LTC Bullet:  LTC Bias 

Thursday, January 25, 2007 


LTC Comment:  Bias in LTC policy plus national coverage of Jesse Slome's LTCI Summit after the ***news.*** 

*** WEBINAR.  Yesterday's LTC E-Alert about our forthcoming experimental, members-only "webinar" garnered more than 40 registrations in less than 24 hours.  Seems like we're on to something here.  We'll try to honor all the registrations so far.  Otherwise, hang tough.  We'll offer more web-based programs and education after this practice session is successfully completed. *** 

*** BOOMER BUCKS.  Remember the article by Barbara Whelehan we took to task in "LTC E-Alert #7-009:  We Fight Bad Media, Again" on Friday, January 19, 2007 (  True to her word, the author published extensive "reader feedback" here.  Check it out.  You'll find letters from Chris Perna, President of MedAmerica, Phyllis Shelton, well known author and LTC sales trainer, and yours truly. *** 

*** VIRTUAL TRADE SHOW.  Isn't this an interesting idea?  Follow up if you'd like to learn more about LTC providers' perspectives on long-term care issues.  Here's the email invitation we received: 

"Dear Colleague:  Tired of the hassle, expense and wasted time of traditional trade shows?  We have a unique solution:  The 2007 McKnight's Online Expo!  This FREE two-day event takes place March 14-15.  It gives you the benefits of a  traditional trade show such as interactive presentations led by some of the  country's top experts, as well as interactive vendor booths.  Get personal attention from the comfort of your own desk - or wherever your computer is.  No hassles, expenses or wasted time!  To  sign up for this FREE event or learn more, simply visit:" *** 



LTC Comment:  Steve Moses's articles on (1) bias in long-term care public policy and (2) the recent LTCI Summit conference in Austin, TX are 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 articles in the February 2007 issue at and, respectively.  


"Bias in Long-Term Care Favors Nursing Homes, Government" 

Written By: Stephen A. Moses
Published In: Health Care News
Publication Date: February 1, 2007
Publisher: The Heartland Institute

Bias pervades America's long-term care (LTC) service delivery and financing system. 

The system is biased in favor of nursing home care--which Medicaid pays for but which most people would rather avoid. It is biased against home- and community-based care--which Medicaid is much less likely to pay for, but which most aging Americans prefer when they require LTC. 

Perhaps most importantly, LTC in the United States is biased toward public financing (Medicaid and Medicare) and against private financing alternatives such as long-term care insurance (LTCi) and home equity conversion. 

Government Subsidies 

Government pays, directly or indirectly, for the vast majority of all paid LTC nationwide. According to the latest data available from the Centers for Medicare and Medicaid Services (CMS), Medicaid paid 44.3 percent of nursing home costs in 2004, and Medicare paid 13.9 percent. 

On top of that, more than half of the 27.9 percent of nursing home costs paid "out of pocket" were really just contributions from the Social Security income of people already on Medicaid. Thus, direct or indirect government payments accounted for nearly 75 percent of all nursing home expenditures. 

Similarly, Medicaid and Medicare paid 69.7 percent of all home health care costs in 2004. 

Private health insurance contributed only 7.8 percent of financing for nursing home care, and 12 percent of home health care costs. 

It's not surprising private insurance plays such a small role in financing nursing home and home health care. Only 15 percent of seniors and 5 percent of baby boomers have purchased private LTCi. 

According to a study by the National Bureau of Economic Research in 2004, Medicaid-financed long-term care crowds out two-thirds to 90 percent of the potential market for private LTCi. 

Pro-Government Bias 

Bias for public financing and against private financing is deeply ingrained in America's long-term care system. That won't change as long as government pays for most long-term care, even for middle-income and affluent people. 

Good public policy demands tough love. In this case it means targeting Medicaid LTC to those truly in need and encouraging everyone else to plan early to save, invest, or insure for long-term care. 

The new Deficit Reduction Act of 2005 (DRA) constraints on Medicaid eligibility, the Administration on Aging's "Own Your Future" Long-Term Care Awareness Campaign, and the Sisyphean efforts of LTCi agents to sell their product in spite of the obstacles they face are progressing ... slowly but surely. 

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

For more information ... 

