LTC Bullet: Center Begins Study in California

Tuesday, August 24, 2010


LTC Comment: The Center for Long-Term Care Reform and California's Pacific Research Institute have begun a study of long-term care financing in the "Golden State." Details after the ***news.***

*** SUBSCRIBE TO LTC BULLETS. Please encourage your colleagues to fill out the simple online subscription form at . Subscriptions are free to everyone for the first month. After that, we'll ask you to help support the cause: rational long-term care public policy. ***

*** CLASS ACT driver to talk at LTCI Producers Summit and meet with insurers. AALTCI ( president Jesse Slome announces that Connie Garner, the former Senate staffer, credited with or blamed for (depending on your perspective) the design and passage of the CLASS Act, will address and confer with the group at its event April 3-5, 2011 in Las Vegas, Nevada. The program and information are now available online: Association members are being offered the lowest Summit registration fee of $219. Others will pay $398 (Regular Registration). If you are not an AALTCI member, you can join now at 50% off ($49) and thus qualify for the lowest Summit rate. But this is a limited time offer, so act now. Click on this link to join and enter the code CENTER50 in the Referral Code box:***

*** IF YOU THINK WE'VE GOT PROBLEMS: Explosion in 85 plus year olds will have massive long term care funding burden, Private Healthcare UK [United Kingdom], 8/19/10: A massive explosion in the number of people living to 85 and beyond will put huge pressures on workers and state funding for the long term care of older people in the next 20 years, according to an analysis of Office of National Statistics (ONS) data by retirement solutions specialist Partnership. The analysis suggests that in some council areas, for every 2 people of working age there will be 1 person in retirement. . . . In 2010 Christchurch, in Dorset, is identified as the council with the oldest population, with 3 retired people for every 5 in work. Christchurch people aged over 85 currently make up 1 in 6 people in retirement. Chris Horlick of Partnership says, "This analysis presents significant funding issues as there will be far fewer young people entering the working population to fund the retired population through direct taxation. The impact of our ageing population on the oldest councils will be extreme. We must ensure that people are making sufficient provision for their long term care funding." ***

*** JOIN "THE ZONE" WITHOUT THE $150 FEE UP-FRONT. Did you know you can now donate as little as $12.50 per month (automatically on your credit card) and qualify immediately for the Center for Long-Term Care Reform's members-only web zone AND for our one-a-day mental vitamins ("LTC Bullets" and "LTC E-Alerts")? Please make a new or supplemental contribution now at . Don't feel limited to the minimum if you can afford and feel moved to contribute more. Your support is much needed and greatly appreciated. Please direct any questions regarding our members-only website, AKA "The Zone," or donating online or by check to or call us at 206-283-7036. ***



LTC Comment: The Pacific Research Institute's ( mission "is to champion freedom, opportunity, and personal responsibility for all individuals by advancing free-market policy solutions."

The San Francisco think tank has retained the Center for Long-Term Care Reform to conduct a study of long-term care financing in the state. A description of the project follows below. Preliminary research and identification of sources began last week.

I'll visit California's state capital in Sacramento during the week of September 13-17, 2010 to conduct interviews and other field work. We have begun to schedule meetings with key interest groups and public officials. Our goal is to have a final report in draft by mid-October.

I've apprised the Center's California mailing list of the project. But if you know people in the state who might like to be involved as interviewees or respondents, please have them contact the Center at

Specifically, we want to schedule a briefing and interview with California representatives of the long-term care insurance and reverse mortgage industries. Please contact Damon at 206-283-7036 or if you would like to participate in this session tentatively scheduled for Thursday or Friday, September 16 or 17 in Sacramento. We'll decide the exact date, time and location based on availability and preferences of participants.


