Bullet: Alzheimer's Association
Shortsighted on LTC Financing
Wednesday, July 6, 2005
LTC Comment: The
Alzheimer's Association's public position on Medicaid reform and long-term care
financing is a classic example of how good intentions invite unintended
LTC BULLET: ALZHEIMER'S
ASSOCIATION SHORTSIGHTED ON LTC FINANCING
LTC Comment: The
Alzheimer's Association (AA) does a wonderful job of providing support,
research, education and advocacy on behalf of individuals and families stricken
by the disease. But when it comes
to public policy on the critical issue of long-term care financing, AA is way
off base. Here's the story.
As "LTC Bullets" readers know, Medicaid is the
principal payor of long-term care today, but Medicaid cannot possibly carry the
weight of long-term care financing in the future. The aging baby boom generation is just too big.
State Governors understand the problem.
They struggle to make budgetary ends meet while keeping up with
Medicaid's explosive growth. The National Governors Association recently proposed some
sensible ideas to save Medicaid for the genuinely needy and encourage others to
plan early and save, invest or insure for long-term care.
Read their policy paper at http://www.nga.org/cda/files/0506medicaid.pdf
when Governor Mike Huckabee of Arkansas and Governor Mark R. Warner of Virginia
testified before the House of Representatives' full Committee on Energy and
Commerce on June 15, 2005, members were highly attentive.
Listen to the webcast of this hearing titled "Medicaid Reform:
The National Governors Association's Bipartisan Roadmap," at http://energycommerce.house.gov/108/Hearings/06152005hearing1550/hearing.htm
Unfortunately, the Alzheimer's Association opposed much of
what the Governors proposed in a "Statement to the House Committee on Energy &
Commerce." Read it at http://www.alz.org/Advocacy/medicaidreform.asp
. Following are quotes from the
AA's position paper followed by our comments.
Comments on the Alzheimer's Association Position Paper
We have time. The long term care pressure on Medicaid comes in 15-20 years
when baby boomers begin to need long term care; in the short term growth in
demand for Medicaid long term care will be slow or negative.
Dead wrong. LTC has a
"long tail." We have to
build reserves now to be able to pay benefits later.
If we wait until the baby boom hits LTC, there's no hope to save the
safety net. Besides, in 15 or 20
years, we'll be struggling to fund Medicare and Social Security.
The most effective way to reduce Medicaid spending on long-term care is
to increase funding for Alzheimer research at the National Institutes of Health.
By delaying the onset and progress of Alzheimer’s, we can save $10
billion in annual Medicaid spending.
If we control the abuse of Medicaid eligibility, we could save $20
billion per year and provide practically unlimited funding for Alzheimer's
research. Then if the extra $10
billion savings from Alzheimer research does accrue, we could use it to improve
reimbursements, and hence quality, of care for all Medicaid dependents at all
levels of care. See "How to Save Medicaid $20 Billion Per Year AND
Improve the Program in the Process" at http://www.centerltc.com/pubs/howtosavemedicaid.pdf
Eliminate 1915(b) and (c) waivers and let states implement home and
community based services through state plan amendments – while maintaining
entitlement and access to quality nursing home care for those for need that
level of care.
Making Medicaid more attractive by offering HCBS before controlling the
eligibility hemorrhage would unleash the woodwork factor, increase Medicaid
estate planning, and undermine private insurance.
Fix eligibility first, however, and Medicaid will be able to pay
adequately for a broader ranges of services for fewer genuinely needy
recipients. See "The Realist's
Guide to Medicaid and Long-Term Care" at http://www.centerltc.com/realistsguide.pdf
Allow states to implement long term care partnership programs and provide
a targeted tax credit for purchase of long term care insurance that meet NAIC
standards in effect at time of purchase.
to encourage home owners to consider reverse mortgages to help meet their
retirement needs including but not limited to their long term care needs.
Great ideas, but they won't help significantly as long as Medicaid is
easily available without spending down and the home remains exempt.
Who buys insurance or taps their home equity for a risk and cost that
don't exist? Not many is the fact.
This is Economics 1A; really just common sense.
Current asset transfer rules already impose a heavy burden on an older
person applying for Medicaid, especially when that person has dementia.
Proposals to “look-back” even further or to change the start date of
the penalty period are most likely to harm those who truly do not have the
resources to pay for long term care.
Not true. Current rules are
easily circumvented by anyone who chooses to take advantage of Medicaid.
Responsible people who do pay their own way are punished by the current
system in that they pay half again as much for care provided free or subsidized
to people who choose to use Medicaid.
We agree with NGA that a person should be able to pass on a certain
amount of assets without penalty, and that protections should be in place for
vulnerable persons including those with dementia.
As long as Medicaid remains "inheritance insurance" for boomer
heirs, Medicaid will be unable to pay adequately for quality care at any level:
home care, assisted living, or nursing home care and the boomers are
unlikely to plan and insure for their own long-term care after seeing their
parents covered by Medicaid and their inheritances protected.
Congress should proceed cautiously and consult with those who work most
closely with older people who are trying to manage their finances to meet their
needs within the rules that Congress has already established.
Association opposes any additional requirements for family contributions as a
precondition of Medicaid eligibility.
Ironically, the Alzheimer's Association's position is inimical to the
interests of their members and their families because it guarantees inadequate
financing for long-term care in the future.
Older Americans, even those of relatively modest means, make decisions
every day about the use of their resources – tithing to their churches,
contributing to charity, assisting grandchildren with college education, helping
adult children who face a financial crunch because of a job change or a health
emergency. Those decisions are not
made with an eye toward Medicaid but represent deeply held values about family
and civic responsibility. Yet each
of these gifts is considered an illegal transfer of assets if made within the
so-called “look back” period for Medicaid eligibility.
In addition, people with dementia and many other vulnerable elderly may
be victims of fraudulent appeals or otherwise make ill-advised gifts that
jeopardize their Medicaid eligibility.
LTC COMMENT: Nothing in Medicaid rules discourages any of these gifts. All Medicaid says is that people cannot give away their wealth without penalty and expect the public welfare program to pay their long-term care bills. Bottom line, the rule is this: give away anything you want to anyone you like for any purpose you wish, but don't expect tax payers to pay the bill for your generosity. Exempting such gifts from Medicaid eligibility creates a perverse incentive and leads to the kind of recommendations Medicaid planners frequently make such as encouraging people to throw away their money on practically anything to avoid "giving it to a nursing home." How could we possibly expect people to plan, save and insure responsibly for long-term care when the system encourages them to give away everything they own in order to get free or subsidized long-term care?