LTC Bullet:  LTC is the New Front in Medicaid War

Friday, June 16, 2017


LTC Comment:  Most of the debate over ObamaCare repeal has focused on Medicaid for children and young adults (most recipients), but attention is changing to long-term care for the elderly and disabled (highest expenditures). Let’s explore the ramifications.



LTC Comment:  There’s a war on Medicaid raging. Republicans want to cut the program’s expenditures and give states more flexibility and authority to operate the program efficiently and cost-effectively. Democrats claim cuts to the safety net program would devastate low-income people who rely on it for access to basic medical services.

Up to now, most of the battles in this war of words have focused on potential consequences for poor women, children and low-income adults newly added to Medicaid by the Affordable Care Act (ObamaCare). They are important. They represent roughly three-fourths of all Medicaid recipients. But they account for only about one-third of the program’s expenditures.

Lately, the Dem. opponents of Rep. health reform proposals are redirecting their aim. They are beginning to focus on the one-fourth of Medicaid recipients who account for two-thirds of the program’s costs:  the elderly and disabled, especially their long-term care needs. The opposition claims that revenue cuts on the order of what the Trump Administration proposes would ravage America’s long-term care service delivery system.

Let’s examine one recent example of that criticism. On Tuesday, June 13, the New York Times ran an op-ed titled “You’re Probably Going to Need Medicaid” by David Grabowski, Jonathan Gruber and Vincent Mor. Following are quotes from that piece followed by our comments:

NYT Op-Ed: “Imagine your mother needs to move into a nursing home. It’s going to cost her almost $100,000 a year. Very few people have private insurance to cover this. Your mother will most likely run out her savings until she qualifies for Medicaid. This is not a rare event.”

LTC Comment: Actually, Medicaid exempts virtually unlimited assets from consideration for long-term care eligibility including a minimum of $552,000 in home equity and, without any dollar limit, one income-producing business including the capital and cash flow, IRAs in payout status, one automobile, term life insurance, prepaid burial plans for the recipient and immediate family, home furnishings, and personal belongings. Excess cash over $2,000 can be converted to an exempt asset by purchasing any of those uncounted assets. There is no empirical evidence of commonplace catastrophic long-term care spend down to qualify for Medicaid as our forthcoming report titled “How to Fix Long-Term Care Financing” substantiates conclusively.

NYT Op-Ed: “Roughly one in three people now turning 65 will require nursing home care at some point during his or her life. Over three-quarters of long-stay nursing home residents will eventually be covered by Medicaid.”

LTC Comment: Well, yes, and why is that? Medicaid made nursing home care virtually free in 1965. Easy access since then to government-financed care after the care is needed desensitized the public to long-term care risk and cost resulting in excessive Medicaid dependency, nursing home bias, too few home care options, and little reason to pay privately from personal funds, home equity or private insurance.

NYT Op-Ed: “Many American voters think Medicaid is only for low-income adults and their children — for people who aren’t ‘like them.’ But Medicaid is not ‘somebody else’s’ insurance. It is insurance for all of our mothers and fathers and, eventually, for ourselves.”

LTC Comment: So true and that, precisely, is the Medicaid trap. People don’t know who pays for long-term care, but they figure someone must. You don’t see Alzheimer’s patients dying in the gutter. So why worry? Then Grandpa has a stroke or Grandma forgets her medicine and suddenly long-term care is unavoidable. Then the question becomes whether to: (1) provide your parents’ care yourself, which is what most people do until the demands become too great, or (2) pay for professional care out of pocket, a practice less and less common having fallen from around 50 percent to about 25 percent of long-term care expenditures, or (3) rely on Medicaid, which as explained above, is relatively easy to get, but has serious access and quality problems. It should be no surprise that most people end up sooner or later in the Medicaid trap.

NYT Op-Ed: “[A]ny legislation that passes the Republican Congress is likely to include the largest cuts to the Medicaid program since its inception. Much focus has rightly been placed on the enormous damage this would do to lower-income families and youth. But what has been largely missing from public discussion is the radical implications that such cuts would have for older and disabled Americans.”

LTC Comment: OK, that’s the pivot from emphasizing most Medicaid recipients (the young) to stressing most Medicaid dollars (the aged and disabled.)

NYT Op-Ed: “Medicaid is our nation’s largest safety net for low-income people, accounting for one-sixth of all health care spending in the United States. But few people seem to know that nearly two-thirds of that spending is focused on older and disabled adults — primarily through spending on long-term care services such as nursing homes.”

LTC Comment: True enough.

NYT Op-Ed: “Indeed, Medicaid pays nearly half of nursing home costs for those who need assistance because of medical conditions like Alzheimer’s or stroke. In some states, overall spending on older and disabled adults amounts to as much as three-quarters of Medicaid spending.”

LTC Comment: True again. Who would deny Medicaid is the 800-pound gorilla of long-term care financing? But does that mean the rapidly growing, financially unsustainable entitlement program should be immune to cost controls and programmatic reform? Evidently so, according to these writers.

NYT Op-Ed: “As a result, there is no way that the program can shrink by 25 percent (as under the A.H.C.A.) or almost 50 percent (as under the Trump budget), without hurting these people. A large body of research, some of it by us, has shown that cuts to nursing home reimbursement can have devastating effects on vulnerable patients.”

LTC Comment: Whoa! Wait a second. Who said anything about reducing nursing home reimbursements? That’s been tried by Medicaid and it has caused serious access and quality problems. What we’re really talking about is giving state Medicaid programs the incentive and authority to manage eligibility and service delivery more efficiently and cost-effectively. How much could Medicaid save by ensuring its LTC benefits go only to the genuinely needy? What if people had to spend their own wealth including home equity before becoming eligible for Medicaid? Genuine spend down, home equity conversion, and private long-term care insurance would pump desperately needed private financing into the service delivery system at market rates relieving LTC providers from the stress of notoriously low Medicaid reimbursement rates. Over time, private financing could replace Medicaid dependency for most Americans thus improving access and care for everyone.

NYT Op-Ed: “Mr. Trump and the Republicans would lower spending on the frailest and most vulnerable people in our health care system. They would like most Americans to believe that these cuts will not affect them, only their ‘undeserving’ neighbors. But that hides the truth that draconian cuts to Medicaid affect all of our families. They are a direct attack on our elderly, our disabled and our dignity.”

LTC Comment: What nonsense! Shame on these scholars for evading the truth of how Medicaid has trapped generations of aging Americans in welfare-financed nursing homes. By ignoring that reality, they condemn future generations to a similar fate at who knows what cost. The real choice could not be more stark. Watch this whole sad house of cards collapse under the impending age wave or fix Medicaid by targeting it to the truly needy and incentivize everyone else to plan early, save, invest or insure for long-term care.

Final LTC Comment: Did you recognize the name of one of this op-ed’s authors, Jonathan Gruber? He’s the same ObamaCare architect notorious for stating “lack of transparency is a huge political advantage. And basically, you know, call it the stupidity of the American voter or whatever, but basically that was really, really critical to getting the thing to pass.” (Source: ObamaCare’s ‘Secret’ History, Wall Street Journal editorial, June 14, 2017) Fool me once, shame on you; fool me again, shame on me.

Suddenly, I’m seeing a spate of articles shifting the focus from young Medicaid recipients (big numbers) to the aged and disabled (big dollars). Here are two examples:

Daughters Will Suffer From Medicaid Cuts,” New York Times editorial, June 15, 2017

The Senate’s Stealth Raid on Seniors’ Health Care,” Alex Lawson and Jon Bauman, HuffPost, June 14, 2017

Beware the emotional hyperbole and factual misfeasance in such appeals.