LTC Bullet: Centennial Careless and DIY Publicity
Friday, September 9, 2016
LTC Comment: How can we get the word out more effectively about the need to plan for long-term care and avoid Medicaid dependency?
LTC BULLET: CENTENNIAL CARELESS AND DIY PUBLICITY
LTC Comment: Analysts, legislators and public officials have drifted into a dangerous frame of mind about long-term care financing. They blame Medicaid for impoverishing millions who need LTC; they’ve given up on private LTC insurance; so they assume the only hope is to give more power, control and financing of LTC to government.
But they’ve got the problem and the solution all wrong as we explain in our new report (currently in draft) and in LTC Bullet: Real vs. Mythical Medicaid. Medicaid for LTC does not require impoverishment. Rather Medicaid has operated to fund long-term care after people need expensive care while allowing them to preserve most of their wealth. The right way to think about Medicaid’s role in long-term care financing is that it substantially ameliorates the risk and cost of long-term care, not that it impoverishes people.
The result is that most people do not worry about long-term care until they need it at which point they qualify easily for Medicaid without spending down significant assets. What that means for state Medicaid programs I’ve described in the following “op-ed” which was published in slightly modified form in last Sunday’s Albuquerque Journal, New Mexico’s, the “Land of Enchantment’s,” largest-circulation newspaper. Also published yesterday on NMPolitics.net here.
I’d like you to read this op-ed in a special way. It is designed to be a template. For each of the data points underlined in the article there are easily accessible state-specific online sources. What this means is that virtually anyone in possession of those sources could fill in the blanks and create a similar op-ed for any state in the country.
As I have those sources at my fingertips, I could easily replicate this op-ed for any state or help others tap those sources to do it themselves. Your Center at work.
“Centennial Care” is New Mexico’s name for Medicaid, the national means-tested public welfare program providing health benefits to the needy. Fully one-third of the state’s citizens rely on the program.
Expansion of Medicaid under ObamaCare has blown a big hole in the state’s budget. Governor Martinez recently called for a five percent across-the-board cut. An even bigger problem is the demographic time bomb facing Centennial Care: long-term care (LTC) for the aged, blind and disabled.
Three-fourths of Medicaid recipients are poor women and children in need of acute care. But they account for only one-third of Medicaid’s cost. The aged, blind and disabled are barely one-fourth of total recipients, but they consume two-thirds of program costs, mostly for their long-term care.
LTC costs skyrocket after age 85. New Mexico’s 85-plus population is only two percent now (28th nationally), but it’ll be three percent (10th) by 2032, about when their Trustees say Social Security and Medicare will become insolvent.
Already, Centennial Care pays too little to ensure quality care. The state reimburses nursing homes $25 per day less than the cost of providing the care (a $34 million annual shortfall). But New Mexico shuns nursing homes, relying more heavily on home and community-based care (73.6 percent of LTC expenditures, third in the nation). Home care workers are notoriously underpaid, especially by Medicaid, which is why quality caregivers are extremely difficult to hire and retain.
Given the staggering financial risks Centennial Care already faces, and the exponentially greater liabilities it will soon encounter, some of the state’s policies regarding eligibility for Medicaid long-term care boggle the mind.
For example, New Mexico exempts up to $828,000 of home equity from asset eligibility consideration, the maximum allowed by federal law. Why does a state with fiscal problems invite people with so much wealth to partake of its welfare program’s most expensive benefit?
Nor is income an obstacle to qualifying for long-term care benefits in New Mexico. Anyone with income over the monthly limit of $2,199 a month can shift the excess into a “Miller income diversion trust” and qualify quickly.
Even much wealthier people qualify without spending down their assets by consulting elder law attorneys. Try Googling “Medicaid planning in New Mexico” for advice like this: “Medicaid planning involves developing a strategy to protect your assets should you require long-term nursing home care. . . . We will help you maintain what you spent your life earning.” (http://www.pbwslaw.com/services/medicaid-planning/)
Since 1993, the federal government has required state Medicaid programs to recover care costs from the estates of deceased recipients. Otherwise, the welfare program would become free inheritance insurance for boomer heirs. But New Mexico recovers only $1.7 million from estates annually, less than half of one percent of its LTC expenditures, and only one-fourth of Idaho’s, the best state’s, recoveries percentagewise.
Medicaid was supposed to be a safety net for the poor, but it has become the dominant source of long-term care financing for nearly everyone.
Is it any wonder that only 3.8 percent of New Mexico’s age-40-plus population (33rd nationally) have planned ahead for long-term care by purchasing private insurance? They can ignore the risk, avoid the premiums, preserve their estates and get Centennial Care to pay if they ever need expensive extended care. So why worry?
What should New Mexico Medicaid do? Governor Martinez and the Human Services Department should work with the state legislature and the federal Centers for Medicare and Medicaid Services to (1) cut the home equity exemption to the federal minimum (currently $552,000), (2) maximize estate recoveries to bring in an extra $5 million per year in non-tax revenues, (3) curtail long-term care financial eligibility loopholes wherever possible, (4) promote your LTC Partnership Program, and (5) educate the public that long-term care is a personal responsibility for which everyone one needs to plan, save, invest or insure.
It is probably too late for New Mexico to avoid a long-term care financing catastrophe, but those measures could reduce the damage and save Centennial Care $100 million per year.
Stephen Moses is president of the Center for Long-Term Care Reform in Seattle, Washington (www.centerltc.com) and a Santa Fe homeowner. Reach him at firstname.lastname@example.org.