LTC Bullet:  Plain(s) Talk on Medicaid and Long-Term Care 

Thursday, November 2, 2006 


LTC Comment:  How to save Medicaid and long-term care in Kansas, on the Great Plains, and everywhere else.  After the ***news.*** 

*** WHAT'S THE DIFFERENCE?  Story: "ORANGE CITY, Iowa -- A woman was sentenced Monday to 10 years in prison for stealing her disabled father's inheritance and disability payments. Sharon Ann Van Dorn, 43, of Orange City, pleaded guilty in September to first-degree theft after an investigation found she spent Social Security disability payments intended to pay for her father's nursing home. Her father, Jeffrey Eppinga, received an inheritance of about $60,000 in 2004, and Van Dorn spent that money as well and didn't report the money to Medicaid authorities."  Read this story here

Other than dotting legal "I's" and crossing legal "T's," how does what this woman is going to prison for differ from what Medicaid planning attorneys do?  The Balanced Budget Act of 1997 made it a crime, punishable by a fine and incarceration, to recommend asset transfers to qualify for Medicaid in exchange for a fee.  That law was deemed unenforceable after Congress repealed the "throw granny in jail" provision in the Health Insurance Portability and Accountability Act of 1996.  But it is still on the books and clearly shows the intent of Congress and President Clinton at the time. *** 

*** NH STAT YEARBOOK available on CD-Rom. Timely and comprehensive statistical insights into the U.S. nursing home industry are now in electronic format, on CD-Rom.  Published by Cowles Research Group, the Nursing Home Statistical Yearbook is an annual digest of over 100 tables, charts and graphs gleaned from the Center for Medicare and Medicaid Services' (CMS) databases.  Facility characteristics include payer mix, type of certification, staffing, size, and survey deficiencies. Resident characteristics include acuity levels and patterns of care. Data are presented on a state-by-state basis and include trend data. For research, advocacy, litigation, or public policy debate, the yearbooks provide the only source of current, accurate data on both residents and facilities.  Yearbooks are available for the years 2003 through 2005 on easy-to-use CD-Roms. Prior years are available in book form. They can be ordered through the website: *** 

*** METLIFE ALF SURVEY for 2006 has been posted to our "Long-Term Care Cost Surveys" section in The Zone to make it easy for you to find in the future.  Find the whole report here.  But here's the gist in case you missed it elsewhere. 

"Assisted living costs in the U.S. continue to rise, though moderately, according to a new report by the MetLife Mature Market Institute.  The private pay rate for an individual at an assisted living facility, according to the 2006 MetLife Market Survey of Assisted Living Costs, averaged $2,968 per month, or $35,616 yearly. That's up 2.2% or $63 from 2005 and 17.6% from 2004. Rates range considerably by region with North Dakota the lowest ($1,742 monthly) and the Bridgewater, New Jersey area the highest ($5,197 monthly)." *** 



LTC Comment:  Steve Moses's article on Medicaid and long-term care in Kansas is republished below with permission from Health Care News.  Health Care News is The Heartland Institute's national monthly outreach publication for free-market health care reform.  The Heartland Institute is a 501c3 charitable, nonprofit organization devoted to discovering and promoting free-market solutions to social and economic problems.  Visit Heartland at  Read Health Care News at  Find Steve's article in the November 2006 issue at  

This article recounts findings and recommendations from a study conducted by Moses and the Center for Long-Term Care Reform in Kansas with the support and active participation of the Flint Hills Center for Public Policy.  The Flint Hills Center, an influential think tank in Wichita, Kansas, is a dynamo of analysis and activism on Medicaid.  Its adjunct scholars, including Matt Hisrich and Michael Bond of the Buckeye Institute in Ohio and historian Greg Schneider, have published dozens of op-eds, articles, and reports on Medicaid reform.  We particularly wish to thank Flint Hills Director George Pearson for enthusiastically supporting this project and Dr. Schneider for his work planning, participating in, and publicizing the study. 

Flint Hills' long and detailed "Medicaid Handbook," distributed to all state legislators and the media, is a treasure chest of information, analysis and advice available at  The report described by the following article is at  If your first thought is "What can I learn from Kansas?," you have a very pleasant surprise coming on a whole range of issues at  


"Plain(s) Talk on Medicaid and Long-Term Care" 

Written By: Stephen A. Moses
Published In: Health Care News
Publication Date: November 1, 2006
Publisher: The Heartland Institute 

How can a state cope with the growing cost of Medicaid long-term care? The Flint Hills Center for Public Policy of Wichita, Kansas tackled that question in a study I conducted for it in July 2006. The lessons we learned--explained in "Plain(s) Talk on Medicaid and Long-Term Care in Kansas"--apply to any state. 

Our "Plain(s) Talk" conclusions and some quotes from the report follow this summary.

Struggling to Fund 

Like most states, Kansas struggles to fund long-term care (LTC) through its Medicaid program. Like Oregon and Washington, Kansas pushed hard to reduce high-cost nursing home care and replace it with ostensibly cheaper home- and community-based services (HCBS). 

But that strategy backfired. It made Medicaid more desirable, unleashed pent-up demand for Medicaid-financed care, increased the problem of Medicaid estate planning (artificial self-impoverishment to qualify for Medicaid), and impeded demand for private financing alternatives such as insurance (LTCi) and home equity conversion (HEC, e.g., reverse mortgages). 

