LTC Bullet:  Sound Solutions for Long-Term Care

Wednesday, August 24, 2005 

Washington, DC-- 

LTC Comment:  When it comes to public policy pronouncements from interest groups in Washington, DC, we seldom see any that get it as right as this one.  More after the ***news.*** 

*** DON'T MISS THE GREAT DEBATE AND FREE LUNCH.  Vincent Russo (a well-known New York elder law attorney and Medicaid planner) and Steve Moses (a staunch advocate of private LTC financing alternatives) will "mix it up" in a debate September 7 at the Cato Institute in Washington, DC.  With National Health Policy Reporter Ceci Connolly (invited) moderating and Cato's Health Policy Studies Director Michael Cannon commenting, this is an event you won't want to miss.  Space is limited (150 seats with some overflow capacity) and filling fast so register soon at .  You can also register by e-mailing, faxing (202) 371-0841, or calling (202) 789-5229.  Cato Policy Forums and luncheons are free of charge.  If you absolutely, positively can't attend in person, be sure to watch the webcast of this stimulating debate either live or later in Cato's archives at . *** 

*** STEVE MOSES'S "LTC EMBED" REPORTS from the policy front in Washington, DC will start again soon.  We occasionally summarize these reports on the "Moses LTC Blog" at , but to get all the nitty gritty details, you must be a member of the Center for Long-Term Care Reform with a subscription to our daily LTC E-Alerts.  Membership is easy to arrange.  Just call or email Damon at 206-283-7036 or .  Tell him you'd like to join and he'll get you a user name, password, access to our "Members Only" website zone, and a subscription to the LTC E-Alerts WHILE your check is in the mail.  Alternatively, you can join online and pay the annual dues of $150 by credit card at .  Become part of the solution, join the Center for Long-Term Care Reform today. *** 



LTC Comment:  Having spent the better part of the past four months discussing the issue of Medicaid and long-term care financing with dozens of interested parties in Washington, DC, we've rarely found so thoughtful an analysis and set of recommendations than those that follow.  

Heavily excerpted in the interest of brevity, these quotes come from written testimony submitted by Hal Daub, President and CEO of the American Health Care Association (AHCA) & The National Center for Assisted Living (NCAL), for the U.S. Senate Special Committee on Aging hearing on July 20 , 2005 titled "Sound Policy, Smart Solutions: Saving Money in Medicaid."  The full text of the testimony can be found at

If your organization or association has a carefully articulated point of view on Medicaid and long-term care financing that you would like to have evaluated and critiqued by the Center for Long-Term Care Reform, please send it to .  Fair warning, however, we can't cover every one for publication and our reviews are not always complimentary.  See for example "LTC Bullet:  Alzheimer's Association Shortsighted on LTC Financing," published Wednesday, July 6, 2005, at  

Now, here are selected excerpts from the testimony referenced above before Senate Aging. 

". . .  In evaluating the means, methods, and concepts we can employ to save Medicaid resources - and to use them in the manner intended for our most vulnerable citizens - we see three primary areas of opportunity:  Medicaid estate planning, tax incentives to encourage the purchase of long term care insurance, and home equity conversion concepts.  

"Medicaid Estate Planning  

"Medicaid was never intended to become the nation's primary long term care financing program and is not sustainable if the baby boom generation uses it as such.  While we must preserve Medicaid as a safety net program, we must also take steps to encourage people who are able to otherwise fund their own long term care.  

"Medicaid is a means-tested public assistance program.  However, the eligibility rules and the statutory prohibition on asset transfer have not apparently achieved the desired end of care for the truly eligible for at least two major reasons:  first, the prohibition itself is not adequate; and, second, the apparent proliferation of Medicaid estate planning techniques that circumvent the prohibition.  

"The situation results in the inappropriate use of state Medicaid funds for individuals who should not qualify for such public assistance and the concomitant lack of funds for appropriate reimbursement to providers for care of the truly needy.  Thus, both the state and Medicaid providers such as nursing facilities are negatively impacted. . . . 

"AHCA/NCAL supports additional policy and efforts that both help states retain Medicaid funds for the truly needy and help providers to receive reimbursement for care that has been provided. . . . 

"Tax Incentives to Encourage the Purchase of Long Term Care Insurance 

"In recent congressional sessions, legislative efforts to expand the utilization of insurance through tax incentives have found growing support.  In addition to tax credits, AHCA/NCAL has supported an 'above-the-line' deduction to make the deduction available to a maximum number of Americans.  

"We continue to support such measures today but recognize that the cost to the federal government has been a hurdle for congressional passage of the legislation.  . . .  Such solutions must allow the nation and its citizens' to move beyond today's pay-as-you-go financing system to one that encourages, supports, and protects individuals who choose to plan for their own long term care needs through private insurance and other financial means, while preserving Medicaid as a safety net program. 

"Home Equity Conversion and Other Resources 

"Other proposals being advanced involve home equity conversion, long term care annuities, and inclusion of long term care policies in cafeteria plans.  While encouraging citizens to utilize long term care insurance alone won't save the Medicaid program from collapse - these and family caregiver exemptions and credits are all elements that could be combined with the Long Term Care Partnership Plan into a comprehensive national long term care policy.  

"Home equity conversions such as reverse mortgages are particularly intriguing.  According to the National Council on the Aging, 48% of America's 13.2 million households age 62 and older could utilize $72,128 on average from reverse mortgages.  The value is that these funds are available immediately and could go a long way to pay for help at home and for retrofitting the home to make it safer and more comfortable.  These funds could also be used to purchase long term care insurance, or for assisted living or nursing home care for an ill spouse while the well spouse remained in the family home.  We are aware of the limitations in utilizing reverse mortgages to fund long term care expenses.  Despite the current limitations, the equity that many seniors possess could help them tremendously with their needs and their desire to remain in their homes. . . . 

"Demographic realities require a change in policy and a transformation in thinking.  We must fundamentally shift the role of government - from government simply paying for services to government helping individuals save and plan for their own long term care needs, while still preserving the Medicaid program as a safety net for those who truly need it."