The Latest   l   Articles, Speeches & Reports   l   LTC Bullets Newsletters

Media   l   LTC Graduate Seminar   l   Members-Only Zone

  Search   l   About Us   l   Contact Us   l   Home

* Subscribe to the Center *

LTC Bullet: Is the Jig Up for Medicaid Planning?

Monday, December 20, 2004


LTC Comment: Individuals and states have manipulated Medicaid to maximize benefits, but Medicaid planning at both levels is under attack. More after the ***news.***

*** PLEASE SUPPORT THE CENTER. The Center for Long-Term Care Financing is a 501c3 charitable, nonprofit organization that relies on private donations. Your tax-deductible contribution to the Center does much more than gain access to our popular donor-only publications and website Zone. It helps support our fight for rational long-term care policy. The Center's mission is to ensure quality long-term care for all Americans. We pursue that mission by advocating public policy to target Medicaid to the genuinely needy and to encourage everyone who is young, healthy and affluent enough to plan early and save, invest or insure for long-term care. You can support the Center for Long-Term Care Financing by sending a check (at least $150 annually or $12.50 monthly for donor-zone access but any amount helps) to 2212 Queen Anne Avenue North, #110, Seattle, Washington 98109 or contribute online at . Thanks for your support. ***

*** LTC GRADUATE SEMINAR DETAILS. Everything you need to know about this superior training course is at for our January 6 seminar in Pasadena. For January 21 in Minneapolis, check out . For January 27 in Orlando, go to . Center President Steve Moses says: "We're very proud of the wonderful feedback we've received about this full-day advanced training class for senior financial advisors. Check out the glowing testimonials at and then join us for the program at your earliest opportunity. ***

*** LATEST DONOR-ONLY ZONE CONTENT: Here's the latest Zone content followed by instructions on how to subscribe so you can receive these critical epistles daily by email.

LTC E-Alert #4-065--Spread the Good Word (Here's how to alert your state and federal legislators to the Center's two new reports.)

The LTC Reader #4-052--Kudos to Bankers Life (Communication between generations about long-term care planning is critical, but disappointingly weak.)

Don't miss our "virtual visits" to major LTC industry conferences in The Zone. You'll find our comparison of the conferences, session summaries, interviews and pictures at .

Individual donors of $150 or more and corporate donors to the Center for Long-Term Care Financing receive our daily email LTC Bullets, LTC E-Alerts, LTC Readers, and LTC Data Updates for a full year. You'll also get access to the donor-only zone where these publications are archived along with other donor-only features. 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 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 . ***


LTC Comment: Two Times articles today--one in the Seattle Times, the other in the New York Times--suggest days are numbered for Medicaid planning by individuals and states.

Liz Taylor's "Growing Older" column in today's Seattle Times is titled "Alarming Medicaid Report Should Keep Us, Governor, Lawmakers Awake at Night." She refers to the Center for Long-Term Care Financing's latest study, published December 7, 2004: "What We Don't Know About Medicaid and Long-Term Care is Hurting Washington State."

Following are some excerpts from Ms. Taylor's column. Read the full piece online at:

". . . Growing older and needing care are the twin causes for huge numbers of formerly affluent older folks to use the ultimate of safety nets - welfare. Why? Because, not having planned how they'll pay for their care someday, they end up on Medicaid (welfare) to cover these costs.

"Now a report - just out - gives us the grim picture, and it's a wake-up call for every legislator heading to Olympia next month - and you, the voters and (many of the same people) potential users of Medicaid.

"'What We Don't Know About Medicaid and Long-Term Care is Hurting Washington State,' is a short (21 pages), easy-to-read report that should keep each of us awake at night. Authored by Steve Moses of the Center for Long-Term Care Financing in Seattle, it offers 'a tree-top-level analysis of long-term care in Washington and proposes some tough questions that need to be asked and answered as soon as possible.' . . .

"[W]ith the right help (from elder-law attorneys and other 'Medicaid advisers'), affluent older people are being shown how to qualify for Medicaid's 'free' care by sheltering or transferring their wealth. The report estimates that the average person in Seattle who engages in these practices has a home owned free and clear worth $250,000 to $400,000 plus $150,000-$200,000 in additional assets, plus income of $2,000 to $2,500 a month.

. . .

"As budget deficits combine with a skyrocketing increase of older people needing care, something's gotta go. So far, the victims are quality of care (Medicaid recipients have long had the poorest quality and fewest choices of care) and those who are truly poor. A study from the University of Washington shows that, as state coffers got smaller in 2003, 20,615 people - primarily children - lost Medicaid health coverage between April and December.

