LTC Bullet: LTC Whammy!

Tuesday, October 28, 2008

Kansas City, Kansas (LTC Tour Mile 23,181; State # 34)--

LTC Comment: The bottom seems to be falling out of LTC financing--as I've predicted but sooner than I expected. More evidence after the ***news.***

*** LTC GRAD SEMINAR FEEDBACK. Here's a sampling of feedback from our three LTC Graduate Seminars in Minnesota for LTC Tour coordinating sponsor GoldenCareUSA (GC). Special thanks are due to GC for the company's wonderful year-long support of the LTC Tour and of our goal to wake the public up about LTC risk and ensure quality long-term care for all Americans.

"Fantastic presentation! Wow! This info needs to be 'gotten out there' right away." Tamara Day

"Thanks for awesome knowledge! Kimberly Langert

"Apathy and ignorance has forced our American way of life to be in jeopardy. The American public needs a slap in the side of the head! Thank you for a great two hours." Jim Motz ***

*** FEEDBACK FROM DES MOINES. Friday's LTC Graduate Seminar in Des Moines, Iowa elicited these comments. Special thanks to Doug Ireland, CLU, ChFC, LUTCF, Manager of Professional Insurance Programs, Kelley Insurance Center - Drake University, for organizing the well-attended on-campus program.

"Steve Moses is the best advocate and speaker for the LTC industry that I've ever heard in my 20 plus years in this industry." Karey Meek Anderson

"Steve has done more for the LTC industry than the combined efforts of government and LTC insurance industry and continues to do so, on his tour." Barry Ill

"Excellent overview of serious problems with LTC. Thanks for the wake-up call." Robert L. Auld

"There is an elephant in the room and Steve helps you see it and assists you in effectively dealing with it." Paul Davis

"I wish every taxpayer could hear you before voting." Clark Byers ***

*** BONUS WEBSITE. All you have to do to have your very own LTC website designed by LTC Connection is to join the Center for Long-Term Care Reform. That's right, join the Center for $150 per year, get all our publications and access to The Zone, including our new "Almanac of Long-Term Care," and on top of that LTC Connection will design your website and waive their usual $149 fee. Or look at it this way, buy your website from LTC Connection through the Center and get a year of membership in the Center for only $1 more. Sure, you'll have to pay LTC Connection's $39 per month website maintenance fee, but you'll get a whole year of LTC Bullets and LTC E-Alerts for no extra charge. So, what do you have to do? Just contact Damon at 206-283-7036 or, join the Center, pay your membership fee, and say "I want my website." We'll connect you with the right person at LTC Connection and you'll be on your way. Great content from the Center and a great website from LTC Connection. How can you beat it? Already a member of the Center but want your free website? No problem. Renew your annual membership early and get the same deal. ***

*** ART JETTER AND COMPANY are Silver Sponsors of the 2008 National Long-Term Care Consciousness Tour. Their logo is on the Silver Bullet and their information is in our elegant presentation packet. Learn more about this excellent Omaha, Nebraska company at Join us for the LTC Tour program they're presenting with me and the Silver Bullet of Long-Term Care in Lincoln, Nebraska on November 3, 2008. Here are the bare essentials from the invitation:

Stephen Moses, President of the Center for Long-Term Care Reform, will speak in Lincoln on Monday, November 3. Steve is an innovator, an expert, a dynamic speaker and tireless advocate of responsible long-term care planning. You are cordially invited to attend his presentation.

To reserve your seat, please reply to:
Director of Long Term Care Insurance Sales
Art Jetter & Company - Insurance Marketing


November 3, 2008
9:30 - 11:00 AM
Continental Breakfast at 9:00 AM

The Cornhusker Hotel
333 South 13th Street
Lincoln, NE 68508

Genevieve White
Director of Long Term Care Insurance Sales
Art Jetter & Company - Insurance Marketing
11305 Chicago Circle - Omaha NE 68154-2633
402-330-2900 or 800-228-0008 Extension: 1029
Staff Contacts and free E & O: ***



LTC Comment: According to scholars Jeff Brown and Amy Finkelstein, Medicaid crowds out two-thirds to 90 percent of the potential market for long-term care insurance. (Search for their articles at the National Bureau of Economic Research website:

Logically, the converse of their findings should be that if Medicaid stops funding most long-term care in the USA--for the middle class and affluent, not just the poor--the market for long-term care insurance should explode.

So, what's the likelihood Medicaid financing of long-term care will collapse?

Answer: High and sooner than any of us expected.


Medicaid is under water financially already. See the stories that follow for proof of that. But you haven't seen anything yet.

