Tuesday, July 16, 2002
*** Richard Rowland, President of the
Grassroots Institute of Hawaii in Honolulu, HI wants to bring Center President
Stephen Moses over to brief policy makers and others on problems with and
alternatives to that state's CarePlus mandatory, government-run LTCI proposal.
See our LTC Bullet on the CarePlus program at:
If you're interested in sponsoring this project, with public recognition,
contact Steve Moses at 206-283-7036 or firstname.lastname@example.org.
So far, we have $3,000 pledged and need $2,000 more.
All proceeds support the Center for Long-Term Care Financing. ***
*** LTC Graduate Seminars for August 26
through October 1 are listed below. Pre-registration
required; enrollment limited to 15 persons; continuing education credits
approved or pending. Details at http://www.centerltc.com/ltc_grad_seminar.htm.
Pre-register or inquire by replying to any LTC Bullet.
August 26, 2002: SEATTLE, WASHINGTON, 9 AM to 5 PM at the Courtyard Bellevue,
14615 Northeast 29th Place, Bellevue, WA, 98007, 425-869-5300 for directions.
August 28, 2002: PORTLAND, OREGON, 9AM to 5PM at the Alderwood Inn Hotel, 7025
Northeast Alderwood Road, Portland, OR, 97218, 503-255-2700 for directions.
September 26, 2002: DALLAS, TEXAS, location to be announced (TBA), 9AM to 5PM
September 28, 2002 (Saturday):
HOUSTON, TEXAS, location TBA, 9M to 5PM
October 1, 2002: NEW
ORLEANS, LOUISIANA, location TBA, 9AM to 5PM
The Center's LTC Graduate Seminar is a full day of
instruction and discussion. It will
help (1) LTCI producers sell more insurance, (2) LTC providers attract more
private payers, and (3) legislators and policy makers design better programs.
Don't miss the LTC Graduate Seminar when it comes to a location near you!
*** New donor-only zone content posted today includes:
The LTC Reader #25--Older Driver Fatalities to Skyrocket
The LTC Reader #26--Aging Boomer Women Will Strain LTC and
The Data Base #25--How Many Nursing Homes and Who's in Them?
The Data Base #26--Utilization of Home Health Care by State
In "The LTC Reader" and "The Data
Base," we report to donor-zoners on the latest reports and data.
We read and summarize the material and include a hyperlink to the
original whenever possible. To
qualify for The Zone, donate $100 or more per
year to the Center (tax deductible). To
contribute online, go to http://www.centerltc.com/support/index.htm
or, better yet (it saves the online donation fee we have to pay), simply drop a
check in the mail to Center for Long-Term Care Financing, 2212 Queen Anne Avenue
North, #110, Seattle, WA 98109.
Then just hit "reply" to any LTC Bullet, give us your preferred
user name and password (up to 10 characters each) and we'll sign you up and
confirm your access even while your check is in the mail.
Zone in now! ***
LTC BULLET: BOARD
CHAIR CLAUDE THAU ON MEDICAID PLANNING
*** This LTC Bullet is longer than most.
You may wish to print or save it for reading later. ***
LTC Comment: Connecticut
wants to save Medicaid big bucks. The state has requested a waiver from CMS (formerly HCFA) to
(1) expand the transfer of assets look-back period from three to five years and
to (2) stop the egregious "half-a-loaf" self-impoverishment strategy,
which now reduces spend-down liability by half effortlessly.
This is a political hot potato. CMS
Administrator Tom Skully favored the plan, very delicately, at a recent Chamber
of Commerce conference. But
advocates of loose and expanded Medicaid eligibility object strongly to it.
We covered the issue in depth with "LTC Bullet: Connecticut Attacks Medicaid Planning to Save Money and
Encourage Private LTCI," published Wednesday, June 12, 2002:
What follows is an op-ed attacking the CT waiver proposal and a rebuttal
by Center for Long-Term Care Financing Chairman of the Board of Directors Claude
Thau. Enjoy the intellectual joust.
