required that a lien be placed on the estate of the beneficiary to be collected upon their death.

In the worst of the Depression, voluntary organizations, local and state governments could not keep up with the need and demand for old age assistance. The 1935 Social Security Act created federal/state old-age assistance.

Title I … created a program, called Old Age Assistance (OAA), which would give cash payments to poor elderly people, regardless of their work record. OAA provided for a federal match of state old-age assistance expenditures. Among other things, OAA is important in the history of long-term care because it later spawned the Medicaid program, which has become the primary funding source for long-term care today.

These new benefits discouraged poorhouses and stimulated for-profit homes for the aging. “OAA recipients were able to pay cash at a time when there was little real money in circulation, making them very attractive customers for proprietary operators, and old age homes were a perfect ‘cottage’ industry.”

State and federal governments began to share welfare costs. “The OAA program established the precedent of splitting welfare expenditures between the federal and state governments while allowing the states to retain a significant amount of authority and autonomy to set standards, eligibility, and payment levels as they desired.” This division invited intergovernmental tension and “gamesmanship.”

LTC Comment: As the federal and state governments began to take a larger role in old age assistance, they required very strong controls. Strict eligibility criteria, transfer of assets restrictions, and mandatory liens were commonplace. These practices largely went by the wayside when Medicaid took over long-term care financing in 1965. Such restrictions only found their way back into the Medicaid program gradually over four decades as Medicaid LTC expenses exploded immediately and kept on a steady upward trend. The practice of splitting state and federal funding presaged the practice and its problems later in Medicaid. For more on this post-Medicaid history, see How to Fix Long-Term Care Financing (2017), especially pages 19-24 and 34-63.

1940-1949: “The size of the elderly and disabled population was growing, and many of them were now eligible for government payments of one kind or another, including veterans benefits, old-age assistance, Social Security, and unemployment assistance. Those payments could be used to pay for nursing home care, further encouraging the development of care facilities.” Both the cap on Old Age Assistance and the proportion paid by the federal government increased. Costs skyrocketed despite efforts to control abuse and overuse. Welfare planning, i.e., self-impoverishment to qualify, was feasible but still unpopular.

The benefit levels had risen so much that by 1948 the average OAA benefit ($38.18 per month) greatly exceeded the average Social Security benefit ($25.13 per month), providing a perverse disincentive for people to provide for their own old age by working and saving.

Government support for hospital construction gradually expanded to include nursing homes. “Hill-Burton financing lead to an explosion in public and non-profit hospital construction, and provided a model for federal and state standards for the design, regulation, and financing of healthcare institutions that was later used for nursing homes.” Many old hospitals replaced by the Hill-Burton program became nursing homes.

LTC Comment: Around the time of WWII we begin to see the perverse incentives created by state and federal government involvement in financial and long-term care support for the elderly. Why work when welfare pays more than Social Security? Why not start a nursing home? Success is guaranteed by direct subsidies and indirect government funding paid to welfare beneficiaries. Why save, invest or insure for the risks and costs of old age? The VA, OAA, SSA and UI will take care of you. The old principles of personal responsibility, self-reliance, and voluntary philanthropy are dying out but the inevitable consequences are not yet felt. So as the country enters a period of post-war prosperity, we’ll see more of the same.

1950-1959: The government is now heavily involved in nursing home care. The first official inventory showed 270,000 people living in 9,000 homes classified as “nursing care home” or “personal care home with nursing.” Of such homes, 86% were for-profit, 10% were voluntary, and only 4% were public.

Social Security and Old Age Assistance made the poorhouses irrelevant so many closed. Consensus grew to consider nursing homes as providing medical care, not just welfare. Social Security expanded in the 1950s “creating millions of additional people who would have a reliable source of income in their old age.” By the end of the decade, “the government was totally enmeshed in the business of providing nursing home care.” Half of private nursing home residents were welfare recipients and government was paying half the cost of nursing home care in the country.

Federal reimbursement, formerly split 50/50 with states, changed to give more to low-income states. With new nursing homes being built, smaller, older ones closed, especially “Mom and Pops.”

Not surprisingly, with government financial spigots open wide and few restrictions on what nursing homes should look like or how they should operate, quality issues started to come to the forefront. … A 1955 study by the Council of State Governments reported that the majority of nursing homes had low standards of service and relatively untrained personnel.

States often failed to enforce quality for fear of worsening the remaining shortage of nursing home beds.

LTC Comment: Government, at the federal, state and local levels, gets increasingly involved in building, funding, encouraging and regulating nursing homes. Federal funds pour into the public’s hands through Social Security and Old Age Assistance, which empowers people to purchase nursing home care, incentivizes investment in large for-profit facilities and contributes to crowding out smaller, family-run homes. Despite the rapid building of nursing homes and the new money pouring into the business, quality becomes a serious problem. Already, with government as the dominant payer and nursing homes as the customers, patients and residents are caught in between with little independence, control or protection.

1960-1969: In 1960, Congress passed the Medical Assistance for the Aged (“MAA”) program which made health care available to people sixty-five and older with low or moderate income and required state matching funds. 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.” This critical change found its way into Medicaid.

These programs benefited thousands of older people who were not technically ‘poor’ but whose incomes were inadequate to pay for expensive medical costs like nursing home care. The program also helped nursing home operators, since they now had a source of payment for a whole new group of people who otherwise would not have been able to pay for their care.

Program costs exploded due to these new classes of beneficiaries and elimination of the only effective spending control, the cap on OAA payments.

From this point forward, states could set payments to nursing home providers as high as they wished, and the federal government, which had no control over rates, was mandated to pay its part of the cost.

Nursing home demand remained “unquenchable” because people, who managed somehow before, were coming out of the “woodwork” to take advantage of the new government money and programs. The expansion of Social Security added more people with more money who were able to pay at least a part of the cost for their care.

Medicare passed in 1965 and intentionally excluded most nursing home care as not in keeping with its mission. It was custodial, not curative care. Then Medicaid passed almost as an afterthought, with little consideration for its mission and turning its administration over to the states.

The new Medicaid program contained features that guaranteed high costs: it paid for nursing home care for higher income medically indigent people but not for cheaper home care; it paid for “housing, food, housekeeping, and laundry, services” which would not have been covered for in-home services; federal matching funds incentivized states to move people from state-funded in-home programs to Medicaid nursing homes expanding services at little or no state cost; states could reimburse nursing homes at any rate and never pay more than half the cost; federal fiscal control was virtually impossible because states controlled all of the data.

First year costs for Medicaid, estimated at $250 million, turned out to be that much for New York State alone with 41 percent of its population eligible for Medicaid. “In spite of the looming problems with Medicare reimbursement, publicly-traded nursing home chains became one of the hottest things on Wall Street. Everyone viewed Medicare and Medicaid as a risk-free source of revenue that made this a business where no one could lose money.”

LTC Comment: Adding the medically indigent to nursing home eligibility drove up, and continues to drive up, government expenditures for long-term care. People came, and continue to come, out of the woodwork to take advantage of virtually free care. Demand skyrocketed as Medicaid covered, and continues to cover, housing, food, housekeeping, and laundry, not just “care.” Easy money from federal matching funds invited states, and still invites them, to change programs and pass costs to the federal government which they had shouldered themselves before.

Closing LTC Comment: The history of long-term care since Medicaid is the story of how state governments have tried to make the most of the program and the federal government has struggled to fix the problems inherent in its design. Unfortunately, most of the initiatives taken to improve Medicaid have only made it worse. Instead of recognizing the cause of Medicaid’s problems, perverse incentives that reward over-utilization and abuse, legislators, analysts and advocates have insisted on addressing symptoms only. But that is a story for another LTC Bullet and we’ll tell it soon. Stay tuned.

Selected bibliography: other sources of information on the pre-Medicaid history of long-term care:

No Place Like Home, by Karen Buhler-Wilkerson

Chronic Disease in the Twentieth Century: A History, by George Weisz

Unloving Care by Bruce Vladeck: history of nursing homes and public policy starts on p. 30.

Too Old, Too Sick, Too Bad, by Frank E. Moss, and Val J Halamandaris

“Legislating Medicaid: Considering Medicaid and Its Origins,” by Judith D. Moore and David G. Smith, Ph.D.

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Updated, Monday, February 25, 10:14 AM (Pacific)

Seattle—

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LTC E-ALERT #19-008: LTC NEWS AND COMMENT

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

Paul Ryan: Medicare Advantage is the Future of Medicare, and Medicaid Reform Will Return
Midlife Activities Linked to Alzheimer’s, Dementia
Waste not, why not?
National Health Expenditure Projections, 2018–27: Economic And Demographic Trends Drive Spending And Enrollment Growth
Untangling the Mysteries of the Brain
Resident who kissed woman in iconic WWII photo dies at 95
Medicaid Pressures, Worker Shortages Lead to SNF Closure Wave in Wisconsin
Consumers at High Risk for Dementia Put More Wealth in CDs: Researchers
The Link Between Menopause and Alzheimer’s
Experts: Home equity is key to solving the country's looming retirement crisis
California Commission Lays Out Plan to Drastically Boost Health Care Workforce
‘If I Ran AARP for One Day: Here’s What I’d Do to Redefine Aging, Fix Health Care, Balance Generational Equity, Eliminate Ageism in the Popular Culture, and Create a New Social Role and Purpose for Elders.’

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Updated, Tuesday, February 19, 2019, 9:16 AM (Pacific)

Seattle—

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LTC E-ALERT #19-007: LTC NEWS AND COMMENT

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

What Are Medicare Advantage Plans' New Mini LTC Benefits Really Like?
Seniors' Health Costs May Be Moderating But The Need For Long-Term Care May Be Growing
One state’s single-payer push now includes LTC insurance
THE NATIONAL DEBT IS NOW MORE THAN $22 TRILLION. WHAT DOES THAT MEAN?
Announcing the Minority Aging Statistical Profiles
Brighthouse Prepares to Launch Life-LTC Hybrid
Secrets From the Medicare Advantage Producer Comp Spreadsheets
A change is happening in Maine with wide-ranging effects: State is seeing more deaths than births
The Largest Individual LTCI Claim of 2018
Don’t expand Social Security. Our elderly are mostly fine.

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Updated, Wednesday, February 13, 2019, 10:10 AM (Pacific)

Seattle—

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LTC BULLET: AMPLIFY LTC SANITY

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: AMPLIFY LTC SANITY

LTC Comment: The U.S. national debt is about to tip over $22 trillion. That’s $67,547 for every man, woman and child in the country. Even that figure is dwarfed by our total unfunded liability for Social Security, Medicare, federal employee, and veterans’ benefits: $123 trillion or $376,113 per citizen. Entitlement programs for the elderly plus interest on the debt to pay for them threaten to crowd out other government spending. According to the Congressional Budget Office (p. 12), half of noninterest federal spending will go to the elderly by 2029. Yet we hear loud calls to expand Social Security and Medicare even further.

Alas, even entitlement spending is small potatoes as Congress considers the “Green New Deal.” That resolution proposes to eliminate greenhouse gases, feed all Americans, upgrade every building in the U.S., replace air travel with high-speed rail, and guarantee “a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security to all people of the United States.” All in 10 years! Even a perennial advocate of expanded government long-term care spending acknowledges “the resolution’s ambitious promises will add trillions of dollars to the nation’s debt. And that itself could slow the economy.”

What’s happening?

Frankly, we’re spoiled. Like a child who wants an expensive toy, we don’t care how much it costs as long as someone will get it for us somehow. Too manyAmericans have come to think that buying something and paying for it are two entirely unrelated matters. Want a new house? Get a “liar’s loan.” Need a car? Buy it on credit with interest deferred. Save for retirement? Why bother when Social Security, Medicare and Medicaid await? Aging Americans’ widespread ill-preparedness for retirement is easy to understand in such a frame of mind.

But how do we explain the same lack of concern about the government spending beyond its means by politicians and public officials who ought to know better? Don’t they understand what will happen when they borrow, spend, and promise with no thought to repayment? The answer is that people and their political representatives are slowly sliding into this sinkhole of irresponsibility because it works. Rather, it has seemed to work for several decades. We’ve ignored debt and deficits so long without dire consequences that we’ve become jaded. We wonder “Why can’t this go on forever?”

Socialism works until it doesn’t

Adam Smith said “there is a great deal of ruin in a nation.” By promising citizens retirement income and medical security through unfunded entitlements, we’ve chipped away at America’s “ruin” since the Depression. Just as debilitating, we’ve undermined fiscal and monetary responsibility since the Great Recession by spending more carelessly than ever before and deferring the consequences through artificially low interest rates. Nations’ ruin may come slowly, but following such practices it comes inevitably. Cuba, Venezuela, the Soviet Union and every previous attempt to have something for nothing in every historical epoch provide the proof. You can delay but you cannot avoid the consequences.

Like each of those examples, America’s fate is inevitable without a change of course. Pursuing such policies will lead ultimately to an economic paroxysm. Just as bankruptcy comes sooner or later to irresponsible individuals and to failed companies, countries can only consume their economic “seed corn” for so long before further financial prestidigitation fails. Currency devaluation, inflation, economic stagnation, shortages, hunger, civil unrest, poverty, crime, depression … follow inexorably.

What does this have to do with Long-Term Care?

It’s not hard to see this same story playing out in the economy’s long-term care microcosm. America has funded LTC since 1965 through Medicaid, a public welfare program. Supposed to require spend down, Medicaid has actually provided a long-term care safety net for the middle class and affluent as well as the poor. By paying for nursing home care after care is needed without effective spend down requirements and enforcement, Medicaid created institutional bias, impaired development of a private market for home care, and crowded out savings, investment and insurance as preferable funding sources. Without even the pretense of a trust fund, Medicaid is today a dead fiscal weight on the country’s future adding substantially to the problems discussed above.

So what should we do about it? Most long-term care policy analysts and advocates call for even more government involvement and funding. They either ignore paying for government’s increased role altogether, adding to the debt, or they propose higher taxes or “premiums,” further reducing private capital and debilitating the economy. In a phrase, they propose doing more of the same and hoping for a different result, AKA insanity.

There is another way

Are you aware of a different voice in the LTC financing conversation? If you’re reading this, you probably know the Center for Long-Term Care Reform has stood resolutely for two decades in opposition to excessive government dependency and in favor of personal responsibility.

