LTC Bullet:  LTC Sneak Peek

Friday, August 28, 2015


LTC Comment:  Our study of long-term care in the U.S. and New Hampshire nears completion.  Highlights after the ***news.***

*** LTC CLIPPINGS:  If you’re not subscribed to the Center for LTC Reform’s LTC Clippings service, here’s a sample of what you’re missing.  Contact Damon at 206-283-7036 or to begin receiving these daily “heads-ups” for about $.28 per day if you’re already a member of the Center and $.33 if you’re not.

8/24/2015, “5 things to know about long-term care policies,” by Terry Savage, Chicago Tribune

Quote: “Long-term care is a subject nobody likes to think about. Yes, Medicare and supplements will pay for illness and hospitalization costs. But they don't pay for care at home, or in assisted living, when you can no longer do basic activities such as bathing, dressing, toileting and dining. Will your children come to help? Or, if you are an adult with aging parents, are you prepared for Mom or Dad to move into your home? That's where long-term care insurance comes in. Here are five things you should know:”

LTC Comment:  Here’s a piece favorable on LTCi from a solid source. ***



LTC Comment:  Last April, the Center for Long-Term Care Reform and the State Budget Solutions policy organization undertook a study of long-term care service delivery and financing in the U.S. generally and New Hampshire specifically.  I spent several weeks in the Granite State this summer researching the subject and conducting interviews.  Our report on that project is nearing completion.  Though it’s still in draft, we thought you might like to see some of our study’s major findings.  So we pulled the following “highlights” to give you a preview.  Plans are to convene a conference based on our study to discuss the future prospects for long-term care at the national and state levels.  We also plan to publish a series of op-eds based on our findings to draw candidates’ attention to the LTC issue in the first-in-the-nation presidential primary state.


“Considering only the expected growth in New Hampshire’s age 85-and-over population between now and 2050, LTC expenditures could nearly quadruple from $282 million to $1,047 million, more than one billion dollars every year.” 

“While [New Hampshire’s] Health and Social Services spending increased in absolute terms, it actually declined as a proportion of the state budget from 2005 ($1,785,525,000) to 2014 ($2,153,341,000) from 43.0 percent to 42.4 percent.” 

“Because the average Medicaid nursing home reimbursement rate in New Hampshire is $157 per day or $57,305 per year [within the U.S. middle income quintile], any medically qualified elderly person with net income at or below that level is eligible based on income.” 

“Since homes with less than $552,000 in equity are not countable assets, most homeowners may qualify for Medicaid.”  (New Hampshire Bar Association publication) 

“It is important to note that the money which must be spent down can be used for any purpose that would benefit either spouse, such as home repairs, vehicles, life insurance, prepaid funerals, furniture, travel, etc.” (New Hampshire Bar Association publication) 

“Our attorneys have significant experience in asset protection strategies, such as Medicaid-Qualifying Irrevocable Trusts; Special Needs Trusts; conversion of assets into income through the use of Medicaid-Qualifying Annuities; Personal Care and Service Agreements; as well as other spend-down techniques that allow for transfers of assets to family members without violating Medicaid gifting rules.” (Medicaid planner’s online advertisement) 

“The bottom line, however, on Medicaid long-term care eligibility in New Hampshire, as elsewhere, is that people who seek state funding for long-term care and are willing to accept the conditions that apply, can, with or without the legal assistance of a Medicaid planner, qualify for assistance much more easily than is commonly understood.”  

“New Hampshire Medicaid’s 2012 nursing home reimbursement rate was $179.66 which only partially covered average costs of $237.05 leaving a shortfall of $57.38 per bed day, the highest shortfall in the United States for that year.” 

“With 64 percent of their caseload on Medicaid, New Hampshire nursing homes are losing money on nearly two thirds of their residents.” 

“What nursing home and home care providers projected as serious financial problems caused by low Medicaid reimbursement rates took on a tone of near desperation on behalf of small, 100-percent-Medicaid ‘assisted living’ providers.” 

“Disproportionality of Medicaid spending is slightly less pronounced in New Hampshire where 29 percent of Medicaid recipients are aged, blind and disabled but account for 67 percent of program costs, whereas poor women and children are 72 percent of New Hampshire’s recipients, but account for 33 percent of the cost.” 

“New Hampshire is one of only four states where long-term care spending on duals was 80 percent or more of total Medicaid spending on duals.” 

“The research evidence that changing [i.e., rebalancing] the delivery system will produce substantial Medicaid savings is not strong, but it is a premise strongly held by many state officials and consumer advocates.”  (Wiener and Anderson)

“Medicaid-financed home and community-based care runs the risk of replacing so-called ‘free’ care provided by friends, family, and loved ones.  AARP estimates the economic value of such care at $470 billion per year.” 

“(1) With a uniquely severe aging demographic challenge approaching, (2) with the U.S. economy already lagging most post-recession recoveries, (3) with loose monetary and fiscal policies presaging another economic bubble potentially bursting and (4) with historically high debt and unfunded entitlement liabilities, we are certainly justified to ask ‘What if?’  What if the federal government reneged on its full share of Medicaid funding either by reducing the federal match rate or by defaulting through inflation or some other means?” 

