LTC Bullet: The LTC Score

Thursday, May 15, 2008


LTC Comment: How the Congressional Budget Office (CBO) "scores" proposed legislation helps or hinders passage often inversely to the proposals' merit. LTC tax deductibility is a case in point, after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a Master General Agent who helps LTCi producers nationwide. Claude is the lead author of Tillinghast Broker World Individual and Group LTCi Surveys. His mentoring skills help you build whichever market suits you best (individuals, executive carve-out, multi-life, affinity, financial institutions, referrals from other professionals, etc.). Claude has been actively involved in the State Partnership movement and has campaigned to allow independent review of LTCi claims. Test Claude by calling 800-999-3026, x2241 to discuss opportunities or ***

*** LTC TOUR RESUMES. My second respite from the rigors of the LTC Tour is coming to an end. I'll board a ViaRail train in Vancouver, British Columbia on Sunday, May 18 for the three-day, three-night journey to Toronto, Ontario. Arriving there, hopefully on time, at 8PM Eastern on May 21, I'll bus to the airport, retrieve the Silver Bullet's FJ Cruiser tow vehicle from long-term parking, and head to Cleveland, Ohio for an interview with Long-Term Living, a leading LTC provider trade magazine. Thence on to Jackson Center, the tiny town in Ohio where Airstream built the Silver Bullet, and where our LTC Tour's media magnet awaits my return after three weeks in the loving arms of its mother and a full servicing of all her many systems. Then the Silver Bullet, the LTC Tour, and I will proceed full speed ahead toward Washington, DC where one of our first activities will be to meet with a delegation from the Prime Minister's office of the United Kingdom. They wonder why LTC insurance has not taken off in the U.S.A. and I have a few things to tell them about that. Furthermore, what I have to say is very relevant to the future prospects of the embryonic private LTC insurance market in the UK! Stay tuned for more exciting adventures from the National Long-Term Care Consciousness Tour. ***

*** SUPPORT THE CENTER AND THE TOUR. Traveling the country (especially at the ground level with today's gas prices) to beat the drum for responsible LTC planning and rational LTC public policy . . . IS VERY EXPENSIVE! If you appreciate what we're trying to do, please help. Be part of the solution. Join the Center with a $150 annual membership; or get your organization or company to join with a group membership (negotiable.) Bring the LTC Tour and the Silver Bullet of LTC to your town while the cost is nominal during this year's road trip. We're having a lot of fun and making a big difference. Find out how to get involved: call or email Damon at 206-283-7036 or He can refer you to Regional Representatives of the Center for Long-Term Care Reform who have already hosted the LTC Tour, scheduled successful programs for the public and financial advisors, and attracted important media attention to our issue AND to their own businesses. Seek their advice. Then if you want to participate, work directly with Steve Moses to plan and accomplish your LTC Tour program. ***



LTC Comment: The "white knight" for long-term care insurers is tax deductibility. Above-the-line preferably; part of cafeteria plans as a fall-back; or through IRA/401(k) plans at least.

Tax deductibility for LTCI would certainly help. Let's leave aside today the more fundamental issue that the private insurance market will never really take off, regardless of tax deductibility or education efforts, as long as the government pays for the vast majority of home care and nursing home care for middle class and affluent people.

What's holding back tax deductibility for LTCI? Simple. The government figures it would cost too much. How does the government know that? CBO estimates (scores) the cost of every proposal.

Therefore, exactly how CBO schedules LTCI tax deductibility proposals is critical to their prospects for passage. Unfortunately, the methods CBO uses handicap the proposals unfairly.

The following (slightly abbreviated) column by Merrill Matthews, Director of the Council for Affordable Health Insurance (, explains how CBO scoring impedes good public policy regarding LTCI tax deductibility.

Read Merrill's thoughtful piece, but don't despair. There is a way to pass all three kinds of LTCI tax deductibility AND finance a much-enhanced education program to encourage responsible LTC planning.

How? Improve Medicaid and cut its cost radically by targeting the program to people truly in need. Use the savings to fund LTCI tax deductibility and public LTC education. You'll have enough left over, no matter how daunting the CBO scores, to improve Medicaid radically for a smaller number of genuinely needy recipients. (For details, see the articles, speeches and reports at

Furthermore, government and the tax payers will reap the added benefit of Medicaid savings and improved care for all that a supercharged market for private LTC insurance will deliver. CBO's mis-calculations to the contrary, notwithstanding.


The following column is republished with permission from the author.

And Now You Know...

by Merrill Matthews, CAHI Director

The biggest enemy of moving to a consumer driven health care system may not be those wanting a government-run system, but the way certain federal agencies "score" various pieces of legislation.

Before Congress can vote on a bill, it must get an estimate, or score, from the Congressional Budget Office (CBO) or the Joint Tax Committee of how much money the legislation will cost or save the federal government.

To most Americans, that sounds like a reasonable procedure. Don't most families, before remodeling a room, estimate how much the project will draw from the family budget and whether that's a workable number?

But like so many things in Washington, it's not that easy. Take, for example, the long term care (LTC) legislation that CAHI has supported for several years. The legislation would allow workers to pay their long term care premiums out of their tax-deferred IRA or 401(k) account. Rep. Lee Terry (R-NE) introduced a version of this legislation.

There is a different bill that has been floating around for years -- and going nowhere -- that would create a new tax break for LTC premiums. But it received a very large score, that is, Congress would lose a lot of money. That cost has effectively killed the legislation.

But the Terry bill wouldn't create a new tax break; it simply made LTC premiums a qualified distribution of an existing tax break. It's fair to say that some people would increase their IRA and 401(k) contributions, but both programs' contributions are capped. So the federal government would certainly lose some money, but it would be minimal.

However, the score assumed another factor -- one that drove up the "cost" of the legislation. It asked how much money the government would lose if people bought all of those LTC policies with after-tax dollars. Of course, they wouldn't be buying those policies without the tax break in the first place, so the government wouldn't actually lose a dime on the sales. But that's beside the point. That assumption added a significant cost to the legislation, making it more difficult to move.

And because these scores usually look only 10 years out, they didn't capture all the future savings to the Medicaid program, which would be paying out less for long term care.

I can't tell you how many times good legislation has been thwarted by bad scores and bad legislation has been boosted by good scores. . . .

Scoring will also be a huge hindrance to Medicare reform. Almost any market-oriented Medicare reform envisions paying providers a reasonable fee for their services. But Medicare price-controls most of those fees now. So the score for market-oriented reforms almost always looks more expensive than the status quo -- even when everyone knows that the current system is unsustainable and the proposed legislation would be affordable.

So while we can count on the usual suspects opposing good health reforms, the biggest hurdle may come from those who can't count.

Source: Health Care Central, May 6, 2008,