We’ve conducted and published dozens of national and state-level studies explaining why government-financed long-term care has failed and advocating “simple, cost-free solutions.” Steve Moses’s articles and speeches have urged less welfare dependency and more personal responsibility in both public policy and individual planning. The Center’s 2008 “Long-Term Care Consciousness Tour” crisscrossed the country delivering that message through TV, radio, and professional appearances. Since then we developed the “Index of Long-Term Care Vulnerability” to measure and publicize states’ risks from burgeoning LTC expenditures. So far, we’ve applied the Index and published its results for New Hampshire, New Jersey, Georgia and Virginia. With your help, we could do the same for the other 46 states and help them get in front of the age wave instead of being swamped by it.

What else do we do for you?

We publish daily “LTC Clippings” to keep you apprised of the latest articles, reports, and data related to health and long-term care issues. We do the research so you can focus on doing your job while staying at the forefront of professional knowledge and expertise. Read testimonials about our “LTC Clippings” here including this one from our late friend and colleague, the highly regarded and beloved sales trainer Mark Randall:

Your clipping service has saved me hundreds of hours of research each year since we started receiving your clippings. Using it makes me feel confident knowing that I’m on top of anything happening in the industry – from legislation to state movements to industry and insurer announcements. And being on top of things is critical in our industry. Any serious LTCi agent who doesn’t take advantage of this . . . doesn’t realize the value the service can bring to their production! For anyone above the level of agent, this service has to be considered a must. Thank you for your diligence in uncovering all the daily news a person in our industry needs!

Once a week, on Monday, we compile the previous week’s “LTC Clippings” in an “LTC E-Alert,” so you’ll never miss a critical piece of news even if you skip a Clipping on the day it’s published. These E-Alerts are also archived in our members-only website, “The Zone,” along with an organized compilation of all the news of the past decade or so that we call “The Almanac of Long-Term Care.” Also in The Zone:

LONG-TERM CARE CLIPPINGS ARCHIVE
CLASS Act Update -- Quick reference to publications on CLASS.
One-hour webinar about the CLASS Act with Steve Moses. Details in this E-Alert.
LTC GRADUATE SEMINAR TRANSCRIPTION
LTC ALMANAC
Deductibility Limits for Long-Term Care Insurance
LTCI TAX TREATMENTS
MEDICAID AND MEDICARE KEY NUMBERS UPDATED ANNUALLY
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.
Long-Term Care Cost Surveys
Reasons Why Veterans Should Not Depend on VA Benefits for Long-Term Care
VIRTUAL VISITS to LTCI conferences.

Frequently, we publish “LTC Bullets” like the one you’re reading now to report and analyze developments that we believe anyone active in the long-term care market needs to understand and consider. Today’s is LTC Bullet number 1,247. You can review them all archived both chronologically and by subject here. Age Wave founder Ken Dychtwald once said this about the Bullets and the Center’s reports:

In my attempt to stay abreast of this subject, I continually scan dozens of reports and newsletters. However, I have found no resource more insightful and useful than the LTC Bullets I regularly receive as well as the potent reports the Center for Long-Term Care Financing [Reform, since 2005] periodically prepares. Keep up the great work - your analyses and conclusions are like a lighthouse beacon.

Over the years, we’ve done countless interviews, seminars and presentations advocating private long-term care financing solutions. Find testimonials about those here including this one:

From the moment of the legislative breakfast to [a TV] interview at 7:30 Tuesday morning, we have been overwhelmed by the positive response to our sponsorship [of the Center for Long-Term Care Reform’s LTC Tour] from the media and the community. This means bundles for us, our company, and furthering the cause of long-term care planning.

Gail Lindsey of Lindsey and Associates – Chattanooga, TN

Frankly, friends, it’s a little lonely out here making the case for personal responsibility and freedom from government interference. We need all the help we can get. If today’s message strikes a chord, please …

Join the Center if you’re not already a member
Upgrade your membership to Premium or Premium Elite levelEncourage your broker or general agent to join as a corporate member
Ask the LTC insurance carriers you represent to support the Center for LTC Reform
If you work on the provider side of long-term care, ask your nursing home, assisted living facility, or home health agency and their trade associations to support the Center’s advocacy for private LTC financing
Forward our publications to your state and federal political representatives and media
Encourage reporters to view the Center’s website and interview Steve Moses

You can find our “Membership Levels and Benefits Schedule” here. It describes all the advantages of membership at each of the individual and corporate levels. When you’re ready to join us in this noble fight, contact Steve Moses at 425-891-3640, smoses@centerltc.com or Damon at 206-283-7036, damon@centerltc.com.

We can do this, but not alone. When you support the Center for Long-Term Care Reform and encourage others to do so, you “Amplify” our common voice for “LTC Sanity.” Make the Center your megaphone! Thanks for your consideration

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Updated, Monday, February 11, 2019, 10:06 AM (Pacific)

Seattle—

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LTC E-ALERT #19-006: LTC NEWS AND COMMENT

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

How to keep nursing home costs from devouring your life savings
The Medicare Plan Market Is Alive!
Aging Population Could Cut U.S. 2096 Output 39%: Economists
PCPs, Psychiatrists Much Less Likely to Accept Medicaid
Genworth diverts $327 million to shore up long-term-care insurance
Continued push to keep seniors out of nursing homes irks industry leaders
Explaining The Slowdown In Medical Spending Growth Among The Elderly, 1999–2012
THE NATION'S RETIREMENT SYSTEM: A Comprehensive Re-evaluation Needed to Better Promote Future Retirement Security
72% of retirees are concerned about long-term care expenses: survey
Longevity, Life Expectancy & The Long Run
The Impact of Cognitive Decline on Families' Finances: RBC Survey
Spending dips on health care for the Medicare elderly
Alzheimer's May Have Different Trajectory for Women
Good News for Indemnity Based LTC Coverage
As Democrats Talk Single Payer, Private Medicare Advantage Soars

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Updated, Monday, February 4, 9:18 AM (Pacific)

Seattle—

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LTC E-ALERT #19-005: LTC NEWS AND COMMENT

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

Report: Lack of services and supports driving seniors into nursing homes earlier than necessary
The Federal Government Will Spend Half Its Budget On Older Adults In Ten Years
How to Afford Long-Term Care
Big rise: More than 43,000 jobs open in long-term care as leaders plot
The Budget and Economic Outlook: 2019 to 2029
CMS chief: Providers should expect new set of quality measures, more sophisticated enforcement strategies
Aging Americans fall prey to 'brain-boosting' supplements offering hope, hype and dodgy data
Funding for skilled nursing needs to be a priority
Skilled Nursing Facilities Face ‘Colossal Collapse’ in Mass. Amid Low Medicaid Rates
Report: 85% of Baby Boomers plan to work into their 70s (and even 80s)
Older adults’ top priorities for the government may surprise you

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Updated, Wednesday, January 30, 2019, 10:03 AM (Pacific)

Seattle—

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LTC BULLET: VALUE IS IN THE EYE OF THE BEHOLDER

LTC Comment: Like beauty, health care value is in the eye of the beholder, and it may turn out to be very unattractive indeed. We explain after the ***news.***

*** ILTCI UPDATE: The 19^th Annual Intercompany Long-Term Care Insurance Conference convenes at the Sheraton Grande Hotel in Chicago March 23-27, 2019. Details on speakers, sessions, sponsors, scholarships and more are now available here. Download the mobile app here. Attendees will meet and learn from industry thought leaders, get in-depth insights and information at more than 40 breakout sessions, network and have substantive discussions with more than 60 exhibitors and sponsors that specialize in providing products and services to this growing industry. You know the movers and shakers of the LTC insurance profession will be there. But did you know that if this is your first time attending the ILTCI, you may be eligible for an additional $50 scholarship?! Just reply to info@centerltc.com to receive your discount code, which you can use when registering at http://www.iltciconf.org/. Damon and I hope to see you there. ***

LTC BULLET: VALUE IS IN THE EYE OF THE BEHOLDER

LTC Comment: The 1960 Twilight Zone episode “Eye of the Beholder” begins with a young woman lying in a hospital bed. Her head is wrapped in bandages. She awaits the outcome of a surgical procedure performed by the State in a last-ditch attempt to make her look "normal." When finally the bandages are removed, we see her beautiful face but we hear the horrified expressions of others in the room. Then the camera pans to those others. They have dreadfully disfigured faces. In their eyes, our idea of beauty is ugliness itself.

The latest trend in health care financing reminds me of that story.

The government wants to pay for high-quality health care outcomes (value) instead of reimbursing for specific health care services (volume) in the traditional manner. “Value-based” reimbursement for acute and long-term care under both Medicare and Medicaid is all the rage. The idea is to pay for better care instead of more procedures. Policy makers hope that medical outcomes will improve and expenditures will decline under such a system.

But some analysts worry the end result will be a two-tiered system. Poor providers, punished for delivering inferior care, may become even worse and more dependent than ever on low Medicaid reimbursements. Better providers, rewarded for higher quality care, may attract more private payers. That could reduce the subsidy private payers’ higher reimbursement rates deliver now to providers already too dependent on Medicaid. The result may be far different from the expectation, just as so many well-intentioned government interventions have caused unintended and highly disagreeable consequences.

What will we find when the bandages come off and we finally see what value-based health care reimbursement has wrought?

LTC Bullets have followed the value-based revolution in long-term care financing for several years. We first raised the issue in LTC Bullet: A New Revolution in Long-Term Care Financing . . . by Government on November 6, 2015:

Huge changes in how the government pays for post-acute and long-term care are under way, building steam, and about to revolutionize LTC service delivery. “Bundling” and “prospective payment” are on every health care bureaucrat’s lips. The system’s transformation to “managed care,” whereby state Medicaid programs turn over responsibility for providing and paying for LTC to the highest bidders, has long been sweeping the country. … The government’s latest move toward centralized control of the LTC market is even more significant. The Centers for Medicare and Medicaid Services (CMS) is changing the focus of long-term care financing in both of the programs for which it is responsible from paying for services (volume) to paying for value (as measured by new, vague and complicated “quality” metrics). The new system will put care managers and providers at far greater financial risk. Only time will tell if this shake-up improves or damages the care patients actually receive.

The following week, in LTC Bullet: The Future of Long-Term Care Seen Through the Prism of History, November 13, 2015, we answered some key questions bearing on the prospects for value-based financing:

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

We introduced the topic with satire:

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

A monopsonistic [i.e., single buyer], government-based nutrient payer could ensure quality food distribution by paying for value instead of quantity.

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

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

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

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

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

This Bullet traced the history of long-term care financing, explained how earlier government interventions caused the problems this latest government intervention seeks to resolve, and concluded “The risk is that further interference in an already fragile LTC market will turn everything topsy-turvy just as the age wave begins to crest and the entitlement programs’ unfunded liabilities begin to come due.”

Next, in LTC Bullet: What’s Wrong with Bundled and Value-Based LTC Payments?, January 20, 2017, we expressed concern that the new president replacing Barrack Obama would carry on with the same plans.

Recently, listening to long-term care policy experts speculate about the likely future prospects under the approaching Trump presidency, I heard something both wrong and disturbing. A supposedly “conservative” commenter observed that a major new approach to LTC financing promoted by the Obama Administration—bundled and value-based long-term care payments—should be embraced and carried forward by the new Administration. I could not disagree more. Because such views are being expressed and because so many of the officials of both parties in DC and the states who are implementing the new policies will remain in positions of influence, I want to re-visit our critique of these bad ideas.

The fundamental problem with value-based reimbursement is that central government planners determine who gets what and they alone define what patients are supposed to consider good care. “In a free market,” we explained instead, “consumers rule. They demand quality and volume. If they don’t like what they get, they vote with their pocket books and move on to products and providers they prefer. Competition to provide the best care at the lowest price in the most appropriate settings could and would solve the LTC service delivery and financing problems that have been created by government’s interventions, however well-intentioned those interventions may have been.”

Then, in LTC Bullet: Government LTC Financing “Revolution” Averted, August 25, 2017, we announced with relief: “According to Healthcare Finance: “The Centers for Medicare and Medicaid Services on Tuesday officially announced it is pulling back from mandatory bundled payment models set up under the Obama administration.”

How wrong we were!

It appears now that the Trump Administration’s Center for Medicare and Medicaid Services (CMS) is proceeding full-speed ahead with the value-based approach. Find a summary of several such initiatives here. Impacting long-term care the most and soonest is the Patient-Driven Payment Model (PDPM), whereby “therapy minutes are removed as the basis for payment in favor of resident classifications and anticipated resource needs during the course of a patient's stay,” whatever that means. Only time will tell whether this expansion of centralized control over the health care Americans receive will achieve its objective of better care at less cost or pull us even further away from patient choice at even higher public expenditures. Count me among the dubious.

