Tuesday, April 16, 2002
If this Bullet interests you and you'd like to dig deeper into the topic, come
to an LTC Graduate Seminar. The
next opportunity is April 22 in Baltimore.
See http://www.centerltc.com/ltc_grad_seminar.htm for details and future
opportunities. The Baltimore Grad
Seminar is special because we have several long-term care leaders registered to
attend including representatives of the American Health Care Association, the
Health Insurance Association of America, The Seniors' Coalition, and the
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is very limited so contact email@example.com immediately if you wish to
New content added today to the Center's donor-only zone includes the following:
LTC Reader #15--Book Report--The Ultimate Safe Money Guide by Martin D.
LTC Reader #16--Book Report--J.K. Lasser's Choosing the Right Long-Term Care
Insurance, by Benjamin Lipson
Data Base #15--Spotlight on Five States Facing Medicaid Crisis (ID, IN, MO, NC,
Data Base #16--CMS Actuaries Predict LTC Expenditure Growth
in now or go to http://www.centerltc.com/DOZ_info.htm
to find out how to qualify. ***
BULLET: MEDICAID, STATE BUDGETS,
AND LTC INSURANCE
Kaiser Commission on Medicaid and the Uninsured published a report on "The
Role of Medicaid in State Budgets" in October 2001.
You can read it in full at http://www.kff.org/content/2001/4024/4024.pdf,
but here are some pertinent excerpts. We'll close this Bullet with our take on
what it all means in a "LTC Comment."
year, Medicaid covered some 44 million people, including 22.6 million children,
12 million elderly and disabled people, and 9.2 million adults . . . .
More than one in four children in the United States now rely on the
program for their health care coverage. Medicaid
. . . is the single largest purchaser of nursing home services and other
long-term care services . . . in the United States. . . .
In 1999, federal Medicaid funds represented roughly 40 percent of federal
grant-in-aid dollars that flowed to the states."
Medicaid spending grew at the relatively modest average annual rate of 5.5
percent between fiscal year 1996 and 1999, it grew by 9 percent in fiscal year
2000 and by an estimated 11 percent in fiscal year 2001.
Soon after the resurgence in Medicaid spending, states began to
experience fiscal difficulties due to a downturn in the economy."
to new data gathered by the National Conference of State Legislatures in
mid-October, 44 states are now reporting that revenues have come in below
forecasted levels in the opening months of state fiscal year 2002 (which began
in July of 2001 for most states). A
smaller, but still significant number of states also are reporting that their
expenditures are exceeding budgeted levels.
In these states, Medicaid is often cited as one of the programs that is
growing most rapidly."
state official in Michigan . . . reported that 'The September 11 attacks appear
to have sent an already weak economy into a tailspin,' while a Florida official
reported that things 'went south' after the attacks."
the relatively modest recession of the early 1990s, states would have needed
reserves that equaled approximately 17 percent to 19 percent of their state
general funds budgets to maintain expenditures through the recession without
increasing taxes. At the beginning
of state fiscal year 2002, states had reserves that equaled 5.9 percent of
general fund expenditures--only a little more than a third of what would have
been needed to get through he last recession without spending cuts or tax
particular concern to states is that future Medicaid spending growth is
projected to outstrip relatively weak revenue growth, causing Medicaid to
consume a larger share of their budgets over time."
light of the worsening fiscal situation of states the pressure to find effective
strategies to control Medicaid spending is likely to be stronger than
they represent a relatively small share of Medicaid beneficiaries, the elderly
and disabled account for the vast majority of Medicaid spending.
In fiscal year 1998, for example, elderly and disabled beneficiaries
accounted for more than two-thirds of all Medicaid spending on benefits and for
four in five Medicaid dollars spent on prescription drugs."
increased cost of caring for elderly and disabled Medicaid beneficiaries was the
single largest factor behind the $12.4 billion increase in federal Medicaid
spending between 2000 and 2001."
the exception of Vermont, all states and the District of Columbia are required
to balance their budgets each year. Given
the resurgence in Medicaid spending growth and Medicaid's large share (on
average 15%) of state budgets, many state policymakers will be looking for
options to cope with Medicaid expenditure growth during the downturn."
Comment: When economic times are
good, most analysts and politicians take for granted that Medicaid can be the
long-term care safety net--not just for the poor, but for the middle class as
economic times turn bad, however, that perspective changes.
The last recession we faced in the early 1990s spawned closure of
loopholes and mandatory estate recoveries (OBRA '93), "throw granny in
jail" (HIPAA '96), and "throw granny's lawyer in jail" (BBA '97).
of those measures made good sense. Others
were ham-handed and counterproductive. None had the intended effect--to discourage Medicaid
dependency and encourage private LTC financing alternatives--because they were
not, or could not reasonably be, enforced.
here we are in another recession with state tax receipts down, with welfare
rolls up, and with Medicaid costs skyrocketing at double-digit rates again for
the first time in a decade. Let's
hope this Congress and President Bush can do a better job than former Congresses
and Presidents in targeting Medicaid to the genuinely needy and encouraging
everyone else to save, invest or insure for long-term care.
time has come for a double whammy: above
the line tax deductibility for private long-term care insurance combined with
reasonable controls on Medicaid nursing home eligibility, along the lines of the
Center's LTC Choice proposal. (Read
"LTC Choice: A Simple,
Cost-Free Solution to the Long-Term Care Financing Puzzle" in .pdf format