Castellblanch, "Rowland's Medicaid Proposal Would Punish Seniors," Hartford
Courant, June 14, 2002
now, Gov. John G. Rowland is busy preparing a nasty shock for Connecticut
seniors and their families. The
governor is proposing to punish seniors who have used assets such as their home
equity to help their children - maybe by helping them to buy a house, helping
their grandchildren get through college or getting their children out from under
credit card debt.
penalty would come through an idea projected to cut $10 million from the state's
Medicaid budget for nursing home care. The
financing for nursing home care for many Connecticut seniors comes through
Medicaid. The program starts paying
for people's nursing home care when they have "spent down" - that is,
when they have virtually no money.
way that the Rowland cut would work would be to go after seniors who decide to
help their children. Under normal
Medicaid rules, if a senior gives her children some money, she would be
disqualified from getting Medicaid help for nursing home care for a period of
time known as a disqualification period. For
example, if a parent had $60,000 and gave her children $30,000, she might have a
disqualification period of four months. This
could mean that she would have to pay for the first four months of nursing home
care, or $30,000, out of her own pocket.
this is a stiff penalty, it's one that many families and nursing homes can
accommodate. The senior would have
done something for the good of her family, and after four months, she would have
"spent down" and Medicaid would start paying.
governor is asking the Bush administration to let him change the date on which
the disqualification period starts. He
wants it to start on the date on which the person had "spent down" -
the date on which she went broke.
the nursing home with the senior described above would get the senior's $30,000.
Then the nursing home would get nothing for the next four months.
homes would be less likely to admit seniors in these circumstances.
As a result, Connecticut seniors would have a harder time getting nursing
home care. Gov. Rowland's plan
would be a hard blow to many middle-income seniors.
the plan is approved, Connecticut will have one of the most draconian sets of
nursing home eligibility rules in the country.
People from Connecticut might have to leave the state just to get
admitted to a nursing home or just go without necessary care.
and Republicans are standing in broad opposition to this devastating proposal.
The Legislature's Human Services Committee voted it down unanimously.
It has been opposed by Connecticut's U.S. Sens. Chris Dodd and Joe
Lieberman. Democratic U.S. Rep. Jim
Maloney of the 5th District is urging its rejection. Republican U.S. Rep. Nancy
Johnson of the 6th District is on record as opposed. But still Rowland brazens it out and keeps pushing his
request in Washington.
the Rowland administration has claimed that its plan for balancing the state
budget does no serious damage to Medicaid.
I guess it considers wrecking the last years of the lives of
middle-income seniors - driving them out of state, perhaps - to be no serious
hope the Bush administration will hear what Connecticut's congressional
delegation is telling it and stop this plan.
Otherwise, the final years of many Connecticut seniors will get much
Ramon Castellblanch is assistant professor of management at the School of Business at Quinnipiac University in Hamden. His column appears the second Friday of every month. To leave him a comment, please call 860-241-3164. Or e-mail him at mailto:email@example.com.
by Claude Thau, President of Thau, Inc. and Chairman, Board of Directors, Center
for Long-Term Care Financing. Reach
him at (913) 403-5824 or mailto:firstname.lastname@example.org:
is a welfare program for the benefit of people who lack the assets to pay for
their own care. However, Medicaid
planning attorneys have totally distorted it and well-meaning state employees
help middle class and affluent people siphon money from other tax-payers by
using Medicaid money to pass assets on to their children.
They do it out of good intentions ("just trying to help
somebody”), but they don't look at the broad view of how they are destroying
our Medicaid system by helping people, in essence, to steal money from future
generations, particularly the future poor and future middle class whose parents
did not avail themselves of this “opportunity”.
is how Medicaid is supposed to work for LTC:
If you are indigent, Medicaid pays.
That is, tax-payers pay (a lot!), so that indigent people can get care.
This is great! It would be
even better if the providers could provide better care, but they can't because
of the abuses in the system.
If you have assets (e.g., your house), but they are not liquid, the
tax-payers give you a loan because we want to make sure that you can return to
your house if you ever recover. It
would not make sense to recover and not have your house.
When we give a loan, we give a long-term loan.
It lasts until the later of:
1) the death of the last of:
a) the Medicaid recipient,
b) their spouse, c)
any minor or disabled children, d) any
child living in the house who provided care for the Medicaid recipient for at
least two years in that house
2) or until the house is sold.
only do we provide such a long-term loan, but we give it interest-free!
Then, as required by the law which permitted these loans, the principal
is supposed to be collected via the lien placed on the house.
rather than looking at the broad view, the Medicaid planning attorneys publish
article after article about "poor Sarah." All she wanted to do was to leave her house to her kids but
it was encumbered by nasty Medicaid so it was sold and lost to the family.
They never point out that Sarah had a 20-year (for example) interest-free
loan and that all we are doing here is trying to recover the principal; the
interest is totally forgiven and all we are trying to do is to get that
principal back so that we can loan it to someone else.
upshot is: This failure to collect
the debt opens the door for tremendous abuse.
Every time the government closes a loophole, the attorneys find another.
For example, one automobile is exempt.
So the attorneys would give Granny's automobile away, then buy a
Cadillac, then give it to another relative and continue doing so until all of
Granny's relatives had Cadillacs. Sorry,
but I don't want to pay taxes so all of Granny's relatives can get Cadillacs.
