LTC Bullet: LTC Predictions
Friday, December 9, 2016
LTC Comment: Yogi Berra said “It’s tough to make predictions, especially
about the future.” I should have listened. Find out why after the
*** TODAY'S LTC BULLET is sponsored by
Claude Thau, a GA whose proprietary tools help advisors find clients
and reduce the “Ping-Pong” in the LTCi sales process. Help clients
make informed final decisions about buying LTCi in 15-20 minutes!
Gauge a client's true interest in a combo product immediately! Change
work-site LTCi sales from a series of proposal deliveries to a single
interactive consultation! Claude is the lead author of the Milliman
Broker World LTCi Survey, one of Senior Market Advisor's 10 "Power
People" in LTCi in 2007, a past Chair of the Center for Long-Term Care
Financing. Test Claude by calling 800-999-3026, x2241 or email him at
to ask questions or get references. ***
*** 17TH ANNUAL INTERCOMPANY LONG-TERM CARE INSURANCE
CONFERENCE, themed this year “Navigating the Future” has announced: “Early
Bird discounts of up to $1,995 for Sponsors and Exhibitors have been
extended through December 16th! We also offer a First Time
Exhibitor/Sponsor Discount of $250 and a Non-Profit discount of $500.”
http://www.iltciconf.org/. The conference will convene March
26-29, 2017 at the Hyatt Regency in Jacksonville, FL. ***
LTC BULLET: LTC PREDICTIONS
On November 14, 2008, ten days after the historic election of Barack Obama
to be President of the United States, we published some predictions about
the future of health and long-term care public policy. Recently, a
long-time Center friend and member, LTCI producer Jack Smelser, reminded
me of those predictions, as he does every so often. Today, we’d like to
share the original predictions with you and explain how we think we did
and how we would modify the predictions going forward. Following is the
original publication containing our predictions with our LTC Updates
added in italics.
When this LTC E-Alert was sent, I was about to complete a full year
on the road in the
Silver Bullet of Long-Term Care on the
National Long-Term Care Consciousness Tour. I was a little over
25,000 miles into that tour and visiting its 37th state.
Those were some pretty heady times. Expectations were high that the new
Administration could achieve many policy goals that had evaded politicians
up to then. (Kind of like now, though from a vastly different political
perspective.) I was dubious and tried to temper the enthusiasm.
LTC E-Alert #8-110: LTC Predictions
Friday, November 14, 2008
Newport Beach, California (LTC Tour Mile 25,232; State #37)--
LTC Comment: Lately, I've heard some Panglossian prognostications about
the future of health and LTC public policy.
People think the time has finally come for all they've worked for to be
Universal health care? Good as done.
Tax incentives for LTC insurance? Section 125, at least, maybe
above-the-line tax deductibility.
Recession? [LTC Update: We were right in the middle of the
December 2007 to June 2009 “Great Recession.”] Just the usual cycle
that a "New, New Deal" will fix.
Sorry, but this looks to me like the victory of wishful thinking over hard
So, I've decided to lay down a few markers. What follows are predictions.
Not what I hope will happen. Rather, what I expect to happen.
Read this now. Then set it aside. Tickle your calendar to read it again
in five years and ten. I will too. Let's review then.
health reform will come to pass, much less reform that includes
For eight years, it looked like I’d gotten half this prediction wrong.
The Patient Protection and Affordable Care Act, AKA “ObamaCare,” passed
in 2010. Its LTC section, the Community Living
Assistance Services and Supports Act (or CLASS Act) was repealed
on January 1, 2013. The new Congress and President elected on November
8, 2016 intend to repeal the rest of ObamaCare. So, it’s taking a
while, but it looks like I got this one right. Whatever replaces
ObamaCare is much more likely to rely on market forces than government
control and micro-management.
"stimulus" will fail as they all do, only shifting wealth, not creating
Sure enough, “The
American Recovery and Reinvestment Act of 2009 (ARRA) (Pub.L. 111–5),
commonly referred to as The Stimulus or The Recovery Act,”
which was supposed to pump $787 billion into “shovel ready”
infrastructure projects was a huge flop mostly enriching friends and
supporters of the new Administration. The U.S. economy has yet to
return to pre-Recession growth levels despite unprecedented fiscal and
monetary stimulus. Unfortunately, expect those same economic errors to
continue until the next crash occurs.
Huge increases in
the federal deficit and debt will require additional borrowing to the
point where interest on the public debt will crowd out new--and even
much current-- social spending.
