LTC Bullet: Try British LTC Plan Here

Friday, May 26, 2017


LTC Comment: Use home equity to fund better home care and relieve the entitlement cost burden on the young, say Tories. Nix, says Labour. All lose, after the ***news.***

*** SOMETHING SPECIAL TO SHARE: Thanks to LTCI leader Claude Thau for bringing the “Big Sonia” film and fund-raising campaign to our attention. Claude says:

“Having lost all my grandparents during the holocaust before I was born, I experience cognitive dissonance as each generation of my descendants identifies less-and-less with the holocaust. I feel a loss in that regard although it is wonderful that the holocaust has not recurred for them. But genocides continue (consider ISIS attacks on Yazidis; Serbia; Rwanda) and I think we generally don’t respond strongly enough. Genocide goes beyond war and even beyond terrorism. Leah Warshawski and Todd Soliday effectively deliver a very important message about persistence and resilience and wrap it subtly with other issues such as aging of people and malls, caregiving, prisons, and immigration.”

The crowd-funding website attempting to bring the film to the big screen describes it as follows:

BIG SONIA is a feature documentary about 91-year old diva, ‘national treasure,’ business owner and Holocaust Survivor - Sonia Warshawski. The film interweaves themes of resilience, aging with purpose, inter-generational trauma, the death of modern American retail, and survival against all odds to ultimately ask: ‘Will you let your past define your present?’ BIG SONIA is relatable and universal - it's a ‘non-Holocaust, Holocaust movie’ - and the film's lessons are important and relevant NOW, more than ever.”

I (Steve Moses) watched the film’s “trailer,” made a personal contribution here and thought readers would find the film and the fund-raising campaign of interest. ***

*** ON INNOVATION: "[T]here is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them." Machiavelli, The Prince, Chapter 6. ***



LTC Comment: Here’s the gist of “The British Entitlement Backtrack,” a recent Wall Street Journal editorial, about a good idea the Brits couldn’t quite pull off. Our comments follow quotes from the column.

WSJ Editorial: “[British] Retirees currently receiving medical and other personal care in their own homes have the bulk of their costs covered by taxpayers, while those who need to move into nursing homes must sell their homes and use the bulk of the proceeds [all but 23,500 British pounds or $30,550] to fund their care.”

LTC Comment: Pretty unfair, huh? We solve that particular problem by exempting up to $840,000 of home equity from Medicaid eligibility consideration for both home care and nursing home care. Sweet deal for people who don’t want to bother planning for LTC risks and costs, but awfully unfair for the young who will have to pick up the tab for their elders’ taxpayer-subsidized windfall.

WSJ Editorial: “The Tory plan would have factored in the value of a care recipient’s home when means-testing in-home care. This in turn would fix two big injustices. First, it would have ended the double standard under which those who require nursing-home care are expected to use the value of their homes to pay for it, while those who require at-home care get to pass their homes to heirs as taxpayers fund their care. Second, the reform would have meant that younger workers would no longer be forced to subsidize in-home care for the elderly who can afford it.”

LTC Comment: Our own Medicaid-based LTC financing system fails on both counts, trapping most people on Medicaid for long-term care, wherever provided, and sending the bill to future generations.

WSJ Editorial: “The Tory reform would have allowed people to remain in their homes during their lifetimes, recouping care costs only after death. Further, it exempted the first £100,000 ($130,400) of an estate, four times the current cut-off that applies to those entering nursing homes.”

LTC Comment: Recouping exempted home equity from Medicaid recipients’ estates was the idea behind making estate recoveries mandatory in the Omnibus Budget Reconciliation Act of 1993. See the HHS Inspector General report I wrote that was the basis for that reform: Medicaid Estate Recoveries: National Program Inspection -- Office of Inspector General (1988). Unfortunately, the states didn’t implement the new requirement effectively; CMS didn’t enforce it aggressively; the media didn’t publicize it; and consumers remained oblivious. So estate recoveries didn’t have the desired effect of incentivizing more people to plan early and responsibly for LTC risks and costs.

No problem today, however. We now have reverse mortgages that enable people to remain in their homes, but generate income to pay for any needed long-term services and supports. There’s no need any more for Medicaid to recapture home equity from estates. The reverse mortgage issuers take that burden off the government’s shoulders. All we need to do is eliminate or radically reduce Medicaid’s home equity exemption and the USA can enjoy all the benefits the British passed up by dropping their home equity reform.

WSJ Editorial: “This gave the Tories an opening to combine a free-market disdain for subsidies for the wealthy with the left-wing mantra that ‘the rich’ should pay their fair share.”

LTC Comment: There in a nutshell is the essence of the issue and the argument we need to make for curtailing Medicaid’s home equity exemption. Both fiscal conservatives and economic liberals who condone huge home equity exemptions are hypocrites based on their own avowed principles.

WSJ Editorial: “It’s hard to sell a major entitlement reform when the rest of your platform tells voters you think they’re entitled to a litany of government-mandated handouts. . . . The more you adopt the entitlement mentality of the left, the less your ability to advance the major reforms that Western economies—and their taxpayers—need.”

LTC Comment: Sound familiar? For all its efforts to rein in Medicaid over-spending, the Trump budget proposal’s neglect of Social Security and Medicare, even bigger entitlement sieves, parallels the British mistake recounted in this column.