LTC Bullet: Long-Term Care in the Crosshairs

Wednesday, March 19, 2003


LTC Comment: An important objective of the Center for Long-Term Care Financing is to increase understanding and reduce mistrust between the insurers and providers of long-term care. Read McKnight's Long-Term Care News' interview with Center President Steve Moses after the ***news***.

*** REGISTER NOW for the full-day LTC GRADUATE SEMINAR to be presented by Steve Moses in New York City on March 25, 2003. It's not too late to hold your seat for this highly-acclaimed program, but please call or email Amy McDougall ASAP at 425-377-9500 or . ***

*** WHERE ARE THEY NOW? Center for LTC Financing Co-Founder and Past Executive Director DAVID ROSENFELD is now on board with Jay Grant & Associates, P.S., a boutique firm offering counsel for Congressional issues and state and federal regulatory compliance matters. JG&A's services include: Congressional lobbying, strategic planning, information services, regulatory compliance, association member services, written and oral testimony, Washington conferences, grass roots materials and NAIC representation. In fact, David just returned from the NAIC Spring meeting in Atlanta where the LTC Working Group reconvened after a two year hiatus. He'll be in DC March 18-21 for high level meetings with Administration, Congressional and trade group leaders. Check out David's new home at and , a service of JG&A. You can reach David at and 202-595-2029 x221. ***

*** "NEW LONG-TERM CARE INSURANCE COURSE OFFERED BY THE AMERICAN COLLEGE. Bryn Mawr, PA, Mar. 6 - The American College, of Bryn Mawr, Pennsylvania, is now offering a new course in Long-Term Care (LTC) insurance. The course explains the complexities of the product, how LTC insurance is uniquely designed to meet consumers' needs, and how to market and sell LTC insurance. Developing the appropriate sales skills is an important part of the new course. A 10-step selling process, introduced in other LUTC courses, shows students how to select, approach, and work with prospects. The importance of fact-finding and field underwriting in making the LTC insurance sale is emphasized. In addition, the course explains how to customize the LTC insurance policy to meet prospects' objectives. Other course content includes: How to market LTC insurance in three different age-based markets; an analysis of LTC insurance products and policy features; information on conducting seminars; an examination of the relationship between the need for LTC insurance and the need for comprehensive financial services; and how to build an LTC insurance practice. " Source: INSURANCE-LETTER for Tuesday, March 9, 2003. To subscribe send an e-mail to with the word "subscribe," or call 888.282.1765, or subscribe online at .

*** Our latest donor-only zone content includes:

A NEW "VIRTUAL VISIT" TO THE 16TH ANNUAL LTC INSURANCE CONFERENCE RECENTLY HELD IN SAN ANTONIO, TX. Check it out at . You'll find a comparison between the San Antonio conference and the Society of Actuaries' conference in Las Vegas, summaries of selected general and breakout sessions, and 17 more pictures of and interviews with the movers and shakers of long-term care insurance.

LTC E-Alert #3-019--100 Tips for Healthy Aging
The LTC Reader #3-011--The LTC Liability Crisis and How it Affects LTCI
The LTC Data Base #3-007--Sex Data and LTCI
LTC E-Alert #3-020--MediCARE Planning?


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 donor zone content and the archives: . If you do not already qualify for The Zone, mail your tax-deductible contribution of $150 or more to the Center for Long-Term Care Financing, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109. Then email your preferred user name and password (up to 10 characters each). You can also contribute online by credit card or direct withdrawal at . ***


McKnight's Long-Term Care News describes itself as "the leading newsmagazine for those providing quality long-term care throughout the continuum of care, including skilled nursing care, subacute care, assisted living, seniors housing, adult day care and home care. First published in 1980 under the name Today's Nursing Home, the magazine reports on external news, events and trends that affect the internal operations of long-term care providers. McKnight's Long-Term Care News is the market's most credible and trusted resource for long-term care news and information. Today, the magazine reaches a readership of more than 50,000 long-term care decision-makers. McKnight's Long-Term Care News is published by Haymarket Media."

We encourage LTC Bullets readers to subscribe to the excellent McKnight's Long-Term Care News publication as a way to follow the challenges and rapid changes facing America's long-term care service delivery system. Annual subscriptions are $44.95. To subscribe, call (800) 558-1703.

McKnight's Long-Term Care News interviewed Stephen Moses for its "People & Opinions" feature in the magazine's February 10, 2003 issue. We thank McKnight's for permission to republish. Here's the interview minus the pics:

LTC funding in the crosshairs

Bio: Stephen A. Moses, President, Center for Long-Term Care Financing

Moses is a prolific author and lecturer on Medicaid, Medicare and other long-term care funding issues. He is a strong endorser of privately financed long-term care options, including long-term care insurance.


