LTC Bullet: Medicaid LTC More Generous than English Socialized System
October 20, 2005
Comment: England's means test for
nursing home care is stricter than Medicaid's.
In fact, it's even stricter than new far-tighter Medicaid limits proposed
by the Governors and opposed by advocacy groups.
More after the ***news.***
NCOA BOOKLETS ON REVERSE MORTGAGES. New
National Council on the Aging Booklets Help Seniors Understand Reverse
Mortgages. October 13, 2005.
Through its Use Your Home to Stay at Home initiative, NCOA has published
two new booklets that help consumers understand how home equity might help them
continue to live at home. "Use
Your Home to Stay at Home: A
Planning Guide for Older Consumers" http://www.ncoa.org/Downloads/PlanningGuide%2Epdf
helps consumers learn about the benefits and challenges of using reverse
mortgages as part of their retirement planning. "Use Your Home to Stay at Home: A Guide for Homeowners Who Need Help Now" http://www.ncoa.org/Downloads/ImmediateCareGuide%2Epdf
helps consumers decide whether tapping their home equity is the right choice for
meeting the financial challenges of living at home with a chronic health
condition. Both booklets identify
financing options and tell where to find more information.
A grant from the National Reverse Mortgage Lenders Association and its
members made the booklets possible. ***
GAO ON LTC. On October 11, 2005, the
Government Accountability Office (GAO) released the following letter report:
"Overview of the Long-Term Care Partnership Program,"
GAO-05-1021R, September 9, 2005. Read
it at http://www.gao.gov/cgi-bin/getrpt?GAO-05-1021R
BULLET: MEDICAID LTC MORE GENEROUS
THAN ENGLISH SOCIALIZED SYSTEM
Comment: As we've written and
thoroughly documented in this space and elsewhere repeatedly, there are no hard
limits on income or assets for Medicaid long-term care eligibility.
Income is unlimited as long as medical expenses are high enough or a
Miller income diversion trust applies. Assets
are unlimited as long as they are held in exempt form, such as a home, business,
automobile, home furnishings, prepaid burials, term life insurance, etc.
For thorough documentation of these facts, see "Aging America's
Achilles' Heel: Medicaid Long-Term
Care" at http://www.centerltc.com/AgingAmericasAchillesHeel.pdf
and "The Realist's Guide to Medicaid and Long-Term Care" at http://www.centerltc.com/realistsguide.pdf.
Medicaid's wide-open LTC eligibility rules with those applied in England's
reputedly socialist health care system as described in Donald Hirsch, Facing
the Cost of Long-Term Care: Towards
A Sustainable Funding System, Joseph Rowntree Foundation, York Publishing
Services Ltd., Layerthorpe York, Great Britain, 2005, http://image.guardian.co.uk/sys-files/Society/documents/2005/09/15/JRF.pdf.
with below £20,500 in capital (including the value of their own home unless a
spouse or certain other categories of people are living in it) are eligible for
local authority help towards their costs based on a means test of their weekly
income and 'tariff income' on any capital above £12,500.
However, the local authority pays only for the residual cost of the care
after the recipient has used all of his or her income, minus a small weekly
allowance for personal expenses (currently £18.80) to pay for it."
other words, converting British pounds to dollars at today's exchange rate of
$1.77 to the pound, the English system exempts only $36,285--including home
equity--from its means-tested spend down requirement.
All of the recipient's income must be spent for care except a "small
weekly allowance" of £18.80 or $33.28.
[NB: The English income
allowance is actually more generous than Medicaid's personal needs allowance,
which is usually no more than $50 per month.
