Bullet: What's Really Happening to LTC?
Wednesday, July 11, 2007
LTC Comment: Still
mystified why America's LTC system is so messed up and impervious to
improvement? Read on, after
TODAY IS SEVEN ELEVEN.
MAKE IT A LUCKY ONE!
*** THIS LTC BULLET IS SPONSORED BY PETER GELBWAKS
in celebration of LTC Global Solutions' (www.ltcglobalsolutions.com)
acquisition of Gelbwaks Insurance Services (www.gelbwaks.com).
Gelbwaks and LTCGS's Tom Skiff, both veteran leaders and
innovators in the LTC insurance industry, believe they and their
professional teams will make a real difference working together to build
and improve long-term care insurance.
We congratulate both companies and their directors and
representatives on this promising merger and thank them both for their
past and on-going support of the Center for Long-Term Care Reform. ***
*** CHALLENGE MET:
Last week, we invited readers and Center members to pitch in so
Steve Moses can attend and report from the Long-Term Care Partnership
Summit meeting in Arlington, Virginia August 1-2.
We set an ambitious goal of $2,000 to cover travel, lodging, and
to offset time otherwise spent on fund raising or revenue-producing work
to sustain the Center. We
offer very special thanks to the following persons for their pledges of
support. In the order received: Charles
Arnold, Teresa Eagan, Gurdon Horner, Bill Lee, Bob Vandy, Pete Gelbwaks,
Jerry Dock, Phyllis Shelton, Phillip Sullivan, and Sally Leimbach.
Amounts varied but every pledge of support is greatly
appreciated. We dedicate
the "LTC Embed Reports" that will spring forth from this
important meeting to all those who pitched in so generously. ***
*** SPEAKING OF THE LTC PARTNERSHIP SUMMIT MEETING:
Here's the scoop. Mark Meiners, Professor and Director of the Center for Health
Policy, Research & Ethics at George Mason University, has announced
the revival of the LTC Education Foundation (which previously put on the
original 17-year-running "Private LTC Insurance Conference")
for the purpose of sponsoring "The First Annual Partnership Summit:
Charting the Future of Long-Term Care Insurance" to be held August
1-2, 2007 in Arlington, VA. The
meeting begins with a "pre-conference" on July 31.
For all the details and to register, go to http://www.gmu.edu/departments/chpre/ltcedfoundation/.
(Scroll right if your browser doesn't catch all the links.)
Be there if you can. This
one's important. ***
LTC BULLET: WHAT'S
REALLY HAPPENING TO LTC?
LTC Comment: If
you're still wondering . . . why most Americans are in denial about
long-term care . . . why our system remains plagued by institutional
bias . . . why a welfare program pays for most LTC in the wealthiest
country in the world . . . why access to and quality of care are so
questionable . . . why lawyers prosper but caregivers and LTCi producers
struggle in today's LTC system, read on.
The following opinion column by Steve Moses is
published in the current issue of Health
Insurance Underwriter (HIU).
Members of the National Association of Health Underwriters (www.nahu.org)
receive HIU for free. Learn
more and read the magazine online at http://www.nahu.org/media/index.cfm.
listen to the speech as originally delivered?
Access an MP3 or WMA audio recording at http://www.centerltc.com/speakers/center_speeches.htm.
Really Happening to LTC?," Health Insurance Underwriter,
Vol. 55, No. 7, July 2007, pps. 48-52; http://hiu.nahu.org/article.asp?article=1624.
Really Happening to LTC?
Presented at the 7th Annual Intercompany LTCI Conference in Dallas on
and Gentlemen: You have been sold a bill of goods.
topic today is "What's Really Happening to Long-Term Care?" I
could subtitle it: "How Ideological Bias and Special-Interest
Politics Are Ruining Long-Term Care for Everyone." Do I have your
is the "bill of goods" you've been sold?
goes something like this: Long-term care is expensive. People are
spending down catastrophically all across the country because of it. A
growing elderly population will need more and more LTC in the future.
Yet, people don't buy insurance against the risk. They're in denial and
the coverage is way too expensive and (whisper) not very good. People
don't even use their home equity for long-term care. What a mystery!
Given these circumstances, we have nowhere to turn but to government
programs. But the ones we have, Medicaid and Medicare, are no good
trap people in nursing homes, unnecessarily; provide questionable
quality, at best; and they're still breaking the bank.
best hope is social insurance: universal publicly financed health care
on the European or Canadian model, but including long-term care, unlike
most of those countries. Failing that, we should "re-balance"
Medicaid to pay for less expensive home and community-based long-term
care (which people want), instead of nursing home care (which they
any slick sales pitch, some of this is true. Most of it isn't. Is
long-term care expensive? Of course, but there is only a small risk of a
catastrophic loss, which means long-term care lends itself perfectly to
a private insurance solution.
people spending down catastrophically for long-term care? Of course not.
If they were, LTC insurance policies would be flying off the shelves.
Three-dozen "spend-down studies" proved long ago that asset
spend-down for long-term care is inconsequential.
people fail to buy long-term care insurance because it is too expensive,
too complicated and poor in quality? No! They don't buy insurance for
long-term care because the government has been giving it away for 40
wait a minute, you say. That can't be true. Everyone knows Medicaid
requires impoverishment and Medicare LTC financing is severely limited.
Will Rogers said: "It isn't what we don't know that gives us
trouble; it's what we know that ain't so."
is almost never an obstacle to Medicaid long-term care eligibility.