Consequently, Kansas' Medicaid program is sliding toward financial insolvency. 

The state should aggressively implement provisions in the Deficit Reduction Act of 2005 (DRA) to discourage excessive dependency on Medicaid and to encourage personal responsibility for and private financing of LTC. That is, Kansas (and every other state) should quickly enforce: 

* the DRA's five-year transfer-of-assets look-back;
* the new penalty date to stop the half-a-loaf Medicaid planning strategy;
* the $500,000 cap on Medicaid's home equity exemption;
* the restrictions on the use of annuities to qualify for Medicaid;
* the other DRA provisions restricting access to Medicaid by the well-to-do; and
* the expanded LTCi partnership program. 

Drawing Conclusions 

Conclusion 1: Medicaid's LTC and other medical services for the elderly place a heavy strain on state finances, divert government resources from other priorities such as children, and pose a fiscal challenge for the future. 

"The increases of recent years in Medicaid funding are unsustainable for the state," Kansas Senate President Steve Morris (R-Hugoton) said. "In the 1960s Medicare was created by the federal government as a safety net for seniors. Now state Medicaid programs ... are assuming a large part of the financial burden for vulnerable seniors." 

Conclusion 2: Generous and elastic Medicaid LTC eligibility criteria bode ill for Kansas' ability to fund home-based and nursing home care in the future. 

Kansas Medicaid LTC eligibility policy expert Jeanine Schieferecke told us, "The general public is aware of Medicaid planning [artificial self-impoverishment to qualify for Medicaid LTC benefits]. When my mom came to me and asked about Medicaid planning, I knew it was big." 

Asked to identify the upper and lower ends of his firm's Medicaid planning clientele, one elder law attorney said, "I have three cases sitting on my desk right now; with $70,000 to $100,000 houses and pensions around $2,000 per month. That's the lower end of the scale. At the upper end, I have one with $450,000 in countable assets but no home equity." 

Another agreed: "My range is the same on the upper end. ... At the lower end of the range would be a married couple in the $30,000 area who are just terrified to deal with the state." 

Conclusion 3: Kansas has cost-effectively evolved its LTC service delivery and financing system toward less nursing home care and more home care (using Medicaid's HCBS waivers), but future prospects for continued success are questionable. 

Said Kansas Medicaid Director Scott Brunner, "One thing the [HCBS] waivers do is create demand. People can live at home with support from their family or go to [the] nursing home as a Medicaid entitlement, but HCBS waivers create the option to get care and financial help from Medicaid at home. So, there is not enough [Medicaid] money if everyone gets HCBS." 

Conclusion 4: Although operating a reasonably successful Medicaid estate recovery program, Kansas is clearly not maximizing potential recoveries. To the extent recoverable wealth remains unrecovered, Kansas Medicaid is operating as "inheritance insurance" for heirs instead of as an LTC safety net for people in need. 

Conclusion 5: Home equity conversion is an enormous but largely untapped potential funding source for LTC in Kansas that could substantially relieve fiscal pressure on Medicaid and state taxpayers except that Medicaid exempts the home and all contiguous property up to as much as $750,000. 

A reverse mortgage specialist said, "We're probably one of the last states to get really involved [in reverse mortgages (RMs)]. At this point in my experience, [using RMs to fund LTC] has come up only a couple times. Medicaid is a given, so people don't worry about LTC." 

Conclusion 6: Although quality affordable LTCi is available in Kansas, too few people buy it--partly because of its cost and complexity, but mostly because consumers do not perceive that LTC is a big financial risk for them. In fact, they are right, because of the generous availability of Medicaid-financed care. 

LTCi expert Claude Thau observed that Kansas' market share of annualized LTCi premiums sold dropped 11 percent this year. 

"I think it is reasonable to say Kansas was among the 10 states with the largest drop," Thau said. 

Ominously, we also learned that a carrier dropped the LTCi plan for state employees because of lack of participation. 

The LTCi agents we interviewed said, "[Medicaid planners are] very strong here in Kansas. Potent competition. They run lots of commercials on the radio: 'Do you have an Alzheimer's diagnosis? Then see an elder law attorney. Come see us quick before you lose everything.' This absolutely impairs the market for our product." 

Conclusion 7: Kansas should implement, enforce, and publicize new federal rules and guidelines from the DRA to restrict Medicaid LTC eligibility, discourage Medicaid estate planning, and encourage private financing alternatives such as HEC and LTCi. 

Calling for Action 

The report closes with this "Heartland Manifesto": 

* Kansas' public-assistance budget is limited. The state's first responsibility is to take care of the truly poor and disadvantaged. 

* The middle income and well-to-do should pay privately for LTC to the extent they are able without suffering financial devastation. 

* Homeowners who need LTC should pay for it privately by using their home equity with the help of reverse mortgages. 

* Prosperous people who rely on public assistance for LTC should reimburse the taxpayers before giving away their wealth to heirs. 

* Seniors and their heirs who wish to avoid such recovery from the estate should plan ahead, purchase private LTC insurance, and pay privately for care when the time comes. 

Stephen Moses ( is president of the Center for Long-Term Care Reform in Seattle.