Social Security props up Medicaid LTC financing because people on Medicaid have to contribute their income to offset Medicaid's cost of care. But Social Security has a $16 trillion unfunded liability and nothing in its "trust funds" but IOUs. That's 13 percent of the cost of nursing home care nationally that Medicaid could lose and will definitely see reduced over time.

Medicare props up Medicaid LTC financing by paying 17 percent of the cost of nursing home care very generously, thus partially making up for Medicaid's $4.2 billion annual underfunding of nursing homes. But Medicare has an $86 trillion unfunded liability and nothing in its "trust funds" but IOUs. Medicare will yank the floor out from under Medicaid LTC financing soon.

So, what's going to happen as Medicaid backs out of financing most LTC?

Expect Medicaid LTC to be severely means tested in the future. Worse, expect Social Security and Medicare to be means tested, i.e. welfarized, also. That process has already begun. If you take Social Security at 62 and keep working, they'll take one dollar of your benefit away for every two dollars you earn over $13,500 (until you hit full eligibility age, at 66 or 67 for most of us nowadays.) Medicare's Part B premium is means-tested now: the Part B premium skyrockets as your income increases. The Part D premium is gauged to income too.

See what's happening? Government won't double payroll taxes or cut benefits by half as former GAO chief David Walker says they'd have to do to save Social Security and Medicare. Instead they'll turn traditional entitlements--de facto like Medicaid and real entitlements like Social Security and Medicare--into public welfare programs only fully available to the poor, drastically reduced in availability for the middle class and unavailable altogether to the affluent. So much for the greater dignity of "social insurance" programs over public assistance programs. We'll all be on welfare in the future . . . unless we can pay our own way.

When more people have to pay their own way for long-term care, they'll quickly spend down their meager savings. Then they'll spend their home equity. Only then will they get help from the government, if the government has any help left to give which is getting more and more doubtful. Once this transpires, private LTC insurance will become a mainstream product . . . but not until.

What's different now than at the beginning of the 2008 National Long-Term Care Consciousness Tour is that we see light at the end of that tunnel and, unfortunately, it is the train of fiscal catastrophe. The $1 trillion mortgage crisis driving financial markets into the tank today is chicken feed compared to the real debt problem: $102 trillion of unfunded liability for Social Security and Medicare . . . not counting the hole Medicaid long-term care is in. Medicaid doesn't even have a phony trust fund.

Enough set up. Here's some of what makes me worry the end is near for America's social safety net.


Analysis Estimates That States Face Combined $100B Budget Gap by Fiscal Year 2010, Which Could Prompt Cuts in Programs Such as Medicaid. Access this story and related links online here. State tax revenues declined in the most recent quarter, with the median state studied experiencing a 5.5% inflation-adjusted decline in total tax revenue, according to an analysis by the Center for Budget and Policy Priorities, the Wall Street Journal reports. CBPP analyzed available data from the revenue departments of 15 states and found that total inflation-adjusted revenue was down in 14 of the 15 states for the quarter that ended in September compared to 2007. The report estimates that by fiscal year 2010, states will face a total budget gap of $100 billion, or 15% of their budgets. The decline "has potentially broad economic significance" because, unlike the federal government, states generally are required to balance their budgets each year and will have to either reduce spending or raise taxes -- "both the opposite of what many economists, including some deficit hawks, say is needed during the current economic downturn," the Journal reports. In addition, states "often take measures that exacerbate the difficulties created by the recession, such as tightening Medicaid eligibility at a time when workers lose their jobs and health insurance," according to the Journal. Nicholas Johnson, a co-author of the report and director of the center's State Fiscal Analysis Initiative, said cuts in state spending "will take demand out of the overall economy and worsen the economic downturn." He added that moves such as slashing reimbursements to Medicaid providers or reducing grants to not-for-profit social-service providers "are all things that take dollars out of families' pockets, and that's money they can't spend in their local economies." Chris Edwards, director of tax policy at the Cato Institute, said the recession should prompt states to overhaul programs, adding, "Private companies do it all the time, and I think it's beneficial," adding, "Recessions come and go -- we survive" (Drucker, Wall Street Journal, 10/25). The report is available online (.pdf).

Source: Kaiser Daily Health Policy Report - Monday, October 27, 2008


NY: Medicaid applications soar amid potential cuts to state aid. By Jay Gallagher. Democrat & Chronicle. Oct 26, 2008 "This is a time when the Medicaid safety net is more important than ever," said William Van Slyke, a spokesman for the state Health Care Association. "It's going to be an impossible task to keep up with that growth in demand while at the same time doing draconian cuts in Medicaid." NY: Van Slyke said that health-care spending was already reduced this year by $400 million in an attempt to narrow the budget gap.
Read it

NY: Report: Dual eligibles challenge New York's healthcare reform plans

McKnight's Long-Term Care News & AssistedLiving. Oct 27, 2008

The dual-eligible population of New York accounts for more than 40% of the state's healthcare expenditures, soaking up $3.5 billion in Medicaid spending.

