LTC Bullet: LTC
Tour in North Carolina; Report Published
Tuesday, January 22, 2008
LTC Comment: Links
to the Center's new report on LTC financing in North Carolina and a
video of Steve Moses's Shaftesbury Luncheon speech at the John Locke
Foundation in Raleigh, NC yesterday . . .
after the ***news.***
FLOCK TO LTC TOUR. By noon,
I'd done four radio interviews yesterday about the Center's new North
Carolina report and our "LTC Wake-Up Tour" They were with Jack Boston on WPTF 680 News Talk Radio (Raleigh's leading 50,000-watt news-talk station);
Mitch Kokai on Carolina
Journal Radio, the John Locke Foundation's weekly public affairs
program, which airs on 18 radio stations across the state; Matt
Willoughby on the North Carolina News Network, www.ncnn.com;
and Josh Ellis on State Government Radio, an internet-intensive
radio service that focuses on state government issues. ***
*** SPONSORS FLOCK TO LTC TOUR. We are pleased and gratified by the interest in and support
of the Center for Long-Term Care Reform's National Long-Term Care
Consciousness Tour by our Platinum, Gold, Silver and other Tour
sponsors. Our goal is to
have sponsors' logos emblazoned on the Silver Bullet of Long-Term Care
by early February. A
beautiful presentation packet, in which sponsors' information will be
presented at major events, is in the final stages of preparation.
If your company or organization is not on the Silver Bullet and
in our "presentation packet" already, ask yourself this:
what will people and producers think when they see the Silver
Bullet of Long-Term Care and attend our major functions, but you are not
represented? That problem is easy to fix.
Check out all the details about our LTC Wake-Up Tour at the top
Then contact Damon at 206-283-7036 or email@example.com
to receive a copy of our "sponsor's packet."
Finally, join the Tour as a sponsor, and we'll refer you to our
coordinating sponsor to handle all the details of signage,
representation in the presentation packets, and scheduling of your
events with Steve Moses headlining. ***
MR. LTC BLOG POST: "For those of you who are not yet members of the Center
for Long Term Care Reform, you're doing yourself and your industry a
disservice. The Center's
president, Steve Moses is the nation's strongest advocate on Medicaid
reform and wants to keep Medicaid available only for the truly needy,
which was it's original purpose. And
of course one way to do that is by having the public purchase LTCI.
So, by default, Steve strongly believes in LTCI.
He has just left on a 12 month barnstorming campaign throughout
the US, stopping in 37 states over the next year to promote his agenda.
He relies only on donations to fund his Center and if you're not
yet a member and you care about our industry the $150 per year
membership fee is a way to make a statement.
Here's his website: http://www.centerltc.com/.
There's some good stuff to view (even if you're not a member) and
a lot more available to members only.
Take a look and send him a check.
I have no vested interest in this, other than I believe what
Steve is doing is beneficial to our industry."
Rudnick, White Plains, NY ***
LTC BULLET: LTC
TOUR REACHES NORTH CAROLINA; REPORT PUBLISHED
LTC Comment: Last
June, I spent a week in North Carolina interviewing dozens of
legislators, public officials, LTC providers and senior financial
advisers about the state's long-term care service delivery and financing
Yesterday, the John Locke Foundation (www.johnlocke.org),
the State Policy Network (www.spn.org)
think tank that sponsored the study, published our report on LTC in
North Carolina. Here's the
citation and the link:
A. Moses, "Long-Term Care Financing in North Carolina:
Good Intentions, Ambitious Efforts, Unintended
Consequences," John Locke Foundation, Raleigh, North Carolina,
January 2008, http://www.johnlocke.org/site-docs/policyreports/NC_LTC_finance.pdf.
Following below is the report's "Executive
Summary" and "Conclusions and Recommendations" sections.
Special thanks are due to Joseph Coletti, the JLF's
Fiscal Policy Analyst, for his help in planning and executing the
project and for his fine skills editing the report.
Thanks also to Mitch Kokai, JLF's Communications
Director, for arranging four radio interviews for me before yesterday's
speech and for posting the report (and a video of my speech) on the
internet the same day it was published in hard copy.
