LTC Bullet:  The Eyes of Texas are Upon Elder Care 

Wednesday, December 6, 2006 

Dallas, TX-- 

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 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:

Excerpts:  "Faced 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 spouses." 

LTC Comment:  Hear, hear! 

Excerpts:  "Texas 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. 

Excerpts:  "But 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. 

Excerpts:  "That 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. 

Excerpts:  "In 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. 

Excerpts:  "Many 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.  

Excerpts:  "Financial 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. 

Excerpts:  "To 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 gross income. 

"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 said." 

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 government.  

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.