LTC Bullet: Uninsurance Problem Solved. For LTC Too?

Wednesday, August 27, 2008

Willow Lake Park, Brunswick, OH (LTC Tour Mile 16,810; State # 25)--

LTC Comment: NCPA President John Goodman says nearly everyone is "insured" somehow for health care in the U.S. Read his argument and our comment relating it to LTC, after the ***news.***

*** REFERRALS. Thank you for reading the Center for Long-Term Care Reform's latest "LTC Bullets" newsletter. If you know someone who would be interested in this publication, please recommend us by clicking here If you have received this edition as a forward, and would like your own subscription, you may subscribe here Thank you. ***

*** PRUDENTIAL REPORTS LTC COSTS. "Long-Term Care Costs on the Rise. By Thomas Gaudio. NJ Biz. Aug 18, 2008. Costs of long-term care services have increased between 5 percent and 13 percent nationwide in the past two years and are expected to continue to rise, according to a newly released study by Prudential Financial. The average daily cost for an assisted-living facility is now more than $100, or $3,241 per month, and the average daily cost of a private room in a nursing home is now $217, or $79,205 a year. The report is available to consumers on . An interactive consumer cost of care mapping tool is also available at" Source: AHCA / NCAL Gazette - Tuesday, August 19, 2008. ***

*** LTC TOUR UPDATE. Check out the latest picture of the Silver Bullet of Long-Term Care at the New York State Capitol building in Albany, NY: Watch our latest video from Niagara Falls on the LTC Tour's YouTube channel: Go to the LTC Tour Map at and check out the LTC Tour Calendar at Now, think about how you might get on the band wagon and join the LTC Tour. To plan media and events for your town, contact Damon at 206-283-7036 or He'll help you scope out the possibilities and put you in touch with Steve Moses to nail down a plan. ***



LTC Comment: John Goodman is the President of the National Center for Policy Analysis in Dallas, Texas. He's the co-author of the 1993 book "Patient Power," still one of the best on acute care health policy. Goodman has long been a leading advocate of personal responsibility, private insurance, and "Health Savings Accounts" as alternatives to government financing of health care and dependency on public programs.

Republished below with his permission is John Goodman's "Health Alert" dated August 25, 2008 and titled "Uninsurance Problem Solved by Executive Order." It is an interesting analysis of the so-called problem of uninsurance and self-explanatory. So, read it first. Then, stay tuned for our comment applying Goodman's point to the long-term care "uninsurance" challenge.

If you are inspired to subscribe to Mr. Goodman's "Health Alert," do so at


"Uninsurance Problem Solved by Executive Order"
John Goodman

In the next few days the Census Bureau will come out with new figures, probably showing that the number of uninsured has reached an all-time high. This will cause gnashing of teeth, crying and wailing....possibly driving some people to drink. It will cause apoplexy on the editorial pages of The New York Times.

[Actually, when the Census Bureau's report was published yesterday, it showed to everyone's surprise, an INCREASE in the number of insured Americans. In the words of today's Wall Street Journal: "The number of Americans without health insurance fell in 2007, thanks largely to government insurance programs offsetting declines in private-sector coverage . . . Medicaid, the state-federal health-insurance program for the poor, picked up 1.3 million more people, while Medicare, the federal program for the elderly, insured an additional one million people. In addition, the government's military health-care programs insured 400,000 more people than the year before." Which only makes Goodman's point even stronger.]

So I have a solution. And it will cost not one thin dime. The next president of the United States should sign an Executive Order requiring the Census Bureau to cease and desist from describing any American (even illegal aliens) as "uninsured." Instead, the Bureau should categorize people according to the likely source of payment should they need care.

So, there you have it. Voila! Problem solved.

Here is the idea: only people who are denied care are truly uninsured. Everyone who gets care is effectively insured by some mechanism. So instead of producing worthless statistics that people fling around in vacuous editorials and pointless debates, the Census Bureau should produce meaningful numbers, identifying all of the sources of funds people will draw on if they need medical care.

Also, my solution would put the United States on a par, say, with Britain and Canada. Those countries insist that all of their citizens are "insured," whether or not they get needed medical care.

Here are some categories I would use:

Self-Insured + EMTALA + Free Care. At a minimum, everyone is self-insured up to the extent of his net worth; and it would be a useful Census activity to show the assets people have available to pay medical bills directly. Then, the fact that the Emergency Medical Treatment and Active Labor Act (EMTALA) requires hospital emergency rooms to provide emergency care (regardless of ability to pay) counts as additional insurance. It is supplemented by the availability of free care - variously estimated at between $1,000 and $1,500 per uninsured person per year.

Potential Medicaid. About one in every four "uninsured" persons is eligible for Medicaid or SCHIP (for children), but is not yet enrolled. Enrollment is a mere formality, however. It can be done in the emergency room. In many places it can be done several months after the care has been delivered. Surely this must count as health insurance de facto prior to enrollment.

Self Insured + Potential Private Coverage. There is also the possibility of buying private insurance after the onset of illness. About one-third of the uninsured are in households earning $50,000 or more, and more than half of those earn $75,000 and up. These people can clearly afford to buy a lot of medical care directly. They also can afford insurance. Six states have guaranteed issue and community rating in the individual market. In other states, many are protected by the Health Insurance Portability and Accountability Act (HIPAA) and many have access to state subsidized risk pools - allowing access to private insurance after illness has occurred. Sorting out how many people potentially have access to different types of private coverage would be another useful Census function.

Potential Employer Coverage. About 80% of the uninsured are living in a household with someone in the labor market. More than one-fifth of them were offered coverage at work but turned it down. If the need arises, they can always enroll. Also, anyone who already has a job can probably land one with employer-provided coverage (if needed), possibly in return for a pay cut. Note: HIPAA prohibits employers from denying people coverage because of their (or a family member's) health status.

In general, America has made it surprisingly easy to get someone else to pay your medical bills - even if you don't have a Blue Cross card. . . .


LTC Comment: Goodman's point is that what matters more than if someone is "insured" is whether or not they get needed care and who pays the bills.

How would this principle apply to long-term care?

Despite all the gnashing of teeth about catastrophic long-term care spend down and the lack of insurance for long-term care, the truth is that the vast majority of expensive long-term care in the USA is paid by sources other than personal assets. Add up direct government payments from Medicaid, Medicare and the VA; throw in the spend-through of Social Security and other income of people already on Medicaid; then include all sources of third-party funding of LTC such as private LTC insurance and other kinds of private health insurance. What do you get? Upwards of 90 percent of all expensive long-term care in the United States, including nursing-home and home health care, is paid for by someone or something other than personal asset spend down.

Furthermore, research by Jeff Brown and Amy Finkelstein ( found that Medicaid alone crowds out two-thirds to nine-tenths of the potential market for private LTC insurance.

So, to paraphrase John Goodman's conclusion about acute care "insurance":

"In general, America has made it surprisingly easy to get someone else to pay your long-term care bills, even if you don't have private long-term care insurance."

As long as that is true, the market for private LTC insurance in the U.S. will remain stunted and most Americans will remain dependent on financially stressed public programs like Medicaid, Medicare, and, indirectly, Social Security for their long-term care financing.

The solution is obvious as soon as you understand the true nature of the problem. Target public financing of long-term care to the truly needy and use the savings to incentivize responsible long-term care planning through private financing alternatives like insurance and home equity conversion.