LTC Bullet:  Told You So 

Wednesday, April 12, 2006 


LTC Comment:  Twenty years ago we knew what needed to be done about long-term care financing, but despite recent progress, the job still isn't finished.  Details after the ***news.*** 

*** EXTEND OUR REACH.  After reading yesterday's LTC E-Alert titled "LTC Policy Battles Rage," Center member F. Jay Shetler, who is President & CEO of the Glencroft Retirement Community in Glendale, Arizona, sent us the following note: 

"Thank you for your alert.  As part of the effort to get the word out on the Deficit Reduction Act and the importance of planning for the cost of long-term care, I would like to offer to our local newspaper a guest editorial or article.  To accomplish this, I wonder if you would be so kind as to let me use some of the material from saved alerts from you.  What I had in mind was to click and paste some of your material combined with my perspective as the CEO of a continuing care retirement community.  If this is agreeable with you, I would write a draft, e-mail it to you for your approval and then submit it to the newspaper editor, who is a fellow Rotarian.  What do you think?"

I responded:  "Jay:  Absolutely, great idea, this is precisely what I encourage people to do to leverage the Center's work and advocacy.  If you use literal quotes in your op-ed, please cite the source and refer people for more information to our website at and/or to me by email or phone.  Thanks for your support of the Center and for being so proactive on this critical issue.  Steve Moses"  *** 

*** THE BRAVE NEW WORLD OF LTC TELE-CONFERENCE is available to hear online until April 28.  Listen to Steve Moses describe the huge changes in LTC public policy implemented by the Deficit Reduction Act.  Learn about the positive sea change coming for the marketability of private LTC insurance and reverse mortgages.  Find out how noble AMGs (altruistic, masochistic geniuses) who've struggled heretofore to convince the public to plan responsibly for long-term care can now expect to do well by doing good for exponentially more people.  This program has received rave reviews from hundreds of listeners who've paid thousands of dollars to hear it.  Now, the Brave New World of Long-Term Care presentation is available free of charge for a limited time to dues-paying members of the Center for Long-Term Care Reform including new members who join in the next two weeks.  Simply go to the link in our password-protected website (The Zone) and listen:  We offer our sincere thanks to the National Long-Term Care Network for making this program available to Center members. *** 

*** NO USER NAME OR PASSWORD?  Can't access the Center's "Members-0nly Zone?"  Missing out on the "Brave New World of LTC" and all the other great features in The Zone?  There is a simple solution.  Join the Center.  Dues are affordable at $150 per year or $12.50 per month.  You can be in The Zone today with access to Steve Moses's "Brave New World of Long-Term Care" audio file presentation about the Deficit Reduction Act's huge impact on the marketability of LTCi and reverse mortgages.  To join, go to or contact Damon at 206-283-7036 or *** 



LTC Comment:  Today's Bullet is a personal story with aspects of professional value for readers, I hope.  For those of you who've asked me over the years:  "What drives you?  How can you possibly be so passionate and persistent about an issue like long-term care?"  Here's the answer. 

Twenty years ago, I was a career U.S. government employee with 14 years of service (starting with two years in the Peace Corps in the late 1960s).  I was the "Medicaid State Representative" for Oregon in the Seattle federal regional office.  My job was the liaison between that state's Medicaid program and the Health Care Financing Administration's (HCFA's) Baltimore headquarters.  HCFA administered Medicaid and Medicare back then. 

I took an interest in long-term care financing and wrote the November 1985 draft report titled "The Medicaid Estate Recoveries Study" which is posted today on the Center's website at  Despite its narrow-sounding title, this report was really a general analysis of America's long-term care financing problem including recommendations on how to fix it.  Here's an excerpt: 

"In truth, we do not have a long-term care funding crisis in this country.  We have a public policy crisis.  The elderly possess a $600 billion resource in their homes [over $2 trillion today] which is the product of many years of hard work and mortgage payments augmented by rampant real estate inflation.  Many of the elderly would be able to pay for their own long-term care and comply with the principles of self-reliance by which they lived, if they could contract to reimburse Medicaid from their estates.  The cost of this solution would be paid in the first generation by the middle income recipient heirs who will lose a portion of their inheritances.  By the second generation, however, without the competition of easily available public funding through Medicaid, new funding sources will be able to develop such as private long-term care insurance, medical IRA’s and reverse annuity mortgages.  In the meantime, policy makers will be able to make more Medicaid resources available to the destitute elderly who have nowhere else to turn." (pps. 35-36) 

Sound familiar?  My message hasn't changed much in 20 years.  But neither has the problem or the solution needed.  Here's what I recommended in that draft report for HCFA: 

"Effective stop-loss measures which can be taken are: 

(1)  To make Medicaid eligibility conditional upon recovery of benefits from the applicant/recipient’s estate; 