Description of the project:

How to Reduce Medi-Cal Expenditures and Improve Long-Term Care

a proposal by the

Center for Long-Term Care Reform

submitted to the Pacific Research Institute

on March 22, 2010

I. The National Problem

Medicaid (Medi-Cal in California) is a means-tested public assistance program, i.e. welfare. Yet Medicaid is the principal funding source for long-term care (LTC) throughout the United States, not only for the poor, but for most Americans. Although LTC users are only seven percent of the Medicaid population, they account for more than half of the program's costs nationally. The only way Medicaid can survive as a long-term care safety net for the poor is if more prosperous people plan responsibly and pay privately for their own long-term care. But Medicaid crowds out most private LTC financing alternatives such as home equity conversion and insurance. The trend toward greater and greater dependency on welfare-financed nursing home care is reversible. It will be reversed by responsible public policy or by default as costs skyrocket and public resources dwindle with the aging of the baby boom.

II. The State Problem

California spent $31 billion on Medi-Cal in 2007 of which $7.5 billion or 24.2% were LTC expenditures for older people and adults with physical disabilities, an increase of 58% since 2002. California's age 85 plus population, the cohort most likely to require LTC, was 585,000 or 1.6% in 2007, but is expected to be 1,159,000 and 2.5% in 2030, a 98% increase. Medi-Cal is the primary payer for 65% of the state's nursing home residents. Another 13% rely primarily on Medicare. Medicaid and Medicare also pay for most home health care, 75% nationally. Our best estimate is that only 6% to 9% of California's 50+ citizens own LTC insurance. Very few use home equity to fund LTC. Thus, financing Medi-Cal LTC is a large and growing strain on California's budget. Private LTC financing is minimal and shows few signs of increasing. Demographic and fiscal pressures will exacerbate these problems. Yet federal law and regulations inhibit some effective corrective actions California might take--such as tightening loose eligibility rules--and encourage other initiatives--such as "rebalancing" from institutional to home care--which may increase utilization and costs.

III. Substantive Proposal

California can reduce its annual Medi-Cal budget by an amount equal to 10% of current nursing home expenditures for aged and disabled recipients or $365,700,000 per year within five years. We propose to conduct a study of LTC financing in California that shows why such savings are possible and how to achieve them while improving access to quality LTC for everyone in the state. Toward that end, we will . . .

  • Research and document federal and state Medi-Cal LTC eligibility laws and regulations that encourage public assistance dependency for LTC.
  • Interview state staff who make, interpret, and implement LTC eligibility policy to identify eligibility "loopholes" that circumvent spend-down rules.
  • Measure the level of Medi-Cal estate planning, i.e. artificial impoverishment to qualify for Medi-Cal LTC, in California with a literature search and interviews.
  • Analyze how much revenue California receives from federally mandated estate or lien recoveries and how much more could be recovered using best practices.
  • Examine the reverse mortgage market and interview lenders and loan representatives to identify ways home equity could offset Medi-Cal LTC costs.
  • Examine the LTC insurance (LTCI) market and interview carriers, brokers, agents and regulators to identify ways LTCI could offset Medi-Cal LTC costs.
  • Meet key state legislators and executive branch officials to discuss why Medi-Cal LTC expenditures are so high and how they could be reduced progressively.
  • Meet LTC providers (nursing home, assisted living and home health) to get their perspective and gauge their support for measures to increase private LTC revenue.
  • Meet senior advocates to get their perspective and gauge their support for measures to increase overall public and private LTC resources.

We propose to work with a representative of the Pacific Research Institute and/or the State Medi-Cal program to identify interviewees and schedule appointments. We will visit California for one week to conduct the onsite research and interviews. We will conduct other necessary research online.

IV. Business Proposal

Deliverables, within six weeks of project approval, will include (1) a comprehensive report (approx. 25 pages) that explains the problem of LTC financing and recommends solutions to achieve savings of at least 10% of California's Medi-Cal nursing home budget per annum; (2) one or more newspaper op-eds, and (3) an article suitable for publication in the Pacific Research Institute's journal.

Stephen Moses (professional bio attached) will conduct all of the research and interviews for this project. He has conducted many similar studies over the years. Examples of his project reports are at

Respectfully submitted March 22, 2010 by

Stephen A. Moses