LTC Bullet: No Good Deed Goes Unpunished

Tuesday, October 5, 2010


LTC Comment: How the fiscally irresponsible public sector punishes the financially responsible private sector after the ***news.***

*** REFERRALS. Thank you for reading the Center for Long-Term Care Reform's latest "LTC Bullets" newsletter. If you know someone who would be interested in this publication, please recommend us by clicking here If you have received this edition as a forward, and would like your own subscription, you may subscribe here Thank you. ***

*** DAMNED IF YOU DO the right thing. Grace-Marie Turner of the Galen Institute explains how health reform implementation is actually working out in "Disastrous Dynamics." She says: "Instead of recognizing the economic reality of what they've done, officials are railing at the companies and industries that are responding in perfectly rational ways to the incentive structures they have set up." Fits right in with today's theme that private companies often get whacked for behaving responsibly. ***

*** LTCI RANKED HIGH in study. National Underwriter reports: "Employment-based benefits make a difference in the ability of employers to attract and keep workers, according to a new survey by the Employee Benefit Research Institute (EBRI)." Interesting that only 48% rated Social Security "very important" while 85% rated health insurance as an "important workplace benefit." "Other benefits rated highly were long term disability, rated very important by 39%; short-term disability (35%); long term care insurance (31%); supplemental life insurance (21%); and annuities (19%)." [Emphasis added.] ***



LTC Comment: In an LTC E-Alert a couple weeks ago we tried to "Put Hancock News in Context." We compared the report that Hancock was raising LTC insurance premiums with the federal and state governments' total failure to set aside any reserves to pay future claims. "Who's being more responsible?," we asked.

Neither Social Security, Medicare, nor the newest Ponzi scheme (CLASS) make any provision for genuine reserves. Those programs' "trust" funds have been spent already. They contain only IOUs (Treasury bonds) on which taxpayers will have to repay the principal and interest some day. Medicaid doesn't even maintain a fictional trust fund to pretend it's solvent.

So how does the public sector respond to the private sector's attempt to be financially responsible?

According to a September 30, 2010 article in Investment News: "State insurance regulators are not likely to approve John Hancock's recently announced long-term-care rate hikes, denting third-quarter profits for the insurer's parent company, Manulife Financial Corp., according to analysts."

This sounds like the pot insisting the kettle remain black. Don't prepare to pay future claims. Follow the lead of Social Security, Medicare and CLASS. Ignore the problem and hope for the best in the future.

Where has that policy gotten the public programs? Trillions of dollars in unfunded liabilities for Social Security and Medicare. And here's the latest news on Medicaid from last Thursday's New York Times:

"Joblessness and the accompanying loss of health benefits drove an additional 3.7 million people into the Medicaid program last year, the largest single-year increase since the early days of the government insurance plan, according to an annual survey by the Kaiser Family Foundation.

"Enrollment in the program, which provides comprehensive coverage to the low-income uninsured, grew by 8.2 percent from December 2008 to December 2009, the second-largest rate of increase in the 10 years that Kaiser has conducted the survey. There were 48.5 million people on Medicaid at the end of 2009, or about one of every six Americans."

Well, OK, we expect safety net costs to go up in hard economic times, right? Will government do the responsible thing in good times and reduce spending?

Not so according to a piece by John Graham of the Pacific Research Institute: "Although the Great Recession gives politicians an easy justification for increasing the so-called 'safety net,' history shows Medicaid grows even when society prospers."

But surely, the government is cutting back on Medicaid's hemorrhaging eligibility rolls and lenient income and asset limits. No again. The federal government pumped $87 billion into state Medicaid programs through December 31, 2010 and extended the largesse recently through June 2011. All this extra money is conditional upon states doing nothing to rein in out-of-control eligibility!

Because they'd lose their extra federal matching funds if they reduced Medicaid eligibility from what it was on July 1, 2008, states have cut benefits and provider reimbursements instead. Such cuts hurt the poor most, because they would qualify anyway if eligibility for middle class and affluent clients were cut instead.

It is sad and ironic that when the market demands financial responsibility and good companies behave responsibly, they're bashed in the media and harassed by bloviating politicians.

But when government does things that entrepreneurs or business leaders would be thrown in jail for doing, reporters and rent-seeking public officials look the other way.

No wonder so many in the private sector turn to "crony capitalism" and rip off the system. When bad deeds aren't punished, good deeds often are.