LTC Bullet: The Enemy of LTC Truth

Monday, February 8, 2010


LTC Comment: Albert Einstein said "Unthinking respect for authority is the greatest enemy of truth." See how this principle applies to long-term care, after the ***news.*** [omitted]


LTC Comment: Einstein disdained "unthinking respect for authority," but he wasn't alone. President John F. Kennedy said:

"The great enemy of truth is very often not the lie--deliberate, contrived and dishonest--but the myth--persistent, persuasive and unrealistic. Too often we hold fast to the clichés of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought."

The field of long-term care financing is a perfect case in point. What exactly are the "persistent, persuasive and unrealistic" myths of long-term care? I nominate the following:

1. The high cost of long-term care consumes the life savings of millions of Americans.

2. Medicaid forces people to spend down into impoverishment for LTC before it helps.

3. Most people don't buy private long-term care insurance because it's too expensive.

4. The best solution for long-term care is more government financing.

5. Medicaid can cover more people for less money in home care than in nursing homes.

All five of these myths are patently false. Yet they persist in both the popular and academic literature.

I've disproved each of the myths in published articles and reports over 25 years. See for example:

Interestingly, the five "myth-statements" about long-term care financing are not always stated explicitly in the literature anymore. They've seeped into the academic psyche. They've migrated from articulated premises to hidden assumptions.

For example, I'd point to the January 2010 special issue of the journal Health Affairs, Vol. 29, No. 1, dedicated entirely to "Advancing Long-Term Services & Supports." There you'll find the myths of long-term care implied in nearly every article if rarely affirmed outright.

But let me focus on just one piece from that issue: "The Complementarity of Public and Private Long-Term Care Coverage," by David G. Stevenson, Marc A. Cohen, Eileen J. Tell and Brian Burwell. This is one of the best articles in the special Health Affairs issue and its authors are well known, highly qualified experts in the field. (Respected colleagues as well.) Their article is available here, although it's gated so you'll have to pay if you want to read more than the "abstract."

The theme of the article is that the solution to long-term care financing is neither exclusively public sector nor private sector, but a complementary melding of both. OK, agreed. But what would such a solution look like? How do you get there? Why hasn't it evolved already? And what are your assumptions? It seemed to me that false assumptions--including some of the myths I enumerated above--prevented the article from identifying the desirable solution convincingly.

So I wrote to the authors explaining why I think their unstated "myth-assumption" that people are more financially at risk for long-term care than they actually are leads to their underestimating the "crowd out" effect of government LTC financing on the LTC insurance market. Here's my email letter:


January 22, 2010

Dear LTC Research Friends:

Thank you for citing me in your Jan. 2010 Health Affairs article. [p. 98, footnote # 7, "Aging America's Achilles' Heel: Medicaid Long-Term Care"] I'd like to offer some comments and suggestions.

You write: "Medicaid's share of total long-term care costs has remained relatively stable over the past few decades at around 50 percent." [p. 98]

Actually, Medicaid's share of nursing home costs has declined steadily from 55.4% in 1980 to 40.6% in 2008. Medicaid's share of total home health costs is only 34.6% for 2008.

I think what you're missing is that Medicaid's absolute dollar expenditure for LTC is not what matters for the crowd out issue. It is rather the total government role in LTC financing.

So, you need to add to Medicaid's share, (1) the one-half of "out-of-pocket costs" that are really just spend-through of Social Security income of people already on Medicaid, (2) Medicare's 18.6% of NH [nursing home] and 41.1% of home health, (3) other state and federal LTC funding sources; (4) other non-Social Security income, as opposed to assets, that Medicaid recipients contribute toward their cost of care. The last point is important for the crowd out issue, because, while Medicaid LTC consumes most of recipients' income, most of their assets are not at risk as explained below and in the attachments.

I've documented and analyzed the true impact of government financing of LTC on the demand for private LTC insurance annually in a series called "So What if the Government Pays for Most Long-Term Care." The latest addition to that series is attached and available here: It covers 2008 data. Past editions are in our LTC Bullets archives for each January here:

You write: "Although Medicaid is not an insurance product, because it offers little explicit financial protection for long-term care costs, some have argued that Medicaid in fact does provide a degree of protection for those who are well schooled in Medicaid eligibility policy." [p. 98]

Nearly every phrase in that sentence is incorrect. Medicaid offers little financial protection for LTC? How about the unlimited resource exemptions and easy estate recovery avoidance explained in detail in my article you cite! Medicaid only offers asset protection for those "schooled" in policy? No, that's never been true nor is it my argument. Medicaid planning is just the tip of the iceberg. The vast majority of Americans qualify for Medicaid LTC based on income and assets without any such schooling or legal advice. That's the big problem, although even GAO admitted "transfer of assets," itself only a small part of Medicaid planning, is a $1 billion a year expense. Nothing to sneeze at.

I urge you to read our new report titled "Doing LTC RIght," attached and available here: It focuses on LTC financing in Rhode Island but offers a model for national reform. I hope it nails these points down even more clearly than "Achilles' Heel."

You write: "Even if one accepts that Medicaid crowds out long-term care insurance purchase for the majority of people across the wealth spectrum, it seems neither feasible nor desirable to reduce Medicaid eligibility standards to eliminate this impediment to the private market. For instance, empirical analyses have shown that even if all states moved to the most stringent eligibility standards allowed by federal law, private long-term care insurance purchase would rise by only 2.7 percentage points." [p. 99]

But you entirely miss the point. Federal law and regulations governing Medicaid LTC eligibility are wide open. States have little authority to restrict access based on income and assets. That's why our new Rhode Island report is so important. It shows what a state, freed of Lilliputian federal rules, might do to target Medicaid to people truly in need and encourage others to plan early and responsibly for LTC. Rhode Island's unique "global Medicaid waiver" is a reason to hope for change and a way to experiment with more rational LTC policy.

Again, I hope you'll read the two attachments and as always, I'd value your comments.

Thanks again for citing my work. That's more recognition than I usually receive from researchers, Josh Wiener excepted. But if I could get you to understand what I'm actually saying and cite THAT, it would be so much better.



LTC Comment: No substantive reply yet but I'm looking forward to their answers.