Bullet: So What If the
Government Pays for Most LTC?, 2006 Data Update
Thursday, January 16, 2008
LTC Comment: Heads
up! We're about to explain
why long-term care insurance sales have disappointed, why people don't
"use their homes to stay at home" and why LTC providers who
depend on public financing are at risk.
After the ***news.***
*** WHAT WOULD MLK SAY?
nursing home residents are one-third more likely to be hospitalized than
their white counterparts, according to university researchers who
analyzed data on more than 500,000 residents and 9,000 facilities
recently. Nearly a quarter (24.1%) of black residents were hospitalized
in the study period (2000 onward), while 18.5% of white residents were
hospitalized during the same span. Researchers associated with Brown
University's Albert Medical School said conditions ranged from pressure
ulcers to dehydration and malnutrition.
Not that simple:]
percentage of residents who had to be hospitalized was strongly
correlated with the residents on Medicaid, which also was strongly tied
to facilities with limited resources,' said lead study author Andrea
Gruneir. Her report, which is to appear in the June issue of the journal
Health Services Research, concludes the racial admissions differences
could be lessened by devoting more resources to facilities that most
rely on Medicaid funding." Source:
McKnightsonline.com Daily Update, 1/16/8.
Comment: A better solution
would be to improve Medicaid as a safety net for people truly in need by
targeting it to the poor. Then
use the savings to attract more private financing to the LTC system by
encouraging LTC insurance, reverse mortgages, and LTC planning.
That is the only way to improve long-term care for everyone:
rich, poor and in between. ***
LTC TOUR SPONSOR PACKET. Check
it out at http://www.centerltc.com/LTC_Tour_Sponsor_Packet.pdf
. You'll find the whys and
wherefores of the LTC Tour; the sponsor levels, benefits and costs;
pictures of the Silver Bullet of LTC with sizing and positioning of
sponsors' signage; our schedule and itinerary and more.
Too small to sponsor at the higher levels?
There's a wonderful role for you too.
Become a Regional Representative of the Center for Long-Term Care
Reform and work with me in your local area to organize speaking events,
attract media attention, and wake the public up about LTC planning.
For those details, go to http://www.centerltc.com/Regional_Rep-Sponsor_Level.htm.
*** MORE MEDIA COVERAGE OF THE TOUR:
"Where in the Heck is Steve Moses This Month?
The Center for Long-Term Care Reform's Steve Moses is taking the
issue of long-term care on the road.
In a specially-equipped Airstream trailer (the Silver Bullet) http://www.centerltc.com/LTC_Grad_Seminar/SILVER_BULLET_of_LTC.htm,
Moses will travel around the country and discuss the problems with
Medicaid expansion and long-term care insurance as a private sector
alternative. Read his
latest update here http://www.centerltc.com/bullets/latest/738.htm.
If you would like to schedule an event with Steve, get more
information here http://www.centerltc.com/bullets/archives2007/714.htm."
Medicaid Exchange, 1-15-2008. This
newsletter is published by the National Center for Policy Analysis in
Dallas, TX and is a wonderful resource for news and analysis about all
aspects of Medicaid.) ***
YESTERDAY ON THE TOUR, I worked with the Center's Miami Regional
Representative George Braddock of G. Holmes Braddock & Associates.
George and I and "Fearless Caregiver" Gary Barg (www.caregiver.com)
were interviewed by Joseph Cooper, host of the WLRN 93.1 "Topical
Currents" show. We
hope to have a link for you to that hour-long call-in program by early
next week. Later in the
day, Regional Rep Braddock interviewed me on video at the University of
Miami's state-of-the-art broadcast studio for a program we also want to
make available to you soon.
with only two weeks of the LTC Tour behind us, I'm constantly amazed at
the resourcefulness and creativity of the Center for Long-Term Care
Reform's Regional Representatives.
Together we will continue throughout this year to wake up America
to the importance of responsible long-term care planning and rational
LTC public policy. If you
want to join the LTC Tour as a Regional Rep of the Center, contact Damon
at 206-283-7036 or email@example.com
for details. When you
qualify, you'll work directly with me to plan speaking events and media
opportunities in your area. ***
LTC BULLET: SO
WHAT IF THE GOVERNMENT PAYS FOR MOST LTC?, 2006 DATA UPDATE
LTC Comment: Once
a year around this time the Centers for Medicare and Medicaid Services
(CMS) report health care expenditure data for the latest year of record.
Recently, CMS posted 2006 statistics on its website at http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf.
The current issue of Health
Affairs (Vol. 27, Issue 1, pps. 14-29) contains a summary and
analysis of the new data titled "National
Health Spending in 2006: A
Year of Change for Prescription Drugs."
Registered subscribers to Health
Affairs can access the full text of the article online at http://content.healthaffairs.org/cgi/content/full/27/1/14#T1.
is our annual analysis of the new nursing home and home health care
"So What If the Government Pays for Most LTC?,
2006 Data Update"
Ever wonder why LTC insurance sales and market
penetration are so discouraging? Or
why reverse mortgages are rarely used to pay for long-term care? Or why LTC service providers are always struggling to survive
financially and still provide quality care?
America spent $124.9 billion on nursing home care
in 2006. The percentage of
nursing home costs paid by Medicaid and Medicare has gone up over the
past 36 years (from 26.8% in 1970 to 60.1% in 2006, up 33.3 % of the
total) while out-of-pocket costs have declined (from 52.0% in 1970 to
26.4% in 2006, down 25.6% of the total).