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Updated, Monday, January 28, 2019, 10:22 AM (Pacific)

Seattle—

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LTC E-ALERT #19-004: LTC NEWS AND COMMENT

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

The Health 202: Policymakers are realizing health is about a lot more than just care
Long-term care led all of healthcare in deal volume in 2018
Too Many Americans Will Never Be Able to Retire: Without more babies and immigrants, the country won’t be able to support its aging population
Simplicity Acquires LTC Distributor
‘I feel deeply ripped off.’ Steep hikes in long-term care premiums jolting many consumers
DEMENTIA AND GUM DISEASE: ALZHEIMER'S LINKED TO GINGIVITIS
Medicare LTSS changes may not help two-thirds of beneficiaries
Scamming Grandma: Financial Abuse of Seniors Hits Record
MedPAC Unanimously Calls for $2 Billion in Skilled Nursing Payment Cuts in 2020
New Study Says Americans Flocking To Urgent Care Instead Of Their Primary Doctor Due To Convenience
Blood Test May Predict Alzheimer’s Progression

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Updated, Tuesday, January 22, 2019, 10:10 AM (Pacific)

Seattle—

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LTC E-ALERT #19-003: LTC NEWS AND COMMENT

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

CMS announces new ‘innovations’ to Medicare Advantage plans
5 Things Actuaries Are Saying About Death Now
Dementia and Firearms Make a Dangerous Combination
Former HHS chief: Nursing homes playing a part in Medicare ‘drifting toward disaster’
Medicare Advantage industry sees slower growth for 2019
New York Approves China Oceanwide-Genworth Deal
Long-Term Care Insurance Claims Rise 12%: AALTCI
When Older American Households Fall Short
Trump wants to bypass Congress on Medicaid plan
Tech companies edge into crowded caregiving space
Costs of New Long-Term Care Insurance Policies Vary Considerably

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Updated, Thursday, January 17, 2019, 10:30 AM (Pacific)

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LTC BULLET: THE LONG-TERM CARE TRIFECTA

LTC Comment: How is long-term care financing like a trifecta bet? The answer, after the ***news.***

*** SPECIAL DEAL: You know the movers and shakers of the LTC insurance profession are meeting for the 19^th annual Intercompany Long-Term Care Insurance Conference in Chicago this March. But did you know that if this is your first time attending the ILTCI, you may be eligible for an additional $50 scholarship?! Please reply to info@centerltc.com to receive your discount code, which you can use when registering at http://www.iltciconf.org/. Find details about the conference and registration here. If today’s LTC Bullet is correct, this conference could be your opportunity to get in on the ground floor of LTCI’s resurgence! ***

*** MOVIE UPDATE: Ross Schriftman’s “My Million Dollar Mom” movie continues to make news. I found this 30-minute interview with Ross and female lead Susan Moses [no relation] interesting and inspirational. Ross reports “We are planning lots of community events around the country to show our film this year. Our program page will highlight these:
https://www.mymilliondollarmom.com/program.cfm
https://www.mymilliondollarmom.com/events.cfm
Stay tuned.”***

LTC BULLET: THE LONG-TERM CARE TRIFECTA

LTC Comment: Invited to survey the “state of the long-term care insurance industry” at the start of 2019, I took the high-altitude policy perspective that follows. I hope this speech, delivered to two groups of LTC insurance producers in early January, educates, motivates, and inspires everyone on the front lines of LTCI sales to carry on despite the challenges this business faces. Here’s the speech as delivered, once as a webinar and later in person. You can find the “handout” that went with it here. If you’d like to have this speech or another developed to meet your unique needs delivered to your group, contact me at smoses@centerltc.com or 425-891-3640.

The Long-Term Care Trifecta
by
Stephen A. Moses

You don’t need me to tell you that the long-term care insurance business has faced some pretty strong headwinds lately … so I won’t dwell on that.

Let’s forget about bad publicity over premium increases, carriers leaving the market, consumer indifference to planning, damaging public policy, and so on.

Set all that aside and think positively with me today. Let’s try to understand what happened, why it happened, and what’s most likely to happen in the future.

Believe me, the view through the windshield is much more encouraging than the one through the rear-view mirror.

My goal today is to tell you some things that, when you think about them and apply them to selling LTC insurance, you will be more successful, help more people, and feel great about yourselves. In fact, it will be much easier than you ever thought possible. Sound good?

OK, when you face a challenge in life, and selling long-term care insurance certainly qualifies, the best way to begin is to review and understand what you’re up against.

Let me tell you a little story.

In 1968 … yeah half a century ago, hardly seems possible … my late wife and I joined the Peace Corps. We were assigned to a tiny town in the Venezuelan grasslands called Carmen de Cura, three hours south of Caracas by bus.

Our site sat behind a river with no bridge that flooded in the rainy season. We had electricity four hours at night if the generator was working. The house they gave us flooded from rain run off but also from the septic tank because of the high water table. How charming was that? Still, we loved the people and enjoyed the work.

Part of our job was to meet with visiting doctors and nurses and back them up by supporting good health care practices when they left town and we remained. Unfortunately, they rarely showed up, never when scheduled, and did very little to promote good health habits.

The Venezuelan constitution promises health care to all citizens, but the government didn’t deliver. That was a bitter early lesson that political entitlements guarantee nothing.

Nowadays, everyone knows what a tragedy Venezuela has become by pursuing public policies that promise everything but deliver nothing.

What concerns me is that we seem to be following a similar path here at home. We promise American citizens retirement income security, senior health care and even long-term care. But Social Security, Medicare and Medicaid come with no guarantees. A future Congress and President can, and may have to, cut those programs radically or even eliminate them entirely and they can do it with the stroke of a pen.

Where did we get the idea that government programs can take care of us? What has confidence in that idea done to our sense of personal responsibility? I think answering those questions will explain why long-term care insurance faces the challenges it does today.

In the 19^th century as the United States was evolving from an economic backwater to an industrial super power, people had to fend for themselves. There was no public safety net of any kind, only private charity.

Free-market capitalism prevailed. Waves of creative destruction disrupted markets. Competition compelled improvement. Sink or swim was the order of the day. That environment got the most out of everyone. People had a positive incentive to achieve and prosper, backed up by a negative incentive to avoid the poor house.

Rough and tumble? Of course. Most people prospered but some didn’t either by dint of bad luck or through their own irresponsibility. Life punished the irresponsible and provided strong lessons on how to turn their lives around.

But good, hard-working people were also vulnerable to ill fortune. Private insurance evolved as a way to protect responsible individuals and families from the bad luck of unforeseeable events. Insurance allowed them to replace the small risk of catastrophic financial loss with the certainty of an affordable premium.

In the absence of government programs to lean on, responsible individuals worked hard to succeed and they bought insurance to mitigate unpredictable risks. Such a system works well if you believe most people are good, capable, self-interested and hence motivated.

That’s what our country’s founders believed and that’s what they counted on when they gave us a government based on protecting life, liberty and property, AKA the pursuit of happiness.

So Americans did great for many decades after our founding, but no system is perfect. The more prosperity we achieved, the harder it became to accept misfortune or poverty of any kind in any amount for anyone.

The Great Depression shook our country to its foundations. Arguably government interference in previously freer markets caused that economic catastrophe, but whatever the cause, people were having a very hard time. The government wanted to help. Franklyn Delano Roosevelt and his Administration pushed hard for the idea of “social insurance” as the solution.

They said “social insurance” would improve on “private insurance” because it would have the widest possible risk pool, inasmuch as everyone would be required to participate. Social insurance would also be better than private insurance, they argued, because it would treat everyone the same, giving equal benefits to everyone.

Therein lie the two fatal flaws of social insurance. It is compulsory and therefore violates the fundamental principle of freedom on which our nation’s earlier success depended. And it spreads, but does not price risk, thus rewarding irresponsible behavior at the expense of more responsible people. Let me explain what I mean.

Ted Marmor is a Yale professor emeritus of some influence. He recently explained the difference between social and private insurance this way: “In commercial insurance,” he said, “price must reflect risk. Social insurance, by contrast, operates on the premise that contributions are calculated according to one’s income and benefits are related to one’s needs.”

Does that idea ring a bell? Ever heard the motto “From each according to his ability to each according to his need.” Yes, that’s the Marxist creed, the fundamental principle of communism. That’s exactly where Venezuela … not to mention Cuba and the Soviet Union … went astray.

This is a fundamental difference between social insurance and private insurance. Both spread risk but only private insurance prices risk. Social insurance pays benefits to everyone the same regardless of the level of risk they bring into the risk pool. Consequently, social insurance rewards risky behavior. You can be lazy, smoke, drink, take drugs, no matter, social insurance pays everyone the same.

Private insurance spreads risk, but it also prices risk. Your premium is based on underwriting which measures the amount of risk you bring into the risk pool and charges you accordingly. That’s why smokers pay more for life insurance. And it’s why people already demented or dependent on walkers can’t purchase long-term care insurance at any price.

Pricing risk is fair to everyone. It is justice. It rewards good health care behavior and early planning, punishes poor behavior or failure to plan, and hence promotes social good. This is a critical point. Keep it in mind.

Its other main difference from social insurance is that private insurance is voluntary. You’re free to participate or pass, but social insurance is mandatory. It violates deeply held American values of freedom and personal responsibility.

Now, what does this have to do with long-term care insurance?

Since 1935, the government has told Americans work hard, contribute to Social Security, and it will take care of you financially in your old age.

Since 1965, the government has told Americans, pay your Medicare premiums and you won’t need to worry about health care in your senior years.

Since 1965, the government has told Americans, whether or not you work or pay taxes, Medicaid will cover your long-term care if you ever need it and can’t afford it.

Americans believed those promises. Look what it got them.

All three of the major programs Americans were invited to rely on are now on a slippery slope to insolvency.

Social Security and Medicare are already consuming the IOUs in their so-called “trust funds,” funds that the rest of government borrowed, spent and is having to pay back with interest, crippling our economy. Even those borrowed funds run out in the 2030s, only a little more than a decade away.

Medicaid doesn’t even have a phony trust fund to pretend to spend. It’s a direct drain on general funds and hence on private investment capital, further debilitating the economy.

Do you get angry complaints because private long-term care insurance premiums have increased? Don’t take it lying down. Stand tall. LTC insurance carriers raised premiums to ensure that contractual benefit promises would be met. The government has done nothing similar to ensure it will be able to pay for promised benefits that it cannot possibly provide.

Never forget that you occupy the moral high ground on the issue of premium increases. Claim it!

So social insurance has done tremendous damage by making promises it can’t keep. But that’s not the worst of its impact, not by a long shot.

The greatest negative impact of Social Security, Medicare and Medicaid is the effect those programs have had on Americans’ work ethic, saving behavior, and attitude toward private insurance protection.

Nowadays, fewer people work; more rely on Disability or welfare; life spans are shortening; waistlines are widening; we have an epidemic of obesity. Private companies no longer offer retiree health benefits. Why duplicate Medicare, they figure? Who needs long-term care insurance when the government pays for most expensive extended care costs anyway?

Do you see the fix we’re in? We’ve inhaled the social insurance drug for so long that we’ve lost the drive and incentive to take care of ourselves. This is happening when reality is about to force us to go cold turkey, by curtailing, if not eliminating entirely the safety net on which we’ve come to rely.

Let me give you a few examples.

Americans think the government should take care of everyone and they don’t care how much it costs. Here are a couple quotes from the Wall Street Journal:

“A Pew study … found majorities endorsing the view that government does too little to help young people, the elderly, the middle class and the poor.”

Too little to help? Most of the federal government’s budget goes to help those exact groups.

Nor do we care how much it costs.

“[S]urveys also register a steep decline in public concern about the federal budget deficit. In 2013 … 72% of Americans regarded deficit reduction as a top priority. By the beginning of this year the figure had fallen to 48%.”

We are so concerned about the poor that we think deficits and debt no longer matter.

But, here’s the irony with that view. Most of the poor, aren’t!

According to a study published by the Cato Institute: “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.”

How can that be?

Government poverty statistics make the poor look poorer and the rich look richer by ignoring most forms of public benefits paid to the poor and by ignoring taxes paid by the rich.

Here’s the net impact:

It’s a wash for the middle class: “On average, [middle class] households with $63,136 in earned market income get to keep it all. They pay taxes averaging approximately $17,000 per year, but on average they also get an equal amount of government transfers.”

But the affluent have to make up the difference: “The top 47.5 percent of households were taxed to do the following:

Transfer enough money to the bottom 52.5 percent of households, to give them average spendable incomes close to the median income
Pay for the many activities of government that require 40 percent of all government spending
Pay the interest on the national debt, which constitutes 12 percent of government expenditures”

Cato concluded “More than 50 years after the United States declared the War on Poverty, poverty is almost entirely gone.”

I conclude: Government should declare success in the War on Poverty and start eliminating policies that discourage personal responsibility and work.

Besides, what is poverty in America anyway?

According to the Heritage Foundation: “The typical poor household, as defined by the government, has a car and air conditioning, two color televisions, cable or satellite TV, a DVD player, and a VCR. By its own report, the typical poor family was not hungry, was able to obtain medical care when needed. The typical average poor American has more living space in his home than the average (non-poor) European has.” From Heritage Foundation, 2011: “Air Conditioning, Cable TV, and an Xbox: What is Poverty in the United States Today?”

Ladies and gentlemen, I have seen poverty up close in Venezuela, South America and Asia. And that is not it!

The anomalies and contradictions in government entitlements are unending. Conventional wisdom states that only poor people get Medicaid but research shows that “at the top of the income distribution. 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 [mostly the ones who end up needing long-term care] … tend to have high medical expenses and tend to receive large Medicaid benefits (De Nardi et al., 2016a).” (p. 24)

What impact on demand for long-term care insurance do you think Medicaid’s offsetting about a quarter of rich people’s high medical expenses has had?

Of course, tremendous. Government tells the poor explicitly “don’t worry about long-term care, we’ll pay” but government tells the rich exactly the same thing implicitly by actually paying for most expensive long-term care if and when the wealthy need it.

Nor does the government honestly report Medicaid’s impact on the LTC financing market.

The Centers for Medicare and Medicaid Services (CMS) reports that Medicaid is the “primary payer” for 62 percent of nursing facilities’ residents. Don’t you think that would mean Medicaid pays most of the cost of the care for such residents?

You’d be wrong. If a nursing facility resident is on Medicaid, Medicaid is counted as the “primary payer” even if it pays nothing toward that resident’s cost of care.

How can that be? People on Medicaid have to contribute most of their income, principally their Social Security income but also private pensions and other sources, to offset Medicaid’s cost. In some cases, the private income suffices to pay the entire cost of their care … at the low Medicaid rate.

This is the critical point: even if Medicaid pays nothing and the entire cost of the care comes from the Medicaid recipient’s private income contribution, the nursing home receives the low rate of Medicaid reimbursement, often less than the cost of providing the care. That’s why Medicaid has such a poor reputation for quality of care.

Now, why on earth would Medicaid operate this way? Claiming that Medicaid is the “primary payer” for nearly two-thirds of nursing home residents gives the appearance that Medicaid does more for more people than it really does. It makes public officials, senior advocates, and politicians look good. It wins votes.

There’s still more to this deception, however. CMS reports out-of-pocket costs for nursing facility residents to be over 25 percent, but the reality is that half of all out-of-pocket costs are really just spend-through of private income by people already on Medicaid. That makes it look like Medicaid costs less than it really does.

Bottom line: Medicaid takes credit it doesn’t deserve and then misrepresents its cost to the downside.

