LTC Bullet:  LTC Solution May Require Civil Disobedience

Friday, November 2, 2012


LTC Comment:  Federal laws and regulations invite defiance because they prevent states from operating high-quality, cost-effective Medicaid LTC safety nets for the poor.  Details after the ***news.***

*** LTC AWARENESS MONTH kicks off with a bang!  Life Insurance Selling magazine features AALTCI director Jesse Slome on the cover of it’s November 2012 issue filled with articles about LTC insurance.  Check it out here.  Read “Not Your Grandpa’s LTC” by Corey Dahl here. ***

*** ELECTION PREDILECTION:  We won’t hazard a prediction about who will win Tuesday’s national election, but we are predisposed to expect the following.  Whoever wins will have no choice but to confront our country’s deficit, debt and unfunded entitlement liability problems.  For LTC providers and insurers that means a renewed public policy focus on your businesses.  Get ready to explain how federal policies can help or hurt the people you struggle to serve.  Prepare for a tough fight. ***

*** ERRATUM:  Last Monday’s LTC E-Alert opened by highlighting a letter by Barbara Franklin to the editor of the Charleston, South Carolina Post and Courier.  The item directed readers to the wrong website for a copy of the letter.  The correct website address is ***



LTC Comment:  The Center for Long-Term Care Reform has completed a study of Medicaid (AKA MaineCare) and long-term care financing in Maine.  Our final report is in the hands of the Maine Health Care Association, which commissioned the work.  We expect to make the full report available soon on the Center’s website.  In the meantime, here’s a sneak peek at the “Executive Summary” of our report titled “The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net.” 

Executive Summary

            The probability of needing long-term care (LTC) after age 65 is high (69%) and potentially very expensive (20% require five years or more).  Maine already has a relatively old and rapidly aging population including a baby-boomer bulge that will require much costlier LTC in the future. 

            Most expensive LTC is paid for by Medicaid, a means-tested public assistance program, jointly financed by the federal and state governments.  Medicaid in Maine is called MaineCare.  It faces severe financial challenges, of which funding high-quality LTC is the most serious.

            MaineCare covers 2/3 of nursing home residents, but pays only 69% of the private-pay rate for care of some of the highest acuity patients in the USA.  Likewise, MaineCare’s reimbursement rate for its popular assisted living program, one of the largest in the country, is only half of the private rate.

            State revenues are flat or falling while MaineCare expenses continue to rise, creating a well-publicized budget crisis.  Solutions are few.  Further cutting providers bodes ill for LTC access and quality, but reducing benefits for the poor or robbing education to make budget ends meet are also objectionable.

            Our analysis of the LTC financing challenge in Maine suggests a different approach to the problem.  Many people assume that any effort to reduce MaineCare expenditures constitutes an attack on the poor.  Yet, we found in this study that MaineCare LTC benefits are readily available to the middle-class, affluent and even the wealthy.

            We verified practices that allow MaineCare LTC applicants to protect hundreds of thousands of dollars without penalty immediately before becoming eligible.  We verified official policies that ensure virtually anyone can qualify quickly for MaineCare’s LTC benefits due to exorbitantly generous income and asset exemptions.

            Are MaineCare officials at fault in this regard?  Not at all.  They are constrained by federal laws and regulations that compel them to enforce these easy-eligibility policies.  In past years, Maine had some flexibility within the generous federal eligibility policies to tighten up in certain ways.  No longer.  Because of the health reform law’s “maintenance of effort” (MOE) requirement, MaineCare is locked into its most generous policies that were adopted in better economic times. 

            Options are few.  The state can recover more forcefully from the estates of deceased recipients and their spouses because MOE does not apply there.  Public officials could encourage people to plan to pay privately for LTC with insurance or home equity conversion.  But “jawboning” responsible consumer behavior will likely have little impact as long as people can ignore LTC risk and cost and still protect ¾ of a million dollars of home equity, use annuities to shelter unlimited assets and retain many other resources without limit.

            Even if Maine successfully challenges the MOE rule, the state will remain constrained by federal law to enforce extremely generous federal eligibility policies.  Maine could request a waiver of federal law on an experimental basis to tighten eligibility policies, but no such waiver has ever been requested before, much less granted.

            Under current constraints the only option to solve the problem fully is to defy the counterproductive federal rules, independently implement eligibility policies that target scarce public LTC resources to the truly needy, risk losing federal Medicaid matching funds, and challenge federal officials to defend the objectionable policies that rob LTC benefits from the poor and shower them on the well-to-do.

            Short of such civil disobedience, Maine’s most promising strategy is to redouble efforts to escape the MOE constraints and implement the recommendations listed at the end of this report.