When the government discovered that Granny did not even know that she had
had those cars, they tried to stop the practice. So the Medicaid planners advised each other that they needed
to take Granny for a ride in each car before they gave it away.
Because of the failure to collect on the debt, affluent people and middle
class people are flocking to such attorneys to "protect their assets"
from Medicaid, that horrible government program that expects them to pay for
their care as best they can, then is willing to supplement as needed. Medicaid
is broke, partly because of the failure to collect on debts owed to it.
Squeezed as it is, Medicaid pays inadequate reimbursements.
a result, when nursing homes train their staff, those staff leave the nursing
homes. Human resource (HR) execs in
hospitals have told me that they hire such people from nursing homes all the
time because once they are trained, they are valuable to the hospital and
Medicaid facilities cannot afford to match the hospital salaries.
(Maybe Medicaid could afford a higher reimbursement if it was not paying
for so many people who artificially impoverish themselves.)
So the nursing home becomes short-staffed until the person can be
replaced. Hence quality of care
the nursing home incurs cost hiring the new person, who is less experienced than
their predecessor. So costs
increase and service does not completely rebound. Then the nursing home incurs
more cost training this person (the training is a good idea and is legally
required), so the cycle repeats. Over
time, the good hires leave and the nursing home is stuck with the losers they
unfortunately hired. They should fire the losers, right?
But they don't have enough staff, so they can't afford to fire people.
Meanwhile, as they repeatedly go through the hiring process, the quality
of the HR pool deteriorates, so it becomes harder and harder to find good staff.
home staff turn-over can be 100% year! Thus
NHs cannot provide good care. So
sometimes the attorneys who cheated the nursing homes and tax-payers in the
first place then turn around and sue the nursing homes for the poor care that
resulted. The only thing that keeps
more people from playing this game are their personal integrity and the fact
that Medicaid won't cover home care or assisted living facilities routinely and
will only cover nursing homes if they are Medicaid-certified.
I, and others, would like to give people freedom under Medicaid to select
their care-giver, but we can't afford to do that while allowing anyone to
artificially impoverish themselves to get on Medicaid.
The gusher of expenses would be huge.
are proposals to fix this system, but the issues are misrepresented (as in the
preceding article), discouraging politicians from fixing the system.
If you pay for your nursing home charge with your own money, the nursing
home charges you extra to pay for the Medicaid shortfall on their other
patients. So smart people are
deciding that they don't want to go to a Medicaid-certified facility.
They know that at best they can expect to be overcharged and get adequate
care. At worst, they get overcharged and receive inferior care.
So they go to totally private pay facilities.
Basically, people who pay for private LTC are taxed in at least 3 ways
because of this system that you are trying to protect: a) their normal taxes
partly go to cover these costs; b) they get overcharged at the facility (tax
#2); c) they get inferior care (tax #3).
is somewhat parallel to some of our school district issues, where we create
abysmal public education systems, resulting in affluent people opting for
private schools. Once they have opted out, they care less about the public
schools so the problems get entrenched. Once
someone has given away their assets (including as much income as possible), most
of their remaining income must be applied to their LTC costs.
So Medicaid may only pay a portion of the cost of their care.
However, if Medicaid pays any portion of the care, the nursing home gets
only the Medicaid reimbursement. So
for most of their patients the nursing home gets only Medicaid reimbursement.
This is killing the nursing home industry.
of the Medicaid planning techniques (when they can't do a more aggressive
approach) is to encourage people to give away half their assets, keeping the
balance to cover their costs for the "look-back period".
Then, when the look-back period has expired, their "gifts" are
no longer considered and you and I start paying for their care, no matter how
rich they were before they gave away their assets!
purpose of the [Connecticut] proposal is to stop this abuse, by making their
gifts still count. Just [recently],
I got a call from a Marketing Officer of a particular business.
His (common) approach was to buy a 3-year LTCI policy.
Once he needed care, he would give away his assets.
Then after 3 years, he would be on Medicaid.
This person and his wife clearly have assets and income. They are very healthy and 51/50 respectively in age.
But they are planning to misappropriate money from all of the rest of us.
Who suffers? Not the kids of the affluent! They do great because the assets they misappropriate are worth more than their share of the additional taxes that result. Those who are not wealthy (or do not play this game) suffer from the higher taxes without benefiting from the inheritance. The poor also suffer from worse care in the facilities and worse public programs (schools, health, etc.) because of budget deficits. What is characterized as stealing from the rich to help the poor (which may or may not be an ethical thing to do) is really stealing from the poor to help the rich.