Bullet: House Passes Historic LTC
Reform; Center Helps Tip Balance; AARP Spurned
Monday, December 19, 2005
LTC Comment: The
U.S. House of Representatives approved LTC Partnerships and major Medicaid
loophole closures early this morning after Senate conferees went along.
All hinges on full Senate passage now.
LTC BULLET: HOUSE
PASSES HISTORIC LTC REFORM; CENTER HELPS TIP BALANCE; AARP SPURNED
LTC Comment: At
6:00 AM Eastern, after pulling an historic all-nighter, the House passed
long-term care reforms that exceeded our highest hopes.
Bottom line, we got everything the Senate proposed, plus everything the
House proposed, and then some. We're
still on tenterhooks, however, waiting to see if the full Senate will go along.
Stay tuned to C-Span coverage of the budget bill for the suspenseful
conclusion of this public policy cliffhanger.
Details below, but first this. Members of Congress who stuck their necks out to do the right
thing, spurning harsh, personal and demagogic attacks by AARP, deserve
tremendous thanks no matter what the final outcome in the Senate.
Joe Barton (R, TX), Chairman of the House Energy and Commerce Committee,
is a case in point. Sensitized to the importance of long-term care by bitter
personal experience in his own family, he fought tirelessly for rational LTC
policy reform. Dropped by a heart
attack only a few days ago, Barton rose again to address the House in the early
morning hours today advocating passage of Medicaid and LTC insurance
improvements. Bravo, Mr. Barton. Get well soon!
No matter how dedicated and hard-working members of
Congress are, little happens without staff.
So kudos to David Rosenfeld and his colleagues who sheparded this
extraordinary legislation through to within a hairsbreadth of statutory status.
Rosenfeld co-founded the Center for Long-Term Care Financing, our
predecessor organization, with Center President Steve Moses in 1998.
He fought unstintingly and against overwhelming odds to reach this point.
When last we communicated, he'd been up over 36 hours straight in this
closing round of a long battle for these critical measures in the House.
Your Center for Long-Term Care Reform had a thing or two to
do with this progress too. We spent
half time in Washington, DC this Summer briefing (primarily) Senate Finance
Committee staff on the importance of these reforms. Our "Rule of Law" column titled "Welfare for
the Well-To-Do" ran over the weekend in the Wall Street Journal and
was widely circulated on Capitol Hill Saturday and Sunday before the vote.
Read on for a copy of that op-ed. As
you know, we've repeatedly exposed AARP's irresponsible attacks on members of
Congress who seek to save Medicaid for the poor by diverting the affluent to
responsible long-term care planning.
And then this surprise this morning.
Even the New York Times is on board encouraging rational long-term
care reform. Their editorial today,
titled "The Long-Term Care Conundrum," while it does not address last
night's victories specifically, does conclude thus:
"Americans have to realize that there is no entitlement to long-term
care and that few employers include long-term care in their health insurance
packages. That thought should lead to two things: serious financial planning on an individual basis, and a long
national conversation about how much responsibility the government should have
in ensuring proper care for the elderly and disabled."
The Times rejects the idea that Medicare or Medicaid can handle
long-term care financing and urges personal responsibility and individual
financial planning. Congratulations to the "old gray lady" for
publishing some really good advice.
Now, what's happened?
Read it for yourself in the Conference Report on the Deficit Reduction
Act of 2005 at http://www.rules.house.gov/109/text/s1932cr/109s1932_text.pdf.
A summary of the parts affecting long-term care and Medicaid begins on
page 668 of that document. But here
are the highlights, always assuming final passage in the Senate followed by
President Bush's signature.
care partnerships allowed and expanded. Great
news, but it would mean little if Medicaid planning abuse were not curtailed
also as below. Why buy LTCi to
avoid Medicaid spend-down if it doesn't exist in the first place?
o $500,000 cap
on Medicaid home equity exemption with option for states and politicians who
dare to go up to $750,000.
transfer of assets look back period extended from three to five years.
planners' favorite "Half-a-Loaf" giveaway strategy ended by penalty
undue hardship protections to protect elders from financial abuse and LTC
providers may apply for hardship protection on behalf of Medicaid residents.
o Use of
"Medicaid friendly" annuities restricted.
o Purchase of
"life estates" to qualify elders for Medicaid curtailed.
o Stops an
egregious Medicaid planning dodge that allowed exemption of Continuing Care
Retirement Community deposits of sometimes hundreds of thousands of dollars.
imposition of partial month's eligibility penalty thus ending some states'
policy of permitting monthly penaltyless transfers of one dollar less than
double the cost of private nursing home care.
states to accumulate multiple transfers into a single penalty period thus
closing another abusive loophole.
abuse of certain loans, promissory notes or mortgages to hide assets to qualify
for Medicaid LTC benefits.
Even if these measures pass the Senate and become law, this
battle is not won yet. We will have
to fight to get the States to implement the provisions. We will have to fight to get the federal government to
enforce the new rules. We will have
to fight to prevent the Medicaid planners from circumventing the law and
regulations. We will have to fight
to educate the public that Medicaid is no longer an option for the affluent.
We will have to fight for better education and stronger tax incentives to
get people to buy private LTC insurance and use reverse mortgages.
We will have to fight for better reimbursement for LTC providers by
Medicaid and Medicare. But as we
struggle on, no matter what happens, the forces dedicated to ruining Medicaid by
stretching it to serve their own greedy ends have sustained a big loss. We've won a major victory.
