LTC Bullet--The Triathlon vs. the Triumvirate: Why Can't We Fix Long-Term Care?

Tuesday, November 26, 2002


LTC Comment: Ever wonder why America's corrupt, dysfunctional long-term care service delivery and financing system persists unreformed? Follow the money! But don't expect it to lead where you might think. Find out who benefits from the status quo in LTC and why they won't let us fix it. After the ***news***.

*** This Bullet is sponsored by the National Association of Health Underwriters (NAHU) based in Arlington, VA. Founded in 1930, NAHU represents more than 17,000 professional health insurance agents, brokers and carriers who provide varied insurance coverages, including LTCI, for millions of Americans. If you're not yet a member of NAHU but would like to receive a free copy of the just-published November 2002 issue of HIU, the Association's monthly magazine, with a special focus on LTC insurance, simply write to or call 703-276-3816. Thanks so much to the National Association of Health Underwriters for their generous support of the Center. Won't you help too? Go to to sponsor an LTC Bullet. Find out how you can sponsor other Center activities (e.g., articles, speeches, conference exhibits) by contacting Amy Marohn at 425-377-9500 or . ***

*** NEW BOOK. "There's No Place Like (a Nursing) Home," by Karen Shoff (Invisible Ink, Santa Monica, 2003) is available at or by calling 1-800-BookLog (1-800-266-5564), $12.95 plus $3.95 shipping. This volume, praised by nationally syndicated radio host Michael Medved as "an indispensable guide," details four steps to improve your chances of staying at home if long-term care becomes necessary. The book includes Center President Stephen Moses's "Chapter 14: Long-Term Care Due Diligence for Professional Financial Advisers." (You can also read Steve's article, originally commissioned by The Constellation Group , at .) Other friends of the Center who contributed to this book include: Dave Donchey, who wrote "Appendix D: Why Affluent People Should Consider Buying Long-Term Care Insurance" and Ferd and Cheryl Mitchell, who wrote "Appendix E: Care Management Trusts." ***

*** For more on efforts to warn consumers about Hawaii's compulsory, government-driven, payroll-financed long-term care "insurance" proposal, read "800 Pound Gorilla of Social Problems' Not Getting Any Lighter: Hawaii's Proposed Solutions Through 'CarePlus' Aren't Making Things Any Easier, Those on the Front Lines Say," by Malia Zimmerman, in the Hawaii Reporter of November 21, 2002, ***

*** New content added today to the donor-only zone includes "The LTC Week in Review for November 25-29, 2002: LTC E-Alerts #271-#275." Every LTC E-Alert contains some news or information that will help people understand the need to prepare early for the risk and cost of long-term care. If you already qualify for The Zone, you can click the following link, enter your user name and password, and go directly to the latest E-Alerts: .

LTC E-Alert #271--Hurrah for Grandma
LTC E-Alert #272--Alzheimer's and Altercations Ascending
LTC E-Alert #273--How Does Your State Rank in Health?
LTC E-Alert #274--Dangerous Developments for LTC Consumers
LTC E-Alert #275--More Evidence Red Wine Reduces Dementia Risk

To Zone In, mail your tax-deductible contribution of $100 or more to the Center for Long-Term Care Financing, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109. Then email your preferred password and user name (up to 10 characters each). You can also contribute online by credit card or direct withdrawal at . ***


The following article, titled "The Triathlon vs. the Triumvirate: Why Can't We Fix Long-Term Care?," was written by Stephen A. Moses, president of the Center for Long-Term Care Financing and was recently published exclusively in HIU, the National Association of Health Underwriters' monthly magazine.  It provides an enlightening perspective into why ongoing public policy is perhaps the greatest obstacle to "fixing" the long-term care financing system in the United States. HIU is distributed 11 times/year to 30,000 insurance professionals and legislators nationwide. For more information, please visit .

"The Triathlon vs. the Triumvirate: Why Can't We Fix Long-Term Care?"

by Stephen A. Moses, President

Center for Long-Term Care Financing

It's no secret. America's long-term care service delivery and financing system is a mess. Massive nursing home and home health agency bankruptcies; slow fills at unprofitable assisted living facilities; a dearth of debt and equity capital to build and operate facilities; an underdeveloped home and community-based services infrastructure; excessive dependency on welfare-financed nursing homes; skyrocketing liability insurance premiums; desperate shortages of paid and unpaid caregivers; inadequate provider reimbursements from Medicaid and Medicare; lagging demand for long-term care insurance and so on. The list of seemingly intractable problems could go on and on, far beyond any reader's patience with the enumeration. So what's wrong?

