LTC Bullet: LTC Victory
February 2, 2006
LTC Comment: The Deficit Reduction Act of 2006 passed yesterday curbing Medicaid abuse and unleashing LTC Partnerships. Celebrate? Sure. But don't take a victory lap until you consider what can go wrong. After the ***news.*** [omitted]
BULLET: LTC VICTORY
Comment: Yesterday's passage by a
razor-thin margin of the Deficit Reduction Act is a huge victory for the LTC
good guys. The new law curbs
Medicaid planning abuse and releases the Long-Term Care Partnership program for
details on what this historic legislation does, see "LTC Bullet:
House Passes Historic LTC Reform; Center Helps Tip Balance; AARP
Spurned" from December 19, 2005 at http://www.centerltc.com/bullets/archives2005/593.htm.
a nutshell, the DRA warns the public that long-term care is a personal
responsibility, that its risk and cost should not be ignored, that Medicaid
remains a safety net but only for those truly in need, and that everyone who is
financially and medically qualified should begin now to save, invest and insure
for long-term care.
delivered, that message can prevent a great tragedy that threatens this country.
It can save Medicaid for the poor while preparing most Americans to pay
privately for top-quality long-term care across the full spectrum of LTC
services from home care to skilled nursing facility care.
pat yourselves on the back. Toast
your success. You stood up to some
of the biggest, most powerful, and richly financed demagogues in the country.
And you beat them.
don't assume it's all down hill from here.
I've been through this before. I've
seen what can go wrong. Our fight
to save Medicaid by expanding private LTC financing has only just begun in
earnest. So gird your loins and get
ready for the next fight.
me give you an example of what happened last time Congress took a major shot at
curtailing Medicaid planning and encouraging private LTC insurance.
Omnibus Budget Reconciliation Act of 1993 closed numerous Medicaid eligibility
loopholes, mandated estate recoveries as a condition of states' receiving
federal matching funds, and thus encouraged the purchase of private long-term
care insurance as the optimal means to avoid Medicaid dependency and estate
other words, OBRA '93 implemented most of the recommendations I made in the
Department of Health and Human Services Office of Inspector General's
"Medicaid Estate Recovery: National
Program Inspection" report of 1988. Read
it at http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf.
celebrated then as now, but here's what happened. OBRA '93 passed because a recent recession had driven welfare
rolls up and tax receipts down. States'
and federal budgets were in severe deficit.
Remember Ross Perot? So
Congress acted to discourage Medicaid abuse and encourage private LTC financing.
then, the economy improved. The
welfare rolls declined. The tax
receipts increased. All of a
sudden, implementing the new law was more politically sensitive than simply
throwing more money at the problem.
states did not implement the new rules aggressively. The feds did not enforce them.
Advocacy groups mobilized in opposition. Medicaid planners pried open a dozen new eligibility
loopholes for every one closed.
years later we found ourselves climbing out of another recession, with states'
and federal budgets again under water, and politicians desperate yet again to do
something about exploding Medicaid LTC expenditures. So they passed the DRA yesterday.
here we are more than a decade closer to the Age Wave's cresting and crashing.
We have important new federal statutory authorities, but they mean
nothing unless the states implement them, the federal government enforces them,
the private sector promulgates them, and the public understands them.
the signs are clear that the Deficit Reduction Act of 2006 could meet the same
dismal fate as OBRA '93 did. Here
are the risks:
states are flush with cash again: "From
Massachusetts to Hawaii, signs abound that the immense pressure placed on state
budgets by the fiscal crisis early this decade has eased -- and put tax cuts and
new spending in the realm of possibility for the first time in several
years." ("Rising Revenues
Spur Tax Cuts, Spending," 1/31/6, Stateline.org, http://www.stateline.org/live/ViewPage.action?siteNodeId=136&languageId=1&contentId=84623.)
other words, with the fiscal pressure off, states may shy away from enforcing
the new Medicaid eligibility rules in DRA '06 just as they dropped the ball on
groups are already mobilizing to fight positive LTC reform again:
"But even though we lost in Congress, the fight's not over yet.
It's now up to you. State
advocates will need to do whatever you can . . ..
Each governor and state legislature will be making its own decisions
about how to implement the new legislation."
(FamiliesUSA email message, 2/1/6)
other words, what they couldn't stop in the above-board legislative process,
they'll try to kill surreptitiously behind the scenes in the state legislatures
and Medicaid agencies.
planners are already offering a fire sale on asset transfers and they'll soon be
mobilizing to impede and repeal the DRA reforms: "Although Congress passed a new law February 1 further
restricting the ability of the elderly to transfer assets before qualifying for
Medicaid coverage of nursing home care, many people in most states will still
have time to plan under the old rules . . ..
[T]he old rules will likely apply to transfers if the Medicaid
application is filed before the state passes the complying legislation. So it
may not be too late to plan, and in many cases not too late to transfer
email newsletter, 2/2/6)
other words, make hay while the sun shines.
Impoverish yourself before it's too late to get Medicaid to pay for your
you figure: "Oh well, whatever
happens with Medicaid eligibility, at least we have the LTC Partnerships
that's cold comfort. LTC
Partnerships help on the margin, but without real Medicaid eligibility reform
they will not be any more successful implemented nationwide than they have been
so far in the four or five states that have had them for over a decade.
People won't buy LTC insurance to avoid a Medicaid spend down liability
that does not exist. If the new Medicaid rules are implemented and enforced, the
LTC Partnerships will be enormously successful.
If not, they won't. Simple
line? Our work has just begun.
Everyone who cares about saving Medicaid by increasing private LTC
financing should stay focused on implementing and enforcing the Deficit
Reduction Act of 2006. Who and how?
private long-term care insurance industry should actively support efforts to
help states implement the new Medicaid rules as well as the LTC Partnerships.
equity conversion lenders should actively support efforts to educate the
American public about the new and likely future Medicaid limits on exempt home
providers should actively support efforts to implement the DRA in such a way as
to prevent asset transfers that leave people ineligible for Medicaid but unable
to pay their own way.
Center for Long-Term Care Reform will be active in all these areas.
But we cannot carry on without your continued support.
Please join the Center and help us make the most of this great new