Bullet: The Future of LTC
Monday, November 20, 2006
LTC Comment: The
future of long-term care and Medicaid in less than 1000 words as
presented by Center president Steve Moses in congressional testimony:
after the ***news.***
*** LIZ TAYLOR'S FISCAL FIRE ALARM.
We've pointed you before to Liz Taylor's excellent biweekly
"Growing Older" column in the Seattle Times.
Read today's call for fiscal sanity here.
We'll add this piece to our "Unfunded Entitlement
Liabilities" section in the "Members Only Zone" at www.centerltc.com
so you can find it in the future. ***
*** WHAT DO YOU MAKE OF THIS? We received many replies to our query in Friday's LTC
E-Alert about UNUM Provident's report that 58 percent of its LTCi
claims were for beneficiaries under the age of 65.
Tomorrow's E-Alert will summarize this feedback and answer
the question. ***
Barry J. Fisher, CSA, LTCP of Republic Marketing Group, Inc., a
supporting member of the Center for Long-Term Care Reform, has an
article titled "The Real Uninsured Problem" in the November
2006 issue of Broker World magazine. ***
*** SUPPORT THE CENTER.
The Center for Long-Term Care Reform is able to carry on its
public policy research and advocacy because of your support. Individual memberships ($150 per year or $12.50 per month)
and corporate memberships (negotiable) make it possible for us to do the
studies, write the articles, influence the media, and fight for reform.
If you are not yet a dues-paying member, we invite you to join
our community of long-term care professionals pledged to be part of the
LTC financing solution. Contact
Damon at 206-283-7036 or email@example.com
to sign up, get your user name and password, and become part of our
campaign for rational long-term care policy. ***
LTC BULLET: THE
FUTURE OF LTC AND MEDICAID
LTC Comment: The
American Legislative Exchange Council (ALEC) published the following
testimony in its quarterly journal, the ALEC Policy Forum.
According to its website at www.alec.org:
"The American Legislative Exchange Council's mission is to
advance the Jeffersonian principles of free markets, limited government,
federalism, and individual liberty, through a non-partisan,
public-private partnership between America's state legislators and
concerned members of the private sector, the federal government and the
the citation, the URL and the article:
Stephen A. Moses, "The Future of Long-Term
Care and Medicaid," ALEC Policy Forum, Vol. 8, No. 3, Fall
2006, pps. 45-47, http://www.alec.org/meSWFiles/pdf/HHS/APF_-_Moses_-_DRA_and_LTC.pdf.
“The Future of Long-Term Care and Medicaid”
Statement of Stephen A. Moses
The Honorable Donald Manzullo (R-16-IL)
The Honorable Roscoe Bartlett (R-6-MD)
Monday, July 10, 2006
Roundtable Discussion, Hagerstown, MD
Mr. Chairman Manzullo and Vice Chairman Bartlett,
thank you for the opportunity to testify before you today about
Medicaid, long-term care financing, and the impact of the Deficit
Reduction Act of 2005 on those two critical issues.
I have submitted detailed written testimony which
explains and defends the Deficit Reduction Act’s important changes in
Medicaid eligibility rules and long-term care financing policies.
It took courage for members of Congress to pass
those critically needed, but politically sensitive changes. But instead
of receiving the kudos they deserve, they’ve been criticized. Why?
Medicaid is a means-tested public assistance
program. In a word, welfare. It is supposed to be the public assistance
safety net that guarantees access to quality long-term care for people
who are financially unable to provide for themselves.
Over the years, however, Medicaid has expanded to
become the primary third-party payor for long-term care for most
Americans, not just the needy.
Contrary to popular opinion, Medicaid long-term
care eligibility places no certain limits on program recipients’
income or assets.
Income may be unlimited if medical expenses,
including the cost of nursing home care are high enough. Assets may be
unlimited as long as they are held in exempt form, such as a business,
home, automobile, term life insurance, prepaid burials, etc.
Medicaid’s income and asset eligibility rules are
easily stretched even beyond these already highly generous limits.
