LTC Bullet: Atlanta Journal-Constitution LTC Series Hits Mark for Best Solution

Tuesday, August 6, 2002


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LTC Comment: Kudos to reporter Carrie Teegardin and the Atlanta Journal-Constitution (AJC) for an outstanding four-part series on long-term care service delivery and financing. You can read all four articles, for free at least for awhile, at . What follows are excerpts from two sections of the fourth article in the series, published Sunday, August 4, 2002, which focuses on LTC solutions. Author Teegardin captures the essence of the LTC problem (excessive dependency on an underfinanced welfare program, i.e. Medicaid) and the key to the solution (stronger incentives for Americans to plan early and save, invest or insure for the risk of long-term care).

Carrie Teegardin, "Solution 1: Encourage Insurance, Discourage Medicaid," Atlanta Journal-Constitution, August 4, 2002, .

"Most middle-class families wouldn't dream of going without health insurance, homeowner's coverage or a life insurance policy. But when it comes to long-term care -- a stay in a nursing home, say, or a move into assisted living -- few have insurance and most think they don't need it.

"That's because many people believe, mistakenly, they are already covered.

"People who need nursing home care for months or years often are shocked by the truth: They must pay for the care themselves or they must turn to Medicaid, the government program for the poor.

"'The public is confused,' said Steve Moses, president of the Center for Long-Term Care Financing, a nonprofit organization. 'They don't know who pays for long-term care -- Medicaid, Medicare or the tooth fairy.'

"Half of baby boomers have given no thought to how they will pay for long-term care if they need it, says the American Health Care Association. And 85 percent can't name the program that pays the vast majority of nursing home bills.

"Reliance on Medicaid

"Medicaid, created as a safety-net program for the poor, now pays the bills for 80 percent of Georgia's nursing home residents. It has become the de facto insurance policy for nursing home care for the nation.

"Here is what most people don't know about Medicaid:

"You have to be poor before you can become eligible.

"That means that, if you have savings, you have to spend most or all of it before Medicaid will cover your bills.

"Even if your assets are exhausted, you still have to turn over any retirement income, such as Social Security, to pay whatever portion of your nursing home bill that income will cover. Medicaid will cover the rest.

"All of this is a shock to many who suddenly need nursing home care, said Rich Amentrout, the chief financial officer for Presbyterian Homes of Georgia, a nonprofit corporation that operates nursing homes and retirement communities.

"'We're viewed many times as the big, bad wolf because the mindset of the individual is that if they do have any private assets, the mean old nursing home wants to take everything they've got,' Armentrout said.

"The general public has become so reliant on Medicaid that many estate planners recommend transferring an elderly person's assets to children in advance. That way, the children still get an inheritance -- rather than watching their parent's savings swallowed up by nursing home bills -- and the parent's long-term care needs are covered by Medicaid.

"This reliance on Medicaid for long-term care has placed a huge burden on taxpayers. It has also contributed to the poor quality of care in many nursing homes, because so many people are served by the government program. In most states, Medicaid payments for nursing home care are relatively low. And in Georgia, the system is focused on keeping costs down, not on providing high-quality care.

"If people started paying for their own care, primarily through long-term care insurance, many of the problems in long-term care would be solved, according to leaders in the nursing home industry and some advocates for consumers. The burden on the public would be lessened. And consumers with private coverage would find more options for the kinds of care that Medicaid generally does not cover.

"'If you want access to quality care in the private market at the most appropriate level -- home care, assisted living, and nursing home care only as a last resort -- you have to be able to pay privately,' Moses said. 'That's the message that hasn't gotten through to the public.' . . .

"The solution?

"In some minds, more widespread use of long-term care insurance would solve many of today's problems with nursing home care simply by spreading the bills more evenly across private insurance, employer benefits and the public.

"'Medicaid was never intended to be the long-term care health insurance program for senior citizens,' said Fred Watson, director/president of the Georgia Nursing Home Association. 'Medicaid was intended to assist the indigent and the poor who could not afford any kind of coverage for themselves.'

"If more people paid for their own care, then most nursing homes would not be so reliant on bare-bones Medicaid payments and reimbursement programs that emphasize low-cost care. With both private and public programs paying for care, payments would likely be more generous. And with insurance programs offering more care options, competition might improve quality.

"Increasing reliance on insurance would also take the pressure off a Medicaid system already overburdened with nursing home bills.

"With the baby boom population beginning to turn silver-haired at a time when people are living longer than ever, the weight of long-term care on the taxpayers will only increase. That being the case, many argue that a reliance on government to pay for almost everyone's case simply can't be sustained.

"'My generation and others need to step up the plate,' said Armentrout, of Presbyterian Homes. 'A lot of people are going to be needing this.'"

. . . . . . .

Carrie Teegardin, "The Bottom Line Of Caring: More about Solution 7: Changing the Culture, Medicaid Provides Fallback for Too Many, Expert Says, Atlanta Journal-Constitution, August 4, 2002, .

"One fix for the nation's long-term care system would push Americans to plan for something they may not want to face: life in a nursing home.

"One of the central problems with the system is that most bills for nursing homes, home health care and assisted living are not paid by regular health insurance.

"And that has left a crushing load of costs on the federal health care program for the poor -- Medicaid.

"'Nobody ever envisioned that 70 percent of nursing home patients would be on Medicaid,' said Tom Scully, administrator of the Centers for Medicare & Medicaid Services.

"A Seattle researcher says the system could be quickly transformed if elected officials adopted a plan that focused on individual responsibility combined with government assistance for the truly needy.

"Steve Moses, president of the Center for Long-term Care Financing, believes many of the people whose nursing home bills are covered by Medicaid are not truly poor.

"'They just have a cash-flow problem,' Moses said. 'Therefore we are trapping them on welfare unnecessarily.'

"Many nursing home residents own homes and have other assets. But most have no insurance coverage for nursing home care, which routinely costs more than $150 a day.

"Because these costs are usually greater than Social Security and retirement incomes, many retirees can easily qualify for Medicaid.

"It's not unusual for them to make it easier by transferring assets to their children in advance.

"'Medicaid isn't just a health care program for the poor any more. It's also indemnity insurance for upper-middle-class baby boomers, so if their parents ever need long-term care, it won't come out of their inheritance,' Moses said.

"These are the people that the government needs to have an honest discussion with, when they hit their 40s and 50s, Moses said.

"That conversation would include these options: get long-term care insurance and get it now, when it's more affordable than it is for people who are already retired. Or pledge to pay for your long-term care needs another way.

"The government would make it more difficult for people to transfer assets. And before they could qualify for Medicaid, seniors would have to be truly poor. If they have a house or other assets, they would have to take out a line of credit against those assets to pay nursing home bills. The loan would be repaid with the value of the assets when the person died.

"Under the program, Medicaid would be what it was intended, Moses said: a health care program for the truly poor, not a program stretched too thin by people who could afford to pay their own way."

[For a more complete description of the proposed program outlined above and the reasons why it is needed, see "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle" at .]