LTC Bullet:  LTC Embed Report from the First LTC Commission Public Meeting

Friday, June 28, 2013

Washington, DC—

LTC Comment:  The first public meeting of the LTC Commission involved less wishful thinking and more hopeful signs than I expected.  Details and highlights after the ***news.***

*** STUDIES.  The Center for LTC Reform has completed our field work in Virginia.  We’re headed next to begin a study in New Jersey and finally to Georgia in August.  Our interim report on Medicaid and long-term care financing in Virginia will be ready soon.  Final reports on all three projects will be released sometime this Fall before the November elections.  All three studies will provide evidence and reasoning to support our recommendations to the new LTC Commission, whose first meeting is the topic of today’s LTC Bullet.  Commission members are welcome to ride shotgun with me as we interview front line experts in each state about how Medicaid eligibility really works.  For examples of our reports on similar studies in many other states, including California, New York, Pennsylvania and Maine, go to ***

*** MEDICAID PLANNING.  Center member Ross Schriftman forwarded an elder law article to us titled “Not Knowing How Medicaid Annuities Work Will Get Advisors into Hot Water!,” by Mike Anthony, JD.  I couldn’t find the piece online but its message is that Medicaid-compliant annuities succeed:  “There are plenty of good ways to use annuities and other insurance products to proactively help a potential Medicaid patient.”  Schriftman had this to say about the Medicaid planning example in the article:

Dear Steve,

These guys really gall me.  The "ethical" thing to do is having the son keep $250,000 AND stick you and me with the cost of the mom's long term care?  [Hardly.]

Here is the more ethical thing to do.  Son buys his Indiana mom a long term care insurance policy when she is 70 and still generally in good health.  He pays $584 per month out of his own money to protect his inheritance.  Mom's care is paid for by her policy. Son picks where, who and how she gets care; not the government.  Son inherits $250,000 minus his cost for the premiums.  Assuming he pays $584 per month for 10 years he nets $180,000.

(70 year old select rate for Mutual Care Plus $170 per day, 4 year benefit, 90 day EP,3% compound inflation)

Ross Schriftman
Tel. 215-682-7075

Thanks, Ross.  That example struck home.  Knowing every Medicaid planning trick in the book, I chose instead to buy and pay for private LTC insurance for my parents in 1987.  Today, my mother is 100 years old and receives benefit payments from her first-AMEX, then-GE, now-Genworth policy. ***



LTC Comment:  This is how the meeting announcement read:

Federal Commission on Long-Term Care Announces

First Public Hearing for June 27th

Fifteen member commission created by fiscal cliff law tasked with advising Congress on long-term care reform

Washington, DC – The newly created federal Commission on Long-Term Care will have its first public hearing on Thursday, June 27th at 2:00 pm EDT in the Rayburn House Office Building, Room 2322. The title of the hearing is "The Current System for Providing Long-Term Services and Supports.”

The Commission will hear testimony from the following expert witnesses:

• Anne Tumlinson, Senior Vice President, Avalere Health

• Kirsten Colello, Specialist in Health and Aging Policy, Congressional Research Service

• G. William Hoagland, Senior Vice President, Bipartisan Policy Center

• Marc Cohen, Chief Research and Development Officer, LifePlans, Inc.

The Commission was created by the American Taxpayer Relief Act – the so-called “fiscal-cliff” law – to advise Congress on how long-term care can be better provided and financed for the nation’s older adults and people with disabilities, now and in the future.

The bi-partisan commission consists of 15 appointees – nine members appointed by Democratic Congressional leadership and the White House and six members appointed by Republican leadership. The Commission is charged by statute to report with a “plan for the establishment, implementation, and financing of a comprehensive, coordinated, and high-quality system that ensures the availability of long-term services and supports for individuals in need.”

LTC Comment:  When I saw that announcement, I said to myself “I have to be there.  Center members will want to know what happens.”  So I did a couple interviews for our Virginia long-term care financing study by phone instead of in person and hustled myself to the nation’s capital arriving at the hearing room in the nick of time.

The first public meeting of the LTC Commission lasted a full three hours.  Four panelists gave yeomanlike presentations on aging demographics, the ABCs of LTC, the government’s budget crisis and the current state of the long-term care insurance industry. 

Two presenters and their presentations stood out.  One was Marc Cohen’s explanation of LTC insurance.  He presented the usual information familiar to people who know the LTCI industry:  who buys, who doesn’t, why, why not, and how has that changed over the years.  Committee members addressed most of their questions to Marc and at least one praised him for his clarity and synthesis.

The presentation that blew me away, however, was by G. William Hoagland, Senior Vice President, of the Bipartisan Policy Center, which is “a non-profit organization that drives principled solutions through rigorous analysis, reasoned negotiation and respectful dialogue” that was founded by former Senate Majority Leaders Howard Baker, Tom Daschle, Bob Dole and George Mitchell.  Hoagland’s message was couched in polite, almost apologetic terms, but I would translate it thus:

“If you think you’re going to find more government money to improve long-term care, you are out of your minds.  Social Security, Medicare and Medicaid are already in deep financial trouble; they’re sinking fast; and you will have to find some way to divert most people to private LTC financing in the future.”

Hoagland emphasized that LTC spending went from mostly out-of-pocket personal expenditures in 1970 to mostly Medicaid and Medicare spending now.  He left the Commission with two major “take aways.”

1.  Medicare and Medicaid have become the major LTC funding sources but cannot continue so payment reforms are necessary and alternatives must be found for financing LTC.
2.  By making access to LTC available after the insurable event has occurred, Medicaid and Medicare have ended up paying for the most expensive care and cannot afford to do so going forward.

Hoagland concluded that well-intentioned, commendable intent has left America with a current system that discourages long-term care planning, overwhelms state/federal budgets, and limits care available to people who need it.  His arguments were in perfect synch with ones we’ve made year after year in our annual “LTC Bullet:  So What if the Government Pays for Most Long-Term Care?

What I didn’t hear a lot of at yesterday’s LTC Commission meeting were the usual bleating calls for more public spending on long-term care.  Even the strongest advocates for a government takeover of long-term care restrained their fire.  They were brought up short by the hard budget realities. 

What I did hear a lot more about than I expected were puzzled queries about Medicaid “spend down.”  If Medicaid requires impoverishment, how come Medicaid pays for most expensive LTC?  Why do studies show Medicaid crowds out most of the LTC insurance market?  What accounts for recent studies that prove the affluent get as much or more from Medicaid than the poor?

Simplistic dodges of these questions gained no traction.  The obvious observation that people don’t know who pays for LTC and so they can’t be deciding not to buy private insurance because they’re planning to go on Medicaid answers nothing.  That’s not how it works.  Rather, Medicaid has paid for most expensive LTC for nearly 50 years which has desensitized the public to LTC risk and cost.  It’s not that they are planning to go on Medicaid.  It’s that their denial of LTC risk has been enabled by the reality that Medicaid has paid and continues to pay for most expensive care.

If the LTC Commission stays on its current course of acknowledging the fiscal crisis, demanding an explanation about how and whether Medicaid spend down really works, and refusing to gaze thoughtlessly at the chimera of Medicare Part X or mandatory government LTC insurance, there is maybe some hope their deliberations will bear meaningful fruit.

In the meantime, if they’d just read the six succinct briefing papers in “How to Fix Long-Term Care,” they’d be off to an even better start.