To hear and see my speech about long-term care
financing in the United States and North Carolina, go to http://jlf.streamhammer.com/speakers/stephenmoses012108.mp4.
Summary and Conclusions and Recommendations sections from:
A. Moses, Long-Term Care Financing in North Carolina: Good Intentions, Ambitious Efforts, Unintended Consequences,
John Locke Foundation, Raleigh, North Carolina, January 2008, http://www.johnlocke.org/site-docs/policyreports/NC_LTC_finance.pdf.
care in nursing homes, assisted living facilities, or an individual's
own home, is the largest portion of North Carolina's Medicaid budget. It
is also the fastest growing portion of that budget. As the state's
population ages, it will drive even more demand for these services.
Medicaid was not meant to be inheritance insurance for baby boomers, but
current policy in North Carolina allows it to be exactly this.
Encouraging more people to rely on private payment options, such as
reverse mortgages or long-term care insurance, will mean lower state
costs for care and better results for individuals. This paper examines
the state of long-term care in North Carolina, current abuses of the
system, and private payment options.
Long-term care is labor-intensive, highly expensive, and bound to
require ever greater public and private capital investment and spending
Tax-financed public spending funds the vast majority of formal, paid
long-term care (LTC) services in North Carolina and throughout the
Exceptional efforts by North Carolina's Medicaid program to save money
by funding and providing care in less expensive home- and
community-based settings (instead of nursing homes) have not reduced
total long-term care expenditures by the state and counties.
By providing government-financed long-term care to growing numbers of
North Carolinians in more desirable, less restrictive home- and
community-based settings, the state may have increased the public's
complacency about LTC risk and cost, lack of planning, and public
Although North Carolina operates a Medicaid estate recovery program, the
state could reasonably expect to recover an extra $60 million per year
by implementing standards and methods used in more successful states.
Home equity is by far the biggest repository of wealth that seniors
could tap to fund high-quality long-term care in the private market. Yet
North Carolina has done nothing to encourage the use of home equity
Private long-term care insurance could be a viable funding source for
many North Carolinians. Its market is impeded by generous public
financing of long-term care, heavy marketing of Medicaid estate
planning, the absence of a public education campaign to encourage its
purchase and the lack of a strong sales force to market such a highly
specialized product that is so difficult to sell.
Because of long-term care's long tail - the need for insurers to set
aside premiums and invest reserves for decades in order to be able to
pay claims in the future - it may already be too late to save the
Medicaid safety net by redirecting long-term care financing in North
Carolina from taxpayer-generated current revenues toward
consumer-generated private savings and insurance. But the state should
begin that process immediately.
North Carolina should maximize every means to target public financing of
LTC to citizens most in need, use program savings thus generated to
educate the public about the need for LTC planning and to incentivize
LTC insurance and reverse mortgages for long-term care financing,
dramatically increase Medicaid estate recoveries and educate the public
that long-term care is a personal responsibility, not a government
public financing of long-term care services, in North Carolina as
elsewhere in the U.S., has had unintended effects. It has created
institutional bias in the LTC service delivery system and crowded out
sources of private LTC financing which would be far more likely, based
on consumer preferences, to be spent on and to encourage the development
of lower-cost home- and community-based care. Ironically, the more
government money North Carolina invests in improving publicly financed
long-term care, the more attractive it becomes - despite its problems of
access, quality and care-level bias - and the less likely consumers are
to plan early to pay privately for long-term care. As the Age Wave
begins to crest, the fiscal end game nears. At some point, probably not
far in the future, costs will trump revenue and this complicated,
convoluted system will fail.
what keeps such a dysfunctional system going in spite of all the logic
and evidence that cries out for reform? Arguably, Americans in general
and North Carolinians in particular have developed an "entitlement
mentality," an expectation that government will provide so personal
responsibility is unnecessary. People expect Social Security to
supplement retirement income and Medicare to pay for old-age health
care. Most do not give long-term care a second thought until they are in
a crisis. They do not plan consciously to rely on Medicaid, but because
Medicaid has been the primary payer for long-term care for the past 40
years, the public's denial of long-term care risk has been thus enabled.
