LTC Bullet: Health Reform and Divorce

Monday, August 31, 2009

Seattle--

LTC Comment: New York Times op-ed columnist Nicholas Kristof gets the issue of Medicaid planning by divorce and the need for health reform backwards. After the ***news.***

*** WE'RE BAAACK. Have you noticed your email in-box was a little lighter lately? Steve took a break but he's back full force today. Our daily LTC Bullets and LTC E-Alerts resume. ***

*** BLOGGED. New Mexico's Rio Grande Foundation President Paul Gessing reports that he blogged here about the Center for Long-Term Care Reform's proposal to save Medicaid $20 billion per year. To wit:

"Stephen Moses who runs the Center for Long Term Care Reform has put together a document entitled 'How to Save Medicaid $20 Billion Per Year AND Improve the Program in the Process.' The document should form the basis for reforming Medicaid as it relates to long term care. As Moses points out:

Medicaid LTC recipients consume a disproportionate share of total program expenditures. For example, consider people eligible for Medicaid AND Medicare.

Such 'dual eligibles' account for 42 percent of Medicaid spending, although they comprise only 16 percent of Medicaid recipients.

Dual eligibles are heavy users of long-term care and acute care services not covered by Medicare. And Medicaid pays for their Medicare premiums and cost-sharing too.

"The point is that Medicaid is a ripe target for cost savings and reform. Hopefully legislators will look at some of these 'big ideas' rather than just working around the edges. Who says that you can't enact successful health care reforms at the state level?" ***

*** STATES ARE MORTIFIED that federal health reform will expand their Medicaid costs. Read the Kaiser Health News August 24 report "States Worry About Cost of Medicaid Expansion" here in the context of the following LTC Bullet. ***

 

LTC BULLET: HEALTH REFORM AND DIVORCE

LTC Comment: In Sunday's NYT, Nicholas Kristof published a piece titled "Until Medical Bills Do Us Part." Read it here in full or excerpts below following our analysis.

Kristof's argument is that because high LTC costs make divorce an often-recommended technique to self-impoverish and qualify for Medicaid LTC benefits, therefore expanding government financed health care is necessary and desirable.

His line of reasoning is odd and inverted. Health reform proposals under consideration in Congress contemplate expanding Medicaid or adding a Medicare-like "public option." Yet it is Medicaid and Medicare financing of long-term care that have gotten us into the mess we're in.

Why does Kristof's friend "M" in the column feel compelled to divorce her early-onset-Alzheimer's husband? Because that's what the hospital and her attorney recommend that she do in order to dodge the high cost of his long-term care.

Now think about it.

Why exactly is "M" in this bind? Neither she nor her husband purchased private long-term care insurance. Why not? Could it be because Medicaid has paid for most expensive LTC since 1965 and Medicare covers some nursing home care and lots of home care?

Remember, Brown and Finkelstein (www.nber.org) have shown that Medicaid alone--not counting Medicare, VA, and other government funding sources--crowds out 2/3 to 90 percent of the potential market for private LTC insurance.

So, since Medicaid and Medicare are the cause of the long-term care financing problem, how exactly does it make sense in Kristof's reasoning to launch health reform based on expanding Medicaid and Medicare?

It doesn't. Simple as that.

The correct way to approach health reform in general and LTC reform in particular is to restrict public subsidies to people truly in need and use the savings to encourage everyone else--through tax incentives and education--to plan early and save, invest or insure for the risk of catastrophic health and LTC costs.

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Excerpts from the Kristof op-ed at http://www.nytimes.com/2009/08/30/opinion/30kristof.html?ref=opinion:

"My friend M. - you'll understand in a moment why she's terrified of my using her name - had to make a searing decision a year ago. She was married to a sweet, gentle man whom she loved, but who had become increasingly absent-minded. Finally, he was diagnosed with early-onset dementia.

"The disease is degenerative, and he will become steadily less able to care for himself. At some point, as his medical needs multiply, he will probably need to be institutionalized.

"The hospital arranged a conference call with a social worker, who outlined how the dementia and its financial toll on the family would progress, and then added, out of the blue: 'Maybe you should divorce.'

"'I was blown away,' M. told me. But, she said, the hospital staff members explained that they had seen it all before, many times. If M.'s husband required long-term care, the costs would be catastrophic even for a middle-class family with savings. . . .

"The hospital told M. not to waste time in dissolving the marriage. For five years after any divorce, her assets could be seized - precisely because the government knows that people sometimes divorce husbands or wives to escape their medical bills.

"'How could I divorce him? I loved him,' she told me.

"'I explored a lot of options with an attorney here in town,' she added. 'The attorney said, 'I don't see any other options for you.' It took about a year for me to do the divorce, it was so hard.' . . .

"M. still helps her husband and, quietly, continues to live with him and care for him. But she worries that the authorities will come after her if they realize that they divorced not because of irreconcilable differences but because of irreconcilable medical bills. There were awkward questions from friends who saw the divorce announcement in the newspaper.

"'It's just crazy,' she said. 'It twists people like pretzels.'"

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LTC Comment: With this kind of advice dominating in the national media, in the nation's hospitals, and among lawyers, what hope is there for rational LTC policy and responsible LTC planning?

Plenty.

The programs that have anesthetized the American public to the risk of long-term care cannot continue to do so. More and more people will be left to their own devices as the entitlements' eligibility and services are cut drastically. The public will turn first to savings, then to home equity, and finally, those who remain medically and financially qualified will get the message:

Private long-term care insurance is the only way to ensure access to quality long-term care at the most appropriate level while protecting savings and home equity.

When will the public learn this lesson? Within ten years for sure; possibly three to five years. So, hang in there. Relief, for consumers and for private LTC insurers, is on the way.