In the meantime, the damage to consumers is incalculable. Over 80 years of believing in government promises that social insurance entitlements will take care of us have desensitized consumers to all kinds of insurable risks.

But that’s all about to change. I call what lies immediately ahead “The Long-Term Care Trifecta.”

A trifecta is a bet in which the person betting forecasts the first three finishers in a race in the correct order. Here they are.

The first finisher is Medicare. Its trust fund runs out, not that there’s anything in it anyway, by 2026, only seven years away, three years sooner than previously projected.

The second finisher is the baby boomer generation. It starts turning 85, the age at which health and long-term care costs spike upwards in 2031, only 12 years from now.

The third finisher is Social Security. Its, literally empty, trust fund “runs out” in 2034.

Unfortunately, we may not make it to the first finisher in 2026. As I prepared these remarks, the bottom was falling out of the stock market and a recession in 2019 was looking more and more likely.

Since the Great Recession of 2007-2009, we’ve been living in an economic fantasy land with artificially low interest rates and profligate government spending enabling us to live far beyond our means on funds we’ve borrowed from ourselves and from foreign countries.

When the asset bubble created by those policies bursts, all bets are off. Markets are predictive so collapsing equity and real estate values combined with higher interest rates on private and public debt could plunge our public finances and the entitlement programs they mostly support into crisis much earlier.

We may face the Long-Term Care Trifecta at any time.

So what does this mean for you and for long-term care insurance?

LTC risk and cost are greater than ever. Oncoming demographic challenges, the so-called age-wave, is cresting and will crash soon. The need for private LTC insurance protection is greater than ever. Consumers need to plan for this risk.

Yet, although consumers are smarter about LTC risk and cost than they used to be, thanks to our decades of work waking them up, most still don’t operationalize their knowledge enough to take concrete action by insuring for the risk.

That’s where you come in. You’re the last line of defense against the idea that people can ignore the risk, avoid the premiums, and wait for the government to take care of them.

That headwind holding back private LTC insurance is disappearing as the LTC Trifecta nears and arrives.

You should redouble your efforts in the knowledge that you can save people from the awful fate of relying on public programs as those programs are collapsing.

Do you read Ron Hagelman’s columns in Broker World? If not, I think you should. He argues that in the past we pushed too hard to get full LTCI coverage for every client resulting in too few people being able to afford the protection.

Going forward, he suggests, the challenge is to help people mobilize all of their financial resources, supplemented by whatever LTCI they can afford, with the primary goal to stay off Medicaid.

That’s good advice, makes protection affordable for more people, and ensures that fewer will be stuck in welfare nursing homes as their major funding source, Medicaid, dries up.

One of the biggest problems for LTC insurance lately has been the necessity of companies to raise premiums on in-place business. But actuaries’ concerns about future premium increases are abating.

New policies’ premiums are based on longer and better experience and the huge damage done by government’s forcing interest rates artificially to near zero is reduced as interest rates normalize. You should muster and deploy the verifiable evidence of this development in your meetings with prospects and clients.

Did premium increases and the widely publicized Penn Treaty insolvency hurt traditional insurance? Of course, but asset based products evolved to provide guaranteed premiums and benefits. Both kinds of products have critical roles to play in the market, but one or the other may prevail temporarily as the headwinds, largely caused by poor government policy, shift in direction and intensity.

If I’m right about the plummeting direction public programs are likely to take, all forms of private insurance, including traditional LTCI, hybrids, products modeled on a health insurance chassis, term life that converts to LTC protection as proposed by the Society of Actuaries and designs yet uncontemplated will thrive in the new, challenging economic world.

I’m tremendously encouraged by the amazing creativity and resilience of the LTC insurance industry, including the carriers who are sticking it out, the exceptional distributors of the product, and you, the producers, the AMGs (altruistic, masochistic, geniuses) who manage to carry on in spite of the challenges.

So many of you are driven by a passion for this work because of a personal experience of LTC with a loved one, a parent, grandparent or spouse. You’ve proved over and over again that nothing can stop you.

Many carriers were less persistent. They abandoned the LTCI market when utilization increased beyond actuarial expectations, the Federal Reserve destroyed returns on their reserves, and the media attacked the industry for doing the right thing, that is, increasing premiums to ensure benefits would be paid.

Here’s what I predict. Those same companies and new ones will come rushing back into the business as those problems disappear.

We now have better and longer experience data on which to base premiums and they’ve already increased for new products. So as interest rates and hence returns on reserves return to normal levels, the business will become highly profitable, leveraged by the fact that premiums have already increased.

As the pressure I’ve predicted on public programs hits over the next decade, the public will lose confidence in Medicaid, which is propped up by Social Security and Medicare, in which they’ll also lose confidence.

When that happens, Katie bar the door. The rush to find insurance protection against LTC risk and cost will explode. Consumers will prospect for you!

In the meantime, we’re all in this together. I want to thank you for your dedication, hard work, collegiality and friendship in our common mission to improve long-term care for all Americans.

Before I conclude, I’d like to tell you a little bit about how we pursue that mission at the Center for Long-Term Care Reform.

We conduct state-level and national studies of long-term care financing with a focus on the problems created by government interference in that market.

You can find and read dozens of our reports at our website, www.centerltc.com, and on the handout you’ve been given for today’s presentation.

We publish periodic essays called the LTC Bullets. The Bullets discuss and analyze current topics related to long-term care service delivery and financing. We’ve done over 1240 of them in the Center’s 21 years and you can find them archived chronologically and by topic on our website.

We publish a weekly compendium of long-term care news called the LTC E-Alerts designed to keep members abreast of everything they need to know to remain on the forefront of professional knowledge and expertise.

Our daily LTC Clippings give premium members access in real time to the latest stories, articles, reports and data as these are released along with our “take” on what they mean in a sentence or two.

Our Members-Only website, AKA “The Zone,” is full of invaluable resource material including our voluminous “Almanac of Long-Term Care,” where we archive all important news about long-term care organized within 11 sub-topics.

Finally, I want to thank our sponsors for this opportunity to share some ideas with you today and for their long and invaluable support for our work at the Center for Long-Term Care Reform.

I’ll be glad to take questions now.

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Updated, Monday, January 14, 2019, 9:57 AM (Pacific)

Seattle—

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LTC E-ALERT #19-002: LTC NEWS AND COMMENT

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

People Still Need a Way to Pay for Long-Term Care: Idea File
Some LTCI Issuers Count More on Future Rate Hikes Than Others: S&P
With the search for Alzheimer’s drugs foundering, tech firms try to offer solutions
New Data Examine CCRC Occupancy Levels Compared to Assisted Living, SNFs
Poor sleep, daytime napping could be signs of Alzheimer’s
The 5 Governors Who Got A's on Their Fiscal Report Cards in 2018
House May Pass Medicaid Planning Measure This Week
LTC insurance industry is ‘imploding’ as new numbers show chasm in costs for private plans
Premiums spike; long-term care insurance carriers drop out as market
Inadequate Medicaid pay is a ‘rampant’ issue: Parkinson
Bundled Payments Save Money ‘Nearly Exclusively’ By Cutting Skilled Nursing
The New Retirement Strategy
Long-Term Care Insurance Issuers Face a Form Tsunami: Idea File

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Updated, Monday, January 7, 2019, 11:13 AM (Pacific)

Seattle—

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LTC E-ALERT #19-001: LTC NEWS AND COMMENT

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

Countdown to Retirement: 10 Years Away
Dementia care program reduces nursing home admits 40%, trims Medicare costs
Older Americans worried about insurance coverage, health costs as they approach retirement
Maybe not such a safe bet after all
Big claims strain senior living market for U.S. insurers
Is Genworth Financial a Buy?
Is the Rising Storm of Alzheimer's Disease Stoppable?
How and Why Entrepreneurs Should Focus on Seniors in 2019
Genworth Gets Major Regulatory Approvals for China Oceanwide Deal
The Changing Demographics of Family Caregivers
A Guide to Finding Long-Term Care for Your Loved One
Are you heavier or shorter than the average American?
Even a Booming Job Market Can’t Fill Retirement Shortfall for Older Workers
How Your Retired Prospects' Coverage Has Changed
Retiree Survey: Nearly All Say They Are Happy Though Many Are Financially Insecure
The 4 top safety concerns in senior care — and how to address them
Long-Term Care Providers Drive Growth in Special Medicare Advantage Plans
Seniors Appear To Have Highest Rates Of Gun Ownership, Suicide

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Updated, January 4, 2019, 11:13 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 Alma nac and today’s update after the ***news.***

*** IMAGINE THE POSSIBILITIES, but do it quick. Early Bird Registration Discounts for ILTCI 2019 end this coming Thursday, January 10. The 19th Annual ILTCI Conference - March 24-27, 2019 convenes at the Sheraton Grand Chicago. If you’ve been to this annual convocation before, you know it is a top quality industry meeting. If you’re new, get ready for the best presentations and networking in the LTC insurance business. This year’s theme, “Imagine the Possibilities,” expresses perfectly the LTCI industry’s amazing persistence, resilience and creativity in the face of extraordinary challenges. See you there! ***

*** MOVIE NEWS: Ross Schriftman’s film, “My Million Dollar Mom,” won Best Drama at the Tampa Bay Underground Film Festival. Find the press release including seven nominations, a picture and a video with the award here: https://www.mymilliondollarmom.com/news-121418.cfm. The film focuses on the challenges families face when a loved one has dementia and is inspired by Ross’s true story. The value of long term care insurance is also highlighted. Congratulations! ***

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, January 18, 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

AARP's Across the States--Long-Term Care Profiles

Excellent source for state-by-state data on "many facets of long-term care and independent living in each state and the District of Columbia." Updated usually every two years: 2002, 2004, 2006, 2009, 2012, now 2018.

Across-the-states 2018 0918 URL: https://www.aarp.org/content/dam/aarp/ppi/2018/08/across-the-states-profiles-of-long-term-services-and-supports-full-report.pdf

9/4/2018, “Nursing home resident numbers decreasing, while quality varies, new AARP analysis notes,” by Marty Stempniak, McKnight's LTC News

Quote: “Nearly every state in the country (46) saw a decrease in the number of nursing home residents between 2011 and 2016, according to a new analysis published by AARP. All told, about 1.3 million Americans lived in nursing facilities on an average day, occupying about 81% of the 1.7 million beds available, the retired persons interest group noted last week in its 24th annual ‘Across the States’ report, providing a snapshot into long-term care across the country. … You can read the entire free report here, and find specific state-level reports here.” (Emphasis added.)

LTC Comment: This is our second clipping of the day reporting on AARP’s latest “Across the States” report. Check it out and watch for our analysis in the weeks ahead.

9/4/2018, “Assisted living supply, charges vary widely among states, new AARP report shows,” by James M. Berklan, McKnight's Senior Living

Quote: “The District of Columbia ($80,400) and Missouri ($32,400) represent the ends of the spectrum for average annual charges for private-pay assisted living in a new report released by the AARP. Meanwhile, the supply of assisted living and residential care units among various states showed even more divergent statistics: Oregon led with 121 units per 1,000 people, whereas Louisiana was last at 20 per 1,000. The figures are included in the newly released AARP Public Policy Institute's 2018 edition of ‘Across the States/Profiles of Long Term Services and Supports.’”

LTC Comment: AARP stopped publishing this very useful report for several years. It’s good to see it back and we’ll offer detailed analysis in a future LTC Bullet.

We made good on that promise with LTC Bullet: Long-Term Care Across the States, Thursday, September 27, 2018

Expenditures of the Aged

NBER on The Lifetime Medical Spending of Retirees 0518 URL: http://www.nber.org/papers/w24599

The Lifetime Medical Spending of Retirees
John Bailey Jones, Mariacristina De Nardi, Eric French, Rory McGee, Justin Kirschner
NBER Working Paper No. 24599
Issued in May 2018, Revised in July 2018
NBER Program(s):Health Care, Health Economics, Public Economics
Using dynamic models of health, mortality, and out-of-pocket medical spending (both inclusive and net of Medicaid payments), we estimate the distribution of lifetime medical spending that retired U.S. households face over the remainder of their lives. We find that households who turned 70 in 1992 will on average incur $122,000 in medical spending, including Medicaid payments, over their remaining lives. At the top tail, 5 percent of households will incur more than $300,000, and 1 percent of households will incur over $600,000 in medical spending inclusive of Medicaid. The level and the dispersion of this spending diminish only slowly with age. Although permanent income, initial health, and initial marital status have large effects on this spending, much of the dispersion in lifetime spending is due to events realized later in life. Medicaid covers the majority of the lifetime costs of the poorest households and significantly reduces their risk.
You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

LTC Comment: We analyzed and critiqued this paper in LTC Bullet: How and How Much Medicaid Reduces Lifetime Medical Spending for Affluent Retirees, October 10, 2018.

Chapter 3: Unfunded Liabilities--Social Security, Medicare, Pensions and Budgets

National Health Expenditures

Health Affairs on National Health Expenditures for 2017 URL:
NHE for 2017 URL: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2018.05085

See also: LTC Bullet: So What If the Government Pays for Most LTC?, 2017 Data Update, Thursday, December 13, 2018

Unfunded Liability Estimates

AEI on The-2018-Medicare-Trustees-Report 0718 URL: https://www.aei.org/wp-content/uploads/2018/07/The-2018-Medicare-Trustees-Report.pdf

7/9/2018, “The 2018 Medicare Trustees Report: Fiscal and Policy Challenges,” by Joseph Antos and Robert E. Moffit, AEI Economic Perspectives

Quote: “Medicare’s financial outlook has deteriorated in the past year, according to the latest annual report by the program’s trustees. The Medicare Hospital Insurance trust fund is projected to be depleted in 2026, three years earlier than estimated in last year’s report. That understates the policy challenge. Every year, the program relies more on general revenues to cover its costs. In total, Medicare will receive $324 billion in general revenues this year. That will more than double by 2026. Prompt action is needed to put Medicare on a sound financial footing.”

LTC Comment: Trenchant analysis by two of the best health policy analysts I know.

