LTC Bullet:  Medicaid Malfunctions Multiply

Friday, September 16, 2016


LTC Comment:  Medicaid ruined long-term care, but that’s not the only damage it’s done.  Examples after the ***news.***

*** ILTCI CONFERENCE:  The 17th Annual Inter-Company Long-Term Care Insurance Conference will convene March 26 to 29, 2017 at the Hyatt Regency in Jacksonville, Florida. Conference organizers have issued their call for sponsors and exhibitors.  “Early Bird Discounts of up to $3,495 are only available through 9/28/16!”  Booth locations are first come, first pick, so best to get a move on.  See you there.***

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LTC Comment:  Medicaid has had a devastating impact on long-term care services and financing.  By making nursing home care virtually free for all in 1965, Medicaid (1) led to decades of institutional bias, (2) crowded out a market for private home care, (3) crippled private financing options like LTC insurance and home equity conversion, and (4) created the caregiver shortages and access, quality, reimbursement, and discrimination problems we face today.  Seems like that would be enough damage for one centrally planned and managed government program to cause. 

But no, there’s much more to learn about Medicaid’s multiplying misadventures.  Cato’s Dan Mitchell says “Medicaid is a Ticking Time Bomb.”  He delivers devastating evidence that Medicaid (1) is “the fastest-growing entitlement program,” (2) grows faster than state revenues, (3) expands “faster than the private sector,” (4) incentivizes over-spending with a perverse federal funding scheme, (5) lures states into ObamaCare with “free money” that turns out to be very expensive,  (6) hurts the poor with fewer doctors available and worse medical outcomes, (7) enables “staggering amounts of fraud and theft,” (8) enriches the “poverty pimps,” i.e., “the vast array of government employees, their union allies, contractors, and third parties who earn six-, seven-, eight-, or nine-figure paydays taking their cuts of money we think we’re spending on the poor,” and (9) should be block-granted like welfare was in 1996 to stem the red ink and to improve the program for the needy.

That must be all that can be said about Medicaid’s problems, right?  But no, there’s more.  The Mercatus Center’s Brian Blase reports today that “Evidence Is Mounting: The Affordable Care Act Has Worsened Medicaid’s Structural Problems.”  In a nutshell, Blase says:

The first two years of the ACA’s [Affordable Care Act, i.e., ObamaCare’s] Medicaid expansion demonstrate that government experts failed to account for how states would respond to the incentives resulting from the elevated federal reimbursement rate. Enrollment and spending are much higher than expected, and this is espe­cially noteworthy since states are adopting the expansion more slowly than expected. Overall, the ACA expansion significantly adds to Medicaid’s unsustainable spending trajectory, likely fails to produce outcomes worth the corresponding cost, and creates a large federal government bias toward nondisabled, working-age adults at the expense of traditional Medicaid enrollees.

He adds details on each of these problems:  (1)  Enrollment has been higher than expected,” (2) “Total costs have been higher than expected,” (3) “Individual enrollees have been more expensive than projected,” and (4) “Medicaid expansion enrollees receive inadequate value from the program.”  Blase also expands on Medicaid’s fundamental problems, explaining how (1) “It crowded out other priorities,” (2) “It lacked effective oversight,” (3)“It disincentivized work,” and (4) “It resulted in lack of access” to care.

Obviously it’s high time to reform Medicaid radically.  Remove its perverse incentives and target its scarce resources to the truly poor.  But how?  We’ve tackled that question with regard to long-term care in the Center’s forthcoming report “Long-Term Care Financing:  The Myth and the Reality.”  Other analysts, including the two cited in today’s LTC Bullet, have complementary proposals to offer.  But time is running out.  A fiscal vise is closing as an unprecedented monetary bubble expands and the age wave is finally about to crest and crash.  This triple threat compels change either through responsible public policy or by default.