Bullet: Disaster Come Disaster
Thursday, September 15, 2005
LTC Comment: Medicaid
and LTC reform were on a roll until Hurricane Katrina knocked the train off the
tracks. More after the ***news.***
*** LTC CONNECTION has made available a 1.5 hour tele-conference
program featuring a presentation by Steve Moses titled "Why Don't More
People Buy LTC Insurance?" To listen to this program, go to http://www.ltcanytime.com/ltcidigestteleconferencestevemoses.mp3?BMIDS=15221981-603b661c-79146.
It takes a while to load, so be patient.
Feedback on the program has been excellent.
For more information on LTC Connection and its services, check out
Be sure to subscribe to their LTCi Digest online newsletter that
summarizes news of interest to anyone concerned about long-term care. ***
APPROVE OF MEDICAID COMMISSION RECOMMENDATIONS. McKnight's LTC News Daily Update reports that
"Providers generally were favorable about the Federal Medicaid Advisory
Commission's new recommendations, saying the suggestions are in the interest of
the long-term care community. In a
statement Tuesday [9/6/05], the American Health Care Association said it
supported the commissionís approach to finding $10 billion in Medicaid
savings. 'Secretary Leavitt and the
Commission members are to be commended for evaluating Medicaid reform from the
perspective of the many seniors throughout our nation who need and depend upon
this vital program,' said Bruce Yarwood, AHCA acting president and CEO.
Still, long-term care providers remain troubled over the recommendation
in the commission's report to change the start date of the penalty period for
Medicaid applicants who transferred assets for less than fair market value.
The proposed change in the penalty period's start date means providers
would be responsible for uncompensated care, according to AHCA.
Instead, Yarwood recommends that the commissioners recognize that changes
in the asset transfer policy 'must focus on encouraging personal responsibility,
not penalizing providers.'" ***
LTC BULLET: DISASTER
LTC Comment: What
a mess! And I don't just mean the
toxic soup bowl New Orleans has become. Nor
the human and economic tragedy of the whole Gulf Coast.
I refer instead to a specific public policy tragedy that may be emerging
from the natural disaster.
A few months ago, there was little hope that long-term care
financing and Medicaid reform would make any more progress this year than they
have in the past seven. That is to
say, almost none.
Recently, however, Washington, DC was abuzz with talk about
passing LTC Partnerships, closing Medicaid loopholes, tightening asset transfer
rules, and extending the LTC awareness campaign.
The Budget Reconciliation packages due out of the Senate
Finance Committee and the House Energy and Commerce Committee on September 16
were arousing excited anticipation. How
would those committees propose to save the $10 billion targeted to come from
Medicaid savings over the coming five years?
Today, everything's on hold and budget reconciliation is
postponed until late October if it happens at all. Call it collateral damage from the Hurricane Katrina
disaster. Everything has been
knocked into a "cocked hat" by the natural catastrophe.
Politicians have naturally opened the fiscal floodgates to
help those hurt and dislocated by the disaster. Unfortunately, self-promoting Medicaid planners and
self-styled senior advocates are using the physical tragedy in the Gulf to
derail responsible Medicaid reform. They
seek to defend, even expand, the status quo of wasteful, self-destructive
Medicaid long-term care spending.
Interest groups that advocate using Medicaid as inheritance
insurance for affluent boomers (while skimming the financial cream from the
welfare program for themselves) are using Katrina as an excuse to stop reforms
intended to save Medicaid as a safety net for the poor.
A good example is AARP's new full-page newspaper ad which
says: "Real loopholes that allow people to improperly qualify
for Medicaid should be closed. But
unfairly changing penalty dates and arbitrarily extending look-back periods
could deny millions of people the nursing home coverage they desperately
what are the "real loopholes" that AARP supports closing?
Blank out. How does
protecting Medicaid long-term care benefits for AARP's affluent members help the
poor? Blank out.
Why should people be able to give away unlimited millions and qualify for
public welfare three years later? Blank
out. Why should Medicaid's transfer
of assets penalty be reduced by half for those savvy enough to use the Medicaid
planners' half-a-loaf strategy? Blank
measures expected to be in a budget reconciliation package would help to save
Medicaid for those genuinely in need by incentivizing those who are able to
save, invest or insure for long-term care.
That doesn't hurt the poor or the rich but rather achieves a fairer
distribution of Medicaid's scarce resources and attracts new private financing
to improve long-term care for all economic strata.
But don't despair. This
is only a temporary setback. Medicaid expenditures, especially for long-term care, are
spiraling out of control. Something
has to be done and the logical reform is to give Medicaid back to the needy for
whom it was intended.
GAO has completed and delivered its report on "Asset
Transfers" to Congressmen Dingell and Waxman, who requested it. The requestors cannot withhold release of the report beyond
30 days so we'll know soon what GAO found.
Even based only on what I provided to the GAO investigators, it should be
a bombshell. The House Energy and
Commerce Oversight and Investigations Sub-Committee has also collected explosive
evidence of Medicaid planning abuses. We hope that report will also be available soon.
Already, the National Governors Association has proposed,
and Congress is seriously considering, elimination of Medicaid's wide-open asset
exemptions and implementation of a hard-dollar limit on assets.
That would put home equity at risk for long-term care.
Once home equity is at risk, more people will buy private LTC insurance. Those who don't will use reverse mortgages or other means to
fund their long-term care with home equity.
Either way, new private financing will flow into the long-term care
service delivery system improving access to and quality of care while relieving
the fiscal burden on Medicaid.
Extending the look back period for asset transfers is
inevitable. The average period from
onset to death in Alzheimer's Disease is eight years. The short three-year lookback in effect now is an open
invitation to qualify for Medicaid by jettisoning wealth.
A longer lookback period will persuade more people to prepare privately
for long-term care financing while they are still young, healthy and affluent
enough to do so.
The proposed change in the penalty start date threatens to
put nursing homes at risk of providing even more uncompensated care than they
give already. That part needs to be
fixed, but without the change people can give away half their assets, spend the
rest on anything at all, and be eligible for Medicaid in half the time intended
by Congress. Public policy should
not pull people onto welfare sooner than necessary.
Having broken the political log-jam on Medicaid and
long-term with measures like these, it will be easier in the future to reform
and improve Medicaid even further so it can do a better job for those truly in
need. With Medicaid retargeted to
be a true safety net again, long-term care insurance and home equity conversion
will expand to protect more affluent people.
The savings in Medicaid could be used to fund tax incentives for LTC
insurance and reverse mortgages, thus leveraging future Medicaid savings even
The long-term care crisis bound to come with the Age Wave can be avoided. But we have to remove the perverse incentives in public policy that currently discourage responsible long-term care planning. Hurricane Katrina has impeded progress in that regard. But we'll rebuild the Gulf Coast. And we'll rebuild Medicaid and long-term care reform. Keep the faith.