"Excuse me? While older people with half a million dollars in assets receive free nursing-home and home care with my tax dollars, poor children are losing basic health insurance? There's something fundamentally wrong with this picture.

"So what can we do? The report offers numerous possibilities. The key, in my book, is basic: Each of us needs to wake up and realize we're all 'aging rapidly and dying slowly,' as the report says - and prepare now for our future needs. Long-term care insurance and reverse mortgages are options that responsible people need to explore.

"And our legislators need to act - in a host of ways that the report outlines.

"To see the report (available online only), go to ."

LTC Comment: Liz Taylor's "Growing Older" column runs Mondays in the Northwest Life section of the Seattle Times. Ms. Taylor is a specialist on aging and long-term care. She consults and teaches workshops on how to plan for one's aging - and aging parents. She can be reached at or write to P.O. Box 11601, Bainbridge Island, WA 98110. All of her columns are available at .

Medicaid planning is not just affluent seniors and their families manipulating the income and asset rules to obtain subsidized long-term care benefits. Medicaid planning has another dimension as well. States use sophisticated methods to leverage up revenue from their "FMAP" or Federal Medical Assistance Percentage. According to today's New York Times, the Bush Administration is taking aim at those practices as well.

Following are excerpts from Robert Pear, "Administration Looks to Curb Growth of Medicaid Spending," New York Times, December 20, 2004, .

"Federal officials are sending auditors to state capitals across the country to investigate techniques used by states to shift hundreds of millions of dollars in Medicaid costs to the federal government.

"Also, under a proposed federal rule, the Bush administration will require states to prepare annual estimates of total improper payments and calculate payment error rates for Medicaid and the State Children's Health Insurance Program. States will have to identify the cause of each error, address it and recover any overpayments to health care providers.

"The moves come as the administration is considering a wide range of other new initiatives to curb the growth of Medicaid spending, crack down on improper payments and help states save money by restricting eligibility and benefits. . . .

"Lawmakers have talked of overhauling Medicaid for a decade, but a confluence of forces has added new urgency to the debate, which will begin in earnest when Congress convenes next month.

"Medicaid spending shot up 63 percent in the last five years. With more than 50 million beneficiaries and more than $300 billion a year in combined federal and state outlays, Medicaid is now bigger than Medicare. For prescription drugs alone, Medicaid spending soared to $34 billion in 2003, from $13.6 billion in 1998.

"Mr. Bush has vowed to cut the federal budget deficit by half in five years, and Republican leaders in Congress say that goal will be virtually impossible without touching Medicaid. . . .

"The growth of Medicaid has outstripped the growth of state revenues and is putting pressure on other state programs. This year, for the first time, Medicaid was a larger component of state spending than elementary and secondary education combined, the governors association said.

"Court decisions have upheld the rights of Medicaid recipients to sue for the denial of benefits, limiting the options for state officials who want to cut costs.

"'When we try to curb expenses, we inevitably get sued in federal court, and we always lose,' [Arkansas Governor] Mr. Huckabee said in an interview. . . .

"In examining how states may be shifting costs to the federal government, the Bush administration contends, for example, that Massachusetts improperly obtained more than $580 million in federal Medicaid money without paying its share. Gov. Mitt Romney, a Republican, met recently with Andrew H. Card Jr., the White House chief of staff, to defend the state's method of financing. . . .

"Medicaid is now an entitlement, guaranteed to anyone who meets the federal and state eligibility criteria.

"In 1995, Congress passed a bill to end the individual entitlement and let each state devise its own program with a lump sum of federal money. Lobbying for that proposal, [HHS nominee] Mr. Leavitt, who was then chairman of the Republican Governors Association, said, 'We are unanimously opposed to inclusion of individual entitlements' in the Medicaid bill. The bill was part of a deficit-reduction measure vetoed by President Bill Clinton. . . ."

LTC Comment: A wag once said "Trends that can't continue, won't." The explosive growth of Medicaid cannot continue. So it won't. The only question is whether the entitlement program will be allowed to implode or whether responsible public policy will reform and save it. The "end game" for Medicaid planning has begun, just as we've suggested it would sooner or later in this space many times. Watch for responsible long-term care planning through private insurance and home equity conversion to emerge as preferred alternatives for middle and upper-middle class people. Watch for Medicaid to return gradually to its original role as a safety net for the poor. Perseverance pays!