LTC Bullet: How Much More Wrong Can They Get It?!

Tuesday, July 21, 2009


LTC Comment: Another "report" from the usual suspects gets long-term care advice dead wrong. More after the ***news.***

*** CENTER PREZ AMONG HERITAGE'S BEST LECTURERS. Heritage Lecture #1001 summarizes the best of the Foundation's first 1000 formal speeches by "U.S. Presidents; Secretaries of State and Defense; House Speakers and Senate Majority Leaders; prime ministers; Nobel Laureates; Vice Presidents and Supreme Court justices . . . public intellectuals and best-selling authors." Steve Moses' April 2000 lecture titled "The Long-Term Health Care Crisis: How Can We Solve It?" is included among "the most important Heritage Lectures of the past 27 years." Here's the summary from Lecture #1001: "Stephen A. Moses, president of the Center for Long-Term Care Financing [now Reform], proposed long-term care insurance as the best way to encourage families to 'pull together, pool their resources, and help each other to insure fully or pay privately for long-term care.' With most of the burden of long-term care expenses covered by private insurance, Moses said, and much of the remainder financed by a line of credit on estates, 'only a small remnant of people will be dependent on public welfare for care.'" ***



LTC Comment: Today, we bring to your attention two examples of propaganda masquerading as research. Both come from an outfit called "The SCAN Foundation."

The first is a poll sponsored by SCAN that purports to show that "Nearly eight in ten Americans are more likely to support a health care reform proposal that includes improved coverage for long-term care services." (Read a press release about the poll here and a summary of the results including the actual questions asked here.)

The only surprising thing about that finding is that only 8 in 10 and not 10 for 10 support health reform that includes LTC. Why? Because the survey didn't ask people how much they're willing to pay for such "reform." Ask the question in an intellectually honest way and you'll get an entirely different answer. Of course people want something for nothing. That doesn't mean it's possible.

Where is the outrage from serious scholars when they see nonsense like this portrayed as research? Ignoring immutable laws of economics is as dangerous as ignoring the law of gravity. Don't let phony polls like SCAN's tempt you to jump over a fiscal cliff without a market-based parachute.

The second new output from SCAN that deserves your SCORN is a report titled "Long-Term Care in Health Care Reform: Policy Options to Improve Both." (Read the press release here, the Executive Summary here, and the full report here.)


Here's what the report recommends in a nutshell followed by our analysis and rebuttal of each proposal:

"Proposals to Improve Long-Term Care in Medicaid

* Expand Medicaid support for home and community-based services

* Improve coordination of medical and long-term care for Medicare-Medicaid "dual eligibles"

"Proposals to Improve Long-Term Care for the Broader Population

* Improve coordination of medical and long-term care for Medicare enrollees with chronic conditions

* Establish public insurance protection for long-term care for the broad population"


SCAN Proposal: * Expand Medicaid support for home and community-based services

LTC Comment: Fine, we all want Medicaid to provide a full continuum of care and to eliminate the program's "nursing home bias." But . . . hello! . . . if you do that without controlling Medicaid's eligibility hemorrhage the result will be disaster. To wit: more woodwork factor; more Medicaid planning; less private financing for LTC; less home equity conversion for LTC; less private long-term care insurance. Result: Medicaid will collapse faster than it is already.

SCAN Proposal: * Improve coordination of medical and long-term care for Medicare-Medicaid "dual eligibles"

LTC Comment: Great idea. Let's do it. But dual eligibles are 16% of Medicaid recipients and consume 42% of Medicaid spending. To avoid collapse of Medicare ($86 trillion unfunded liability and empty trust fund) AND Medicaid (unlimited unfunded liability and not even a phony trust fund to hide it), you'd better focus first on preventing people from becoming "dual eligible" in the first place. Since they'll become Medicare eligible automatically, that leaves diverting them from becoming Medicaid eligible. The secret to that is to target Medicaid eligibility to people truly in need and use some of the savings to incentivize responsible LTC planning through savings, investment and insurance.

SCAN Proposal: * Improve coordination of medical and long-term care for Medicare enrollees with chronic conditions

LTC Comment: Okey, dokey, but how are you going to pay for it? The report is silent.

SCAN Proposal: * Establish public insurance protection for long-term care for the broad population"

LTC Comment: Here SCAN proposes either (1) a Medicare takeover of LTC (tantamount to adding deck chairs to the Titanic after the incident with the iceberg) or (2) the CLASS Act proposal. The first suggestion isn't worthy of serious consideration. So let's focus on the second. The CLASS Act proposes a voluntary public LTC insurance program that won't pass, wouldn't work if it did pass, and undermines responsible LTC planning whether it passes or not. Main problems with the CLASS Act are these:

  1. The program is voluntary so people won't participate any more than they buy LTCI today and for the same reason: Medicaid crowds out 2/3 to 90% of the potential market for LTCI (Brown and Finkelstein,
  2. The CLASS Act proposes to collect premiums for five years before paying benefits and expects to accumulate a $59 billion surplus in the first ten years to pay future claims. But politicians will rob that trust fund just as they've stolen the Social Security and Medicare trust funds to pay for other spending. We'll be that much more in the fiscal tank.
  3. CLASS proposes to pay $50 per day in benefits which does nothing more than further anesthetize the public to the real risk rather than offering real protection.

Here's the fundamental fallacy in all of SCAN's proposals. The report's authors assume and actually state on page 19 that:

"While Medicaid acts as a safety net for individuals with few resources or whose resources have been exhausted by out-of-pocket medical and long-term care costs, most people have little protection against the possibility of impoverishment."

Baloney. If that were true, people would buy private LTC insurance and Medicaid would not be the dominant LTC payor for poor, middle class and affluent as it is today. Read almost anything at for the proof, but especially "Aging America's Achilles' Heel: Medicaid Long-Term Care."

Bottom line: Fix Medicaid LTC eligibility and the market will fix all the rest of these problems. Need full evidence and logic? Start reading the reports available here and ignore the intellectual eyewash coming out of SCAN.