LTC Bullet:  LTC Action on the Hill

Thursday  April 5, 2001




Last week, the U.S. Senate Finance Committee held a hearing on long-term care affordability. You can view the hearing online with "RealPlayer" software at:

The timing of this hearing corresponded with the introduction of Finance Committee Chairman Grassley's (R-IA) "Long-Term Care and Retirement Security Act of 2001" (S 627).  This is the companion legislation to Rep. Nancy Johnson's (R-CT) bill (HR 831) introduced on March 1, 2001.  The legislation proposes a phased-in, above-the-line tax deduction for qualified long-term care insurance premiums until that deduction reaches 100%.   It also permits long-term care  insurance to be offered under cafeteria plans and flexible spending arrangements.  In addition, the legislation proposes a phased-in tax credit for eligible caregivers. You can view both bills online at

In his opening remarks, Chairman Grassley explained:

"It's disheartening to me that the care for nearly two out of every three nursing home residents is paid for by Medicaid.  Not only do these costs result in a big bill for taxpayers, but 'spending  down' to qualify for Medicaid is a traumatizing experience for families.

"Long-term care financing challenges are not new to families or policy makers.  But with millions of baby boomers set to retire in the near future, it is crucial for our nation to better prepare for what will be a dramatic increase in long-term care needs.  Finding solutions is critical if we are going to meet the needs of our parents and grandparents in a way that sustains their health and independence without destroying their financial well-being.

"Unfortunately, public budgets are already under enormous pressure from retirement programs and will probably be unable to meet these needs.  As policymakers, we must be smart and think creatively.  We should attempt to develop new policies for existing public programs that contribute to more efficient and cost-effective services.  Also we should maximize private, market-based options to help finance long-term care, such as private long-term care insurance."

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"The bottom line is that we should do all we can to inform Americans about the importance of planning financially for potential long-term care needs.  And, Congress needs to consider steps it can take to ensure that Americans, especially the baby boom generation, are better prepared to meet the challenges that accompany long-term care."

CLTCF Comment:

The Center for LTC Financing's "LTC Choice" plan addresses all of Chairman Grassley's points. The Center's report, "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care  Financing Puzzle" is available free online in .pdf format at: You can also order a hard copy [$24.95; free to lawmakers and media] by contacting Sarah Allen at 425-467-6840 or with your complete contact information.

In briefest outline, the plan is (1) to educate people about the risk and cost of long-term care while they are still young enough, healthy enough, and prosperous enough to plan, save and insure, (2) to notify people simultaneously of the "LTC Contract" by which every American must acknowledge individual responsibility for his or her future long-term care expenses, (3) to extend to people who do not save or insure against this risk a line of credit fully collateralized by their estates which enables them to purchase LTC services in the private marketplace, and (4) to recover the cost of care funded by such lines of credit from the estates of people who did not plan ahead.

With the "LTC Choice" plan in place, most Americans will save and insure for the risk of long-term care. Those who do not insure or otherwise protect themselves will gain access to quality LTC services in the private market financed by a government-backed, privately administered reverse mortgage on their estates.  Some people will remain who neither planned ahead nor possess estates.  They will rely on a financially re-invigorated Medicaid program that no longer has to support middle and upper-middle class people on public assistance.  In other words, if we remove the perverse public policy incentives that have trapped them on welfare, most Americans should, could, and would take responsibility for themselves, pay privately for their own care, and create a new source of much-needed financing for all sectors of the LTC service delivery system.

At the close of the Senate Finance Committee hearing, Senator Lincoln (D-AR) remarked that she has "an unbelievable paranoia about how ill prepared we are as a nation" to meet our future LTC needs.  Webster's Collegiate Dictionary (10th ed.) defines paranoia in this context as "a tendency toward excessive or irrational suspiciousness."  We don't believe Sen. Lincoln's suspicion is excessive or irrational.  Sen. Lincoln and her colleagues should be very afraid of what's to come absent significant public policy reform.  The Center for LTC Financing is sending Sen. Lincoln a copy of this Bullet with our "LTC Choice" report so she is aware that solving our LTC financing crisis is eminently possible.  It just takes the political will to make it happen.

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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.

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