LTC Bullet:  LTC Hysteria

Tuesday, June 7, 2011

Seattle--

LTC Comment:  Some "senior advocates" are worried that smarter public policy to save LTC for the poor could exclude the non-poor from Medicaid.  Well, then, maybe the non-poor would plan earlier and more responsibly for LTC and avoid Medicaid dependency.  Details follow.


LTC BULLET:  LTC HYSTERIA

LTC Comment:  Defenders of the doomed status quo in which Medicaid funds most long-term care in the USA argue thus:  we must not cut Medicaid eligibility, much less block grant the program, because states will stop helping elderly people already impoverished by exorbitant long-term care costs.

So much is wrong in their argument that I could write a whole article rebutting it.  And have.  But suffice it to say here, as we've said in this space often and proven repeatedly in reports here, Medicaid LTC eligibility does not require impoverishment and never has.  Targeting scarce Medicaid resources to people who really need them would save Medicaid billions and attract more private funding to the LTC delivery system, thus expanding and improving services for everyone, rich and poor alike.

But don't waste your time talking truth, evidence and logic to the ideologues who robotically demand continuance of an over-extended, catastrophically expensive, politically corrupt system that is doomed to collapse.  Instead focus on the LTC stakeholders with open minds who will benefit from more rational LTC public policy.  That's what we'll be doing when the Center for Long-Term Care Reform saturates DC this fall with our analysis and recommendations.

In the meantime, here are some examples of the hysterical outpourings from organizations and analysts who would rather sink the LTC ship than patch its leaks.

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The National Senior Citizens Law Center published a report in April titled "Medicaid Block Grants: Attacking the Safety Net for Low-Income Older Adults."  Here's an example of its tone and content: 

"Proposals to block grant Medicaid, which is a shared federal/state program in which the federal government currently sets the rules and shares the cost with the states, should set off alarm bells for low-income older adults, their families and advocates. With block grants, states would get a fixed amount of money from the federal government to do with presumably as they choose.

"Medicaid is not only a program for low-income older adults. It also provides middle class individuals who have impoverished themselves with long-term care benefits. Medicaid provides financing for long term care in nursing homes for some 1.3 million people aged 65 and over and long-term services and supports for 4.8 million in the community. The nearly 9 million people 65 and over (and countless families) it helps range from those living at or close to the federal poverty level to those in the middle class."

LTC Comment:  Under current law, the federal government forces states as a condition of receiving Medicaid matching funds to provide LTC benefits to people with practically unlimited incomes (because medical and LTC expenses aren't counted in the income limits) and practically unlimited exempt assets (home equity up to at least $500,000, unlimited capital and cash flow of one business, unlimited prepaid burial costs, unlimited term life insurance, unlimited "household goods and personal effects," unlimited value of one auto, etc.).  On top of this federal rules force states to allow Medicaid planners to impoverish affluent seniors artificially with Medicaid friendly annuities, special trusts, asset transfers, life care contracts, reverse half-a-loaf strategies, etc.  Block granting Medicaid would allow states to save money and run their Medicaid LTC programs more rationally to the greater benefit of genuinely needy people.  Those with wealth would quickly learn they're at risk for LTC expenses and plan accordingly, before it's too late to save, invest or insure.

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Not to be outdone by the elder lawyers, AARP got its two-cents-worth in (actual value) with its own April report titled "The High Cost of Capping Federal Medicaid Funding."  It begins with a perfectly ridiculous statement:

"The use of block grants (or other capped funding arrangements) to limit federal Medicaid spending may help balance the federal budget and provide states with more flexibility, but the price is high: Millions of Americans could lose access to basic health services, including long-term services and supports."

LTC Comment:  The whole idea of block granting Medicaid is to save the safety-net program from its impending demise.  How can allowing states to get out from under insanely counterproductive federal mandates hurt the most needy?  It will not happen.  States will prioritize, help the neediest first, and create stronger incentives for others to plan early and save, invest or insure for long-term care.

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Do you still think federal Medicaid isn't stacked against the poor to the benefit of lawyers and their affluent clients?  Read New York Medicaid planner Vincent Russo's recent blog.  Here's a sample:

"Several little-noticed provisions of the recently-enacted law that extended the Bush-era tax cuts fundamentally alter how the Medicaid and Supplemental Security Income (SSI) programs treat tax refunds and other tax credits, making it easier for people with special needs to maintain their benefits. . . .  tax refunds are no longer considered countable income for Medicaid or SSI purposes. . . .  [A]ny money received through a tax refund will not be a countable resource for 12 months following receipt of the funds . . . an SSI beneficiary can now retain his tax refund, even if it puts him over the $2,000 resource limit, for up to one year from the date of receipt . . . Under previous rules, Making Work Pay, Earned Income, Advanced Earned Income, and Child Tax Credits were all excluded as countable income for Medicaid and SSI purposes, but if the income was retained, it had to be spent within nine months of receipt. Now, the 12-month rule applies to all of these tax credits and, furthermore, First-Time Homebuyer Tax Credits that were previously countable as income and as a resource are now exempt and subject to the same countability rules as the other tax credits.  . . .  The Centers of Medicare and Medicaid Services have also indicated that seniors and other people seeking Medicaid coverage for long-term care will not be subject to transfer-of-asset penalties if they give away their tax refunds or credits during the 12-month grace period."

