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LTC Bullet:

Nursing Home Industry in Crisis

Thursday April 29, 1999


In a recent Milwaukee Business Journal editorial entitled, "Nursing Home Industry in Crisis," the Journal stated that "[t]he nursing home industry is sick, and unless drastic changes are made soon, this crisis could turn into a national tragedy."

According to the Journal, "all of the nation's largest long-term care providers are having problems, ranging from mounting debts to allegations of overbilling the federal government for Medicare reimbursements."

The Journal correctly analyzed that "[w]hen Medicare and Medicaid were created in the 1960s, they weren't intended to be the primary national funding sources for long-term care. But that's exactly what is happening.

"Recently, the federal government began cutting Medicare reimbursements to nursing homes even as the cost for that care continues to escalate," explained the Journal. "For nursing home operators, their revenue is diminishing and their costs are rising -- a true prescription for disaster.

"The financial squeeze gives nursing homes an incentive to turn away residents whose care is funded by Medicaid, the federal and state program for the poor, in favor of privately insured residents, who can afford to pay more...."

According to the Journal, "[a] group of Wisconsin nursing home executives met recently with politicians and the federal Health Care Financing Administration, which administers Medicare, to discuss their industry's plight. The federal officials had better listen. Nothing less than a national solution will remedy a problem this pervasive."

The Center for Long-Term Care Financing couldn't agree more. Implementing the Center's "LTC Choice" plan will provide nursing homes and other long-term care providers the private dollars they need to survive in this era of constricting government support. With the proper incentives, most Americans will plan ahead with private long-term care insurance. This, in turn, will allow a reinvigorated public program to provide high quality care to the truly needy.

As long as Americans have nearly unfettered access to taxpayer-financed care after the insurable event occurs, however, no marginal public policy changes will significantly alter this nation's LTC planning behavior.

People purchase insurance to protect themselves against real risks. Today, you can ignore the risk, avoid the premiums, and wait to see if you get sick--since Medicaid will bail you out. The Center's "LTC Choice" plan creates the incentives people need to perceive and protect themselves against a real risk of catastrophic long-term care costs.

Long-term care providers have a choice: They can either (1) watch an impending financial disaster slowly envelop them; or (2) support public policy which leads Americans to plan ahead with insurance and other sources of private dollars.

Long-term care providers can survive and even flourish with the correct public policy in place.

You can purchase a copy of the Center's "LTC Choice" report ($24.95; free to media) by contacting Nadia Morgen at 206-447-1340 or by clicking here to order.

*source: "Nursing Home Industry in Crisis," Milwaukee Business Journal, April 26, 1999