LTC Bullet:  LTC Tour in North Carolina; Report Published 

Tuesday, January 22, 2008 

Selma, NC-- 

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.*** 

***  MEDIA 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,; 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 of  Then contact Damon at 206-283-7036 or 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:  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."  Source:  Arthur Rudnick, White Plains, NY *** 



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 system. 

Yesterday, the John Locke Foundation (, the State Policy Network ( think tank that sponsored the study, published our report on LTC in North Carolina.  Here's the citation and the link: 

Stephen A. Moses, "Long-Term Care Financing in North Carolina:  Good Intentions, Ambitious Efforts, Unintended Consequences," John Locke Foundation, Raleigh, North Carolina, January 2008,

Following below is the report's "Executive Summary" and "Conclusions and Recommendations" sections.  But first: 

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  


Executive Summary and Conclusions and Recommendations sections from: 

Stephen A. Moses, Long-Term Care Financing in North Carolina:  Good Intentions, Ambitious Efforts, Unintended Consequences, John Locke Foundation, Raleigh, North Carolina, January 2008,

Executive Summary 

Long-term 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 for services. 

Tax-financed public spending funds the vast majority of formal, paid long-term care (LTC) services in North Carolina and throughout the United States. 

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 dependency. 

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 conversion. 

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 entitlement. 


Conclusions and Recommendations 

Well-intentioned 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. 

So 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. 

But 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 be curtailed. 

Consequently, 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 as follows: 

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.