People ignore the problem of long-term care until it's too late to save,
invest, or insure. At that point, Medicaid is the easiest and
financially most attractive alternative.
not for much longer. Medicaid LTC depends heavily on Medicare's generous
nursing home reimbursements to make up for the welfare program's
underfunding of institutional care. But Medicare's $75 trillion unfunded
liability guarantees it will not be able to prop up Medicaid
indefinitely. Likewise, Social Security income of people already
receiving Medicaid LTC benefits helps close the gap between what
Medicaid pays for long-term care and what LTC providers need to provide
decent care. But Social Security's $15 trillion unfunded liability
threatens to reduce that support to 75 cents on the dollar. The Social
Security Administration warns everyone covered by the program annually
that their benefits will go down by 25 percent unless the program's
financial shortfall is somehow filled. A third problem facing
continuance of Medicaid LTC levels in the future at levels approaching
those of the past is that the federal government is moving more and more
aggressively to discourage initiatives, commonplace for decades in North
Carolina, to shift costs from state to federal responsibility. Thus
mainstays like provider taxes, used now to maximize federal matching
funds without increasing state costs, are under scrutiny and likely to
the problem of financing long-term care is approaching critical mass.
LTC policy makers in North Carolina should follow the fundamental
principle of responsible medicine: "First do no harm." Stop
making the problem worse by funding too much LTC through public
programs, permitting easy access to government-financed care, and thus
preventing the growth of private financing alternatives. Unfortunately,
the state's hands are tied by federal rules that prevent full
application of this advice. So, North Carolina should do what it can do
Reconsider the public policy recommendations of the NCIOM LTC Task Force
that encourage spending more and more on public benefits without a
comparable emphasis on encouraging personal responsibility, early
planning, and private LTC financing alternatives.
Immediately implement all of the provisions of the Deficit Reduction Act
of 2005, including the $500,000 cap on Medicaid's home equity exemption,
the five-year look back for assets transferred to qualify for Medicaid,
and the change in the date of the asset transfer penalty.
If North Carolina's Medicaid planning bar continues to obstruct DRA
implementation, the Atlanta Regional Office of the Centers for Medicare
and Medicaid Services should require compliance with the law as a
condition of continued federal financial participation in North
Carolina's Medicaid program.
The state should conduct a study of Medicaid estate planning in North
Carolina, including a valid random sample of nursing home cases to
determine how widespread the practice is, how much it costs the state
and counties in service payments, how much is lost to estate recovery,
and to what extent program resources are being diverted away from North
Carolinians most in need.
North Carolina should carefully review the Medicaid estate recovery
program to find out why its collections are so much lower than those of
many other states. Study the laws, practices, and techniques used in the
more successful states and determine if they would be applicable to
North Carolina. Educate the public about estate recoveries and the
importance of planning early to avoid Medicaid dependency. Educate state
legislators and policy makers about the importance of preventing
Medicaid from becoming free inheritance insurance for baby boomer heirs.
Implement a Long-Term Care Partnership program to incentivize the
purchase of private coverage. Examine Department of Insurance policies
to be sure well-intentioned regulation is not preventing viable
marketing of affordable LTC insurance products in the state. Educate the
public about the importance of planning for long-term care through
savings, investments, and insurance.
Encourage the use of home equity conversion through reverse mortgages
and other means to fund long-term care in lieu of Medicaid dependency.
Consider removing regulations that interfere with the marketability of
RMs, such as the requirement that every borrower receive a face-to-face
briefing on the product. (Sometimes issues of cost or mobility make a
telephone counseling session more effective.)
Recognize that federal funding of LTC (through direct Medicaid funding;
provider taxes and other Medicaid-maximizing methods; Social Security
spend-through supplementing recipients' cost of care; and Medicare) is
likely to decrease rather than increase in the future. Integrate that
hard financial reality into long-range state budgetary planning.
• Resist the temptation to "spend and tax," i.e., expand LTC financing in good times and raise taxes to cover the inevitable shortfalls when bad economic times arrive. As the boomer generation retires and starts taking benefits out of Social Security and Medicare instead of putting payroll taxes in, future recessions may be deeper and recoveries less robust. When welfare rolls are up, tax receipts down, and budgets tight, take the opportunity to tackle public policy initiatives like the ones recommended here that may be too politically sensitive to implement when budgets are in surplus.