The answer is simple. For nearly forty years, our well-intentioned government has paid for nursing home care through Medicaid and Medicare. Conventional wisdom says people must be poor to get Medicaid and that Medicare "does not pay for long-term care." The truth is that most people who lack the cash flow to pay private nursing home rates do qualify for Medicaid nursing home benefits even though they may have several thousands of dollars per month in income. They aren't poor. They just have a cash flow problem.

Medicare, while stingy with nursing home benefits, does pay ten percent of the cost of nursing home care nationally and pays many billions for extended home health care benefits. Here's the nub of the issue. Government financing of nursing-home and home-health care has anesthetized the public to the risk and cost of long-term care, crowded out demand for private long-term care insurance and created an over-reliance on nursing home care despite the public's preference for non-institutional care. As America's Age Wave crests and starts to crash over the next two decades, our long-term care service delivery and financing system will continue to fail and, ultimately, collapse.

Unless we fix it, of course, but that is easier said than done. If excessive public financing and heavy-handed government administration are the primary causes of America's long-term care service delivery and financing problems, why doesn't the private sector, including the financiers (who supply the capital), the providers (who deliver the services), and the insurers (who enable consumers to transfer the risk) offer a better system and effectuate the change?

If long-term care's race for survival requires private capital, services and financing, why can't the private sector deliver those goods without leaning on the government so heavily for support? In other words, if the status quo in long-term care is unsatisfactory, why does it remain entrenched? Who benefits from things as they are? And how do the beneficiaries of stasis protect their interests?

Just as three groups comprise the private sector of long-term care (financiers, providers, and insurers), three groups make up the dominant public sector of the field as well. This "LTC Triumvirate" includes the Government, the Entitlement Lobby and several private-sector Enablers of public sector dominance. How do each of these groups benefit from the status quo? Why and how do they advocate more and more of the same policies which caused the problems in the first place?

Government, the first component of the LTC Triumvirate, includes both politicians and public administrators. Politicians have a very short time horizon. Winston Churchill said "Politicians think about the next election; statesmen think about the next generation." Unfortunately, America has a far greater supply of politicians than statesmen. The short-term interests of politicians are better served by promising voters immediate give-aways (such as a prescription drug program or tax credits for current caregivers) than by tackling the tougher challenges of the future (targeting Medicaid eligibility to the needy and providing tax incentives to encourage the purchase of private long-term care insurance.) That is why the center of gravity in public policy discussions about long-term care is nearly always on the side of increasing public benefits instead of encouraging private responsibility.

Similarly, public program administrators benefit by expanding their budgets and programs, not by reducing them. That is to say, they win by failure (which increases public dependency on their programs) and they lose by success (which reduces their client population.) Their primary challenge is to maintain and expand their power and influence while sustaining and growing the need for their services. Unlike the standard practice in a market economy, bureaucrats rarely benefit personally by providing a top quality product or service in a highly efficient and cost-effective manner. This is not to say that the ranks of politicians and public administrators do not include many highly dedicated, hard-working and sincerely idealistic people. They do. The problem is not the people, but rather the existing system's inherent tendencies and perverse incentives.

A second member of the LTC Triumvirate is the Entitlement Lobby. It includes advocacy groups, their members and beneficiaries and such think tanks and academics as are disposed to justify the groups' demands intellectually. Senior advocacy groups promote and pursue the "rights" of some people (the aging) to receive benefits provided by other people (taxpayers) through an enforcing intermediary (government). Advocacy groups almost never encourage personal responsibility and almost always champion publicly-financed programs. Their dependent populations usually include genuinely and innocently needy people who deserve everyone's concern and compassion. Unfortunately, the advocacy groups also promote the interests of a much wider and non-needy clientele who merely want something for nothing at others' expense.

