LTC Bullet:  Long-Term Care and the Four Urban Legends

Wednesday  May 23, 2001


Every now and then, LTC Bullets alerts you to an article which articulates clearly many important observations about our current long-term care financing crisis as well as ideas for reform.  The following such article, “Long-Term Care and the Four Urban Legends” comes courtesy of Conrad F. Meier, Senior Fellow in Health Policy at The Heartland Institute.  Thank you to Mr. Meier and The Heartland Institute for this thoughtful and provocative analysis.


“Long Term Care and the Four Urban Legends”

by Conrad F. Meier

According to the “American Opinions on Reforming Medicaid” survey, 72 percent of Americans say they cannot afford to pay the high cost of LTC without assistance.  Our current reliance on Medicaid to finance LTC actually propels people towards dependence on government largesse and personal impoverishment.

We also know Medicaid cannot long withstand the current demographic onslaught of aging citizens much less the approaching tidal wave of baby boomers.  Unless there is a fundamental shift to a long-term care system based predominately on private sector insurance, Medicaid and other entitlement programs will cause a major demand for increased taxation and further rationing of services to citizens.

LTC insurance is a sensible alternative that can ease the fiscal burden on state and federal governments while allowing a level of freedom not found in restrictive government plans.

From the same survey, 76 percent of those interviewed said they want government to shift from the current Medicaid financing program to one grounded in private long-term care insurance.  However, the survey also noted that few Americans understand what LTC options exist.  Given this knowledge gap it is no wonder LTC urban legends exist.    

*Urban Legend #1:  Don’t need it*

Seventy-six percent of Americans believe they will have no need for nursing home care, assisted living programs, home-based or community-based care, or any other LTC service.  The facts show otherwise:  two out of five Americans will need some LTC some time in their life.  Over the age of 50, the risk is even greater for one in five Americans who will need LTC services during the next twelve months.  The U.S. Census Bureau reports the over-85 population is the fastest growing societal group with one out of four elders already living in a nursing home.

Last year about seven million men and women over the age of 65 needed long-term care. By 2005, the number will increase to nine million.

*Urban Legend #2:  Can’t afford it*

Some interest groups and vocal advocates for increased, if not total, government funding for long-term care incorrectly insist that most Americans cannot afford LTC insurance.

The facts collected from insurance buying patterns data indicate are revealing:  a majority of LTC insurance buyers have annual incomes of less than $35,000, and one third of those buyers had assets valued at less than $30,000.  This seems to suggest LTC insurance is a viable option for retiring middle-class seniors, particularly when balanced against the high cost incurred by someone without financial protection.

Nursing home LTC can average around $55,000 a year, with East and West Coast facilities reporting twice that amount.  While in-home LTC is less expensive, bringing in an aide to help with dressing, bathing, feeding, meal preparation, and similar chores can easily top $12,000 a year.  These figures do not reflect the emotional or physical cost of the family caregiver or the added cost of skilled aid, like physical therapists. 

Government bureaucrats promising a LTC government entitlement program are pandering to seniors.  Significant reform would have government partnership with the private sector and allow a 100 percent tax deduction for all qualified LTC insurance premiums along with tax-free distribution of 100 percent of all benefits.  Increasing Medicare or Medicaid benefits to cover LTC is nothing less than the redistribution of private wealth from one social group to another.

*Urban Legend #3:  Not a good value*

Here again, advocates for government funding claim LTC insurance is not worth the cost of premiums.  This position raises the following questions:

1.  Is the cost worth the freedom of choice for quality care?

2.  Is the cost worth being free from personal debt?

3.  Is the cost worth knowing your family will not be financially or emotionally burdened  with your care?

4.  Is the cost worth being free of government rationing experienced in Medicare and Medicaid?

5.  Is the cost worth increasing your dependence upon government?

*Urban Legend #4:  Medicare will pay for it*

Reliable studies show that most people fail to prepare for the long-term care event because they mistakenly believe Medicare or their own health insurance will pay for care. This knowledge gap is dangerous in that it gives the consumer a false sense of security. According to the Health Care Financing Administration, two out of three nursing home residents - about one million people - rely on government welfare to pay for their care.

Medicare has restrictive limits that cover post-hospital skilled nursing and rehabilitation care for a maximum of 100 days for each illness.  For the first 20 days Medicare pays the full cost of care, but for the next 80 days the patient must pay a substantial co-insurance payments.  The 2001 co-pay is $99.00 a day from the 21st day to the 100th day.

The average length of stay in a skilled facility is reportedly one year.  After which there is no Medicare benefit in any other level of care such as custodial or intermediate care.  Most long term-stays are at the custodial or intermediate care level.

Medicaid is welfare and as such requires forces a patient to declare a state of impoverishment before being eligible for benefits.  Despite the popular belief, private individual and group health insurance plans do not cover LTC costs.


LTC is a two-fold issue and must be addressed as such.

One:  a consumer knowledge gap is a threat to the financial well being of everyone who mistakenly thinks long-term care is a luxury rather than a necessity in the 21st Century.

Two:  The notion that government can effectively deal with the potential cost and administrative complexities of a program vastly more expensive than Medicare is a dangerous step towards a socialized program that would rob every senior citizen of the very independence they cherish.

We must have the courage to educate citizens about taking individual responsibility for themselves before government is allowed to make individuals more dependent and less responsible. 


Conrad F. Meier is Senior Fellow in Health Policy, The Heartland Institute, Chicago, IL. Contact This essay was first published by BrokerNews, Feb.,2001.


1.  Luntz Research Companies national survey “American Opinions on Reforming Medicaid.”

2. The Gallup Organization, “Public Attitudes on Long Term Care: The EBRI Poll.” 

3. HIAA Consumer Information, “Guide to Long-Term Care.”

4. Conrad F. Meier,  Long-Term Care or Long-Term Government Dependency? Broker News, May, 1999.