Don’t Count on Social Security or Medicare

Social Insurance and American Health Care -- Principles and Paradoxes, by Theodore R. Marmor 11-29-2018 (3) URL: https://read.dukeupress.edu/jhppl/article/doi/10.1215/03616878-7104419/135383/Beneath-the-Surface-Social-Insurance-and-American

Journal of Health Politics, Policy and Law, Vol. 43, No. 6, December 2018
DOI 10.1215/03616878-7104419 _ 2018 by Duke University Press

We analyzed and critiqued this article in LTC Bullet: Venezuela, Yale and Long-Term Care, December 7, 2018

Chapter 6: Long-Term Care Financing

General

NBER on LTCHs 0818 URL: http://www.nber.org/papers/w24946.pdf

8/2018, “Long-Term Care Hospitals: A Case Study in Waste,” by Liran Einav, Amy Finkelstein, Neale Mahoney, National Bureau of Economic Research

Quote: “There is substantial waste in U.S. healthcare, but little consensus on how to identify or combat it. We identify one specific source of waste: long-term care hospitals (LTCHs). These post-acute care facilities began as a regulatory carve-out for a few dozen specialty hospitals, but have expanded into an industry with over 400 hospitals and $5.4 billion in annual Medicare spending in 2014. We use the entry of LTCHs into local hospital markets and an event study design to estimate LTCHs’ impact. We find that most LTCH patients would have counterfactually received care at Skilled Nursing Facilities (SNFs) – post-acute care facilities that provide medically similar care to LTCHs but are paid significantly less – and that substitution to LTCHs leaves patients unaffected or worse off on all measurable dimensions. Our results imply that Medicare could save about $4.6 billion per year – with no harm to patients – by not allowing for discharge to LTCHs.”

LTC Comment: This is the abstract for the full paper which is available through NBER here: http://www.nber.org/papers/w24946.pdf. Could treating high-acuity LTCH patients in SNFs save money without tipping the delicate balance of high Medicaid dependency and low reimbursement against quality? I’m very dubious.

8/27/2018, “How to Tame Health Care Spending? Here’s a One-Percent Solution,” by Margot Sanger-Katz, New York Times

Quote: “The researchers concluded that the health care system could probably save a lot of money — around $5 billion a year — by paying the long-term care hospitals the same prices that are paid to skilled nursing facilities, the places that most long-term patients end up in when there is no long-term care hospital nearby. If they’re right, the savings would probably be in the 1 percent range. … The scholars involved in the project know that they are not the first group to think small. The sort of deep and narrow investigations they are undertaking have long been the focus of groups like the Medicare Payment Advisory Commission, a group that recommends changes to Congress and that had even flagged long-term care hospitals for overhaul years ago. Washington policymakers and think tanks have long assembled briefing books of options to help them nip and tuck dollars out of government health programs.”

LTC Comment: More on the NBER research we highlighted earlier today, this time in the New York Times. If saving a measly $5 billion is no longer beneath the dignity of the economics profession, maybe they should reconsider our analysis and proposal: Save Medicaid LTC $30 Billion Per Year AND Improve the Program (2011).

Chapter 10: Medicaid

Medicaid Financing and Burwell Data

8/23/2018, “Don't Blame Older Adults For Big Increases In Medicaid Spending,” by Howard Gleckman, Forbes

Quote: “Is the growing need for long-term supports and services (LTSS) by older adults driving big increases in Medicaid spending? Not according to a new study by Don Redfoot and my Urban Institute colleague Melissa Favreault. Indeed, they found that while Medicaid enrollment and expenditures for older adults grew in recent decades, it had far less effect on the program than increases in other Medicaid populations, especially younger people with disabilities. Older adults accounted for only about 13% of Medicaid spending increases from 1975 to 2011. … What did account for the relatively modest boost in Medicaid spending on older adults? … First, the asset test that helps determine financial eligibility for Medicaid is not indexed for inflation, and its income test is tied to a relatively slow-growing inflation factor. For instance, unmarried older adults generally are barred from enrolling in Medicaid if they have non-housing assets that exceed $2,000—a limit that has not changed since 1989. Thus, as the wealth of many older adults is increasing, the asset test is not and the percentage of seniors eligible to enroll in Medicaid is shrinking.”

LTC Comment: More double talk and statistical prestidigitation from the usual suspects. The fact that ObamaCare policies spiked Medicaid costs mostly for new, young, able-bodied recipients doesn’t reduce, rather it increases, the future medical and LTC financial liability from the age wave which is just now starting to hit in earnest. The flat Medicaid asset test of $2,000 means nothing, because exempt assets are virtually unlimited, countable assets are easily convertible to exempt assets, and Medicaid planners still wave magic legal wands to make any additional wealth disappear. This research assuages concern about entitlement spending on the elderly in order to encourage more of the same. That’s a very risky prospect a decade or so before the bottom falls out of Medicare, Social Security, and Medicaid and boomers start turning 85, the age at which medical and long-term care costs explode.

KFF on Medicaid Enrollment and Spending 1018 URL: http://files.kff.org/attachment/Issue-Brief-Medicaid-Enrollment-and-Spending-Growth-FY-2018-2019

10/25/2018, “2019 Will Be ‘Year to Watch’ for Medicaid as Long-Term Care Drives Spending,” by Alex Spanko, Skilled Nursing News

Quote: “Increases in long-term care costs contributed to an overall boost in Medicaid spending during fiscal 2018, and a leading health policy non-profit warns that 2019 could be a pivotal year for the program. ‘FY 2019 will be a year to watch how Medicaid’s role evolves on the ground in the 50 states and D.C.,’ the Kaiser Family Foundation (KFF) wrote in its annual report on Medicaid enrollment and spending, released Thursday.”

LTC Comment: Medicaid LTC spending growth, overshadowed for years by the rapid expansion of able-bodied ObamaCare recipients, is once again assuming the role of key revenue driver. And you ain’t seen nothin’ yet!

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Updated, Sunday, December 16, 2018, 4:43 PM (Pacific)

Seattle—

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LTC E-ALERT #18-047: 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:

Minnesota Considers Two New Ways To Pay For Long-Term Care
Could Medical Procedures Transmit Alzheimer’s?
Older Americans Drive Growth of Wearables
Dementia Patients Fuel Assisted Living’s Growth. Safety May Be Lagging
7 Myths About Caregiving Costs
Provider groups rail against Trump administration pitch to penalize immigrants for using Medicaid
Senior Homeowners Give Reverse Jumbo Mortgages New Life
The Human Freedom Index
2019 SSI and Spousal Impoverishment Standards
‘Means Tested’ Welfare Means Nothing in Practice
The Loneliest Generation: Americans, More Than Ever, Are Aging Alone
Reverse Mortgages Seen By Advisors As Option Of Last Resort
Senior Living vs. Home Care: Consumer Preferences May Be Changing

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Updated, Thursday, December 13, 2018, 9:24 AM (Pacific)

Seattle—

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LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2017 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.

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose proprietary tools help advisors find and educate clients, reducing the “Ping-Pong” in the LTCi sales process. Help clients project their exposure to LTC risk, compare Combo vs. Stand-Alone LTCi easily, and make informed final decisions about buying LTCi in 15-20 minutes! Change work-site LTCi sales from a series of proposal deliveries to a single interactive consultation! Claude is the lead author of the Milliman Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power People" in LTCi in 2007, & a past Chair of the Center for Long-Term Care Financing. Contact Claude at 800-999-3026, x2241 or claudet@targetins.com to ask questions or get references. ***

*** NEW MEDICAID/MEDICARE NUMBERS: We’ve just updated the Medicaid and Medicare Key Numbers in The Zone for 2019. One highlight: Medicaid’s home equity exemption has increased to $585,000 or $878,000 depending on your state. For all the raw numbers as reported by the Centers for Medicare and Medicaid Services (CMS), go to 2019 SSI and Spousal Impoverishment Standards and Social Security, Medicare announce key 2019 numbers. For access to The Zone, you’ll need your user name and password. For a reminder or to become a member of the Center for Long-Term Care Reform and get your UN and PW, contact Damon at 206-283-7036 or damon@centerltc.com. ***

*** REST IN PEACE. We are sad to report the passing of Mark Randall. Mark was a much-beloved national trainer of long-term care insurance agents. His humor and passion for his subject inspired trainees across the country to market this crucial product successfully. I worked most closely with Mark during the 2008 National Long-Term Care Consciousness Tour, which he played a major role to organize and direct. I know there are thousands of past and present LTCI agents throughout the nation who will remember Mark Randall fondly and with deep appreciation for the education and entertainment he gave them. See his picture and read his obituary here. We say goodbye to a great friend of the business and a key contributor to the mission we share. ***

LTC BULLET: SO WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2017 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 2017 statistics on its website at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Tables.zip. Click “save” when asked what to do with Tables.zip. You’ll need to 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 2017: Growth Slows to Post–Great Recession Rates;
Share of GDP Stabilizes." 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 sixteenth 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?, 2017 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 $166.3 billion on nursing facilities and continuing care retirement communities in 2017. The percentage of these costs paid by Medicaid and Medicare has gone up over the past 47 years (from 26.8% in 1970 to 52.9% in 2017, up 26.1 % of the total) while out-of-pocket costs have declined (from 49.2% in 1970 to 26.7% in 2017, down 22.5% 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 1970-2017.

So What? Consumers' liability for nursing home and CCRC costs has declined by nearly half, down 45.7% in the past four decades while the share paid by Medicaid and Medicare has nearly doubled, up 97.4%.

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 $572,000 and in some states up to $858,000 of home equity (as of 1/1/18). No wonder nursing homes are struggling financially--their dependency on parsimonious government reimbursements is increasing while their more profitable private payers are disappearing.

Unfortunately, these problems are even worse than the preceding data suggest. Over half of the so-called "out-of-pocket" costs reported by CMS are really just contributions toward their cost of care by people already covered by Medicaid! These are not out-of-pocket costs in terms of ASSET spend down, but rather only INCOME, most of which comes from Social Security benefits, another financially struggling government program. Thus, although Medicaid pays less than one-third of the cost of nursing home care (30.2% of the dollars in 2017), it covers nearly two-thirds (62%) of all nursing home residents. Because people in nursing homes on Medicaid tend to be long-stayers, Medicaid pays something toward nearly 80 percent of all patient days.

So What? Medicaid pays in full or subsidizes almost four-fifths of all nursing home patient days. 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. The 2015 national projected shortfall in Medicaid reimbursement was $22.46 per patient day and over $7 billion in total. Source: 2015 Report on Shortfalls in Medicaid Funding for Nursing Center Care.

Private Health Insurance

Don't be fooled by the 10.0% of nursing home costs that CMS reports as having been paid by "private health insurance" in 2017. 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 85% private pay (Source: AHCA/NCAL Data) and they cost an average of $48,000 per year (Source: Genworth's 15th Annual [2018] Cost of Care Survey Shows Continuing Rise in Long Term Care Costs). 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 $572,000 or $858,000 depending on the state), plus—in unlimited amounts—one business, one automobile, prepaid burials, term life insurance, personal belongings and Individual Retirement Accounts not to mention wealth protected by sophisticated asset sheltering and divestment techniques marketed by Medicaid planning attorneys. Income rarely interferes with Medicaid nursing home eligibility unless such income exceeds the cost of private nursing home care.

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

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

Home Health Care

The situation with home health care financing is very similar to nursing home financing. According to CMS, America spent $97.0 billion on home health care in 2017. Medicare (40.0%) and Medicaid (36.1%) paid 76.1% of this total and private insurance paid 11.1%. Only 9.3% 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 1970-2017.

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:

“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.

* 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 10, 2018, 10:18 AM (Pacific)

Seattle—

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LTC E-ALERT #18-046: 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:

Take advantage of protections in NY from nursing-home costs
Growth in Medicare Advantage Spending Far Outpaces Traditional Medicare
U.S. healthcare spending growth slows for second year in a row
Lawsuit accuses Brookdale of ‘dumping’ residents of 10 CCRCs
In times of low unemployment, nursing home quality suffers
Boomers Create a Surge in Luxury Care Communities
Trump Cabinet Calls on States to Eliminate Certificate of Need Laws
Federal watchdog: Nearly half of Medicare patients in long-term-care hospitals experienced harm
Demand Grows, Challenges Increase for Senior Housing in Low-Density Markets
Medicare Players Team Up for 2020 Chronic Care PushOpinion: This isn’t your grandpa’s Social Security system
Social Security Runs Short of Money, and Ideas Fly on How to Repair It

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Updated, Friday, December 7, 2018, 10:39 AM (Pacific)

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LTC BULLET: VENEZUELA, YALE AND LONG-TERM CARE

LTC Comment: What could those three diverse terms possibly have in common? Read on, after the ***news.***

*** REMEMBER PEARL HARBOR: This is a good day to recall what others have given so we can live free of foreign or domestic compulsion. ***

*** “IMAGINE THE POSSIBILITIES” is the theme of the 19th Annual ILTCI Conference, which will convene March 24-27, 2019 at the Sheraton Grand in Chicago, IL. Organizers report “You can rest assured that you’ll receive expert insight into only the most current tactics and information pertaining to long-term care. There will be opportunities to attend special workshops, network with both peers and industry leaders, and also engage with exhibitors and sponsors at their booths. This conference truly is centered around dramatically enhancing your understanding of the long-term care industry, so that you can easily and efficiently implement success strategies for your organization.” Register here. Apply to exhibit here. Sponsor here. ***

*** MOVIE UPDATES: “Big Sonia” is the poignant story of 91-year-old Sonia Warshawski– great-grandmother, businesswoman, and Holocaust survivor. We’ve pointed you to this wonderful film before. The latest news is that Big Sonia is now available for rent on Google Play and Amazon and can be purchased at those sites or www.BigSonia.com. Similarly Big Sonia is available to rent or buy on iTunes. Here is a link to Q & A after the showing at the Dole Institute: https://www.youtube.com/watch?v=G1I6P37MYGc&feature=youtu.be. Finally, a core-standard curriculum guide for Big Sonia is now available for download here.

