LTC Bullet:  Principles of Long-Term Care


Tuesday December 5, 2000



The Center for Long-Term Care Financing was recently asked by the President and CEO of a major long-term care provider chain to suggest talking points for a public policy briefing.  We thought you might like to see how we boiled down the complex issue of long-term care service delivery and financing into a single page.  For more details, consult the Center's website at and read our three major reports: "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle," "The Myth of Unaffordability: How Most Americans Should, Could and Would Buy Private Long-Term Care Insurance," and "The LTC Triathlon: Long-Term Care's Race for Survival" (forthcoming December 7, 2000.)

Principles of Long-Term Care

*The Problem*

*Americans are living longer, but dying slower often in need of expensive long-term care (LTC).

* Trends in aging demographics guarantee that LTC will become a much bigger and more expensive, possibly catastrophic, social and political challenge in the future.

* America's LTC service delivery and financing system is severely dysfunctional in terms of access, quality, reimbursement, discrimination, and institutional bias.

* LTC places a huge financial burden on U.S. social programs (principally Medicaid and Medicare) while private financing of LTC, especially insurance, is very limited.

* In the absence of adequate public and private third party financing for professional LTC services, American families struggle to provide informal care at home with little help.

* Related problems are growing, such as, physical and financial abuse of the elderly exacerbated by economic and emotional pressures on the "sandwich generation."

*The Reason*

* Ironically, well-intentioned public financing of LTC since 1965, although helping many people in need, has inadvertently created and exacerbated the status quo.

* Medicaid financing of nursing home care led to institutional bias. Neither Medicaid nor Medicare can afford to provide the community care most seniors prefer.

* Simultaneously, public financing of LTC inhibited the growth of a private market for home care, assisted living and the private insurance products to pay for them.

* Limited provider reimbursement by Medicaid and Medicare caused access and quality problems, which led to discrimination against public recipients and in favor of private payers.

* Consequently, private payers are migrating to home care and assisted living leaving public payers and nursing homes with the highest acuity, most expensive patients.

* Ramifications for staffing, litigation, liability insurance, capital financing, stock prices, and viability of the system are approaching the end game.

* In the meantime, relatively easy access to Medicaid nursing home care and Medicare home care has desensitized the American public to the risk and cost of formal LTC.

* Thus, most people who need formal long-term care still end up in nursing homes paid for by Medicaid and very few Americans plan, save or insure for LTC.

*The Solution*

* The good news is that America's LTC crisis is relatively easy to solve, because it is self-inflicted by well-intentioned, but negative incentives in public policy.

* In America today, one can ignore the risk of LTC, avoid premiums for private insurance, qualify much more easily for public benefits than is commonly understood, or dodge "spend-down" requirements entirely.

* Stricter eligibility rules (e.g., "Throw Granny in Jail") and mandatory estate recovery have failed to save Medicaid or encourage individual responsibility because they come after it is too late to save or insure.

* To solve the LTC crisis, we must: (1) educate everyone by age 50 about the risk and cost of LTC, (2) enforce "LTC Contracts" before retirement whereby everyone acknowledges the personal responsibility to save or insure for LTC, (3) extend to all uninsured Americans the "LTC Choice" of a publicly backed line of credit on their estates so they can purchase quality LTC in the private marketplace at the most appropriate level of care, and (4) faithfully recover these secured loans from the estates of deceased borrowers in order to encourage their heirs and all other Americans to plan early and insure fully for LTC.

* Benefit payments can be administered through vouchers or formal loans, but they must be secured by collateral and recovered upon death of the last surviving exempt dependent relative, such as a spouse or disabled child.

* With these positive programs and incentives in place, fewer people will depend on Medicaid or Medicare for their LTC and those programs will be better able to serve their legitimate recipients and beneficiaries.
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The Center for Long-Term Care Financing is a 501(c)(3) charitable non-profit organization dedicated to ensuring quality long-term care for all Americans.  Ask how you can support the Center today! Visit our website at or contact Amy Marohn at for details.

This e-mail is the latest installment of "LTC Bullets" -  the Center's periodic online news service covering the latest information and trends in long-term care financing.  We welcome responses to the material presented.