LTC Bullet:  How to Save Pennsylvania Billions:  Two New Center Studies Released

Wednesday, January 12, 2011


LTC Comment:  Read "Long-Term Care Reform:  More Access to Better Care at Lower Costs" and "The Keystone of Long-Term Care:  More Access to Better Care at Lower Public Cost for Pennsylvanians" after the ***news.***

  ***  Lincoln Financial Life Stages Survey: Long-term Care:  "Promises to save money or manage debt perennially appear on New Year's Resolution lists across the nation. With the lessons of the Great Recession still fresh, as many Americans review their financial plans for 2011 and beyond they are more concerned than ever with rebuilding their portfolios, protecting their savings and better analyzing their long-term financial risks. One such risk is the impact of the cost of long-term care."  Press release. ***

*** U.S. Nursing Home Closings Hit Poor Neighborhoods Hardest: Study:  "Widespread nursing home closures over the past decade have resulted in a 5 percent drop in available nursing home beds across the United States, with poor, urban neighborhoods hardest hit, new research reveals."

LTC Comment:  This is one example of what we mean when we write that the impending collapse of Medicaid long-term care will hurt the poor most.  But it will also send the middle class and affluent rushing to LTCI producers for protection which is becoming obvious to them that they need. ***

*** LTC PARTNERSHIP TRAINING:  "LTC Connection, a continuing education company that specializes in offering mandatory LTC Partnership Training in a classroom setting, has launched their 2011 class schedule.  The classes . . . include many new and exciting initiatives in order to make Partnership training the best value for LTC agents, distributors and insurance carriers."  Press release. ***



LTC Comment:  Your Center for Long-Term Care Reform is capitalizing in these first weeks of 2011 on many months of research conducted during the second half of 2010.

Last week, we announced publication of our study titled "Medi-Cal Long-Term Care:  Safety Net or Hammock" by California's Pacific Research Institute.  Read a California Healthline "most-commented" review of that "incendiary" report here.

This week, we're proud to announce the publication of two more reports generated from the Center's research. 

Yesterday, Pennsylvania's Commonwealth Foundation, a free-market think tank, released "Long-Term Care Reform:  More Access to Better Care at Lower Costs," which is based on our research, in tandem with their own study "Five Ways to Cut $5 Billion."  Our LTC recommendations added to their proposals brought the total savings for "Keystone State" taxpayers to $8.1 billion: 

Reform Long-Term Care Spending:  Estimated Yearly Savings-$1 Billion+.  Long-term care currently costs Pennsylvanians $6.6 billion per year, making up 40 percent of all Medicaid spending (much higher than the national average).  Pennsylvania needs to reduce the number of individuals dependent on the program by adjusting enrollment guidelines to target the truly needy while encouraging more Pennsylvanians who can afford it to purchase private long-term care insurance.  Additional Savings for FY 2011-12-$2.8 Billion;  Total Savings for FY 2011-12-$8.1 Billion.

Today, the Center for Long-Term Care Reform is releasing "The Keystone of Long-Term Care:  More Access to Better Care at Lower Public Cost for Pennsylvanians."  This is our full-length study, conducted for the Commonwealth Foundation, on which their abridged version, published yesterday and described above, is based.

We want to thank the Commonwealth Foundation for retaining the Center to conduct this research and for their invaluable assistance in conducting the research and publicizing the results.

Following is the "Executive Summary" from our full-length report.


Executive Summary

Long-term care is very expensive whether provided in a nursing home, an assisted living facility or in someone's home.

Medicaid pays for most professional long-term care in Pennsylvania.  The cost is already huge and likely to increase rapidly because of the Commonwealth's aging demographics.

Most people prefer to receive long-term care in their homes instead of going to a nursing home, but Pennsylvania Medicaid pays mostly for nursing home care.

That's all changing as Pennsylvania Medicaid pursues "rebalancing" from nursing-home to home care in a massive effort one official compared to the "Manhattan project."

The goal of rebalancing is to provide more of the home care people prefer at less cost, based on the opinion that, overall, home care is less expensive than nursing home care.

But research does not bear out the view that home care saves money overall.  In fact, providing more home care delays but does not replace institutional care and costs more in total.

Furthermore, rebalancing without controlling eligibility discourages free care and private LTC financing alternatives while encouraging Medicaid enrollment and "Medicaid planning."

The only way to rebalance Medicaid to provide more home care at less cost is to reduce the number of Pennsylvanians who become dependent on the program in the future.

Only four alternative sources of LTC financing exist:  (1) Asset Spend Down, (2) Estate Recoveries, (3) Home Equity Conversion, and (4) Private Long-Term Care Insurance.

This report explains why these alternative funding sources remain small and how to maximize them to relieve Medicaid and enable the program to rebalance cost-effectively.

Pennsylvania Medicaid would save nearly $120 million per year by preventing only 20% of its "dual eligibles" from ending up dependent on the program in the future.

If Pennsylvania Medicaid recovered from estates at the same rate as Oregon, the Commonwealth could recover an additional $213 million per year.

Pennsylvania may have 135,000 households "at risk for spending down" that could receive an estimated $62,800 each or $8.5 billion in total from reverse mortgages to help pay for their own long-term care, stay off Medicaid or at least delay Medicaid dependency.

In the absence of Medicaid's $500,000 home equity exemption and with other tougher income and asset limits, far more Pennsylvanians would purchase private long-term care insurance, avoid Medicaid dependency altogether, and save the Commonwealth large sums.