LTC Comment:  These new gimmicks are just the latest arrows in the Medicaid planner's quiver.  It remains very easy, especially in prodigiously profligate states like New York and California, to get virtually anyone on Medicaid after they need care practically overnight.  See our reports on those two states for all the details:  New York and California.  Is it any wonder LTC is bankrupting state Medicaid programs and the public is asleep about the risk and cost of long-term care?

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Here's another example of how Medicaid planners can line their pockets with big fees by impoverishing prosperous clients.  It's titled "Penalty Start Dates, Partial Cures and Reverse Half-A-Loaf" by Certified Elder Law Attorney Jeffrey A. Marshall.  Excerpts: 

"Let's say that two years ago your mom gave you $70,000. You used $40,000 to make a down payment on a home, and put the other $30,000 in a bank account.

"Now, your mom is in a nursing home and she has spent all of her savings paying for her care. You apply for Medical Assistance (MA) benefits to pay for mom's care.  But the County Assistance Office (CAO) tells you that mom won't qualify for MA because of the money she gave you within the last five years.

"The CAO caseworker patiently explains that a penalty period of ineligibility is imposed when an applicant for Medicaid Long Term Care benefits makes an uncompensated transfer of assets and applies for MA within 5 years.  The penalty period resulting from an uncompensated transfer of assets does not begin on the date of the transfer. Instead, it starts to run only after the applicant has met all other functional and financial requirements for Medicaid eligibility and is ineligible solely due to the transfer. . . .

"Since mom is ineligible for MA, you use the $30,000 you have left from mom's gift to pay the nursing home for her care.  Using this money, combined with mom's retirement income, you are able to pay for mom's care for 170 days.  What now?  There are still 99 days left on the original penalty period.

Or are there?

* Haven't you really refunded $30,000 of mom's initial gift to you?
* Doesn't that mean she really only gave you $40,000, and that the penalty period should be reduced to 154 days (40,000/259.76=154)? 
* Haven't those 154 days already gone by while you were privately paying 170 days for mom? 
* Shouldn't mom now be eligible for MA benefits?  . . .

"[R]ecently a New Jersey Court (either unaware of or ignoring the CMS guidance) has held that partial refunds of gifted funds change the start date for the imposition of the penalty period."

LTC Comment:  This technique is called the "Reverse Half-a-Loaf" and it is used to circumvent the intent of Congress in the DRA '05 to prevent the affluent from gaming Medicaid by tricking the transfer of assets rule to reduce the eligibility penalty by half.  This is just another example of how Medicaid rules drive the unsavvy poor into destitution while proving highly profitable to Medicaid lawyers and their clients, who are usually the adult children of vulnerable elders shunted off to welfare-financed nursing homes. 

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Let's hear from someone on the right side of the issue.  Michael F. Cannon, Director of Health Policy Studies at the Cato Institute, wrote May 5 for Kaiser Health News:  "Yes, Cut Medicaid - It Won't Be As Painful As You Think."  Some excerpts:

"The budget blueprint passed last month by House Republicans would replace Washington's current Medicaid-funding system -- which encourages waste, fraud and abuse -- with a block-grant system that encourages states to combat those problems.  . . .  The reality is that states could maintain or even expand their Medicaid programs under the GOP proposal . . .  Nevertheless, the GOP budget would encourage states to cut their Medicaid rolls. As it should: the evidence shows there are millions of people enrolling in Medicaid who don't need taxpayer subsidies to obtain coverage, and experience shows that Medicaid cuts will not be as painful as you might think.

"Economists of all political stripes acknowledge that Medicaid crowds out private health insurance, which provides better access to medical care. Jonathan Gruber, a Massachusetts Institute of Technology health economist and sometime consultant to the Obama administration, has estimated that, in effect, as many as six out of every ten enrollees added to Medicaid and similar programs would otherwise have had private coverage. Put differently, these programs cover four uninsured Americans for the price of ten -- a lousy deal even by government standards. . . .

"All of which means that if states reduce eligibility for their highest-means enrollees, many will obtain private coverage themselves. These include the patients of a Louisiana ob-gyn who, The New York Times reports, have private coverage through an employer but enroll in Medicaid when pregnant to avoid the co-pays. . . .