Anybody who can't afford private nursing home care--and that's almost
everybody--can qualify easily, based on income.
assets ARE severely restricted, but exempt assets have no hard limits.
equity was capped at $750,000 by the Deficit Reduction Act, but Medicaid
LTC recipients can still keep a business, automobile, home furnishings,
personal belongings, term life insurance, and pre-paid burial plans for
everyone in the family--of unlimited value.
that's before we even consider the unlimited asset transfers five years
in advance or the sophisticated "Medicaid planning" techniques
marketed widely by elder law attorneys.
OK, you say. Virtually anybody can get Medicaid to pay for long-term
care even after the insurable event has occurred.
Medicaid has a terrible reputation for poor access, quality, low
reimbursement, discrimination and institutional bias. No one in his/her
right mind would plan intentionally for that.
but the real problem is almost nobody's planning intentionally for
anything regarding LTC. Few people think about long-term care until it's
too late for insurance. Why? Simple. The government has funded most
formal, paid LTC for so long that the risk and cost isn't on anyone's
why 80% of the potential market for LTCI never rises to a level of
concern sufficient to speak with an insurance agent. And it's why only
1/3 to 1/2 of the remaining 20% actually buy the product.
people in possession of all the facts would buy LTCI to avoid Medicaid
dependency and to mitigate their biggest risk: the impending insolvency
of Social Security ($15 trillion unfunded liability), Medicare ($71
trillion), and Medicaid (bankrupt already.)
that's not what rational people are being told.
government (and its minions in the rent-seeking domain of consultants
and others who profit from the status quo) is talking out of both sides
of their mouths: out loud they say, "beware long-term care; buy
LTCI." But in practice
they strive to make Medicaid LTC even more attractive by providing more
HCBS that are easier to get with more and more generous eligibility
a disastrous path. Why? Because HCBS do not save money, but they do
leave the public thinking Medicaid is OK and getting better all the
time. That leads to a "woodwork factor," i.e., induced demand,
increased artificial impoverishment and a reduced market for private
the same path that has led us to the current brink of fiscal disaster.
And, there is an easy solution... more on that in a moment.
first, how'd we get into this mess where the Bush Administration, most
states, and all the academics and for-profit consultants are pushing
policy that can only make things worse?
and foremost, the problem is that there is a lot of money to be made by
milking the status quo for all its worth. But let's give the advocates
of government financing the benefit of the doubt and assume they're not
just greedy, self-serving and taking advantage of the easy money. Let's
say they're just honestly confused. How could that be?
look at the status quo and assume there's no solution but more
government money. They fail to ask the critical question: how'd
long-term care get so screwed up in the first place?
they asked that question, they'd see that when government made long-term
care free in 1965, it choked off a private market for HCBS and LTCI to
pay for them, it generated a deadly entitlement mentality, and it
created the deficient welfare-financed, nursing-home-based system we're
struggling so hard to fix now.
you understand that today's LTC system is the way it is because of
excessive and misguided government intervention in the marketplace, the
last thing in the world you'd recommend is more government funding for
more attractive publicly financed services. That would be like trying to
put out a fire by dousing it with gasoline.
going to happen if we follow the course recommended by most
"experts," and expand public financing of LTC and make it ever
more attractive and easier to get? To find the answer, look no further
than the experience of the private LTC insurance industry over the past
decade. When LTCI was mostly nursing home insurance, policy-holders were
loath to file claims. Who wants to go to a nursing home unless you
really need to be there?
LTCI expanded to include among its benefits home care, assisted living,
adult day care, respite care, case management, etc... The whole claims
dynamic changed. Now everyone with a policy wants to collect all the LTC
benefits they can legitimately claim and more if they can get away with
More claims from more insureds, higher costs, rising premiums,
tougher sales, lower profits, a flat or declining market, and companies
exiting the business. Sound familiar?
makes the advocates of government-financed long-term care think their
experience will be any different? Certainly, it won't. As Medicaid
converts from funding primarily nursing home care to primarily home and
community-based care, the welfare program--already a huge drain on state
and federal budgets--will undergo the same consequences as did the
private LTCi industry.
wit, demand for Medicaid will increase when the program offers services
people want instead of nursing home care. Medicaid estate planning will
grow if it gets people home- and community-based care, and even in some
states, Medicaid payments for relatives to provide the care. Demand for
private LTC insurance and reverse mortgages--the two major private
financing alternatives for long-term care--will decline even more than
already. Why pay premiums or use your home equity if government will
provide the services previously only available to private payers? Either
Medicaid program costs will explode or long lines will form of eligibles
waiting for access to services. Neither eventuality will please
consumers or voters. Clearly, both public and private financing of
long-term care are heading toward a total meltdown if we stay on the
current course. And it's all so completely unnecessary. The solution is
obvious and easy. Well, it's easy practically speaking, if not
solution is to target Medicaid-financed long-term care to people truly
in need. Stop using Medicaid as inheritance insurance for baby-boomer
heirs. Tighten up the eligibility rules; shut down Medicaid estate
planning; enforce liens and estate recoveries.
take some of the savings from these measures and use them to educate and
incentivize people to purchase long-term care insurance and to use home
these things and, within a decade, the long-term care financing crisis
will be resolved. Extra private financing will save the public safety
net. The elderly will get better care in the most appropriate settings
whether they pay privately or depend on public assistance. LTC providers
will thrive with more private financing and less dependency on
inadequate revenues from fiscally strapped public programs.
they can make a profit, Wall Street firms will again offer the debt and
equity capital to build, operate and maintain the huge infrastructure we
will need someday to care for aging boomers.
a nutshell, folks, this isn't "rocket science" as they say in
Washington, DC. But it does require some clarity and objectivity: a
willingness to confront the facts, to understand how and why we got into
this mess, and to follow the medical profession's timeless admonition:
"First, do no harm." Then, give Medicaid back to the people it
was originally intended to serve.
those two basic things, and savvy consumers in a free market will do the
rest. Thank you.