(2)  To require liens or “open-ended mortgages” for all recipient property in order to assure its availability in the recipients’ estates;

(3)  To extend the limitation on asset transfers for less than fair market value to five or more years; 

(4)  To mandate that all state Medicaid programs operate estate recovery programs with minimum qualifying recovery rates as a condition of receiving Federal Medicaid matching funds, and; 

(5)  To empower state Medicaid programs to appoint conservators for the enfeebled elderly as a collateral service in order to protect them from expropriation by unscrupulous family members or others."  (pps. 31-32) 

When I finished this report in draft, I sent it out for peer review to several scholars and to the General Accounting Office (GAO, now known as the Government Accountability Office) and to the Office of Inspector General of the Department of Health and Human Services.  The feedback was excellent. 

But when my bosses in the HCFA Regional Office (RO) found out what I'd done, the . . . hmm, stuff . . . hit the fan.  They said RO employees were not supposed to write national policy papers.  They forbade me to distribute the draft paper any further.  They even threatened me with a "negative personnel action" if I disobeyed.  Needless to say, the paper was never published by HCFA. 

So, I bit my tongue and bided my time.  Soon I heard from the GAO.  They loved the paper and wanted to do a national study on the same theme.  Would I help?  Sure, but quietly.  Behind the scenes, I consulted on every aspect of the GAO's study titled "Medicaid Estate Recoveries:  Recoveries from Nursing Home Residents' Estates Could Offset Program Costs," which was published in March 1989.  It's still by far the best thing GAO has ever done on the subject.  Read it at

In the meantime, the federal Health and Human Services (DHHS) Office of Inspector General (OIG) started a similar project.  They wanted my help.  When I explained that HCFA had gagged me on the subject, they said "no problem, come to work for us."  So, I did and that was my ticket out of the professionally stultifying environment of the Health Care Financing Administration.  

To get the OIG position, however, I had to swap jobs with one of their staff members who wanted to stay with the feds.  By taking his position, I guaranteed myself severance from federal service because the OIG was closing its Seattle regional office.  That was my ticket out of government altogether.  But it took more than two years to close that office and sever the staff. 

So, in the meantime, I conducted the research and wrote the report which the OIG published in June 1988 titled "Medicaid Estate Recoveries:  National Program Inspection."  You can read it on the Inspector General's website at  (Kudos to the OIG for making this archive available online despite its cocky-wampus layout.) 

Bottom line, the GAO and OIG studies of Medicaid estate recoveries "forged the framework" (according to a Florida Medicaid-planner and past president of NAELA) for the Omnibus Budget Reconciliation Act of 1993 which closed many Medicaid eligibility loopholes, made the transfer of assets look-back period longer and stronger, and mandated Medicaid estate recoveries.  OBRA '93 implemented most of the recommendations I'd proposed in the original report that HCFA suppressed and in the OIG study just mentioned. 

Unfortunately, most states didn't implement OBRA '93 thoroughly; the feds didn't enforce the law aggressively; the media didn't publicize it; and the insurance and reverse mortgage industries didn't sell to it.  Hence, consumer behavior didn't change; people kept ignoring the risk of long-term care; few bought LTC insurance; the Medicaid planning industry thrived; most people in need of long-term care ended up on Medicaid; and that welfare program continued its long downward spiral toward its currently impending collapse.  

It became obvious by the mid-1990s that we had to go back to the drawing board and try something different.  The end result of that rethinking of the problem is the Medicaid LTC eligibility reform implemented in the recent Deficit Reduction Act, of which I've written at some length in this space recently.  For that development, I have to thank my friend and former colleague David Rosenfeld who worked with me from 1996 to 2001 on these issues and has recently been promoted to the position of Chief Health Counsel for the House Energy and Commerce Committee, the germane committee for Medicaid in the U.S. House of Representatives.  More than any other single individual, David made the DRA's Medicaid improvements happen. 

So, that's my story and I'm sticking to it.  I got angry 20 years ago that the government agency responsible to fix long-term care was making the problem worse.  I decided that I'd tackle the long-term care financing problem and not give up, no matter what it took, until we remove the perverse incentives in public policy that discourage responsible long-term care planning.  It's been a long haul but the progress, especially lately, is very gratifying.  

Had we implemented the needed reforms 20 years ago when it first became obvious they were needed, the country could have avoided warehousing our World-War-II generation in nursing homes on welfare.  It's too late for that now, but it is not too late to prevent aging baby boomers from facing the same fate.  We started down the right path with OBRA '93 and DRA '06.  But, the job isn't done yet.  Much remains to do.  

We need your help.  Want to join the fight?  We'd like to have you on the Center for Long-Term Care Reform's team.  And heaven knows, we could sure use your professional, moral and financial support to finish this job. 

Steve Moses