Bullet: The Eyes of Texas
are Upon Elder Care
Wednesday, December 6, 2006
LTC Comment: As
field work for the Center for Long-Term Care Reform and Texas Public
Policy Foundation's study of long-term care financing proceeds onsite, a
newspaper article scopes the problem.
Our comments follow below.
LTC BULLET: THE
EYES OF TEXAS ARE UPON ELDER CARE
LTC Comment: Our
study of Medicaid and long-term care financing in Texas proceeds apace.
Its goal is to identify ways and means to preserve Medicaid as a
viable safety net for long-term care by attracting more private
financing into the mix.
So far, we've met with representatives of Governor
Perry and the nursing home industry; with Medicaid LTC financial
eligibility specialists and with the state Medicaid director; with
representatives of the state legislature and with the Commissioner of
the Health and Human Services Commission, Texas' Medicaid agency.
Today, we're off to Dallas to interview field office eligibility
workers who actually take the applications for medical assistance,
review and verify them, and approve or disapprove qualification for
benefits. We'll also meet
with representatives of the home health industry.
Back in Austin on Thursday and Friday, we'll meet with state
staff who run Texas' new estate recovery program and with
representatives of the elder law bar, senior advocates, long-term care
insurance producers and reverse mortgage lenders.
After reviewing documents we've collected and reflecting on the
findings from the interviews, our report will be prepared, submitted and
reviewed in draft. Everything working as expected, it will be published in time
for the next session of the Texas legislature early in 2007.
In the meantime, an article published last Saturday
in the San Antonio Express-News, titled "Texas Eyes Elder
Care, Medicaid" and written by Aissatou Sidime, raises a lot of the
issues germane to LTC. Here
are excerpts from the article with our comments interspersed.
Read the whole piece at: http://www.mysanantonio.com/business/stories/MYSA120306.1R.LTC.1b69e59.html.
with a doubling of long-term care expenses in less than a decade, Texas
officials are looking at new ways to curb consumer demand for
state-funded elder care.
"Letters from Gov. Rick Perry soon will be
mailed to Texans aged 45 to 65 to encourage them to plan for long-term
physical and mental limitations that many will face as seniors. They will urge families to request a long-term-care planning
kit that explains government services and how consumers can go about
buying their own private insurance.
"Plus, next year it's likely that the
Legislature will approve a long-term-care partnership to let families
who buy insurance keep more financial assets for heirs and
LTC Comment: Hear,
is struggling to stem the rise in Medicaid costs - about two-thirds of
which are payments for long-term care of the elderly and disabled.
In Texas, Medicaid spent $206.1 million in 2003, the most current
figure, on long-term care. That's
more than double the $98.7 million spent in 1996. . . .
LTC Comment: Sounds
familiar. Same song, 51
similar verses in every state and the District of Columbia.
Texas has a lot of company in this particular mess.
state officials may face an uphill battle because of consumers'
conflicting needs and the limits of the health-care system.
"Long-term-care insurance is only one of
several financial priorities for consumers, planners say. First, families need to save more for retirement and get
disability insurance for their current income.
"Less than 5 percent of Texans older than 65
have long-term-care insurance, according to a 2004 study by the
nonprofit Center for Long-Term Care Financing. . . ."
LTC Comment: Thanks
for the plug.
means most seniors rely on family members and the state to fund their
nursing home and home care needs. . . .
"Texas and the federal government have tried
several other tactics, including setting restrictions on who could
receive Medicaid, with limited results.
"For instance, to get state-funded long-term
care through Medicaid, an individual faces income and asset
restrictions. The person is
limited to about $2,000 in cash, securities and property, other than a
primary residence; and no more than $1,797 in monthly income. . .
LTC Comment: Wrong!
Medicaid LTC eligibility is much less restrictive than that.
In addition to a home with equity as high as half a million
dollars, a Medicaid recipient can have a business, including the capital
and cash flow, one automobile, pre-paid burial plans for the whole
family, term life insurance, and home furnishings, all of unlimited
value. The income
"limit" will be $1,869 as of 2007 and that limit is easily
eliminated with a Miller income trust that Medicaid planning attorneys
all over the state of Texas are promoting heavily. Google "Medicaid planning in Texas" and browse
through the 1.1 million hits.
a small number of cases, seniors and family members have dumped money
into trusts and large homes to save assets for spouses and heirs before
applying for Medicaid. . . ."
LTC Comment: "Small
number?" Who says?
No one knows because no studies have been done.
insurance agents advise all working consumers to buy long-term-care
insurance, citing industry statistics showing that six of every 10
claims are from people younger than 65.
And the earlier a person buys it, the cheaper it is.
"At UnumProvident, a 45-year-old would pay a
minimum of $16.38 a month to buy a policy that would provide $2,000 in
services, including $1,000 of home health care, each month for three
years. But a 65-year-old
would pay at least $59.04 per month for the same policy."
LTC Comment: UnumProvident
sells mostly group policies for which the average buyers are in their
mid-forties. Their claims
experience is not representative, therefore.
But that doesn't mean people shouldn't purchase LTCi early, when
its less expensive. Total
premiums to hold a policy from age 55 to age 85 are one-third what they
would be to buy the same inflation-protected policy at age 75 and hold
it for only ten years.
planners say the policies aren't appropriate for everyone.
"Long-term-care insurance is necessary only
for people who do not want to spend all their assets on their care or
want specific nursing home services, said certified financial planner
James Russell Parker.
"'If you are not married or don't have a whole
lot of assets to protect, then you don't need to buy it,' said Parker,
of Preservation Wealth Management Group. . . ."
LTC Comment: That
is terrible advice, arguably malpractice.
Such advice comes from advisors who do not understand long-term
care. The main reason to
have long-term care insurance is not asset protection.
Medicaid planners offer that for a few thousand dollars after the
insurable event occurs. The
value added with a private long-term care insurance policy is the
financial wherewithal to maintain independence and to command red-carpet
access to top-quality care at the level and in the setting of one's
choice. The only other
choices are to pay for quality care from your own savings or rely on
Medicaid, a public assistance program already struggling financially
that is unsustainable in the future unless reformed to control
eligibility much more tightly.
get millions more Texans to buy long-term-care insurance, the state
needs to offer incentives for private employers to offer it as a
benefit, said Jerry Mathis, a chartered financial consultant and
co-owner of MAR Financial Group.
"And many more individuals would buy the
coverage on their own if federal tax laws provided a direct deduction,
he said. Now, taxpayers can
deduct medical expenses only if they exceed 7.5 percent of adjusted
"Long-term-care researcher Stephen Moses says
state legislators also will have to toughen enforcement of laws that
require estates to refund Medicaid costs if families hide assets.
"'If I don't feel pressured to buy
long-term-care insurance by a strong estate recovery and lien program,
I'm not going to feel any greater need to buy long-term care,' he
LTC Comment: As
worthwhile as education and incentives are to get the public concerned
about long-term care and buying private insurance coverage for it,
little will happen as long as the public can ignore the risk of
long-term care, avoid the premiums, wait to see if they ever need
expensive long-term care, and if they do, pass the cost on to the
That's the main flaw in the existing system that must be fixed. But therein lies the political dilemma. We can't afford to go on paying for long-term care for everyone through Medicaid, but we can't stop doing it without dire political ramifications. Such is the policy tightrope responsible public officials must somehow cross to get from one side of this fiscal chasm to the other.