So celebrate in moderation, hope for the best in the Senate, and get
ready for the next stage of the battle.
Here's the text of my Wall Street Journal op-ed
published over the weekend.
for the Well-to-do
STEPHEN A. MOSES
17, 2005; Page A11
expenditures topping $300 billion and rising 8% annually, Medicaid is a huge
entitlement -- larger even than Medicare. State
governors in particular are howling that their share of the overall costs -- 43%
-- are burning through state budgets uncontrollably.
As Virginia's Mark Warner put it, "We are on the road to a
as the first session of the 109th Congress winds down, House and Senate members
are attempting to hash out a compromise in conference that could provide some
overall budget relief. The spoiler
is AARP, which is dispensing clouds of self-serving rhetoric while attempting to
divert the program's scarce resources to the senior lobby's more affluent
members. What's going on?
people think of Medicaid as the health-care payer of last resort for poor women
and children. But long-term care is
Medicaid's biggest single cost -- and many recipients of this largesse are
anything but poor. One reason is
that, for purposes of Medicaid nursing home eligibility, people are allowed to
retain unlimited income as long as their medical expenses -- including long-term
care -- are high enough. Another
big reason is that they can also keep unlimited assets in the form of home
equity, a business or other kinds of wealth.
theory, once they die the government could recover Medicaid costs from their
estates. In practice, most of this
wealth disappears, often in gifts to family members.
home equity, seniors' largest asset. According
to the National Council on the Aging, 81% of America's 13.2 million householders
aged 62 and over own their own homes, and 74% own their homes free and clear.
Altogether, seniors possess nearly $2 trillion worth of home equity.
Yet, by the time they apply for Medicaid, few own their homes.
Are they giving the homes away to their grown-up children or other
relatives? Such a transfer of
assets carries no legal penalty as long as it is done at least three years and a
day before applying for Medicaid.
just one of hundreds of eligibility "loopholes" that allow
individuals, especially those advised by Medicaid planning attorneys, to qualify
for Medicaid long-term care benefits without spending down their own wealth for
care. If you doubt this, try an
Internet search for "Medicaid planning" and read some of the sales
pitches on the more than six million hits.
You'll learn how to purchase noncountable assets, buy and give away a
string of luxury cars without penalty, hide wealth in exempt annuities, sell
your ailing parent a "life-care contract," even buy a farm or business
-- all for the express purpose of "impoverishing" yourself or a loved
one artificially and qualifying for Medicaid long-term care benefits.
Congresses and four presidents have tried to stop these legal scams.
They've closed loopholes, discouraged Medicaid qualifying trusts, made
recovery from recipients' estates mandatory, and offered tax incentives to
encourage private insurance. They
even criminalized Medicaid planning in 1996, only to be accused of
"throwing granny in jail." When they repealed that measure and
replaced it a year later with another to "throw granny's lawyer in
jail," the law was deemed unconstitutional.
is trying Medicaid reform once again. The
House of Representatives recently passed legislation to curtail a few of the
most egregious abuses. It would
move the look-back period for asset transfers from three to five years,
eliminate Medicaid planners' favorite "half-a-loaf" giveaway strategy,
and cap exempt home equity at $750,000. Even if these measures move out of the conference committee
with the Senate and become law, elderly Americans could still give away $10
million (actually unlimited assets) without penalty five years and one day
before applying for Medicaid. They
could still retain a home worth three-quarters of a million dollars while
getting taxpayers to pick up the costs of their long-term care.
has nevertheless gone ballistic, claiming that the House reforms "seriously
threaten the ability of millions of Americans to get needed long-term care
services" and "will deny millions of older and disabled Americans the
long-term care services they need and leave them vulnerable to substandard
care." They've targeted
members of Congress with advertisements in their hometown papers attacking the
House's efforts to curtail Medicaid abuse; they've run radio and TV spots, and
full-page ads appear in Capitol Hill papers almost daily.
House staffers report that scared and angry AARP members have been
deluging members' offices with calls and letters parroting AARP's distortions
position and tactics are wrong, hurtful and dangerous.
Preventing asset giveaways to qualify for public assistance does not
threaten one's access to quality long-term care:
If people keep their wealth instead of giving it away, they will command
red-carpet access to top-quality care in the private market instead of becoming
dependent on Medicaid's low-cost nursing home care of highly questionable
public welfare to people with three-quarters of a million dollars in home equity
does not reduce their access to care. With
a reverse mortgage, such people can tap their home equity to pay for long-term
care, or indeed to pay for private long-term care insurance.
As private payers, such people will have better access to a wider range
of higher quality long-term care services than they would have as Medicaid
more fundamental questions to ask are why Medicaid should be used as a kind of
inheritance insurance for middle-class baby-boomer heirs -- and how this
practice protects Americans most in need? AARP's
resistance to Medicaid reform anesthetizes boomers to the risk and cost of
long-term care at the very time in their lives when they should be saving,
investing and insuring against such risks. It lines their pockets now at the expense of taxpayers, to
the detriment of the poor, and with a huge risk to Medicaid's solvency.
it all down and you're left with only one conclusion. Faced with the choice of supporting the use of Medicaid for
people genuinely in need, or grabbing what it can for its well-heeled members
and their heirs, AARP took the low road.
Moses is president of the Center for Long-Term Care Reform in Seattle.
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