LTC Bullet:  Kaiser Cover-Up Continues 

Thursday, April 27, 2006 

Seattle-- 

LTC Comment:  Urban Institute "scholars," aided and abetted by the Kaiser Family Foundation, employed an underhanded straw man argument in the foundation's latest unsuccessful attempt to debunk the impact of Medicaid planning abuse.  More after the ***news.*** 

*** DRA WORRIES.  I'm concerned.  I met over lunch yesterday with a state legislator and a policy analyst both of whom understand that Medicaid is doomed as a funding source for LTC for the middle-class.  They want to fix the problem, but they did not grasp until we talked how much leverage the Deficit Reduction Act gives states to save Medicaid for the needy and encourage private financing alternatives like LTCi and reverse mortgages.  I encourage readers of these LTC Bullets to forward them to legislators and reporters with personal notes urging them to check out the articles, reports and speeches at www.centerltc.com.  If legislators and the media do not understand, implement and publicize the DRA, it will not have the beneficial effect on consumer planning for LTC that it should. 

Furthermore, it looks like CMS is moving forward rapidly on the expansion of home and community-based services under Medicaid as authorized by the DRA but dragging its feet on LTCi Partnerships and critical Medicaid LTC eligibility reforms.  That's exactly backwards from what they should be doing.  They should tighten eligibility and mobilize LTCi Partnerships first, before making Medicaid even more attractive than it already is by offering more HCBS.  Watch for a new budget crunch, more severe than ever before, if politicians and bureaucrats attract ever more people to Medicaid with more desirable services but stall on constraining Medicaid planning abuse and encouraging private insurance. *** 

*** DALLAS BOUND.  Many thanks to Center for Long-Term Care Reform members who responded to our appeal in yesterday's LTC E-Alert for targeted contributions to help fund my trip to Dallas in May for the Medicaid Commission meeting.  Feedback I'm getting from several sources suggests the Medicaid Commission is listening mostly to advocates of government LTC financing and opponents of private financing.  I'll be on hand at the next meeting to make sure a better perspective is available.  That is, the best way to save Medicaid is to target it to the genuinely needy and use the savings to incentivize LTC insurance and home equity conversion.  Watch for our LTC Embed Reports from the Policy Front in late May. *** 

*** LTCi  PRODUCERS:  Get involved in AALTCI's Long-Term Care Awareness Week [Nov. 5-11, 2006], an opportunity to create increased understanding of LTC issues among consumers, media and legislators.  You can get more information and download Awareness Week artwork for your Website and marketing material on the Association Website at http://www.aaltci.org. ***   

*** NEED A WEBSITE?  All you have to do to have your very own LTC website designed by LTC Connection is to join the Center for Long-Term Care Reform.  That's right, join the Center for $150 per year, get all our publications and access to The Zone, and on top of that LTC Connection will design your website and waive their usual $149 fee.  Or look at it this way, buy your website from LTC Connection through the Center and get a year of membership in the Center for only $1 more.  Sure, you'll have to pay LTC Connection's $39 per month website maintenance fee, but you'll get a whole year of LTC Bullets and LTC E-Alerts for no extra charge.  So, what do you have to do?  Just contact Damon at 206-283-7036 or damon@centerltc.com, join the Center, pay your membership fee, and say "I want my website."  We'll connect you with the right person at LTC Connection and you'll be on your way.  Great content from the Center and a great website from LTC Connection.  How can you beat it?  Already a member of the Center but want your free website?  No problem.  Renew your annual membership early and get the same deal. *** 

 

LTC BULLET:  KAISER COVER-UP CONTINUES 

LTC Comment:  My favorite logic text defines the straw man logical fallacy as one which "occurs in debate when someone distorts an opponent's position, usually stating it in an oversimplified or extreme form, and then refutes the distorted position, not the real one."  (David Kelley, The Art of Reasoning:  Second Expanded Edition, W.W. Norton & Company, New York, 1994, p. 151.) 

Even more intellectually dishonest than the simple straw man fallacy, is a version I call the "underhanded" straw man argument.  That's when someone distorts an opponent's position, refutes the distorted position instead of the real one, and doesn't even have the professional courtesy to identify the opponent.  That leaves readers unable to compare and contrast the underhanded straw man argument to the real argument it misrepresents. 

A new issue paper by Urban Institute policy advocates Timothy Waidmann and Korbin Liu titled "Asset Transfer and Nursing Home Use:  Empirical Evidence and Policy Significance," published April 2006 by the Kaiser Family Foundation at http://www.kff.org/medicaid/upload/7487.pdf, employs the underhanded straw man fallacy with impunity.  Here's the story. 

Waidmann and Liu attack a simplistic argument while ignoring the carefully reasoned case they distort and failing even to cite the legitimate argument's source.  That's the very definition of the underhanded simple straw man fallacy. 

The straw man argument Waidmann and Liu employ is that "many 'well-to-do' elderly Americans transfer assets to gain Medicaid coverage for nursing home care . . . [and thus] distort the intent of the Medicaid program and unnecessarily inflate public spending."  (p. 1)  

On the face of it, that statement is true, but it is only a small part of the case against overutilization of Medicaid and Medicaid estate planning.  Therefore, even if the authors refuted the straw man argument they pose, which they don't, the real argument would be unaffected.  

