Bullet: LTC Embed:
Report from the Policy Front
Tuesday, March 13, 2007
LTC Comment: I'm
in Topeka to give legislative testimony on Medicaid and LTC financing in
LTC BULLET: LTC
EMBED: REPORT FROM THE
LTC Comment: Today,
I testify before three legislative committees of the Kansas state
legislature and meet with the Speaker of the House of Representatives
regarding our "Plain(s) Talk on Medicaid and LTC Financing"
report. The Center
for Long-Term Care Reform conducted this study with the Flint Hills
Center for Public Policy of Wichita, Kansas (www.flinthills.org).
You can read our report at http://www.centerltc.com/pubs/plains_talk_on_medicaid_ltc_in_kansas.pdf.
My handout for the committee is at www.centerltc.com/MosesHandOut.htm.
Following are my prepared remarks. More tomorrow on the outcome of these discussions.
"Plain(s) Talk on Medicaid and LTC
Mr. Chairman and members of the committee:
Thank you for inviting me to speak with you today
about a critical challenge our country and the State of Kansas face.
I'm here representing the Flint Hills Center for
Public Policy and my own organization, the Center for Long-Term Care
In a moment, I'll tell you about a study we
conducted and a report be published titled "Plain(s) Talk on
Medicaid and Long-Term Care Financing."
But first, let me say that the subject before us
today is extremely complicated.
Both the problem and the solution challenge the
intellect and are often counter-intuitive.
Therefore, I draw your attention to the handout
provided. It directs you to
many publications that elucidate this subject.
Simply go to the first website address provided on
the handout. That will take
you to an online version where all the hyperlinks for each of these
publications are live.
Also, my contact information is on the handout.
Please call or email me whenever you have questions or comments
on this issue.
Long-term care is a very expensive proposition.
Private nursing home rates in Kansas can easily run
$100 to $150 a day.
You might find an assisted living facility for half
that, but it still adds up fast and you may end up needing a nursing
home in time anyway.
Would you rather get your long-term care at home?
Even someone to help with chore or attendant services will set
you back $10 to $15 per hour. Figure on more than double that if you need skilled nursing
care at home.
And if you think long-term care is expensive today,
just wait two or three decades until the baby boom generation starts
needing it. Whew!
Of course, you only have to worry about the cost of
long-term care if you'll have to pay for it yourself, right?
Nowadays, in Kansas, and across the United States
for that matter, the vast majority of all professional long-term care
services are paid for by government programs.
The lion's share of long-term care costs are paid
by Medicaid. Medicare's a
big factor too. Private
insurance and so-called out-of-pocket expenditures are minimal
nationally, although relatively high in Kansas.
The huge role of government in paying for long-term
care is why public policy makers are so worried.
The Flint Hills Center for Public Policy asked me
and my organization, the Center for Long-Term Care Reform, to study
Medicaid and long-term care financing in Kansas and to recommend some
measures to meet this challenge.
Professor Greg Schneider and I spent a week in July
2006 interviewing 44 experts on every aspect of Medicaid and long-term
care in Kansas.
Our report was published by Flint Hills in
September 2006 and is available on their website at www.flinthills.org
and on the Center for Long-Term Care Reform's website at centerltc.com.
In a nutshell, here's what we found.
Long-term care in Kansas is extremely expensive.
Medicaid nursing home expenditures went from $109
million in 1980 to $232 million in 2004.
Home care costs rose much faster in the same time period, albeit
from a much smaller base: from
$1 million in 1980 to $38 million in 2004.
this is what led Senate President Steve Morris to tell us: "The
increases of recent years in Medicaid funding are unsustainable for the
Melvin Neufeld, at that time Chairman of the House Appropriations
Committee, said: "The
feeling in the House is that we're going to have to get control of
Medicaid has been very progressive and proactive in funding long-term
the lead and recommendations of academics, federal officials and other
states, Kansas has moved aggressively to finance lower cost home and
community-based services and to reduce the relative utilization of more
expensive nursing home services.
things are obvious to anyone who looks at the facts.
overall Medicaid long-term care expenditures remain huge despite the
greater focus on home care.
Medicaid is still the predominant payor for professional LTC services
whether in a nursing home or at home.
although we found more private financing of long-term care in Kansas
than is common elsewhere in the U.S., it's still true that out-of-pocket
spending for nursing home or home care in Kansas is the exception
instead of the rule.
and 14 percent of people over the age of 50 in Kansas own private
insurance that will pay for long-term care.
That's higher than most states, but still much lower than it
ought to be.
The use of
reverse mortgages to tap the enormous home equity wealth of seniors in
order to fund their long-term care is virtually unknown in Kansas.