The struggle to get the long-term care community weaned off of so much government financing continues for one of the strongest proponents of long-term care insurance. But it's a battle being waged even as the Center for Long-Term Care Financing struggles for funding of its own.

McKnight's Long-Term Care News: You've said that things are getting so bad with long-term care funding, politicians might actually be considering politically sensitive solutions to get improvements. What do you mean?

MOSES: When the economy is good, welfare rolls are down, and tax receipts are up, and politicians and bureaucrats would rather cover up long-term Medicaid LTC funding problems by paying whatever it takes in the short term rather than confronting the underlying hemorrhage in eligibility. When the economy turns bad, the first place they cut is providers, then benefits. When the economy gets even worse, they finally start to confront the real issue:

The last time the economy went into recession and Medicaid nursing home costs were escalating at double-digit rates, Congress and President Clinton (1) closed some eligibility loopholes and mandated estate recoveries, (2) made it a crime to transfer assets to qualify for Medicaid and (3) repealed the criminalization of Medicaid asset transfers and replaced it with criminalization of Medicaid planning advice.

None of these measures succeeded. States didn't enforce tougher eligibility rules or Medicaid estate recovery, nor did the federal government compel them to do so. Criminalization of asset transfers was repealed and criminalization of Medicaid planning advice was deemed unconstitutional. We're back where we were a decade ago.

McKnight's Long-Term Care News: So what should be done?

MOSES: This time we need to get Medicaid reform right. We need a "kinder and gentler" approach. Instead of punitive, after-the-fact measures, we should implement "LTC Choice," i.e., a line of credit for seniors who are "house rich, but cash poor."

Recognize that seniors with substantial income (which rarely interferes with Medicaid nursing home eligibility) and large exempt assets (such as a home, business, car, etc. of unlimited value) are not poor. They just have a cash flow problem.

Instead of drawing them into Medicaid nursing homes with eligibility exemptions and loopholes, why not supplement their income so they can purchase quality LTC in the private marketplace? The loan will be fully collateralized by their estates and repayable only after the death of their spouse and other exempt dependent relatives.

With a real spend down requirement in effect, most people will buy long-term care insurance to avoid spending down. Those who don't will get better access to care by being private payers, and Medicaid will have more resources to provide better care across a wider spectrum of services for the genuinely needy.

McKnight's Long-Term Care News: Hasn't long-term care funding always been a major problem, or does it just seem that way?

MOSES: Long-term care funding has never been a major issue for most Americans. Ever since Medicaid and Medicare were implemented in 1965, the government has paid for most long-term home care and nursing home care in the United States. That was a bonanza for nursing homes until Uncle Sam started cutting back in the 1990's and then became super-stingy since BBA '97.

Public financing had the effect of creating an institutional bias in America's long-term care service delivery system and it convinced the public that the cost of long-term care is not a risk they need to plan or insure for in advance.

That is why home and community services, including assisted living, did not develop until a decade ago. It is why LTC insurance has still only penetrated a small proportion of the senior market and has tapped practically none of the baby boomer market.

McKnight's Long-Term Care News: You speak often of people "gaming" the system through financial planners, asset hiding, etc. Realistically, how can that ever be stopped, or at least improved to the benefit of LTC providers?

MOSES: Egregious "Medicaid estate planning" by well-to-do seniors is a problem, but it is only the tip of the iceberg. The real issue is that the average senior, in terms of income and assets, walks right onto Medicaid when he or she needs nursing home care.

Despite the conventional wisdom that one must be "poor" to qualify for Medicaid, the truth is that all you need is a "cash flow" problem. If you cannot afford private nursing home and other medical expenses not covered by Medicare, you'll be eligible for Medicaid anywhere in the country (although you'll need a Miller income trust in 20 "income cap" states.)

Assets are no problem as long as they are held in exempt form, such as a home, a business or an automobile. Estate recovery is rarely aggressively enforced and is easy to evade with legal assistance.

McKnight's Long-Term Care News: Amid all the negativity, what would you say has been the brightest point for long-term care in recent years?

MOSES: As government financing of nursing home care has lead to bankruptcies, quality problems, staff shortages, tort liability, and dismal public relations, people have come to realize that access to quality long-term care at the most appropriate level of care requires that one must be able to pay privately. This realization has led to an increasing variety of service delivery modalities, such as adult day care, chore services, private duty nursing, and assisted living.

The public has become willing to spend its own money for long-term care they prefer even though nursing home care remains nearly a free good through Medicaid.

The same process has begun to create a market for LTC insurance.

Sadly, the evolution toward private financing of long-term care is moving too slowly to avoid the collapse of the government-financed, nursing home based system that still struggles on. That's why we need LTC Choice now!

McKnight's Long-Term Care News: How do you, as one of the respected thinkers in long-term care financing circles, deal with the perception that the Center - and therefore you - are simply pushing long-term care insurance?