SO WHAT? The
consumer's liability for nursing home costs has declined almost by half
in the past three and a half decades, while the share paid by Medicaid
and Medicare has more than doubled.
No wonder people are not as eager to buy LTC
insurance as insurers would like them to be!
No wonder they don't use home equity for LTC when Medicaid
exempts the home. No wonder
nursing homes are struggling financially--their dependency on stingy
government reimbursements is increasing while their more profitable
private payers are disappearing.
Unfortunately, these problems are even worse than
the preceding data suggest. Over
half of the so-called "out-of-pocket" costs reported by CMS
are really just contributions toward their cost of care by people
already covered by Medicaid! These
are not out-of-pocket costs in terms of ASSET spend down, but rather
only INCOME, most of which comes from Social Security benefits, another
government program. Thus,
although Medicaid pays less than half the cost of nursing home care
(43.4% of the dollars in 2006), it covers two-thirds of all nursing home
residents. Because people
in nursing homes on Medicaid tend to be long-stayers, Medicaid pays
something toward nearly 80 percent of all patient days.
SO WHAT? Medicaid
pays in full or subsidizes four-fifths of all nursing home patient days.
If it pays even one dollar per month (with the rest contributed
from the recipient's income), the nursing home receives Medicaid's
dismally low reimbursement rate.
No wonder the public is not as worried about
nursing home costs as LTC insurers think they should be.
No wonder nursing homes are facing insolvency all around the
United States when so much of their revenue comes from Medicaid, often
at reimbursement rates less than the cost of providing the care.
Don't be fooled by the 7.4% of nursing home costs
that CMS reports as having been paid by "private health
insurance" in 2006. They
derive that number by subtracting all the known costs from 100% and
reporting the remainder as private insurance.
No one knows how much private health insurance really pays toward
nursing home care, because most long-term care insurance pays
beneficiaries, not nursing homes. Thus,
a large proportion of insurance payments for nursing home care gets
reported as if it were "out-of-pocket" payments because
private payers write the checks to the nursing home but are reimbursed
by their LTC insurance policies. This
fact further inflates the out-of-pocket figure artificially.
How does all this affect assisted living
facilities? ALFs are 90%
private pay and they cost an average of $35,628 per year (Source:
MetLife survey at http://www.metlife.com/WPSAssets/84950851901193758502V1F2007NH.AL.pdf).
Many people who could afford assisted living by spending down
their illiquid wealth, especially home equity, choose instead to take
advantage of Medicaid nursing home benefits. Medicaid exempts one home and all contiguous property (up to
$500,000 or $750,000 depending on the state), plus one business, and one
automobile of unlimited value, plus many other non-countable assets, not
to mention sophisticated asset sheltering and divestment techniques
marketed by Medicaid planning attorneys.
Income rarely interferes with Medicaid nursing home eligibility
unless such income far exceeds the cost of private nursing home care.
SO WHAT? For
most people, Medicaid nursing home benefits are easy to obtain without
spending down assets significantly and Medicaid's income contribution
requirement is usually much less expensive than paying the full cost of
No wonder ALFs are struggling to attract enough
private payers to be profitable. No
wonder people are not as eager to buy LTC insurance as insurers would
like them to be.
The situation with home health care financing is
very similar to nursing home financing.
According to CMS, America spent $52.7 billion on home health care
in 2006. Medicare (37.6%)
and Medicaid (33.6%) paid 71.2% of this total and private insurance paid
11.4%. Only 11.2% of home
health care costs were paid out of pocket.
The remainder came from several small public and private
financing sources. Data
Tables 4 and 11.
SO WHAT? Less
than one out of every nine dollars spent on home health care comes out
of the pockets of patients and a large portion of that comes from the
income (not assets) of people already on Medicaid.
No wonder the public does not feel the sense of
urgency about this risk that long-term care insurers think they should.
line, people only buy insurance against real financial risk.
As long as they can ignore the risk, avoid the premiums, and get
government to pay for their long-term care when and if such care is
needed, they will remain in "denial" about the need for LTC
insurance. As long as
Medicaid and Medicare are paying for a huge proportion of all nursing
home and home health care costs while out-of-pocket expenditures remain
only nominal, nursing homes and home health agencies will remain starved
for financial oxygen.
solution is simple. Target
Medicaid financing of long-term care to the needy and use the savings to
fund education and tax incentives to encourage the public to plan early
to be able to pay privately for long-term care.
For ideas and recommendations on how to implement this solution,
especially "The Realist's Guide to Medicaid and Long-Term
Care" at http://www.centerltc.org/realistsguide.pdf
the Deficit Reduction Act of 2005, Congress took some small steps toward
addressing these problems. A
cap was placed on Medicaid's home equity exemption and several of the
more egregious Medicaid planning abuses were ended.
But much more remains to be done.
With the Age Wave starting to crest and threatening to crash over
the next three decades, we can only hope it isn't too late already.
A. Moses is president of the Center for Long-Term Care Reform in
Seattle, Washington. The
Center's mission is to ensure quality long-term care for all Americans. Steve Moses writes, speaks and consults throughout the United
States on long-term care policy. He
is the author of the study "Aging America's Achilles' Heel:
Medicaid Long-Term Care," published by the Cato Institute (www.cato.org).
Learn more at www.centerltc.com
or email firstname.lastname@example.org.