Why is it
that the largest share of long-term care financing falls on a fiscally
strained public assistance program like Medicaid?
the answer by studying Medicaid eligibility rules and by speaking with
the policy specialists and field workers who make the eligibility
Bottom line, Medicaid-financed long-term care in Kansas
is easy to obtain. Despite
the conventional wisdom that Medicaid is welfare with draconian income
and asset spend-down requirements, the truth is very different.
Anyone with income below the cost of nursing home care
qualifies based on income.
There is no limit on assets held in exempt form, such as
home equity up to $500,000 plus a car, business, term life insurance,
home furnishings, and prepaid burial expenses of any value.
Married couples get even more generous income and asset
eligibility rules allowing a healthy spouse in the community to retain
more than $2500 per month of the institutionalized spouse's income and
more than $100,000 of their joint assets.
course, if you have way too much money for Medicaid, you can hire one of
the legal or financial advisors who specialize in artificial
self-impoverishment to qualify.
"Medicaid planning in Kansas" and got over one million hits.
Here's an example of the kind of thing you're likely to hear from
a Medicaid planner:
someone who is pursuing Medicaid eligibility, following are the types of
spend-down items, in no particular order, which should be considered:
Purchase pre-paid funeral plans. . .
Purchase a new car. . . Purchase of a new home. . . . Make home
improvements. . . [Take a ]
Vacation. . . . Believe it or not, the entire cost of that vacation can
come out of the nursing home spouse's spend-down. . . .
[D]on't let anyone tell you that anything spent must be done
solely for the benefit of the nursing home spouse. . . .
Finally, keep in mind that while some of these spend-down
strategies will not work as well for a single person qualifying for
Medicaid, there are other strategies that can work equally well, no
matter whether you are dealing with a single person or a married couple.
Contact our offices to speak with an experienced elder law attorney for
long-term care eligibility is way too complicated for me to explain in
the time available today, but my goal right now is only to pique your
interest and persuade you to read our report.
what we concluded and what we recommend.
care in Kansas IS hugely expensive and will become far more so as time
goes on and the Baby Boom generation ages.
programs like Medicaid and Medicare can't continue to pay most of the
cost of formal long-term care.
for example, has a $71 trillion unfunded liability. It won't continue to cover as much long-term care as it has
in the past.
Security has a $15 trillion unfunded liability.
It won't be able to offset such a large portion of Medicaid
long-term care costs as it has in the past.
must be done to attract new sources of long-term care financing into the
system to supplement and relieve the fiscal pressure on Medicaid and
only three such sources of new financing:
out-of-pocket expenditures, long-term care insurance, and home
equity conversion or reverse mortgages.
But no one
can reasonably expect the public to plan early and save, invest or
insure for long-term care when they can ignore the risk, avoid the
premiums for private insurance, wait to see if they ever need long-term
care and then easily pass most of the financial liability on to Medicaid
while passing their wealth, mostly home equity, on to heirs.
solution is to target Medicaid to people most in need, tighten income
and asset eligibility rules, recover from recipients' estates, and use
the savings to educate the public and incentivize them to insure
privately for long-term care or use reverse mortgages to fund their
anything else is to leave Medicaid what it has become today:
free inheritance insurance for the baby boom generation.
the federal government put a lot of new tools in states' hands last year
to reform Medicaid.
Reduction Act of 2005, enacted into law February 8, 2006, requires
look-back period from 3 to 5 years for uncompensated asset transfers
done to qualify for Medicaid . . . so we recommended that you implement
that change and publicize it so people know LTC is a personal
the comparable look-back period in Germany is 10 years.
also required state Medicaid programs to start any asset transfer
penalty at a later date than before in order to end the most common
Medicaid planning gambit--the half-a-loaf strategy . . . so we
recommended you implement this immediately to discourage that common
place practice of gaming the system.
But we also
recommended that you implement the DRA's stronger undue hardship rules
just in case someone unintentionally gets stuck with an unfair asset
suggested you cap Medicaid's previously unlimited home equity exemption
at $500,000 instead of opting for $750,000 as the DRA allows.
After all, even that lower limit is 14 times as much as Great
Britain, another socialized health care system, allows.
recommended that you:
discourage the use of annuities to self-impoverish to qualify for
Medicaid as mandated by the DRA.
Long-Term Care Partnership Program as authorized by the DRA.
the temptation to utilize the DRA's new authorities regarding expansion
of HCBS unless and until you get the Medicaid eligibility system under
recommended that you conduct studies to find out why people don't plan
for long-term care, to explore private financing alternatives like
insurance and home equity conversion, and to increase non-tax revenues
from Kansas' lien and estate recovery programs.
Chairman and members of the committee, I do encourage you to read our
report and to examine the other studies documented on my handout.
And if this
subject interests you, please feel free to visit the Center for
Long-Term Care Reform's website at www.centerltc.com
where you'll find many articles and reports explaining these issues in
much greater detail.
Thanks for your attention.