The other movie we’re following is LTC expert and Center-friend Ross Schriftman’s “My Million Dollar Mom,” based on a true story about caring for his mother diagnosed with Alzheimer's. Ross’s film has received seven nominations at the Tampa Bay Underground Film Festival to be held December 6th through December 9th. He says “Our film highlights the value of long term care insurance as the main character faces the challenges of his mom's failing health from Alzheimer's.” Check out the website for ways to view and/or buy the film. ***

LTC BULLET: VENEZUELA, YALE AND LONG-TERM CARE

LTC Comment: In 1968, my late wife and I settled into Carmen de Cura, our tiny Peace Corps site in the Venezuelan llanos. Part of our job was to confer with visiting medical professionals and back them up in the community when they left and we remained. But even though Venezuela’s constitution guarantees medical care to every citizen, the government doctors and nurses rarely showed up in our town and never when scheduled. That was a bitter early lesson that despite what I’d been taught in college, entitlements do not ensure benefits.

Fifty years later everyone knows what happened to Venezuela. Yet our universities and eminent professors continue to teach that government entitlement programs financed by compulsory contributions enforced by the IRS are crucial to individual and social well-being. Let me give you an example published recently by a Yale professor emeritus who is also regarded as an opinion leader.

You can read Theodore R. Marmor’s “Social Insurance and American Health Care -- Principles and Paradoxes” for yourself in the Journal of Health Politics, Policy and Law, Vol. 43, No. 6, December 2018, here. I encourage you to do so, but first, let me give you the general idea and then comment on some illustrative quotes from his article.

Professor Marmor worries that we no longer understand and apply the true principles of social insurance. The original idea behind Social Security, and later Medicare, was that everyone would contribute to a fund that could later pay for their retirement income security and old age health care. This social insurance approach was not based on need, but rather on earned right. You paid in so you had a right to the program’s defined benefits. But somehow, according to Marmor, critics corrupted this grand idea by mixing social insurance programs up with means-tested welfare programs like Medicaid. They bunched these fundamentally different programs together, called them all safety net “entitlements,” and claimed they’ll bankrupt the country as they plunge into insolvency. But funds for senior entitlement programs can’t run out any more than funds for national defense can run out. Voters, especially the burgeoning elderly bloc, won’t allow that to happen. So, we should not worry about the survival of social insurance as long as we return to its purer principles.

That’s his argument in a nutshell. But don’t take it from me. What follows are direct quotes from the article followed by our comments.

Marmor: “Social insurance, like commercial insurance, is about protection against financial risk. In the United States, Medicare and the Social Security Administration’s programs for retirement, disability, worker’s compensation, and worker’s life insurance have become dominant features of American public policy, amounting to more than 41 percent of the federal budget.” (Abstract, p. 1013)

LTC Comment: 41 percent? Maybe, if you leave out Medicaid and the escalating cost of interest on the national debt. Add those and other social entitlement costs back in and you’re looking at two-thirds (67 percent) of the federal budget already and growing rapidly. That’s one very good reason to consider the whole entitlement picture and not just focus on social insurance alone.

Marmor: “This essay seeks to clarify the crucial differences between social and commercial insurance and elaborates on the conceptual justifications and distinctive operational features of America’s social insurance programs.” (Abstract, p. 1013)

LTC Comment: Wait. The proper counterpart for “social” insurance is not “commercial,” but rather “private” insurance. Private, voluntary, nonprofit “insurance” funds created by philanthropic organizations were commonplace in the United States before compulsory government programs crowded them out. Using the term “commercial” is just this author’s way of sneering at the profit motive as if it were a good thing to operate at a loss as social insurance programs routinely do.

Marmor: “There are two issues that involve serious misunderstandings: the difference between social insurance and commercial insurance, and the difference between programs for which benefits are earned through contributions and programs with means-tested, often called ‘welfare,’ benefits.” (p. 1016)

LTC Comment: True, but unfortunately Marmor does not grasp the importance of the distinctions as our comments on later quotes will clarify.

Marmor: “It is ‘insurance’ in the sense that people contribute to a fund to protect themselves against unpredictable financial risks.” (p. 1016)

LTC Comment: That’s a poor definition of insurance because it leaves out half of the term’s legitimate meaning. Both social and private insurance spread risk and charge a fee, but only private insurance prices risk to determine a variable premium amount. By charging everyone the same and giving everyone identical benefits regardless of the risk level each person brings into the insurance pool, social insurance creates a fatal moral hazard. It punishes responsible, healthy behavior and rewards the opposite. The implicit message is “Go ahead and smoke, binge drink, use drugs, take welfare instead of working, no problem. The rest of us will pay for your irresponsibility.” The dignity of private insurance comes from underwriting, which treats everyone justly, charging each a premium commensurate with the risk they’re asking others to share on their behalf. I developed these points more fully in an article titled “The Inherent Individualism of Insurance.”

Marmor: “In commercial insurance, price must reflect risk. Social insurance, by contrast, operates on the premise that contributions are calculated according to one’s income and benefits are related to one’s needs.” (p. 1016)

LTC Comment: There, he’s made it explicit. Social insurance operates on the premise: “From each according to his ability, to each according to his needs.” That is the credo of Marxism, the essence of communism, the fatal flaw that dooms every socialist enterprise. That’s the crumbling foundation on which our social insurance programs are based and the main reason they face eventual collapse. You don’t grant a pickpocket the right to your wallet based on need. Why would you give the same power to the government?

Marmor: “The social insurance contract, once created, cannot be voluntary and survive long.” (p. 1016)

LTC Comment: So, social insurance is wonderful, but it cannot survive without the threat of government force to compel citizens to participate. Loss of freedom and independence are inevitable outcomes of involuntarily taxing ability to fund need. You always get less of what you tax (ability) and more of what you subsidize (need). Over time such policies sap individual initiative, handicap economic productivity, and make increasing dependency on government inevitable. Eighty years of expanding social insurance and welfare programs have set us on that course, the inevitable tragic outcome of which is already in sight.

Marmor: “In recent years, much linguistic muddle has been created through the use of entitlements as the term of choice for discussing both social insurance and means-tested programs.” (p. 1017)

LTC Comment: Social Security and Medicare were originally set up as social insurance programs. You paid in; you took out; no means test. They had the dignity of private insurance in that respect. Medicaid and Supplemental Security Income (SSI), on the other hand, required no contribution and were based on need. They were welfare, not insurance, and shared that stigma. But all that has changed radically. Social Security and Medicare have been substantially welfarized by tying their benefit levels to beneficiaries’ wealth. Medicaid and SSI have gone the opposite direction becoming readily available to able bodied adults and affluent elders in need of long-term care. Social insurance and welfare programs are gradually merging into indistinguishable, fiscally unlimited entitlements that require contributions based on ability to pay, but distribute benefits based on financial need.

Marmor: “We see the power of [calling both social insurance and welfare “entitlements”] by default: few if any critics of Social Security or Medicare explicitly criticize their appropriateness. Instead, they concentrate on claims that the programs are unaffordable.” (p. 1018)

LTC Comment: Do critics walk gingerly around “third-rail” entitlement programs? Well sure. No one wants to be called uncaring, much less have to fend off attacks by Antifa thugs demanding more “free” benefits. But plenty of thoughtful economists have demonstrated that by sopping up private savings and diverting capital away from productive investment, the huge and growing entitlement programs have set the American economy on a dangerous downward course. Borrowing to support spending beyond our means has been going on for decades as indicated by the huge federal deficits and debt. The consequences of such irresponsibility can be disguised and delayed for a long time. “There’s a great deal of ruin in a nation,” Adam Smith acknowledged. But sooner or later the piper must be paid. Sooner is looking more likely than later now as the entitlement trifecta approaches. The first boomers turn 85 in 2031, the same decade in which the empty Social Security and Medicare trust funds use up their economy-debilitating claims on general federal revenue. This crescendo of collapse will give the final lie to the false promise of social insurance.

Marmor: “The idea of a trust fund, then, was to emphasize the special status of a program whose benefits would be paid decades after a contributor’s payments. It was language meant to highlight reliability, to suggest a governmental appreciation of an especially protected program. The sad and second paradox is that this language has been turned upside down, bringing needless fear that the funds will ‘run out.’” (pps. 1018-19)

LTC Comment: Oh well, then, never mind. No worries. The trust funds were never meant to have any real assets in them, just to convey a sense of responsibility by the government in order to sustain the public’s confidence in the social insurance schemes. What a relief!

Marmor: “Anyone who asked whether the Defense Department will ‘be there’ in 2040 would be considered at the very least odd. … As a speaker I face questions about dire predictions of ‘insolvency’ regularly. I urge such questioners to dwell for a moment on how a growing proportion of senior citizens can be politically compatible with large reductions in future Social Security benefits.” (p. 1019)

LTC Comment: Right, we don’t have to worry about entitlements’ insolvency, much less funding national defense, because a lot of old people can vote themselves anything they want. But revenue to fund social benefits and national defense does not come from votes. It comes from taxes. The more important demographic number is not how many old people can vote, but how many young people, a declining bloc, can or will pay taxes to support benefits and services they don’t believe they will ever receive themselves.

Marmor: “The regulatory innovations of Obamacare represent earnest efforts to regulate commercial health insurance to become more like social insurance. Requiring insurers to guarantee issue at a fixed price regardless of preexisting conditions would reduce risk selection that social insurance eliminates directly.” (p. 1021)

LTC Comment: The more government tries to convert private insurance into social insurance, the more likely both forms will collapse. As described above, the distinguishing feature of private insurance is that it prices risk through underwriting. It neither punishes ability nor rewards need. To ignore pre-existing conditions and eliminate underwriting leads inevitably to insolvency, whether in the social or private insurance models. The proper solution for pre-existing conditions is charity, preferably private charity, but means-tested public assistance as a last, not first, resort.

Closing LTC Comment: OK, that covers Venezuela and Yale, but where does long-term care come in? The most popular reform proposals for long-term care financing advance the same ideas and arguments as Marmor’s article. They insist we need mandatory, government-enforced participation in a social insurance scheme to pay for long-term care. They seek to eliminate the necessity for people to take personal responsibility for this risk and cost. They propose to add just a little bit more to the camel’s back of public financing. In other words, they guide us toward the same dark path of ruin that Professor Marmor illumines.

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Updated, Monday, December 3, 2018, 10:26 AM (Pacific)

Seattle—

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LTC E-ALERT #18-045: LTC NEWS AND COMMENT

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

The high price of being an unpaid caregiver
Death rate for those 85+ increases ‘significantly,’ CDC says
In GE Probe, Ex-Staffers Say Insurance Risks Were Ignored
The $15 billion money pit dragging General Electric down
There’s a looming long-term care crisis. Are you prepared?
Generational Wealth Transfer to Hit $68 Trillion Over 25 Years: Cerulli
Here’s what it’s like dealing with the high cost of long-term care
Paying for Long-Term Care: How It’s Changing
What You Need to Know About Hybrid Long-Term-Care Insurance
Daytime sleepiness may indicate a higher risk for Alzheimer’s disease
Senators express ‘profound concern’ over VA nursing home care
New Tax Deductible Limits for Long-Term Care Insurance Announced by AALTCI Director
High-fat diet 'lowers risk of dementia'
Long-Term Care: A Comparison of Assisted Living and Nursing Homes

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Updated, Wednesday, November 21, 2018, 10:14 AM (Pacific)

Seattle—

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LTC BULLET: GET LTC RISK RIGHT

LTC Comment: If you’re still saying 70 percent will need LTC and 20 percent will need it for five years or more, wake up. Research has passed you by. Details after the ***news.***

*** HAPPY THANKSGIVING ***

*** ILTCI REGISTRATION OPEN: The 19th Annual Intercompany Long-Term Care Insurance Conference, themed this year as “Imagine the Possibilities,” takes place March 24-27, 2019 at the Sheraton Grand Hotel in Chicago, Illinois. Register here. Organizers assure you’ll get “discussions led by industry experts across a variety of different disciplines, from legal to marketing, technology,” “expert insight into only the most current tactics and information pertaining to long-term care,” and the opportunity to “attend special workshops, network with both peers and industry leaders, and also engage with exhibitors and sponsors at their booths.” There’s no better way to capture the state of the LTCI business. We hope to see you there.***

LTC BULLET: GET LTC RISK RIGHT

LTC Comment: I keep seeing the ancient (2005) data cited that 70 percent of elderly Americans will need long-term care and one in five of them will need it for five years or more. Well, those estimates went out the window three years ago. We explained and critiqued the newer, better data in LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources on Friday, July 24, 2015. Did you miss it? Well, no worries, here’s that report and analysis again. Don’t take the new findings and conclusions at face value without considering our critique as well.

Following is a slightly modified reprint of: LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources

LTC Comment: New numbers, better than the old numbers, but they require further clarification and explanation.

Highlights from a new report by the DHHS Assistant Secretary for Planning and Evaluation:

Roughly half—not 70 percent—of elderly Americans will need long-term care.
One in seven—not one in five—will need five years or more.
Average LTC expenditures are $138,000 but, not to worry, you can cover that with only $70,000 today.
Average LTC expenditures if you need any paid LTC are $266,000 but you can cover that with only $134,000 today.
Out-of-pocket costs average $72,000, but among those who have out-of-pocket costs, they average $140,000.
Women’s LTC costs average $180,000 compared to $90,000 for men.
For those with any LTC costs, the averages jump to $320,000 for women and $194,000 for men.
36 percent of people in the bottom income quintile at age 65 use Medicaid LTSS, compared to only 5 percent in the top quintile.

Highlights from our analysis:

This new data is a vast improvement over what we had before.
But this report’s analysis of the new data is fraught with political and ideological bias in ways we’ll explain and document.
Saying as this report does that $70,000 and $134,000 set aside today can cover future costs of $138,000 and $266,000 is inaccurate, misleading and irresponsible.
The report misleads by implying without evidence and incorrectly that Americans must spend down most of their wealth before receiving Medicaid LTC benefits.
Two out of five people receiving Medicaid LTC benefits have incomes between $50,521 and $217,032 or more.
More than two-thirds (67.4 percent) getting Medicaid LTC have incomes between $28,895 and infinity. Only for the low income? Hardly.
If the lowest-income-quintile people are so broke, how is it that 5.2 percent of them can expect out-of-pocket LTC expenses to exceed $250,000?
Analysis of long-term care risk and cost should raise consumers’ awareness and concern, not tamp it down unrealistically as this report does.