"The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market," by Jeffrey R. Brown and Amy Finkelstein, National Bureau of Economic Research, December 2004,  

Own Your Future Long-Term Awareness Campaign,  

"Personal Health Care Expenditures, by Type of Expenditure and Source of Funds: Calendar Years 1997-2004," Centers for Medicare and Medicaid Services, table 10,  


"Long-Term Care Conferences Upbeat" 

Written By: Stephen A. Moses
Published In: Health Care News
Publication Date: February 1, 2007
Publisher: The Heartland Institute

The 2006 LTCi National Producers Summit, billed as "the largest LTC [long-term care] insurance sales event of the year," convened in Austin, Texas on November 4. Attending were 600 of the nation's leading LTCi agents. 

I call them AMGs--altruistic, masochistic geniuses--because they struggle to market a product (long-term care protection) that the government has been giving away since 1965. And the challenge is even more complicated than that because, as a direct result of generous public financing, consumers remain in near-total denial about the need for LTCi coverage. 

Nevertheless, the conference mood was upbeat. Patriotic posters proclaiming "Long-Term Care Insurance is Good for America" covered the walls. Hopeful speakers thanked the government for new public efforts to promote LTC planning, such as the Administration on Aging's "Own Your Future" campaign, the National Clearing House for Long-Term Care Information created by the Deficit Reduction Act of 2005 (DRA), and the ongoing expansion of the LTC Partnership program intended to encourage people to buy LTCi by partially forgiving Medicaid spend-down. 

Welcoming Government 

"The old saw, 'I'm from the government and I'm here to help you' is even true this time," observed Roy Gosselin, Prudential's new national LTCi sales manager. 

Jesse Slome, president of the American Association of Long-Term Care Insurance, who organized the conference and promoted LTC Awareness Week, said new government support for private LTCi is a "quantum leap forward" that will "absolutely increase sales." 

Mark Zesbaugh, CEO of Allianz Life Insurance Company of North America, another LTCi carrier, said, "I think the marketability of LTCi will increase because there will be reform to Medicare and Medicaid. There will be more responsibility on individuals. In their current forms, Medicare and Medicaid cannot last."

Biased Reporting 

I addressed the LTCi conference about provisions in the DRA--such as capping Medicaid's home equity exemption and imposing longer, stronger transfer of assets restrictions--that help target Medicaid toward more needy people and thus encourage personal responsibility, early LTC planning, and private financing alternatives like LTCi and reverse mortgages.

But maybe we're all just well-intentioned Pollyannas, hoping against hope that government will get out of the way enough to give the LTCi market a chance to succeed. 

It certainly seems that way when you see what Consumer Reports had to say last November about those AMGs' efforts to awaken America to the risks and costs of long-term care: 

"If the people who sell long-term-care insurance have their way, you'll soon feel even more agitated than you might feel already about your financial future," the editors of Consumer Reports wrote. "The American Association for Long-Term Care Insurance, the industry's trade group, has dubbed November 5 to 11 Long-Term Care Awareness Week and provided its 4,000 members with press kits to stir up local media interest in the topic. Why the public-relations push? One reason might be that a lot of money is up for grabs." 

This from a publication that has bashed private LTCi repeatedly for allegedly high premiums and doubtful benefits, without ever warning readers about Medicaid's access, quality, and reimbursement problems, nor cautioning them about Medicare's $71 trillion unfunded liabilities that make its future LTC coverage dubious at best. 

Such bias permeates the media, adds to the public's denial of LTC risk, and prevents market growth of private LTC financing products that could relieve the fiscal strain on public programs. 

More Alternatives 

The other conference I want to highlight is an elder law symposium hosted by the Notre Dame Law School on November 9. I was on a panel with three law professors, two of whom spoke on the topic of "Who Should Pay for Long-Term Care?" 

Richard Kaplan, a professor at the University of Illinois College of Law, thought we should solve the problems of Medicaid-financed long-term care by adding the benefit to Medicare. I responded that given Medicare's fiscal problems, "that would be like adding deck chairs to the Titanic after the incident with the iceberg." 

Lawrence A. Frolik, professor of elder law at the University of Pittsburgh, preferred a mandatory long-term care insurance system, government enforced, and based on compulsory payroll deductions along the lines of systems now operating in Germany and Japan. 

I observed that both those countries' LTC systems are severely strained financially, already economizing on benefits, and raising payroll deductions to delay insolvency. 

-- Stephen A. Moses 

For more information ... 

"Long-Term Care: Brace Yourself for a Scary P.R. Push,", November 2006.