LTC Bullet: LTC at Sundance
Friday, December 9, 2011
LTC Comment: The 13th
annual Health Sector Assembly brought together 70 thought leaders to
discuss LTC services and financing. Our message was heard loud and clear.
Details follow the ***news.***
*** TOP TEN REASONS WHY MEDICAID NEEDS
REFORM: Check out
this press release from Senators Orrin Hatch (R, UT) and Dr. Tom
Coburn (R, OK) listing "ten examples of the fundamental flaws and problems
confronting the Medicaid program that illustrate why this program needs to
reformed." They include:
1. You can own a Rolls-Royce and
still qualify for Medicaid today.
(Source: The Code of Federal Regulations: 20 CFR 416.1218.)
8. You can own a half a million
dollar luxury home and still qualify for Medicaid.
(Source: The Social Security Act: Section 1917(f).)
And especially this one citing the
Center for Long-Term Care Reform:
9. An entire consulting industry now
teaches how to do financial planning around Medicaidís long-term care
offerings, and not surprisingly, taxpayers now finance 40 percent of
long-term care services in America through Medicaid.
(Sources: The Center for Long-Term Care Reform: Medicaid Planning Quotes
and Kaiser Commission on Medicaid and the Uninsured: Medicaid and
Long-Term Care Services and Supports. March 2011) ***
LTC BULLET: LTC AT SUNDANCE
LTC Comment: It's been a little over
a month since our last LTC Bullet. Capping three months of hard
work on the Hill and in the policy trenches of Washington, DC, I'm just
back from three weeks of much-needed rest, respite and vacation in
Southeast Asia, specifically Borneo, Singapore and a wide-ranging air and
road tour of the Philippines. But now it's time to dive back into the LTC
In between DC and the wilds of Borneo,
I spent three days (with Damon) at the 2011 "Health Sector Assembly" which
convened at the Sundance resort near Salt Lake City, Utah. This
invitation-only, all-expense-paid, annual meeting focused this year on
"Long-Term Care: The Unacknowledged Elephant in the Room." Organizers
described the event thus:
The Health Sector Assembly of
America is a gathering of health leaders from virtually every segment of
the health universe. Bringing together a wide range of philosophical
opinions, experiential dimensions, and varying approaches to the future of
health care in the United States, it has become an annual occasion when
these individuals bond around the discussion table. Without outside
pressures, they are able to exchange openly and frankly often in a
at the Assembly was definitely open, frank and spirited, reflecting the
widely divergent views of attendees representing leading national think
tanks, trade and professional associations, consumer groups and including
public officials and scholars. Eight of the attendees were invited to
offer formal, seven-minute "challenge remarks" from the podium to get the
broader discussion started. I was asked to speak on "Challenges to
Effective Long-Term Care: Cost and Affordability."
is a transcript of my remarks to the Health Sector Assembly. At the end
of those comments, I mentioned that I had prepared six "Briefing Papers"
which ask and answer key questions about long-term care "from a
perspective clearly at odds with conventional long-term care analysis."
Staff of the event distributed a summary sheet with links to all six
essays to all of the attendees. In the coming weeks and months, we will
share the same material with you in forthcoming LTC Bullets.
Health Sector Assembly Presentation
November 4, 2011
Session: "Challenges to Effective Long-Term Care"
"Challenge Remarks: Cost and
Affordability of Long-Term Care"
Stephen A. Moses
First some facts. Long-term care is very expensive. A
private nursing home room for custodial care in 2011 averages $239 per day
or $87,000 per year; a semi-private room runs $205 per day or $78,000 per
year. Both are up 4.4 percent from last year. Base rates for assisted
living climbed 5.6 percent to $3,500 per month or $42,000 per year.
Private-pay hourly rates for home health aides and homemaker/companion
services remained unchanged from 2010 at $21 and $19 respectively.
At these levels, few Americans could pay privately for very long which
leads analysts to conclude that long-term care is unaffordable.
According to the Centers for Medicare and Medicaid Services
(CMS), the United States spent $137 billion in 2009 for care provided in
skilled nursing facilities or continuing care retirement communities.
The country expended another $68 billion for home health care in the same
The total of $205 billion for institutional and home care is up 47 percent
from $139 billion in 2003. As the Health Sector Assembly "Topic
Statement" suggested, public and private long-term care expenditures are
an unacknowledged fiscal elephant in the room. Clearly unaffordable.
What's most interesting about these huge and expanding
long-term care expenditures, however, is "who pays for what and why?"
For example, the percentage of nursing home costs paid by
Medicaid and Medicare nearly doubled from 27 percent in 1970 to 53 percent
in 2009. In the same period, out-of-pocket expenditures declined
two-fifths from 50 percent to 29 percent.
Furthermore, half of the out-of-pocket costs reported by CMS are actually
spend-through of Social Security income by Medicaid recipients who are
required to contribute most of their income to offset Medicaid's costs for
their care. Clearly, direct and indirect government financing of
expensive institutional care has increased dramatically over the past 39
years while personal financial liability for such care has declined
Government financing also predominates in home health care
expenditures. According to CMS, Medicare paid 44 percent and Medicaid, 36
percent for a total of 80 percent of home health care expenses in 2009.
Private insurance paid 7 percent. Only 9 percent of home health care
costs were paid out of pocket.
Assisted living is another matter altogether. Private payers account for
roughly 90 percent of assisted living costs. Government financing of the
sector is very limited. CMS doesn't even report assisted living costs
among National Health Expenditures.
Now for my challenge remarks. What questions should the
hard facts of long-term care's high cost and unaffordability lead us to
ask? I suggest five.
How did the USA come to have a welfare financed, institutionally biased
long-term care system in the wealthiest country in the world where no one
wants to go to a nursing home? If heavy public financing created that
problem, maybe less government and more private funding is the solution.
Does qualifying for Medicaid long-term care benefits really require people
to spend down into impoverishment as the popular and academic media
suggest? If not, maybe Medicaid rules cause the program's overuse and
crowd out private long-term care services and financing.
Will "rebalancing" Medicaid from mostly nursing home care to mostly home
and community-based care save the program money? If not, rebalancing
might make Medicaid more desirable, expand its utilization, and further
discourage private long-term care planning and financing alternatives.
Is it inevitable that millions of Americans will become Medicaid's most
expensive recipients or could different public policy incentives prevent
or delay people from becoming dual eligibles? So called "duals," people
who receive both Medicaid and Medicare benefits, are heavy users of
long-term care and, although they are only 15 percent of recipients, they
account for 39 percent of Medicaid's expenditures.
If long-term care is such a huge risk and cost, why don't more Americans
save, invest or insure against it? Perhaps Medicaid's large home equity
exemption and relatively easy income and asset eligibility rules inhibit
private long-term care financing alternatives such as reverse mortgages or
I have prepared six short "Briefing Papers" that ask and
answer these questions from a perspective clearly at odds with
conventional long-term care analysis. With these remarks, in those
briefs, and during the coming discussion, I challenge you to reconsider
government's proper role in financing long-term care.