“New Hampshire imposes a 5.5 percent ‘bed tax’ on both Medicaid and private long-term care patient revenue.  In state fiscal year 2015, the bed tax raised $37.5 million, which, matched with federal funds, returned $75 million to the state.” 

“So while the trust funds won’t ‘run out’ for a good while, Social Security and Medicare will constitute a drain on general revenue, because the federal government will have to make up shortfalls in payroll tax receipts while simultaneously paying off the trust funds’ IOUs with interest.”  

“The affluent prosper under these policies as their investments in the stock market and real property go up, but the poor and middle class struggle as jobs and salaries recede.” 

“So Social Security income of people already on Medicaid represents a substantial contribution to long-term care funding.  It covers as much as 13 percent of total long-term care expenditures and represents roughly half of all ‘out of pocket’ spending for long-term care.” 

“But a serious economic setback impacting federal tax revenue and limiting the government’s ability to borrow might tip the balance against the traditional high compensatory Medicare reimbursement rates.  The impact on state Medicaid programs and their long-term care providers could be catastrophic and immediate.” 

“On Economic Performance, [New Hampshire] is 36th, two-thirds of the way down from #1, Texas, toward #50, Michigan.  On Economic Outlook, New Hampshire fares a little better at 29, a little below halfway between #1, Utah, and #50, New York.” 

“The Cato Institute issues states a ‘Fiscal Policy Report Card,’ and New Hampshire’s is not one any kid would want to bring home to Mom.” 

Forbes magazine ranks the ‘Best States for Business and Careers’ and concludes New Hampshire is not one of them.” 

“New Hampshire was one of only eight states with unemployment rates below 4.0 percent (3.8 percent).” 

“New Hampshire ranks fourth on overall freedom, a highly promising position for its future economic prospects.  Still, it slipped from number one in 2007, a less encouraging sign.” 

 “We are unique.  We’re both payer and provider.  The counties pay most of the cost, but the state sets policy on Medicaid eligibility and reimbursement rates.  The county has nothing to do with that.  We just get a bill and pay it.  We think we should have some say in eligibility and case management because we have the financial incentive to lower the expenditures for Medicaid.”  (Quote from a county nursing home administrator)

“A more severe recession causing a steeper decline in property values could imperil New Hampshire’s unusual Medicaid long-term care financing system.” 

“The home equity exemption of $552,000 in New Hampshire (up to $828,000 in 13 other states) is a major factor, but the many other exempt assets, not to mention Medicaid planning techniques of artificial self-impoverishment, also contribute substantially.  By comparison the total amount of exempt assets, including home equity, that participants may retain while qualifying for the United Kingdom’s long-term care public assistance program is only £23,500 or $36,895 at today’s exchange rate.” 

“Had New Hampshire matched Idaho’s recovery rate, the state’s estate recoveries would have been $16.7 million in 2011, $11.8 million more than they actually were.” 

“If 80 percent of New Hampshire’s elderly population of 109,000 own homes of median value of which 65.3 percent are owned free and clear, then the total home equity that could be redirected to help fund their long-term care is .8 times 109,000 times .653 times $249,500 or $14.2 billion, many times New Hampshire Medicaid’s total expenditures for long-term care in 2014 of $281,745,000.” 

“Medicaid is the largest funding source for long-term care.  From birth to death, in one way or another, public funding offsets personal financial responsibility leaving more and more people at risk if the sources of public funding decline.” 

“From Medicaid’s paying for nearly half of all births to food stamps for one in seven Americans to welfare benefits topping median salaries in eight states including New Hampshire to surging SSDI rolls bankrupting the disability insurance system and sapping the incentive to work to unfunded pension liabilities in the trillions of dollars, this socialized house of cards is severely vulnerable to any bad economic wind that may, and likely will, come its way.” 

“Nearly two (1.9) million elderly Medicaid recipients receive long-term services and supports of whom 60 percent to 80 percent, based on interviews by the author with many eligibility workers in numerous states over the years, shelter an average of $8,000 to $12,000 each in prepaid burial plans.  Taking the low range estimate of 60 percent and $8,000, that amounts to $9.1 billion diverted from potential private LTC financing to a Medicaid-financed windfall for the funeral industry.” 

“State funds needed to match the federal funds are also vulnerable.  Each new economic bubble bursting—most recently the (2000) and housing (2008) busts—has brought worsening recessions that devastate state tax revenues and reserves.  Economists worry that the latest bubble, inflated by extremely loose monetary (credit expansion) and fiscal (spending) policy, will bring on a much worse downturn than the Great Recession.” 

“A main reason so few people purchase private LTC insurance is that for the past 50 years Americans have been able to ignore the risk and cost of LTC, wait to see if they need extended care and, if they do, qualify easily for public financing while protecting most or all of their estates.” 

“From the foregoing analysis, it is hard to reach any other conclusion than to expect the current long-term care service delivery and financing system to face severe, possibly fatal challenges as the Age Wave crests and crashes on America.”