LTC Comment: The Department of Health and Human Services’ (DHHS) Assistant Secretary for Planning and Evaluation (ASPE) has just published (July 2015) an “Issue Brief” titled “Long-term Services and Supports for Older Americans: Risks and Financing.” Read it here. (Never mind the report’s use of the awkward neologism “LTSS.” What they mean is formal, HIPAA-level “LTC” wherever it is provided. We’ll use the clearer, traditional term “LTC.”)

This new report is an important contribution to our understanding of the incidence, duration, cost and financing sources for long-term care. But it’s a big change from what we used to think, i.e., that 70 percent of the elderly will require some LTC and 20 percent will need five years or more of care. (For our critique of the study that generated those old estimates, see LTC Bullet: Microsimulate This!, March 28, 2006.) We’re asked now to believe that only 52.3 percent will need any formal LTC and that only 13.9 percent will require five years or more.

Big change. What shall we make of the new utilization numbers, lower risk estimates, and funding source information? That’s what today’s LTC Bullet is about. But, bottom line, these new data give a better picture of the reality of long-term care, because they take into account the cost of housing (not just care) in residential settings and because they focus on higher-acuity, more clearly defined HIPAA-level care for two or more ADLs or incidental to cognitive impairment.

So, this is progress, but that said, let’s go through the report, quote by quote, analyze and comment.

Quote: The issue brief’s “abstract”: “Most Americans underestimate the risk of developing a disability and needing long-term services and supports (LTSS). Using microsimulation modeling, we estimate that about half (52%) of Americans turning 65 today will develop a disability serious enough to require LTSS, although most will need assistance for less than two years. About one in seven adults, however, will have a disability for more than five years. On average, an American turning 65 today will incur $138,000 in future LTSS costs, which could be financed by setting aside $70,000 today. Families will pay about half of the costs themselves out-of-pocket, with the rest covered by public programs and private insurance. While most people with LTSS needs will spend relatively little on their care, about one in six (17%) will spend at least $100,000 out-of-pocket for future LTSS.” (p. 1)

LTC Comment: Those are powerful, but confusing numbers. At age 65, you have roughly a 50/50 chance of needing long-term care that will cost $138,000. But you’d only have to set aside $70,000 to cover that cost. On the other hand, you have a 17% probability of spending $100,000 on LTC out of pocket even though half the cost of long-term care will be paid by public programs or private insurance. You’ll need to read the whole report to unravel this confusion, but we’ll try to clarify the meaning in the following quotes and comments, with a special focus on any ideological bias that has crept into ASPE’s exposition.

Quote: “Most Americans who receive formal LTSS pay out-of-pocket. For those with longer spells, they may pay out-of-pocket until they qualify for Medicaid. Reliance on Medicaid for those that cannot afford the full costs of LTSS may result in increased federal and state spending for LTSS.” (p. 2)

LTC Comment: It’s true that most people pay privately for formal LTC at least for a while. It is also true that they continue paying privately while they receive Medicaid benefits. This report does not explain how such private payment works nor how it impacts the LTC financing and service delivery system. The report simply assumes that people spend down their wealth before qualifying for Medicaid. The truth is much more complicated and critical to understand.

First, Medicaid LTC benefits are easily available to high-income people, because anyone with income below the cost of a nursing home (at least several thousands of dollars per month) qualifies based on income. Second, Medicaid’s LTC asset exemptions are nearly unlimited. Uncounted assets include most home equity and a car, term life insurance, prepaid burial plans, IRAs, and one business with no dollar limits. So for purposes of eligibility, even ignoring legal techniques used to hide or divest assets, neither income nor assets prevent most elderly Americans from qualifying for Medicaid LTC benefits.

Thus, the reality is not that most people spend down their wealth and finally become dependent on Medicaid. The reality is that most people are eligible with little or no spend down. Once on Medicaid, of course, they have to contribute their income to offset Medicaid’s cost for their care. That means that the LTC provider receives Medicaid’s dismally low reimbursement rate, but Medicaid only has to pay its de minimus rate minus whatever private income, largely Social Security and SSI, that the recipient contributes. The result is downward pressure on quality and misleadingly low Medicaid expenditures. Recipients’ exempt assets are also subject to estate recovery, but loopholes in the federal law and most states’ failure to enforce estate recovery aggressively allow most exempt assets to pass to heirs instead of reimbursing Medicaid. You cannot understand the distribution of payment sources arrayed in this new data without taking these facts into account.

Quote: “A microsimulation model is used to describe the future care needs for Americans. This model can predict what percentage of individuals will develop a disability, have LTSS needs, use paid LTSS, and among those that use paid LTSS, how much they use and for how long. It estimates care costs, and how they would be financed under current policies. Microsimulation modeling provides not only the average likelihood of these outcomes, but also describes the distribution of these needs and costs.” (p. 2)

LTC Comment: All econometric models should be taken with a grain of salt. A key question: if you input data from 30 years ago, does this model accurately predict current conditions in the LTC service delivery and financing system? Unfortunately, we don’t have the necessary data from 30 years ago to answer this question. So the lesson is to challenge all assumptions and watch carefully and critically how the model’s predictions play out over time.

Quote: “As expected, given the aging population, the number with HIPAA-level disability is expected to grow from 6.3 million to almost 15.7 million.” (p. 3)

LTC Comment: Whatever else we can say about LTC services and financing, we’ll have 2.5 times as many people to care for over the next 50 years. Those aging boomers are marching relentlessly toward senescence and need. Absent a plague targeting old people they’re going to need a lot of long-term care. So it behooves us to get these projections right.

Quote: “The typical person who is alive at age 65 can [be] expected to live another 20.9 years. Fifty-two percent can anticipate having at least some needs for LTSS; 19 percent are expected to have needs that last less than a year, and about 14 percent are expected to have needs that extend beyond five years.” (p. 3)

LTC Comment: Instead of being able to say 70 percent of aged Americans will need some long-term care, we can now say that over half will need assistance with two or more activities of daily living and that one in seven will need such help for five years or more. That makes the risk more tangible and realistic, but still insurable. It remains a small risk of a catastrophic loss, which is the necessary and sufficient condition to make private insurance workable.

Quote: “While on average, individuals will need one year of paid LTSS, 48 percent of individuals will not use paid, formal LTSS at all (measured in service days, where one year is 365 days of paid LTSS). Among those who need paid LTSS services, about half will need less than a year, and a little more than 10 percent will need five years or more.” (p. 4)

LTC Comment: Likewise for paid LTC services, a one in ten risk of needing five years or more of paid care is eminently insurable.

Quote: “On average, individuals can expect to spend about $138,000 for LTSS (see Table 3A, or $70,000 in PDV as shown in Table A1). However, among those who ever use paid LTSS, the average cost will be about $266,000 (Table 3B or $134,000 in PDV as shown in Table A2).” (pps. 5-6)

LTC Comment: Big numbers but it’s more important to examine sub-categories and sub-populations as we’ll do below.

For now, consider that the phrase “individuals can expect to spend about $138,000 for LTSS” is a little misleading. The reality is that “various payers, including the individuals themselves, can expect to pay parts of the $138,000 expended on average per individual.”

What bothers me most here, however, is the idea as first stated in the “abstract” above that “$138,000 in future LTSS costs . . . could be financed by setting aside $70,000 today” or that $134,000 set aside today could cover $266,000 in future LTC costs.

What’s being employed to make this assertion is “present discounted value (PDV).” PDV is a legitimate actuarial concept intended to show how much money you would need to have now to be able to meet a future obligation based on certain assumptions regarding investment returns and inflation. For purposes of this paper, the authors computed PDV “using the Social Security Trustees' ultimate real interest rate of 2.9 percent. (Because the Trustees assume long-range price growth to average 2.7 percent, this amounts to a nominal discount rate of about 5.6 percent in the long-run.)” (Footnote 12, p. 12)

Now, here’s the problem with using present discounted value in this context.

How many aging Americans have earmarked $70,000, much less, $134,000 to cover their future possible long-term care needs? Very few.
Who is getting a safe 2.9 percent return on their savings today? No one.
Why should we expect inflation in the cost of LTC services to be only 2.7 percent? It won’t be.

Suggesting that people can set aside such small sums to meet the risk of catastrophic LTC costs adds another soporific to the already overwhelming factor anesthetizing the public to LTC risks and costs. To wit, the fact that government pays for most expensive long-term care after the care is needed, which enables the public’s denial by ameliorating the consequences of failing to plan or insure.

Quote: “Out-of-pocket costs average $72,000. Among those who have out-of-pocket costs, these costs average $140,000. About three-fifths of individuals face no out-of-pocket costs. Looking at community and institutional expenses together, two predominant payers are Medicaid, comprising 34 percent and out-of-pocket payments, comprising 52 percent of the sum of total LTSS expenditures, respectively. Medicare is the next most important payer, followed by private insurance and other public programs. Payer predominance varies by setting. For example, Medicaid pays for 51 percent of the total for institutional settings. For community expenses, in contrast, out-of-pocket payments by families comprise the majority, about 68 percent.” (p. 6)

LTC Comment: To read this, you’d get the impression that out-of-pocket LTC expenses are very high compared to Medicaid especially for “community services,” which implies that people are spending down savings to pay for long-term care as was stated without evidence or explanation earlier in this report. The reality is more complicated.

Half of the out-of-pocket expenditures for nursing home care is really just spend-through of Social Security income of people already on Medicaid. This is important because it shows that a very significant portion of out-of-pocket expenditures does not come from asset spend down, but from another fiscally vulnerable federal entitlement program. Sure, it’s money people could otherwise put in their pockets, but think ahead a few years. What happens in 2035 when Social Security can only pay ¾ of what it has promised future beneficiaries? Someone will have to make up the difference. Medicaid? It’s already under water and the age wave bodes ill for tax-funded welfare programs. Medicare? It runs out of money sooner than Social Security (2030). Private payers? That would mean even more cost shifting, further punishing private payers for having behaved more responsibly than others by saving, investing or insuring to pay for their own long-term care.

Do families and individuals pay even more for community care out of pocket (68 percent)? Well, yeah, but that’s just money they would have to spend for room and board anyway. What’s important here is that public financing pays for 28.6 percent of community-based care (Table 3B), which means Medicare and Medicaid are paying for most of the care-cost component whereas individuals and families are paying mostly for room and board expenses they would have had to fund in any case.

Quote: “Expected LTSS costs are higher for women than for men. Women’s costs average $180,000 (Table 4B) compared to $90,000 for men (Table 4A). These could be financed by setting aside about $90,000 for women (Table A5) and about $47,000 for men (Table A3). However, when we focus on those with any LTSS expenditures, this average jumps to $320,000 for women and $194,000 for men (translating to $160,000 and 101,000, respectively, in present value terms as shown in Table A6 and Table A4).” (p. 6)

LTC Comment: OK, if you needed any more proof that long-term care is a “women’s issue,” there you have it. Women have a higher probability than men of needing long-term care; they need it longer on average; and if they need any at all, it’ll cost them nearly one-third of a million dollars.

But here we go again with the present-discount-value painkiller. $320,000 looks like a lot of money at first, but the real cost today is only half that ($160,000). So, not to worry. Analysis of long-term care risk and cost should raise consumers’ awareness and concern, not tamp it down unrealistically.

Quote: “The DYNASIM projections suggest that although Medicaid does reach individuals at all points in the income distribution at age 65, it primarily serves those in the bottom two quintiles. For example, about 36 percent of people in the bottom income quintile at age 65 use Medicaid LTSS, compared to just 5 percent in the top quintile at that age. Those in upper income quintiles who use Medicaid are typically individuals who have survived until their mid- to late 90s, consistent with other research (DeNardi et al., 2013).” (p. 7)

LTC Comment: Well, hello! Why is it news that Medicaid, a means-tested public welfare program, covers more poor people than rich people? This report displays ideological bias by bending over backwards to minimize the fact that Medicaid LTC benefits accrue to middle class and affluent people as much or more than to the needy.

Let’s cut the numbers from Table 6A a little differently. Two out of five people (40.8 percent) in the top three income quintiles rely on Medicaid. What are the upper limits for all five income quintiles? According to the Census Bureau, as of 2013:

Lowest:	$28,894
Second:	$50,520
Third:	$78,000
Fourth:	$121,059
Fifth:	$217,032 (This is actually the “lower limit of top 5 percent”)

Hmmm. This looks quite different. Nearly 41 percent of people receiving Medicaid LTC benefits have incomes between $50,521 and $217,032 or more. More than two-thirds (67.4 percent) have incomes between $28,895 and infinity. Not exactly destitute. How does this jibe with the slanted analysis offered in this report? It doesn’t. From now on, every time you read in a newspaper, magazine, or alas, a peer-reviewed academic journal that only “low-income” people qualify for Medicaid LTC benefits and only after they spend down their savings to impoverishment: Think bunk!

Not to put too fine a point on this paper’s bias, but keep an eye out for how its authors round up or down decimal numbers. For example, when they say “about 36 percent of people in the bottom income quintile at age 65 use Medicaid LTSS, compared to just 5 percent in the top quintile at that age,” they’ve bumped up the low-income-quintile number from 35.8 percent and bumped down the top-quintile number from 5.5 percent. That introduces a .7 percent misimpression. Why not just use the actual numbers with the decimals intact? Why indeed? If you like to play “Where’s Waldo,” you’ll love reading this report sleuthing for rounding bias, or searching for typos. Good hunting.

Quote: “Family out-of-pocket expenditures, in contrast, are more concentrated in the higher quintiles. The average out-of-pocket LTSS expense in the top quintile is approximately $97,000 compared to closer to $45,000 in the bottom quintile. But again the mean obscures important distributional information. About 12 percent of people in the top income quintile at age 65 can expect out-of-pocket expenses in excess of a quarter million dollars.” (p. 8)

LTC Comment: The richest people pay only twice as much ($97,000) for LTC as the poorest people ($45,000)? Gee, I wonder if that could have something to do with what we explained immediately above.

It’s not surprising that 11.7 percent of top-income-quintile people have out-of-pocket expenses in excess of $250,000. But Table 6B also says that 5.2 percent of people in the lowest income quintile can expect out-of-pocket expenses to exceed $250,000. Maybe those lowest-income people aren’t quite as broke as we thought they were.