Medicaid estate planning attorneys are in the
business of doing just that. By means of creative legal strategies, they
artificially impoverish middle-class and even affluent clients to
qualify them for Medicaid’s LTC benefits. This practice has had
devastating consequences for the program.
Today, Medicaid-financed long-term care has a
reputation for severe problems of access, quality, reimbursement,
discrimination and institutional bias. Yet, the program continues to
explode in cost.
Because Medicaid financing of long-term care has
been so readily available for forty years, the American people have
become anesthetized to the risk of long-term care. They rarely plan to
save, invest or insure for that risk. Therefore, most end up on Medicaid
when they need long-term care.
A crisis is approaching. As the Age Wave crests and
crashes over the next 30 years, America cannot sustain an $84 trillion
unfunded liability in the Social Security and Medicare programs, and
still provide welfare-financed long-term care to non-needy Americans.
That’s why the Deficit Reduction Act was such an
important measure. It removed some of the perverse incentives in public
policy that have discouraged responsible long-term care planning.
By extending the “look back” period from three
to five years, the DRA discouraged the common practice of giving away
wealth to qualify for welfare. By the way, the “look back” under
Germany’s socialized LTC system is 10 years, double ours.
By changing the date when a transfer of assets
eligibility penalty takes effect, the DRA eliminated the single most
common Medicaid planning strategy, called “half-a-loaf,” thus
removing the main reason people gave away assets to qualify for
By lowering Medicaid’s home equity exemption from
unlimited to no more than $750,000, the DRA discouraged the routine
Medicaid planning practice of “hiding money in the home.” By the
way, the home equity exemption is only $36,000 in the United Kingdom’s
socialized LTC system.
By restricting the use of annuities, self-canceling
installment notes, life estates and other egregious Medicaid planning
gimmicks of self-impoverishment, the DRA sent yet another clear message
to Medicaid estate planners that their practices are unwanted and
counter to clients’ and citizens’ best interests.
In 1996, Congress passed and then-President Clinton
signed a law that criminalized the practice of advising clients for a
fee to transfer assets to qualify for Medicaid. Although unenforceable,
that law clearly established bipartisan Congressional and Presidential
intent to preserve Medicaid as a long-term care safety net for the poor.
So, Congress should be praised for trying in the
DRA to save Medicaid. Instead they’ve been accused of denying access
to needed long-term care.
Critics have said the DRA will penalize people for
routine gifts to charities or grandchildren. They’ve said it will deny
people critically needed care after all their assets have been expended.
Such attacks are totally unfounded. Nothing in the DRA changes the clear statement in the Social Security Act that to be penalizable asset transfers must be done for the purpose of qualifying for Medicaid.
Routine gifts to family members, religious tithing,
and other asset transfers are exempt if they are not done for the
purpose of obtaining welfare benefits.
What about the claim that people will be denied
care when they need it most. That’s nonsense too.
The DRA eliminates the main reason people gave away
assets--the half-a-loaf strategy. That is, give away half your money and
qualify for Medicaid in half the time. Thus, Medicaid planners can no
longer recommend that strategy; there is no longer any reason for people
to give away assets; and therefore, no one should become vulnerable to a
But, what if it does happen? The DRA strengthened
the rules governing "undue hardship waivers" to protect people
who unwittingly incur a transfer of assets penalty.
Let me close by explaining the real reason for the
attacks on courageous members of Congress who voted for the Deficit
Medicaid estate planning has been a lucrative
sub-practice of the law for 25 years or more. Medicaid planners
routinely make six-figure incomes and seven-figure firm revenues
diverting Medicaid’s scarce resources from people truly in need to
their often-affluent clients.
The DRA makes this harder to do and that’s why
Medicaid planners oppose it and attack the people who voted for it.
Responsible public policy requires that we target
public assistance to people truly in need and encourage everyone else to
plan early, save, invest and insure for long-term care.
In the long run, that is the only way we can ensure
access to quality long-term care for all Americans—rich, poor and in
Stephen A. Moses is an advisor to the Health and Human Services Task Force at the American Legislative Exchange Council. He is also the founder and president of the Center for Long-Term Care Reform, Inc., based in Seattle. For more information, visit www.centerltc.com.