This may be feasible because of the Brits' stricter asset test.]
the National Governors Association proposed limiting Medicaid's home equity
exemption to $50,000 or 10 percent of the home's market value, whichever is
less. (See "Short Run Medicaid
Reform from the National Governors Association," August 29, 2005 at http://www.nga.org/Files/pdf/0508MEDICAIDREFORM.PDF,
p. 4.) This proposal is
considerably more generous than the means-test for home equity actually imposed
in England. Nevertheless, advocacy
groups in the United States aggressively oppose such reasonable limits on home
equity. By inference, they support
diverting Medicaid's scarce welfare resources away from the genuinely needy and
toward the affluent heirs of well-to-do elders with expensive homes.
a recent example taken from Victoria Wachino, et al., "An Analysis
of the National Governors Association's Proposals for 'Short-Run Medicaid
Reform'," Center on Budget and Policy Priorities (CBPP), October 14, 2005, http://www.cbpp.org/10-14-05health.pdf.
far-reaching NGA proposal would count home equity as an asset in determining
seniors' eligibility for Medicaid long-term care services, including home- and
community-based services and nursing home care. . . . Counting
home equity against these limits could present many seniors with the agonizing
choice of selling their home or going without Medicaid coverage for long-term
care." (p. 4)
Comment: Well . . . hello! . . .
let's get a clue here. Medicaid is
supposed to be a safety net protecting the ability of needy people to obtain
quality long-term care when they cannot afford to pay for it on their own.
By protecting home equity in unlimited amounts, Medicaid has become
inheritance insurance anesthetizing baby boomers from the risk and cost of
long-term care. That's why the big
boomer generation doesn't buy private LTC insurance.
That's why their parents donít use reverse mortgages.
That's why most people end up in nursing homes on Medicaid when they
require high-cost long-term care. And
that's why Medicaid LTC is collapsing financially even as it bankrupts the
federal budget, state budgets, LTC providers, and tax payers.
CBPP report continues: "To
address this problem, NGA proposes that seniors obtain 'reverse mortgages' and
use the mortgages to pay for long-term care expenses.
There is little research, however, which suggests that reverse mortgages
would work adequately for low-income seniors.
Some seniors might not be able to secure such mortgages.
In addition, there are important unanswered questions about how the use
of reverse mortgages would affect spouses and dependent disabled children who
live in the home. Reverse mortgages must be repaid once the home is no longer
the borrower's primary residence, raising questions about whether a spouse and
dependent children would be forced out of the home if an individual had to enter
a nursing home. Finally, research
in the field raises questions about whether requiring reverse mortgages would be
more effective in controlling costs than the current policy that requires states
to recover costs from the estates of beneficiaries who received long-term care
services." (p. 4)
Comment: These objections are
specious, tantamount to saying "My mind is made up; don't confuse me with
the facts." Obviously, the
Center on Budget and Policy Priorities authors have not taken the trouble to
study the topic before writing about it. (One
of the co-authors rebuffed repeated attempts of ours to meet and discuss this
exact subject.) Abundant
information is available on reverse mortgages.
For example, see the many excellent reports produced by the National
Council on the Aging, AARP, and the National Reverse Mortgage Lenders
Association. The basic purpose of
reverse mortgages is to help low-income seniors to maintain their customary life
styles and to fund special expenses such as long-term care.
Exempt dependent relatives who continue to live in the home can be
protected as they are now by reverse mortgage rules and by Medicaid's
eligibility regulations. The idea
that reverse mortgages (which tap private resources up front) would be less
effective than today's estate recoveries (which attempt to recover assets
dissipated by many years of legal and illegal divestitures) is preposterous.
reactions to sensible long-term care public policy reforms reflect negatively on
the "advocacy" organizations that make them.
The Center on Budget and Policy Priorities represents itself as a
protector of the poor. But how does
sheltering unlimited home equity from long-term care costs help the poor?
It doesn't. It hurts the
poor by trapping middle-class and affluent people on Medicaid who would have,
could have and should have purchased private LTC insurance or used their home
equity for long-term care. That
leaves less revenue for Medicaid to spend on care and leads directly to the
program's institutional bias and access and quality problems.
These problems hurt the poor most, because poor people lack "key
money" to buy their way into the best Medicaid facilities which are readily
available to more affluent Medicaid planning clients.
What such advocacy organizations are protecting is the bankrupt status
quo, not the truly needy.