LTC Bullet: New York Medicaid Planners Are Coming Around
Thursday, April 14, 2005
LTC Comment: After two decades of diverting Medicaid's scarce welfare resources to their affluent clients, New York's Medicaid estate planning bar finally sees the fiscal handwriting on the wall. More after the ***news.***
*** MULTI-LIFE LTCI BOOT CAMP takes place May 1-3 at the Hilton Hotel at the Kansas City Airport. Jesse Slome informs us that the registration fee is $379. But, get this, Jesse says you can save $50 off the price by writing "Center LTC" in the "Discount Code" box when registering. If you have questions, go to http://www.ltcsales.com/multilife/ or call (888) 599-5997. ***
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The LTC Data Update #5-012--MMMI Publishes Profiles of Aging Demographics (Another valuable contribution from the MetLife Mature Market Institute.)
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LTC BULLET: NEW YORK MEDICAID PLANNERS ARE COMING AROUND
LTC Comment: Medicaid's goose--the one that lays the golden eggs for Medicaid planners--is cooked. As we've predicted for two decades, the welfare program's ability to fund long-term care for the poor, middle class, AND affluent is ending, right on schedule. The onset of boomer aging is the death knell.
So, faced with a brick wall of fiscal reality, New York's Medicaid planning bar has finally embraced the idea of targeting the program's benefits to those who need them most. So far they've only taken a baby step in that direction, but it is a start. So let's give credit whenever and to whomever it is due. Here's the story.
First, have a look at the prosaically titled "Report of the Long-Term Care Reform Committee" published by the New York State Bar Association Elder Law Section in February 2005. You can find the 92-pager at http://www.nysba.org/Content/ContentGroups/Kathy_Plogs_Section_info/elderltcreport2column.pdf . We want to draw your attention in particular to the following excerpt from the report's Executive Summary:
"Proposal for a New York State Long-Term Care 'Compact'
"To encourage focused discussion on options that would avoid harm to New York State residents who must turn to the government for assistance, yet also curb the expenses of the Medicaid program, . . . this Report proposes a 'Compact' in which New York State and its chronically ill citizens would agree to share the risks of paying for long-term care. The key elements of the Compact:
o Rather than be required to divest themselves of virtually all of their assets before qualifying for Medicaid, individuals diagnosed as chronically ill would become Compact participants by pledging, at their option, either a set maximum amount (a figure such as $300,000 based on the average cost for three years of nursing home care) or up to one-half of their assets, whichever was smaller, to pay for their long-term care needs.
o Participants would then pay for their own medical and long-term care (either for home health aides or for care in a nursing home) until the amount spent totaled their pledge. They would be allowed to keep all of their income while paying privately for their care. After spending the asset amount pledged, they would have two options.
o Under the first option, they would qualify for standard Medicaid coverage and be required to provide their income, minus the standard allowances, to Medicaid.
o Under the second option, they could elect to remain private patients but would qualify for Medicaid to subsidize their long-term care expenses at a rate equal to 90% of Medicaid's normal rates. They would pay 25% of their income to Medicaid from that point onward. The remaining 75% and assets they retained would be used to pay the balance of their expenses for long-term care and all other related medical expenses (Medicaid would pay only for long-term care).
o For Compact members, the assets they would retain (and for those who took the second option, the remaining 75% of their income) would provide resources to pay for needs such as occasional private duty nurses or assistance from geriatric care managers that are not available from Medicaid." (pps. 8-9)
LTC Comment: Now, let's see if we have this right. Instead of artificially impoverishing their prosperous clients down to Medicaid's current (already generous, especially in New York) income and asset limits, the elder law bar proposes that people should pay the first $300,000 (or half their assets whichever is smaller) toward their long-term care costs before the welfare-financed free ride begins. Well, that is a step in the right direction, but we still have some concerns. For example:
o Isn't this tantamount to admitting, as they've always denied in the past, that Medicaid planners routinely divest extremely large sums of money to qualify people for the current program?
o Why should Medicaid pay the long-term care costs of multi-millionaires just because they agree to pay the first three years or $300,000 of their care? They could have purchased quality private LTC insurance with a fraction of the interest on that amount of money.
o What would it cost to administer this complicated, convoluted new "LTC Compact"?
o Can we expect Medicaid planners to respect the proposed "LTC Compact" any more than they have respected existing Medicaid income and asset limits? Or will they continue to end run all the rules and slip through every loophole in the law?
o What about the infamous "spousal refusal" gambit allowed in New York whereby a Medicaid recipient's wife or husband can "just say no" to following the spend down rules and keep all the couple's money for herself or himself?
o How do federal taxpayers in Nebraska, California, and the rest of the country feel about paying half the cost (the federal "match") for this new Medicaid entitlement in New York?
But let's set these concerns aside for a moment and ask: Where in the world did this proposal come from? It's just not like the elder law bar to expect people to take any personal responsibility for their long-term care costs. In fact, the official recommendation of the National Academy of Elder Law Attorneys (NAELA is the Medicaid planners' trade association and lobby group) is to attach LTC to Medicare. That's an idea we've compared to adding deck chairs to the Titanic after the incident with the iceberg. No, this "LTC Compact" proposal is a major departure from the elder law profession's usual modus operandi.
So, it's no surprise that when you check out the details of the proposal in Chapter 6, you find that the author of the "LTC Compact" is a longtime advocate of private long-term care insurance and an employee of an insurance company that markets that product. Gail Holubinka has a long pedigree in the field having set up and managed the New York Long-Term Care Partnership program and having worked in many other capacities dedicated to improving public and private financing of long-term care. So "Hail to Gail" for working constructively with the elder law bar and getting them to move, however slightly, in the direction of more responsible long-term care public policy.
Here's how Ms. Holubinka introduces the "LTC Compact" proposal in Chapter 6 of the elder law report:
"The subject of this proposal is financing-not services. There are many issues related to the development of better and more efficient long-term care services, but without a viable payment source, concerns about the quality of service are moot.
"At present, 80% of long-term care expenses in New York State are paid by Medicaid. The goal is to privatize as much of that expense as possible. Privatization of up-front coverage would address a dilemma that has faced public officials for years-how to avoid harm to the truly needy while controlling the costs of long-term care." (p. 67)
Hear, hear! We couldn't have said it better ourselves. But we don't need this unmanageable "LTC Compact" to fix long-term care. All we need to do is target Medicaid to the genuinely needy, as it was always supposed to operate anyway. With their wealth, including home equity, really at risk, most people will buy insurance, and those who don't will use their home equity through a reverse mortgage to pay for LTC until they become truly needy and rightfully eligible for public assistance. That simple, cost-saving solution will pour new funds into the fiscally starved LTC delivery system, relieve taxpayers and Medicaid, empower all seniors to obtain better and more varied care, and set us on a course to deal responsibly with long-term care for aging baby boomers.
For details, see "The Realist's Guide to Medicaid and Long-Term Care" at http://www.centerltc.org/realistsguide.pdf and "How to Save Medicaid $20 Billion Per Year AND Improve the Program in the Process" at http://www.centerltc.org/pubs/howtosavemedicaid.pdf .