I got this one mostly right. According to FactCheck.org, during
the Obama years: “The federal debt has more than doubled — rising 116
percent — and big annual deficits have continued.” According to the
National Debt Clock we’ll tip over $20 trillion soon. The
“crowd out” I predicted has not occurred to the level I expected . . .
yet. The reason is that the Federal Reserve forced interest rates to
near zero enabling the Federal Government to deficit spend with carrying
costs a fraction of what they were 20 years ago. Interest on the
national debt in 1996 was 6.58%, but only 2.42% in 2014. Inevitably,
reversion to the mean historical interest rates will sooner or later
unleash major crowd out of social programs.
economic crisis will worsen precipitating immediately problems with
Social Security and Medicare unfunded liabilities ($102 trillion) that
Pollyannas think we won't confront until 2041 and 2017 respectively.
Thanks to trillions of dollars of money printing and bond buying by the
Federal Reserve, the economic crisis didn’t worsen . . . yet. But we’re
experiencing the slowest post-recession recovery in American history.
The stage is set for a “Greater Recession” when the stock, bond and real
estate bubbles created by Fed policy finally pop. When? I’ve predicted
before that the reckoning could come anytime, but will come no later
than when the perfect demographic storm occurs as boomers begin turning
85 in 2031.
Several states will
declare bankruptcy, or whatever they choose to call acknowledging their
Medicare will cut
reimbursements to skilled nursing facilities dramatically leaving the
nursing home industry unable to meet even current standards of care
access and quality for publicly financed patients.
This prediction was too pessimistic. Medicare is still on a glide path
to insolvency, but doomsday is delayed due to the federal government’s
fiscal and monetary shenanigans already described.
Medicaid costs will
skyrocket. After a one-time federal matching fund supplement, state and
federal Medicaid programs will cut reimbursement, then benefits, and
finally eligibility. Expect a new Deficit Reduction Act within five
years that will make DRA '05 look like child's play.
Ditto the update to Prediction #6 above. The next DRA has been delayed
indefinitely for reasons I explain in detail in our forthcoming report
titled “Long-Term Care Financing: The Myth and the Reality.” So you’ll
have to wait for the full explanation, but in a nutshell: major reforms
to target Medicaid to the needy and transfer LTC liability to the middle
class and affluent usually occur shortly after economic recessions, but
didn’t this time because of massive money printing, quantitative easing,
and interest-rate manipulation by the Federal Reserve.
Medicaid will not
increase funding for home and community-based services significantly and
Medicaid financing of nursing home care will be dramatically reduced.
Medicaid HCBS funding continues to increase rapidly while nursing
facility spending has tapered off. Medicaid reimbursements for home and
institutional care remain below the cost of providing the care and
continue to exacerbate access and quality problems. When Fed monetary
policy hits a wall, asset bubbles pop, and interest rates return to the
historical normal (or higher), this prediction will come to pass.
No new federal tax
deductibility for LTC insurance will pass, not even Section 125.
Unfortunately, I was right about this prediction. But government
policies to encourage LTC insurance will likely happen when Medicaid and
Medicare finally have to retreat and more middle class and affluent
elders need to turn to savings and home equity to fund their long-term
care. For why and when it will happen, see above.
Middle class and
affluent people will be far more personally responsible for their own
long-term care in the future.
Not yet, but this too is coming as explained.
Within five years,
reverse mortgages will become a major source of financing for long-term
Oops, way too optimistic, but again, it would have happened if not for
irresponsible fiscal and monetary policy and it will happen when those
policies end—either through more responsible economic policy or due to
Within ten years,
the market penetration of private long-term care insurance will have
doubled at least.
Ditto the update to prediction #11.
The "New, New Deal"
will prove as infeasible to finance as the old "New Deal," and the
United States will slowly return to the principles that made our country
great in the first place: personal responsibility, self-sufficiency,
free minds, free markets, competition and risk without moral hazard.
Be patient; it’ll happen yet.
There you have them. Thirteen predictions. Unlucky? Maybe. But if
everything plays out as I forecast, we'll come out all right in the end.
And with even a little luck, we'll preserve a vestige of the now-fraying
social safety net for the most needy.
LTC Update: It’s harder than ever to sustain an optimistic outlook.
Our political world is in chaos. But whatever you may think of the
incoming Administration, consider this: The disastrous course we were on
is no longer inevitable. If we all redouble our efforts to promote
rational long-term care policy and responsible LTC planning, hope springs