Without well-published academics in foundation-backed think-tanks to endorse their causes, however, the advocates' grand plans for bigger, more expensive public programs might just wither away. Instead, numerous scholars eagerly reprise tired old justifications of the status quo as they continue to effuse ever-more-grandiose spending plans for the future. Again, however, the vocalized motives and intentions of individual Entitlement Lobbyists are usually above reproach. They just want to help people, even as they employ means that, albeit unintentionally, ultimately defeat their altruistic objectives.

The third component of the public sector's LTC Triumvirate, is actually comprised entirely of private sector actors. The Enablers include Medicaid estate planning attorneys, nursing home litigators and a minority of truly exploitative providers. Medicaid planners garner large fees to impoverish frail or infirm elders artificially for the purpose of qualifying them quickly (and without spending down) for the program's publicly financed nursing home benefits. Medicaid planning reduces the number of market-rate private payers in nursing homes and increases the number of low-pay welfare recipients they have to serve. A high Medicaid resident census--the national average is 70 percent--impedes nursing homes' ability to provide quality care by trained professional staff.

Consequently, a growing army of nursing home litigators, sometimes the very same lawyers who wangle welfare for their well-heeled clients in the first place, are taking advantage of the providers' dilemma by suing them aggressively for giving inadequate care. While every American is entitled to seek redress of grievances in court, something is fatally wrong with a publicly-financed system that makes institutionalized low reimbursement into a self-fulfilling prophecy of deficient care.

Finally, some long-term care providers put most of their energy into maximizing public reimbursements and seeking new government favors by hook or by crook. They spare little effort on finding and pursuing sources of private payers and revenue. Such short-sighted providers were so successful for so long taking advantage of the public funding programs that they now lack the will or the way to compete in the private marketplace.

Even these three kinds of Enablers, however, often express high moral purpose--sometimes very sanctimoniously--to justify their actions and policy positions. Can we blame them too severely for profiting from a government-supported system that rewards their legal, if ethically challenged, methods?

These three components of the LTC Triumvirate--The Government, The Entitlement Lobby and The Enablers--are well-represented in the academic and popular media. It is easy to see why the LTC Triumvirate leans toward support and expansion of the existing, publicly based financing system. If the private sector stakeholders in long-term care--the financiers, providers and insurers, let's call them "The Triathlon" for ease of reference--are ever to unleash the power of the marketplace to solve the problems with long-term care, they must communicate better, combine resources and mobilize to promote rational public policy. Imagine what could happen if the big investment firms, nursing home and assisted living chains and insurance companies mobilized to promote private financing of long-term care and to target Medicaid to the needy. LTC service delivery would be more profitable, investors would see better returns and the long-term care insurance market would explode. Even more important, however, with more people empowered to pay privately for long-term care, Medicaid and Medicare could afford to pay adequately for a wider range of higher quality long-term care services for a reduced census of people dependent on public assistance.

Query: Is it possible to forge an alliance of the best in the public sector with the best in the private sector and cut through these problems? Of course it is. But first we need to know how we got into this mess in the first place and why change is so difficult to achieve. How can almost everyone be right about the goals and well-intentioned about the means of improving long-term care and yet the dysfunctional status quo continues?

I've tried to provide the outlines of an answer in this article. But you can find the rest of the story, including a proposed solution to the problem, in the Center for Long-Term Care Financing's major reports: "LTC Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing Puzzle," "The Myth of Unaffordability: How Most Americans Should, Could and Would Buy Long-Term Care Insurance," and "The LTC Triathlon: Long-Term Care's Race for Survival," all three of which are available in .pdf format at .

Bottom line, America's long-term care service delivery and financing problems are not nearly as intractable as they seem. They are self-inflicted by well-intentioned but perversely counter-productive public policy. The current system rewards the Triumvirate (Government, the Entitlement Lobby and the Enablers) while creating insurmountable obstacles in the way of the Triathlon (the Financiers, Providers and Insurers) of long-term care. We need to balance the scales and unleash the power of the market on the challenge of long-term care.

Specifically, we should (1) reform Medicaid eligibility rules to target Medicaid to the genuinely needy and (2) pass strong incentives to encourage private long-term care insurance with genuine, above-the-line tax deductibility and a massive public education campaign. That's what the Center for Long-Term Care Financing is fighting for and we appreciate the support of anyone or any company that shares this goal.