"Crucially, Medicaid block grants would also give states the flexibility to target their programs at the truly needy who can't obtain coverage on their own."

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Grace-Marie Turner of the Galen Institute sounds similar themes in a May 10 article, "Misguided on Medicaid," for the National Review.  She writes:

"One of the major innovations in the House 2012 Budget Resolution is a plan to give states much greater flexibility in running their Medicaid programs through block grants.

"Yet today, a new study was released by the Kaiser Family Foundation, with researchers from the Urban Institute, that is highly critical of the plan. The study concludes that if Obamacare were repealed and states were given block grants for Medicaid, state spending would increase between 45 and 71 percent to offset the loss of federal dollars or 44 million people would be without coverage as a result of the changes.

"Nonsense.

"Rhode Island has proven that block grants can work to protect enrollment and to save taxpayers money. Giving states greater flexibility is the key to greater efficiency in Medicaid spending so states can modernize their programs to fit the needs of their citizens and match the resources available in the individual states.

"States are currently ensnared in federal red tape and must go through time-consuming and bureaucratic appeals to Washington to get permission to make changes. This leads to waste, inefficiency, and a program that relies on the crude tools of price controls to try to rein in spending."

LTC Comment:  Want details on how Rhode Island's "global Medicaid waiver," essentially a block grant, can help save Medicaid LTC for the needy and encourage early and responsible LTC planning?  Read our report titled "Doing LTC RIght." 

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Grace-Marie continues along similar lines in another article titled "States need tools to stem Medicaid's red ink," this time in the Daily Caller:

"States are desperate to find savings to get their budgets in balance. Medicaid spending has nearly doubled over the last decade, and for many it consumes the first or second biggest share of state expenditures, threatening education, public safety, and transportation programs.

"Decades of expansion of what is now the largest single health program in the country are finally catching up. Former Virginia governor and now-Sen. Mark Warner (D-VA) says, 'Long before Social Security goes bankrupt, Medicaid is going to bankrupt all the states.' . . .

"Chief Medicare Actuary Richard S. Foster anticipates that by the end of this decade, 84 million people will be on Medicaid. Many liberals see Medicaid as the foundation for the government-run health program of the future. But this is arguably the worst health care program in the country. It is riddled with waste and fraud, and it offers a generous benefits package on paper but pays doctors so little that few can afford to see more than a few Medicaid patients, relegating them to long waits in hospital emergency rooms to get even routine care. . . .

"States had been lured into expanding access to Medicaid - originally designed to provide health care to the lowest-income Americans - well into the middle class because Washington pays at least half of the cost. The more people they cover, the more money states receive from Washington. Conversely, whenever they try to turn down the federal spigot, they lose two or more federal dollars for every dollar they cut. Many feel trapped."

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For pure ideological duplicity, you can't beat this "poll" from the "caring" folks at the Kaiser Family Foundation as described in a May 25 news release titled "Most Americans Oppose Converting Medicaid to a Block Grant in Order to Reduce the Federal Deficit."

"Most Americans oppose the idea of converting Medicaid to block grant financing to reduce the federal deficit, and more than half want to see no reductions at all in Medicaid spending, according to the latest monthly tracking poll by the Kaiser Family Foundation.

"The May Kaiser Health Tracking Poll finds that 60 percent of people say they would prefer to keep Medicaid as it is, with the federal government guaranteeing coverage and setting minimum standards for benefits and eligibility.  . . .

"While conventional wisdom and recent public opinion polling has suggested that dramatic changes in Medicare would be politically unpopular, the new poll findings illustrate that major alterations to Medicaid also could strike a negative chord with many Americans.

"Support for maintaining the current program may be due at least in part to the public's personal connections to Medicaid and a strong sense of the program's importance.  About half of Americans say they or a friend or family member has received Medicaid assistance at some point, and a similar share say the program is important to their family."

LTC Comment:  News flash:  people like "free" government benefits and don't want them to stop.  When the government takes from Peter to pay Paul, what do you expect Paul to say when he's polled about the program?  Organizations with any pretense to credibility and responsibility should not engage in such blatantly deceptive polling.

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There is much more like this going on in the media-fired debate over government funding of health and long-term care.  But I've had about all I can take for this writing.  I'll leave you with one hour of listening to people who are at best ignorant, and at worst maliciously deceptive on the topic of Medicaid block grants.  If you can stand it, check out this episode of the Diane Rehm show:  "Consequences of Cutting Medicaid."  The one panelist on the program with the right ideas, Congressman Charles Boustany (R, La.), lacks the intellectual ammunition to refute the others.   We'll try to remedy that shortcoming when we hit the ground running in DC this fall.