LTC Bullet: Medicare/Medicaid Meltdown Means More LTCI

Tuesday, October 6, 2009


LTC Comment: As politicians push Medicare cuts and Medicaid expansions to grow health coverage, a long-term care meltdown looms. More after the ***news.***

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*** STEVE MOSES says "I've had it with discouraging news about LTC insurance sales. Anyone who understands why LTC insurance has lagged up to now will also know why the product's sales are going to explode soon. I'm going to prove that prediction to current producers, prospective agents, and potential referral sources. LTC insurance is consumers' only line of defense against the impending collapse of America's social safety net. We need an army of educated, motivated, optimistic, and successful evangelists for responsible long-term care planning. Let's start recruiting now!" ***

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LTC Comment: Let's start with a quick review of our big-picture LTC policy analysis and then adduce the evidence it's happening as predicted.

In 1965, government made long-term care virtually free by funding nursing homes through Medicaid. Costs exploded. The public ignored LTC risk and cost because government paid for most expensive LTC. Nursing home care flourished. Private home care languished. Long-term care insurance stagnated. Today, this "system" lurches toward collapse as Medicaid bankrupts state and federal budgets but the public remains largely oblivious to future LTC liabilities. When the LTC crash comes, middle class and affluent families and individuals will have to pay more of their own nursing-home and home care expenses. Then personal spend down, home equity conversion and private long-term care insurance will become major revenue sources and breathe financial oxygen into LTC. People spending their own money will choose home and community-based care thus ending institutional bias. With fewer people eligible, Medicaid will emerge as a better safety net program for the truly needy. So, we'll come out all right in the end, but the worst part of this transition is just beginning.

Following are recent developments that suggest the end is near for near-universal government financed long-term care. As you read these tales of woe, consider this take-away:


That simple truth, backed up by abundant evidence, trumps every excuse for failing to plan for long-term care.


Click "LINK" at the end of any of these paragraphs to get the full story from the source.

Bruce Yarwood, president and CEO of the American Health Care Association, Monday likened the problems facing long-term care to a "tsunami." "I can't quite remember when it's been this difficult," Yarwood said during the Opening General Session of the AHCA annual conference in Chicago. He cited as problems a 1.1% Medicare rate cut, which went into effect Oct. 1; states' slashing or freezing Medicaid rates in recent months; and healthcare reform legislation that could eliminate the market basket-the annual cost-of-living increase for nursing homes. LINK


Skilled nursing facilities face a projected Medicaid shortfall in 2009 of $15.64 a day, Joseph Lubarsky, a partner with accounting firm Eljay LLC, said Monday. . . . While the under-funding is not increasing sharply for 2009, it is expected to expand wider in 2010 as state budget shortfalls affect Medicaid shortfalls, he said. While states received $87 billion in increased federal medical assistant percentage (FMAP) funding as a result of the stimulus package this year, states haven't use it to increase Medicaid rates, Lubarsky said. Instead, they have used it to balance their budgets. A total of 48 states face budget shortfalls. Meanwhile, Medicaid expenditures for home- and community-based services continue to grow. They soared by nearly 142% from 2000 to 2008. Medicaid expenditures for nursing facilities only increased by 24.5% during that time. LINK


The nation's nursing homes are perilously close to laying off workers, cutting services -- possibly even closing -- because of a perfect storm wallop from the recession and deep federal and state government spending cuts, industry experts say. A Medicare rate adjustment that cuts an estimated $16 billion in nursing home funding over the next 10 years was enacted at week's end by the federal Centers for Medicare and Medicaid Services -- on top of state-level cuts or flat-funding that already had the industry reeling. And Congress is debating slashing billions more in Medicare funding as part of health care reform. Add it all up, and the nursing home industry is headed for a crisis, industry officials say. "We can foresee the possibility of nursing homes having to close their doors," said David Hebert, a senior vice president at the American Health Care Association. "I certainly foresee that we'll have to let staff go." LINK


The nation's governors are emerging as a formidable lobbying force as health-care reform moves through Congress and states overburdened by the recession brace for the daunting prospect of providing coverage to millions of low-income residents. . . . Whether Medicaid can absorb a huge influx of beneficiaries is a matter of grave concern to many governors, who have cut low-income health benefits -- along with school funding, prison construction, state jobs and just about everything else -- to cope with the most severe economic downturn in decades. LINK


Lawmakers are planning to pay for much of their plans to expand coverage to the uninsured by slowing Medicare spending by as much as $500 billion over 10 years, Long Island Newsday reports. Democrats say the only thing the cuts "take out of Medicare is waste" - in the words of Senate Majority Leader Harry Reid, - but Republicans who oppose the Democrat-led reform effort have warned that cuts will reduce services for seniors. Medicare Advantage payments to private plans would receive the sharpest cuts, while future payments to hospitals would also shrink. Some of the cuts represent savings hoped for through increased quality (Brune, 10/4). LINK


GAO report says hundreds more deficient nursing homes should be added to watch list Nearly 450 nursing homes should be added to the federal government's Special Focus Facility (SFF) program, which monitors consistently problematic nursing homes, say the authors of a new report from the Government Accountability Office. LINK


Seniors housing pipeline 'emptying out' as construction slows, NIC says Construction activity in the seniors housing and care sector has slowed significantly over the last two years, due largely to the overall economic recession, according to a new report. "The 2009 Seniors Housing Construction Trends Report" was produced by the National Investment Center for the Seniors Housing and Care Industry (NIC) and the American Seniors Housing Association (ASHA). LINK


Fitch Ratings: Negative outlook for continuing care retirement communities The continuing care retirement community sector is facing a negative outlook over the next 12 to 24 months, according to the newly released CCRC Median Ratios report from Fitch Ratings. Fitch will hold a conference call at 11a.m. EST this morning to discuss the findings. LINK


Historic Medicaid woes expected to continue through fiscal 2010, new report indicates Enrolment in state Medicaid programs grew by an average of 5.4% in 2009 (higher than a projected 3.6%) putting a serious strain on state budgets and resulting in program cuts nationwide. Worse, the trend is expected to continue well into 2010, according to a new report from the Kaiser Family Foundation. LINK


McKnight's Video: Healthcare reform swipes at long-term care funding, Lane says Billions of dollars for nursing home funding are at stake if healthcare reform takes effect. That is according to Larry Lane, vice president of government relations for Genesis HealthCare Corp. He spoke to McKnight's at the National Investment Center for the Seniors Housing & Care Industry conference in Chicago last week. LINK


McKnight's Video: Future cloudy for Medicaid, Medicare reimbursements, Lubarsky says A weak economy, the upcoming end to federal stimulus funding and healthcare reform bode badly for the future of Medicaid and Medicare reimbursements, according to Joseph Lubarsky, president of Eljay LLC, an accounting firm. LINK