MOSES: The Center's mission is to ensure access to quality long-term care for all Americans. We pursue that mission by encouraging public policy that targets scarce public LTC resources to the needy and provides incentives for everyone else to pay privately through home equity conversion or long-term care insurance.

The Center tries to apply the self-interest and profit motive of the private sector to relieve the fiscal burden of LTC on the public sector and improve long-term care for the needy. My professional roots are deep in an 18-year career with the U.S. Government where I fought to preserve Medicaid as a viable safety net for the poor. That is the goal.

Rational public long-term care policy, home equity conversion, and long-term care insurance are the means. If there are profits to be made by LTC insurers and providers as they solve a major national social problem, why not? Isn't that what America is about?

McKnight's Long-Term Care News: Many are pinning big hopes on the federal government's new long-term care insurance program as a way to get the product more widely accepted everywhere. What have we learned from it so far?

MOSES: The main message of the federal LTC insurance program is that the government will not pay for long-term care in the future as it has in the past. By all accounts, the program has been successful in educating federal employees and their dependents and in helping to spread the word to others including those not eligible for the federal program.

The bottom line, however, is people don't fail to buy LTC insurance because they are not educated or because the product has not been genuinely deductible. They don't buy it because they don't think they need it. They don't think they need it because the government has been giving it away for 37 years.

Until we control Medicaid nursing home eligibility and create incentives for people to spend their own money (or an insurer's money) for long-term care, America's long-term care service delivery and financing system will continue its long, slow slide into collapse.

McKnight's Long-Term Care News: You've written that a "major obstacle to LTCI market growth is the insurance industry's denial regarding some critical long-term care marketplace realities." Can you explain?

MOSES: Traditionally, long-term care insurers have sold their product as asset protection. "Buy this product, Mrs. Jones, or you could lose your life savings." They have evaded the reality that most LTC is paid by government and that widespread catastrophic spend down is a myth.

Some insurers actually object to my pointing out the reality of how Medicaid nursing home eligibility works on the grounds that the public may learn how to qualify for benefits. Get a clue!

The public is not nearly as stupid as the experts think. They don't know who pays for long-term care. They don't care whether it's Medicaid, Medicare or Santa Claus. They just know somebody must pay for LTC, because you don't often see Alzheimer's patients dying in the gutter. So, it's not the public that is in denial, but the insurance industry.

McKnight's Long-Term Care News: What is your take on the "hot" issue in the LTCi industry right now - rate stability and whether companies are collecting enough in premiums to cover claims?

MOSES: Rate stability, the worry that premiums may have to go up in the future to compensate for underpricing LTC insurance originally, is a genuine concern. But the insurance industry and the National Association of Insurance Commissioners have taken responsible measures to confront the problem.

Consumers who buy from quality companies with high financial ratings and who avoid bargain-basement premiums should be safe. But safety is relative.

Compared to "going bare" and hoping the government will pay for your long-term care, private insurance is a solid fortress. At least you have a contract enforceable in a court of law that guarantees explicit benefits under objective conditions.

With public financing, you have no legal recourse or protection against increases in premiums (payroll taxes), decreases in benefits (program cutbacks), or the imposition of means tests (welfarization).

McKnight's Long-Term Care News: What does it mean for providers if an initial wave of new LTCi buyers does jump aboard but then buys low-end policies (most affordable), which arguably won't cover much skilled nursing care?

MOSES: It makes no difference how much LTC insurance people have if you implement LTC Choice so that people who are now exempting or divesting large assets to qualify for Medicaid must instead spend down the value of their assets for care in the private market. Once LTC Choice is in place, however, no one who is medically and financially qualified will fail to insure fully for long-term care; people with assets will be private payers until the value of the assets are consumed (no one will be forced to sell a home and the lines or credit will be repaid only from estates); and Medicaid will have such a smaller clientele, so that it should be able to pay market reimbursement rates. Providers win at every level.

McKnight's Long-Term Care News: The Center has had an illustrious, if brief, life yet lack of funding is seriously threatening its existence. How do you ideally fix the situation?

MOSES: The Center for Long-Term Care Financing is almost five years old.

We are a 501(c)(3) charitable, nonprofit, nonpartisan organization, for which funding is always a problem.

We invite the insurance and long-term care provider industries to support the Center because they have the most to gain commercially. The objective, however, is to relieve the fiscal burden on publicly financed long-term care.

Unfortunately, neither the government nor senior advocacy organizations are rich sources of financing for an organization that advocates a heavier reliance on private rather than public financing of long-term care. Tax-deductible contributions to the Center for Long-Term Care Financing are welcome and may be sent to 2212 Queen Anne Avenue North, #110, Seattle, WA 98109. Online contributions may be made at