Source: AHCA / NCAL Gazette - Monday, October 27, 2008


LTC Comment: This message from a Center supporter tells me others are seeing the same trends. Don't mind the political reference. It doesn't matter who's elected president. The financial problems he'll face trump and obviate any ideological or policy differences between them.


I heard you speak in Indianapolis recently. I am an insurance agent, but also an avid reader/researcher. The information on your website has been a help to me. Your talk in Indianapolis helped fill in some of the missing pieces in my thinking.

I especially appreciated hearing you explain how government would have to Welfarize Social Security and Medicare in order for the programs to survive politically and practically. You warned us that this would happen very quickly.

This morning in the Wall Street Journal Online the following piece appeared: "Obama Wants Social Security to Be a Welfare Plan." I've attached a copy for you. [If you subscribe to the WSJ Online, you can read the article at .]

I've started speaking in the Lafayette, Indiana area on the topic: Why should a man buy the cow when he can get the milk for free? I am indebted to you for helping me get past the insurance company line I was taught about long-term care insurance to an understanding of the real reason people won't plan ahead. . . .

Keep up the good work! Thanks very much for speaking to us in Indiana.

Isabel Hogue
Long-term Care Solutions
Lafayette, IN
Licensed insurance agent
Easing the impact of living a long life.


Depressed economy wallops states. By Pamela M. Prah, Staff Writer

Staggered by turbulent financial markets and anxious about a rapidly slumping economy, many state governments are slashing their budgets, frantically trying to stay afloat.'s annual state-by-state look at legislative accomplishments, covering 48 states, spots the trends and precedents emerging from state capitals this year. Read More:

Source: Daily - Oct. 24, 2008


Study: Medicaid under funds nursing homes by $4.2 billion, providers call for pay hike
McKnight's Long-Term Care News & AssistedLiving. Oct 23, 2008 -
Read it

A new report released by AHCA finds that state Medicaid long-term care programs are underfunded by $4.2 billion this year. According to the MedPAC, the average margin on Medicare payment to nursing homes in 2006 was 13.1%. Given the 9.2% shortfall on Medicaid payments for that year, the average margin in 2006 from the two government-funded programs combined was a negative 1.8%. In a floundering economy, many states are facing further budget cuts that could threaten access to long-term care. The full report is available at

Source: AHCA / NCAL Gazette - Thursday, October 23, 2008


Medicaid Spending Will Join Medicare in Out Running the Economy in Years Ahead Long-term care for low-income senior citizens will help drive cost to $4.9 trillion in 10 years Senior Journal. Oct 19, 2008 According to a CMS annual report released Friday, Medicaid spending will far exceed the rate of growth of the U.S. economy over the next 10 years. Read it

Source: AHCA / NCAL Gazette - Monday, October 20, 2008


Medicaid Costs Projected To Grow by 7.9% Annually, According to CMS Report
Access this story and related links online

The CMS Office of the Actuary on Friday projected that state and federal spending on Medicaid will total about $339 billion in 2008 and will rise at a rate of 7.9% annually to $674 billion by 2017, CQ HealthBeat reports. According to the report, Medicaid spending growth is expected to increase at a faster rate over the next decade than the economy in general, which is expected to increase by 4.8% annually, and health care spending in general, which is expected to rise by 6.7% annually. The report found that in 2017, Medicaid will comprise 3% of the gross domestic product, and Medicaid and Medicare combined will make up 6.9% of GDP. Medicare spending is expected to increase by about 7.4% annually through 2017, according to CMS. The report forecast that Medicaid enrollment will grow by 1.8% to 50 million this year. Over the next 10 years, enrollment is projected to grow by 1.2% annually to 55.1 million in 2017, according to CMS.HHS Secretary Mike Leavitt said, "If nothing is done to rein in these costs, access to health care for the nation's most vulnerable citizens could be threatened" (Reichard, CQ HealthBeat, 10/17).CMS each year informs the public about the financial status of Medicare and Social Security, including trends and predictions, but the report released on Friday is the first to project Medicaid spending growth, the AP/San Francisco Chronicle reports. CMS said the Medicaid report now will be conducted annually (Freking, AP/San Francisco Chronicle, 10/17). The report is available online.

Source: Kaiser Daily Health Policy Report - Monday, October 20, 2008


LTC Comment: This could go on indefinitely, but you get the picture. And it isn't pretty. But better known than evaded. If your prospects and clients don't know these facts, and if you aren't making them aware, you may not be fully performing your moral and fiduciary responsibility to them. Helping you meet that responsibility with reliable third-party information is why we publish these LTC Bullets and E-Alerts daily.