We have a lot, and could soon have more than enough, hard evidence to support the statement that asset transfers to qualify for Medicaid are commonplace.  Last week's "LTC Bullet:  Spousal Refusal:  Who Wins?  Who Loses?" at http://www.centerltc.com/members/ltcbullets/627.htm documented nine cases of millionaires using a single asset transfer gimmick ("spousal refusal") to divest hundreds of thousands of dollars in just one county of a single state.  Thousands more examples of asset transfers to qualify for Medicaid could easily be identified by proper scholarly methods, i.e. by investigating a valid random sample of actual Medicaid long-term care cases and projecting to a reasonable estimate of the true incidence and cost of the practice.  The Urban Institute and the Kaiser Family Foundation have sufficient financial resources to undertake this much-needed research, but they don't. 

Instead, Waidmann and Liu equivocate on the word "many," employ a useless research strategy, and commit a serious error of fact and interpretation.  

They equivocate on the word "many" by implying that their unnamed interlocutor believes asset transfers are the only problem, that such transfers are rampant across the whole population of Medicaid long-term care recipients and that asset transfers alone cost Medicaid many billions of dollars.  Certainly, I've never made such a specious case, and I'm unaware of anyone who has.  

As I've explained so many times here and elsewhere, asset transfers and other fancy Medicaid planning techniques are only the "tip of the iceberg."  The real problem is that most elderly Americans qualify for Medicaid even without sheltering or divesting assets and without spending their resources for long-term care.  Last week's other LTC Bullet, titled "Who Still Gets Medicaid Without Spending Down" at http://www.centerltc.com/members/ltcbullets/628.htm, explains in detail how that happens.  Medicaid's income and asset limits are so generous that only the top 10 percent or so of seniors even need to transfer assets, or engage in other, more sophisticated methods of Medicaid planning, to qualify.  

So, when Waidmann and Liu conclude that the "pursuit of transferred assets would recover only about 1 percent of total Medicaid spending for long-term care," I say "Wow!"  That's over a billion dollars.  I think the real figure is much higher for reasons explained below.  But when opponents of my position try to defeat it by misrepresenting it and yet they still concede savings in ten figures from pursuing asset transfers alone, that is a huge victory for our side indeed. 

Now, let's get down to brass tacks.  The research methodology Waidmann and Liu used for their paper is worthless for their present purpose.  The "Health and Retirement Study (HRS)" on which their findings are based is derived from self-reporting by study participants and their families.  Although the surveyors carefully examine, cross-check and benchmark the data they collect, no independent research or verification is done with outside sources to determine whether or not all asset transfers are reported and reported in the correct amount.  

I know from examining many hundreds of actual public welfare and Medicaid case records since the early 1970s that people frequently fail, both unintentionally and intentionally, to disclose all relevant information about their income, assets and wealth transfers when they apply for public assistance.  The only way to get the whole truth is to query financial institutions and public records on a valid random sample of cases and project reasonable estimates of the total incidence and amounts of asset transfers and other artificial self-impoverishment techniques therefrom.  Survey data of the kind employed for this paper is worse than useless because it undeservedly implies credibility, reliability and accuracy without verification. 

Finally, Waidmann and Liu make a serious error of fact and interpretation.  They say "approximately 43% of all nursing home residents eventually become Medicaid eligible, while the balance remains 'always private pay.'"  The truth is very different. 

At any given time, roughly two-thirds (65.7 percent) of all nursing home residents in the United States, and the vast majority of all expensive long-stayers, are covered by Medicaid.  Another 12.4 percent are covered by Medicare.  Other payers, including the Department of Veteran's Affairs (DVA), major medical insurance, private long-term care insurance AND finally private payers account for only 21.8 percent of all payers.  (Source:  Reimbursement and Research Department of the American Health Care Association, The State Long-Term Health Care Sector Data Resource Book, 2005, "Nursing Facility Patients by Payor - Percent of Patients," p. 92, based on  CMS OSCAR Current Survey, June 2005.)  The only way the authors' statement that 43 percent of nursing home residents eventually qualify for Medicaid and the rest remain private pay could be true is if they count everyone who spends even one day in a nursing home and they consider Medicare and the DVA to be "private payers."  Neither such assumption makes sense because the first one illogically mixes expensive long-stayers with inexpensive short-stayers and the other one corrupts the meaning of private pay.  Any conclusions these authors reach based on such faulty assumptions and mistaken reasoning are spurious. 

Let me make an invitation and offer a challenge.  I invite the authors of this latest paper, and those of the dozen or so others of the same ilk published in the past year by the multi-million dollar Kaiser Family Foundation, to read and I challenge them to refute a serious articulation of the argument that over-utilization of Medicaid is undermining the program and driving up costs unnecessarily.  It's titled "Aging America's Achilles' Heel:  Medicaid Long-Term Care" and you'll find it on the Cato Institute's website at http://www.cato.org/pub_display.php?pub_id=4376.   

But does anyone really believe these advocates of public financing posing as objective scholars have not read that paper already?  Of course they have.  Instead of confronting its arguments frontally, however, they would rather ignore the real arguments and attack a distorted, and un-cited position that is easier to defeat.  Even at that, they failed.   

And that is precisely why we're winning the big public policy battles--witness the Deficit Reduction Act--with our tiny war chest, augmented by strong evidence and logic, in spite of their specious sniping, funded by deep pockets. 

Steve Moses