LTC Bullet: LTC Predictions

Tuesday, January 26, 2010


LTC Comment: One week ago today, most people still thought health reform, including the CLASS Act, was a slam dunk. We disagreed. We were right then and 14 months ago! Now too. See the future, after the ***news.***

*** SILVER LINING. McKnight's LTC News editor Liza Berger reviewed our "Doing LTC RIght" report last Friday. She contrasted our positive, hopeful analysis with the "casualty" of the CLASS Act and concluded: "Those who are serious about finding answers to the long-term care and Medicaid problems would be wise to read it." ***

*** NEWS MAP. At this website, put your mouse on a city anywhere in the world and the newspaper headlines pop up. Double click and the page gets larger. The site changes daily with the publication of new editions. Thanks to Karen Minto for this tip. ***

*** PRESS RELEASES. The Ocean State Policy Research Institute ( published a press release titled "Study: RI Can Save Millions in Medicaid" about our joint report "Doing LTC RIght" on January 18, 2010. Read it here. The Center published our own press release on the study titled "Help for States Crushed by Medicaid Costs" on January 15, 2010. Read it here:



LTC Comment: At the LTCI producers' summit in Kansas City last November, I overheard a major player scoff at the idea CLASS would NOT become law.

When the Senate passed a health reform bill on Christmas Eve, several people emailed me assuming CLASS was enacted.

All along, I've said "hold your horses." This won't happen and even if it did, it would be quickly repealed.

Now we know the outcome and why. Last week, CLASS and broad-based health reform ran out of gas.

The electorate permitted Congress to approach fiscal suicide much closer than I anticipated. But in the end, sanity prevailed.

At the brink, America did an about face, led by the most unlikely parade marshal, a political oxymoron--a Massachusetts Republican.

Now it remains to see whether the Administration and Congress tackle the economy--including the national debt, deficits and unfunded entitlements liabilities--or revisit the financial precipice by pushing more taxes, spending and government expansion.

For my part, I'm sticking with the predictions I made in an LTC E-Alert just days after the 2008 presidential election.

Ever since then, we've had a hyperlink to those predictions on the Center's website at (Look just above the "LTC Almanac" link.)

Here are our predictions again, with updates in [brackets], as originally introduced and presented in LTC E-Alert #8-110: LTC Predictions on November 14, 2008.

LTC Comment: Lately, I've heard some Panglossian prognostications about the future of health and LTC public policy.

People think the time has finally come for all they've worked for to be realized.

Universal health care? Good as done.

Tax incentives for LTC insurance? Section 125, at least, maybe above-the-line tax deductibility.

Recession? Just the usual cycle that a "New New Deal" will fix.

Sorry, but this looks to me like the victory of wishful thinking over hard economic reality.

So, I've decided to lay down a few markers. What follows are predictions. Not what I hope will happen. Rather, what I expect to happen.

Read this now. Then set it aside. Tickle your calendar to read it again in five years and ten. I will too. Let's review then. [Why wait? We're already well on our way to fulfilling these predictions.]


  1. No broad-based health reform will come to pass, much less reform that includes long-term care.
  2. Another economic "stimulus" will fail as they all do, only shifting wealth, not creating it.
  3. Huge increases in the federal deficit and debt will require additional borrowing to the point where interest on the public debt will crowd out new--and even much current--social spending. [President Obama announced last night a three-year freeze on discretionary spending.]
  4. The present economic crisis will worsen precipitating immediately problems with Social Security and Medicare unfunded liabilities ($102 trillion [now $107 trillion, 1/26/10]) that Pollyannas think we won't confront until 2041 and 2017 respectively.
  5. Several states will declare bankruptcy, or whatever they choose to call acknowledging their financial insolvency. [Hello, California and New York]
  6. Medicare will cut reimbursements to skilled nursing facilities dramatically leaving the nursing home industry unable to meet even current standards of care access and quality for publicly financed patients. [Hello, MedPAC]
  7. Medicaid costs will skyrocket. After a one-time federal matching fund supplement, state and federal Medicaid programs will cut reimbursement, then benefits, and finally eligibility. Expect a new Deficit Reduction Act within five years that will make DRA '05 look like child's play.
  8. Medicaid will not increase funding for home and community-based services significantly and Medicaid financing of nursing home care will be dramatically reduced. [Medicaid HCBS expansion slows as HCBS payments from LTC insurance expand.]
  9. No new federal tax deductibility for LTC insurance will pass, not even Section 125.
  10. Middle class and affluent people will be far more personally responsible for their own long-term care in the future.
  11. Within five years, reverse mortgages will become a major source of financing for long-term care.
  12. Within ten years, the market penetration of private long-term care insurance will have doubled at least.
  13. The "New, New Deal" will prove as infeasible to finance as the old "New Deal," and the United States will slowly return to the principles that made our country great in the first place: personal responsibility, self-sufficiency, free minds, free markets, competition and risk without moral hazard.

There you have them. Thirteen predictions. Unlucky? Maybe. But if everything plays out as I forecast, we'll come out all right in the end.

And with even a little luck, we'll preserve a vestige of the now-fraying social safety net for the most needy.

LTC Comment: 2010 update: We still have several years to run before all these predictions play out. But so far, we're right on schedule.

The outcome is promising although getting there will be tumultuous. More clear-headed thinking and objective analysis with less wishful idealism and unrealistic ideology would help.

We'll get a better idea which way the Administration is leaning tomorrow night in the President's State of the Union address.