LTC Bullet: When Rhetoric Met Reality

Wednesday, June 24, 2009


LTC Comment: High hopes, wishful thinking, even eloquent oratory do not reform a health insurance system in the face of evidence, logic, and hard fiscal reality. More after the ***news.***

*** YOU HEARD IT HERE FIRST. Whatever shadow of "health reform" emerges from the current political frenzy will not include long-term care. Now other experts are saying what we've said all along. In "LTC on the back burner under Obama health plan," by Darla Mercado on June 21, 2009, here, find this: "We won't see anything to move in the direction of more funding for long term care," said Dallas L. Salisbury, president and chief executive of the Employee Benefit Research Institute in Washington []. "With the government's fiscal situation and the unsustainability that the president has stated is present for Medicare and Medicaid, if anything, there will be a reduction [in spending]." He's right. What will emerge in the end is stricter eligibility for Medicaid LTC, a smaller home equity exemption, and tax incentives to encourage the use of reverse mortgages and private insurance to fund long-term care. But don't hold your breath. That outcome is still a few years away. ***

*** STATE X PROJECT moves forward. I'm scheduled to visit Providence, Rhode Island on July 6-10 to conduct the initial field work for what we hope will become a full-fledged review of Medicaid and long-term care financing in the Ocean State. Why RI? Simple. The state has a unique "global Medicaid waiver" that enables it to experiment creatively with new ways to encourage better access to higher quality long-term care without running afoul of federal regulations. The trade off for that freedom is controversial: Rhode Island had to agree to accept a limit on federal Medicaid matching funds. So, proving that RI can do better LTC for needy people at less cost is critical. We think that goal's eminently achievable and we look forward to a week of conversations about how to do it with all the key LTC stakeholders in the state. The Center for Long-Term Care Reform ( is working closely with the Ocean State Policy Research Institute ( on this project. ***



LTC Comment: From Don Quixote's quest to Bill and Ted's Excellent Adventure, from HillaryCare to the latest health reform windmill jousting, one lesson of history has to be learned and relearned over and over again.

If you want something, even if you want it really, really badly, you'd best be realistic. That includes figuring out how to pay for it before you begin to build.

Setting out to reform 18 percent of the United States' economy without considering how to finance it wasn't smart. What if NASA had constructed the moon ship without taking gravity into consideration?

Now people are all worked up. Hopes are high. There's even talk of adding everyone and everything, including long-term care, to Medicare. Hey, the Titanic got us this far, why not bring on a few more passengers? . . . What iceberg?

Even if you only see the tip of the ice that's visible now, it's clear the good ship health reform in its most ambitious form is headed to the bottom. Sorry to mix metaphors, but do consider the "Bombshells" that Grace-Marie Turner of the Galen Institute describes in her piece below.

For now, here's the essence of the problem. Without removing the perverse incentives in current health policy that discourage inexpensive catastrophic health coverage and reward profligate benefits for the lucky few, extending health insurance to the uninsured is going to cost much more. But, hello, we have no more money.

Not only do we have no more money, we've already spent or committed tons of revenue, at least ten trillion dollars, that we don't have. On top of that we've promised Social Security and Medicare benefits totaling $105 trillion more than those programs can expect to collect. Oh, and by the way, remember long-term care? Whatever that'll cost has to be included too. And Medicaid doesn't even have a raided trust fund. There's no pretence whatsoever that it's solvent.

So let's say grand ideas of expensive health reform don't happen or happen but make the problem worse. One or the other of those outcomes is inevitable. What comes next?

Sooner or later, we have to repay the debt we've created. There are only three ways for government to do that. Tax, borrow, or print more money.

Tax more and you impede the private sector's ability to generate profits to tax in the first place. That's a fiscal whirlpool.

Borrow more and, even if you can still find lenders, interest rates increase and carrying costs start to consume everything you borrow. That's a financial sink hole.

Print more money and you pay for it with the most pernicious tax of all, inflation. That'll drown an economy. Ask Argentina.

So here we are. About to walk the plank. Or shall we pause at the brink, think it over, and begin again?

When you confront a seemingly insoluble problem, the best next step is to re-examine your premises. Is the problem really too little government financing of health care? Or could it possibly be that government intervention in the health care marketplace, however well-intentioned, actually created the mess we're in? Are entitlements the solution or the problem? Hmmm.


In her "Health Policy Matters" e-letter on June 19, Grace-Marie Turner of the Galen Institute ( wrote the following. (Reprinted with permission. If you use or reprint this material, they ask that you credit the Galen Institute.)

The bombshells started dropping on the health reform front this week:

* Soaring costs: The Congressional Budget Office told the Senate health committee its bill would cost $1 trillion over the next 10 years and would only provide health insurance for a net 16 million more people. It said 15 million would lose their coverage at work and eight million would lose coverage from other sources, leaving 36 million uninsured. Since the goal is to have virtually everyone covered with no deficit spending, this was a double whammy, especially since there is even more spending in the bill that the CBO hasn't yet scored.

* Delay: The Senate Finance Committee was forced to delay its work on developing its bill when the CBO offered a preliminary cost estimate of $1.6 trillion over 10 years. Somehow in the hall of budget mirrors in the U.S. Congress, the most they are willing to spend of future generations' money is $1 trillion.

* No agreement: President Obama traveled to Chicago to speak at the annual meeting of the American Medical Association, hoping to sway them to support his health reform plan. He again faced protest signs outside the hall. Inside, there were boos when he said he wouldn't go along with their proposal to cap malpractice awards.

* AMA rebuffs: Worse, when a resolution came to the floor of the AMA which would have endorsed Mr. Obama's idea of a new government health plan, the language he had hoped for was stripped out, and it became a mere restatement of the AMA's long-standing goals supporting "pluralism, freedom of choice, freedom of practice, and universal access for patients."

* More cost-shifting: The CBO also says that congressional plans to rein in federal spending through public plans could end up shifting more of the costs to private insurers, employers, and people with private medical coverage. While there are many efficient providers currently practicing, experts don't yet know how to spread that efficiency throughout the system, and policy makers won't be able to do so "through fiat or good intentions," the CBO said.

"I think there's definitely risk that a portion of the reduction in hospital payments from Medicare will wind up as increased payments by private insurers," said Paul B. Ginsburg, president of the Center for Studying Health System Change. Hospitals may have the motive and means to "transfer those charges to somebody else," and "we'll see costs increasing on the private side and not necessarily falling everywhere," said Harold S. Luft, director of the Palo Alto Medical Foundation Research Institute.

* Don't take it to the bank: The CBO also says that it can't give credit for most of the $2 trillion in savings that were announced with great fanfare in May. You will recall the brouhaha between the White House and six industry groups over whether they had or had not pledged to reduce health spending by 1.5% a year over 10 years through disease management, information technology, coordinated care, etc.

"What was originally offered up as a down payment on healthcare reform simply can't be accurately estimated by the CBO and will result in far less savings than the originally promised $2 trillion," said Republican senator Mike Enzi of Wyoming, the ranking member of the Senate health committee. "The administration will need to come up with far greater savings proposals -- savings that Congress can take to the bank -- to achieve the massive healthcare bill Democrats are proposing."