Quote: “Medicaid is an important payer for LTSS, but because it serves only those who meet income and asset criteria, many families pay for LTSS out-of-pocket. Private LTSS insurance has only a modest reach, and it predominantly covers costs for those high in the income distribution. Similarly, other public expenditures (for example, including Veterans Administration care) only help to cover small shares of the population with long-term care needs. The results presented here highlight the need for better planning for LTSS to accommodate both average and catastrophic financial risks associated with chronic disability.” (p. 8)

LTC Comment: Well, true, that’s what these results show. What they do not show without the explanation and clarification offered here is that Medicaid is a major payer for expensive long-term care for all income and asset levels and that as such it has for 50 years crowded out private-payers, impeded the private insurance and reverse mortgage markets as potential long-term care funders, and distorted the service delivery system in favor of the kind of welfare-financed nursing home care that most Americans prefer to avoid.

Bottom line, however, properly interpreted this data on long-term care incidence, duration, cost and financing sources is better than we have ever had before. Use it, but don’t abuse it to suit any political or ideological bias. If you let the facts speak for themselves they’ll shout:

“Give Medicaid back to the poor and everyone else will save, invest or insure for long-term care.”

Do it before it’s too late!

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Updated, Monday, November 19, 2018, 10:25 AM (Pacific)

Seattle—

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LTC E-ALERT #18-044: 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:

LTCi Liquidation Decision Could Undermine The Insurance Industry, ACLI Says
Obesity and diabetes rates are up in every state
Veterans ‘demand action’ to improve care at VA nursing homes
A Dozen Facts About Medicare Advantage
Failure to Plan for Long-Term Care Often Leaves Caregiving to Female Family Members
Health, Family Take Precedence In Aging Americans' Minds
Life-LTC Hybrids Confuse Regulators, Too
Boomer Retirement Will Fuel Wave of Business Ownership Transitions
Liability insurance rates to increase 5% to 30%, according to new report
Wildfire destroys three skilled nursing facilities

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Updated, Monday, November 12, 2018, 9:53 AM (Pacific)

Seattle—

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LTC E-ALERT #18-043: 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:

New Medicare Advantage Benefits Are Supposed To Help Seniors Stay Out Of The Hospital
Top Strategies to Pay for a Longer, Healthier Retirement
It’s time to sign up for long care coverage
One of the fastest-aging US states has rejected free care for seniors
Study: Dark roast coffee may reduce risk of Alzheimer’s, Parkinson’s
Active Ingredient In Marijuana Reduced Alzheimer's-Like Effects In Mice
Medicaid Is A Big Winner On Election Day
New prize offers $2 million for finding key to Alzheimer’s in past research
Senior Citizens Are Replacing Teenagers as Fast-Food Workers
CalPERS insurance rates moves forward with trial date
In Less Than 10 Years, America Will Have 17 ‘Superaged’ States

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Updated, Thursday, November 8, 2018, 9:36 AM (Pacific)

Seattle—

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LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS? PART 2

LTC Comment: In Part 1, we showed how Medicaid misleads by taking credit for helping recipients whether it pays anything for their care or not. Part 2 shows how Medicaid misleads by downplaying its cost and exaggerating out-of-pocket expenditures, after the ***news.***

11/7/2018, “Medicaid Is A Big Winner On Election Day,” by Jeffrey Young, HuffPost

Quote: “Voters in Idaho, Nebraska and Utah on Tuesday defied their GOP state leaders and approved ballot initiatives to expand Medicaid, which would provide access to health coverage for about 300,000 working adults. … In other potentially positive news for supporters of Medicaid expansion, Kansas elected Democrat Laura Kelly to be its next governor. … Kelly voted for expansion while serving in the legislature. In Maine, Democrat Janet Mills will succeed Gov. Paul LePage (R) after winning Tuesday, which should bring swift implementation of the Medicaid expansion there, which LePage has obstructed since voters approved it via ballot initiative last year.”

LTC Comment: When is adding more people to public assistance a victory? 73.2 million out of 325.7 million or 22.5% already receive Medicaid. What happens when half of us are supporting the other half? We should be working to reduce dependency not to increase it. ***

LTC BULLET: WHO WINS, WHO LOSES WHEN MEDICAID MISLEADS? PART 2

LTC Comment: In “LTC Bullet: Who Wins, Who Loses When Medicaid Misleads?,” we explained how Medicaid claims “primary payer” status for a nursing facility resident whether it pays any part of the bill or not.

We observed that this makes Medicaid, senior advocates, politicians and public officials appear to be supporting more people than is actually the case.

We pointed out losers in this system include nursing facilities who receive Medicaid’s extremely low reimbursement rate and tax payers who fund a system that discourages LTC planning and often results in their ending up in publicly-underfinanced nursing homes.

We explained that the system perversely …

incentivizes consumers to ignore the need for LTC planning by making publicly funded care available after the insurable event, i.e. the need for care, has already occurred.
incentivizes politicians and bureaucrats to drive up public expenditures, deficits and debt offering generous LTC benefits in exchange for votes, professional advancement and ego gratification.
incentivizes state governments to maximize federal funding by “Medicaiding,” i.e. charging Medicaid for any good or service they can get away with, and/or using “provider taxes” to jack up federal financial participation.
incentivizes nursing facilities to do whatever they can to survive debilitatingly low Medicaid reimbursement rates, including economizing on care, creative billing, driving up private pay rates, and over-charging Medicare.
incentivizes tax payers not to plan or insure for long-term care resulting in their dependency on public assistance for care widely recognized as institutionally biased and at risk of lower quality.

Thus, Medicaid misleads to the upside about its benefits and disguises its negative consequences.

But Medicaid also misleads to the downside on its cost and that is our focus in today’s LTC Bullet.

For example, for 2016 CMS reported in Table 15 that Medicaid paid $50 billion (30.7 percent of the total) for “Nursing Care Facilities and Continuing Care Retirement Communities Expenditures” whereas it reports out-of-pocket expenditures for the same service were $43.8 billion (26.9 percent of the total.)

What a bargain! Medicaid is the “principal payer” for 62 percent of all nursing facility residents (see LTC Bullet: Who Wins, Who Loses When Medicaid Misleads?), but it only charges us 31 percent of the total cost of nursing facility care. Who picks up the other half?

Must be out-of-pocket costs. At 27 percent, they’re very high, nearly as high as Medicaid itself (31 percent) and even higher than Medicare’s, $37.5 billion or 23 percent of the total. Reporting out-of-pocket expenditures so high appears to support the conventional wisdom that Americans are spending down their life’s savings before qualifying for Medicaid.

But it’s an illusion.

Nearly half of what CMS reports as out-of-pocket expenditures for nursing home care is actually the “spend through” of Social Security income, by people already on Medicaid who are required to contribute their income to offset Medicaid’s cost for their care. Here’s the proof:

According to HCFA: “An estimated 41 percent...of out-of-pocket spending for nursing home care was received as income by patients or their representatives from monthly social security benefits.” (Helen C. Lazenby and Suzanne W. Letsch, “National Health Expenditures, 1989,” Health Care Financing Review, Vol. 12, No. 2, Winter 1990, p. 8.) Later research confirmed that Social Security spend-through is almost half of nursing home out-of-pocket costs. (Nelda McCall, "Long Term Care: Definition, Demand, Cost, and Financing," in Nelda McCall, editor, Who Will Pay for Long-Term Care, Health Administration Press, Chicago, Illinois, 2001, p. 19.) As all income, not only Social Security, is subject to the Medicaid recipient contribution requirement, private pension and other income also count as income “spend-through” and not asset spend down.

In other words, Medicaid recipients are largely spending income, not catastrophically depleting their life savings as is almost universally assumed and reported. The 27 percent reported by CMS as out-of-pocket costs, half of which are really Social Security income, explains much of the difference between the 62 percent of nursing facility residents for whom Medicaid is allegedly the “primary payer” and the fact that Medicaid only pays 31 percent of the cost for their care.

Wait, people own their Social Security, pension and other income, don’t they? When they contribute those sources of income to offset Medicaid’s cost, they are actually paying out of pocket. True, but you can see the confusion and misrepresentation created. It gives the impression that people are spending down the savings of a lifetime when they’re actually only applying income from another fiscally challenged government program, i.e. Social Security, as likely as Medicaid to suffer catastrophic reductions when the age wave hits in earnest.

We’ve already explained the motive Medicaid advocates have for making the program appear to support more people than it really does. Why do they make out-of-pocket expenditures appear to be higher and more onerous than they really are?

Let me explain with an example…

Some analysts say the out-of-pocket share of long-term care expenditures has skyrocketed to more than 50 percent.^{^[i]} But 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 from the total even though Medicare’s relatively generous nursing home and home care reimbursements are the only thing enabling Medicaid to pay long-term care providers less than the cost of providing the care to a majority of long-term care patients.^{^[ii]}

In reality, the proportion of long-term care expenses paid by taxpayers has been rising and the proportion paid by families has been declining for half a century. When Medicaid first started paying for long-term care in the late 1960s, out-of-pocket expenditures were very high – upwards of half of all nursing home expenditures. Since then, Medicaid and Medicare spending have increased rapidly and dramatically. Out-of-pocket expenditures, as reported by CMS, declined to around one-fourth of total long-term care expenditures. But even that low figure is misleadingly high because roughly half of it is not savings being spent down as often implied but Social Security and other income being “spent-through” by people already on Medicaid to offset Medicaid’s cost of care as federal law requires.^{^[iii]} To this day, upwards of 85 to 90 percent of nursing home expenditures are accounted for without dipping into personal savings and only 8.9 percent of formal home health care costs were paid out of pocket.^{^[iv]}

Nevertheless, analysts and advocates continue to argue that out-of-pocket long-term care expenditures are higher than they really are. Why? When you back out Social Security income that beneficiaries contribute to Medicaid, which is income they would otherwise have spent on room and board in the absence of Medicaid nursing home benefits, you’re left with a much smaller out-of-pocket total for long-term care. Medicaid promoters push up out-of-pocket expenditures creatively in order to justify new, government-funded long-term care financing programs. But spending more on the same programs that caused the problems in the first place is as foolish as it is self-serving.

Closing LTC Comment: Medicaid misleads to the upside by claiming to help more people than it does. Medicaid misleads to the downside by claiming out-of-pocket LTC expenditures, strongly implied to be asset spend down, are higher than they really are. Medicaid advocates do both to promote the program and their own interests. The net effect is that too few people plan for long-term care; they end up unable to pay its full cost; and they become dependent on the Medicaid program, which may disappear just when people need it most as the age wave crests and crashes.

A more honest way to measure Medicaid’s benefits and costs would be to report the number and proportion of patient days the program covers. Medicaid recipients tend to be the long-stayers in nursing homes, often remaining a year or more whereas Medicare residents are in an out usually in 20 days. Private payers last only as long as it takes the family to find a Medicaid planning attorney. If 62 percent of nursing facility residents qualify for Medicaid, but they account for 80 or 90 percent of patient days, because of their long stays, then Medicaid with its notoriously low reimbursement rates is doing far more damage than the commonly reported and highly misleading 62 percent “primary payer” number suggests. So what proportion of total nursing facility resident days does Medicaid touch? That’s the key metric researchers should discover and analyze. Does anyone know?

[i] Melissa Favreault and Judith Dey, “Long-Term Services and Supports for Older Americans: Risks and Financing,” USDHHS Assistant Secretary for Planning and Evaluation (ASPE) Issue Brief, July 1, 2015, revised February 2016, p.5; https://aspe.hhs. gov/basic-report/long-term-services-and-supports-older-americans-risks-and-financing-research-brief. Critiqued in S. Moses, LTC Bullet: New Data on LTC Incidence, Duration, Cost and Financing Sources, July 24, 2015; http://www.centerltc.com/bullets/archives2015/1094.htm.
[ii] “Nursing centers rely heavily on two public programs, Medicare and Medicaid, to pay for the services they provide to most of their patients. The rates paid by states for Medicaid do not adequately reimburse the actual costs incurred by providers, resulting in a major disconnect between payment levels and the needs of the patients. Unreimbursed allowable Medicaid costs for 2015 are projected to exceed $7.0 billion. Expressed as a shortfall in reimbursement per Medicaid patient day, the estimated average Medicaid shortfall for 2015 is projected to be $22.46, which is a 6.0 percent increase over the preceding year’s projected shortfall of $21.20.” ELJAY, LLC & Hansen Hunter & Company, PC, “A Report on Shortfalls in Medicaid Funding for Nursing Center Care,” American Health Care Association, Washington, D.C., April 2016, p. 1; www.ahcancal.org.
[iii] People in nursing homes on Medicaid are required to contribute all of their income, except for a small personal needs allowance, to offset Medicaid’s cost for their care.
[iv] See S. Moses, “LTC Bullet: So What If the Government Pays for Most LTC?, 2015 Data Update,” December 6, 2016; http://www.centerltc.com/bullets/latest/1159.htm.

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Updated, Monday, November 5, 2018, 9:36 AM (Pacific)

Seattle—

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LTC E-ALERT #18-042: 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:

Legal-Ease: Asset protection from nursing home costs
Maine might fund senior home care. How do most Americans pay?
Pete the Planner: Elderly couple learns lesson about long-term care insurance
Deep in the weeds: A tale of two poverty measures
US Retirement Confidence Reaches 10-Year High
Medicare Advantage insurers could be on the hook for billions from audit changes
US News Rolls Out New Nursing Facility Rankings with Short-Term Focus
Evidence mounts that an eye scan may detect early Alzheimer's disease
How Much Will Boomers, Millennials Get in Retirement?
Reimbursement limitations on home healthcare are being loosened

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Updated, Monday, October 29, 2018, 9:50 AM (Pacific)

Seattle—

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LTC E-ALERT #18-041: 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:

Venture-Funded Medicare Advantage Plans Launch into 2019 Market
Retirees' Health Care Costs May Blow Your Mind
2019 Will Be ‘Year to Watch’ for Medicaid as Long-Term Care Drives Spending
Make November The Time to Start LTC Conversations
Ameriprise Will Be a Careful LTCI Reinsurance Shopper
Medicaid Overpays Nursing Homes by $1B Per Year, Study Suggests