LTC Bullet:  WSJ Column on Nursing Homes, Coronavirus and Medicaid

Friday, June 5, 2020

Seattle—

LTC Comment: Steve Moses and Brian Blase published an op-ed in Tuesday’s Wall Street Journal. Here’s the back story and much more on the subject, after the ***news.***

*** THE DEBT CLOCK: New feature. We’re going to start posting a link to the U.S. Debt Clock at the top of each LTC Bullet. U.S. national debt stands now at almost $26 trillion. Worse yet, our country’s unfunded liabilities, including $20.5 trillion for Social Security and $31.7 trillion for Medicare, total $147.9 trillion. Evidently no one cares. The Federal Reserve is printing, the Treasury Department is spending, and together they’re borrowing unlimited funds ostensibly to stimulate the economy but effectively to re-inflate a bubble in stocks, bonds and real estate. This will not end well. The debt is suddenly skyrocketing. In future Bullets, we’ll track where the debt stood as we reported it occasionally in the past. ***

*** WHO KNEW? The coronavirus pandemic lockdown crashed the economy. America is burning, literally, with civil unrest. Government’s monetary and fiscal floodgates are wide open. Public and private debt is spiking. Unemployment is at depression levels. Yet the stock and bond markets are at or approaching new highs. Who knew we could borrow and spend unlimited amounts with no consequences? How great is this? You say: “Don’t waste a crisis.” I say “Why wait for a crisis?” Let the good times roll all the time. Who needs jobs and taxes? Just print enough money for everyone to have everything. Voila! Welcome to economic WallyWorld. ***

*** SOHO FORUM: I find these debates fascinating and now that they’re online, easy to access. The topics are always timely and usually pit a libertarian against a more middle-of-the-roader. Most recent topic paraphrased: did the lockdowns do more harm than good? I love the format. The audience votes on the question before and after the debate. The winner is the discussant who changes the most minds. Here’s how the Forum describes itself: “The Soho Forum is a monthly debate series held in Soho/Noho, Manhattan. A project of the Reason Foundation, the series features topics of special interest to libertarians and aims to enhance social and professional ties within the NYC libertarian community. Moderated by Gene Epstein, former economics editor of Barron's, The Soho Forum features some of the most highly regarded speakers across varied fields. At each event, the audience actively engages with the speakers, votes on the resolution, and there is a social reception that follows.” Enjoy! ***

 

LTC BULLET:  WSJ COLUMN ON NURSING HOMES, CORONAVIRUS AND MEDICAID

LTC Comment: When people started dying in droves at nursing homes all across the country, it raised the question: why are so many frail, infirm elderly people residing in these institutional settings in the first place? My friend, Brian Blase of Blase Policy Strategies and most recently Special Assistant to the President for Health Care Policy, had the same thought.

We conferred and the Wall Street Journal published our op-ed “Nursing Homes, Coronavirus and Medicaid” online Monday evening, June 1 and in the print edition Tuesday, June 2. The WSJ has a pay wall so I can’t link you to the full piece, but here are the first three paragraphs, which I am allowed to share:

“A national tragedy began in March when Covid-19 killed 35 residents of Life Care Center in Kirkland, Wash. Since then, more than 22,000 nursing-home residents have died in Connecticut, Massachusetts, New Jersey, New York and Pennsylvania. Nearly half of all Americans who have fallen victim to the novel coronavirus lived in nursing homes.

“Politicians have made plenty of mistakes. Governors in several states, including New York and Pennsylvania, ordered nursing homes to take coronavirus patients discharged from hospitals and reversed the orders only after weeks of casualties. Families are suffering, forced to stare at their parents and grandparents through windows or talk only by phone. Overworked caregivers are at high risk of exposure.

“Why do so many elderly people live in low-quality nursing homes? Almost no one wants to end up in a nursing home, and most families prefer not to place their loved ones in one. The main answer is the legacy of Medicaid, a Great Society program intended to help the poor.”

Want more? If you don’t have a print or online subscription, maybe you can find someone who does. I can forward a limited number of copies for a limited number of days through the Center’s subscription. If you ask, I’ll try. After 30 days, the article will be in the public domain.

In the meantime, how about reading the “rest of the story” that didn’t make it into the WSJ piece? Here’s my two-part early draft: Part 1 answers the question of why so many people end up in nursing homes vulnerable to the coronavirus contagion. Part II explains what we can do to fix that problem.

“Covid-19 and Long-Term Care, Part 1: Why Are So Many Elderly People Trapped in Nursing Homes?”
by
Stephen A. Moses

News from the nursing home sector is not good.

Thirty-five die at a Life Care Center in Kirkland, WA. Locked out families stare plaintively at quarantined parents and grandparents through nursing home windows across the country. New York demands nursing homes take Coronavirus patients, then prohibits them. Half or more of COVID-19 deaths are nursing home residents.

What’s happening? Why are so many old, frail, often cognitively impaired elders residing in nursing homes? Why aren’t they aging in place at home, safer from contagion with visiting caregivers and telemedicine? Why is nursing home quality such a serious problem?

The answers to all those questions stem from a Great Society program intended to help the elderly poor. In 1965, Medicaid began providing nursing home care—including room, board, and medical care—funded with virtually unlimited federal and state matching funds. It was welfare supposedly, but it allowed unlimited asset transfers to qualify until 1980. Since then, generous financial eligibility rules placed no set limit on income for people with high medical expenses and allowed virtually unlimited exempt assets, including home equity of $595,000 in every state ($893,000 in some states). A program intended for the poor became the fall back payor for middle class and affluent people who didn’t plan for long-term care and slipped through or manipulated Medicaid’s elastic financial eligibility rules.

By making long-term care virtually free when expensive care is needed: Medicaid (1) quickly exploded in cost, (2) created institutional bias by paying only for nursing homes, (3) caused access and quality problems by paying care providers too little, (4) enriched plaintiff’s attorneys with the resulting tort liability cases, (5) crowded out private markets for home care and long-term care insurance, and (6) kept poor people poor with punishing spend down rules, while (7) letting the well-to-do save and benefit through eligibility loopholes.

Medicaid pays the bills of 62 percent of nursing home residents. It pays notoriously low rates, often less than the cost of providing the care. Those low rates drag down nursing homes’ ability to provide quality care for Medicaid recipients and for the few remaining private payers. Very few private payers remain because Medicaid is so easy to obtain, even for the well-to-do. Thousands of elder law attorneys specialize in impoverishing affluent clients artificially to qualify them for Medicaid and to protect their heirs’ inheritances. Search “Medicaid planning” to find these specialists in every state.

Five and a half decades of easy access to Medicaid-subsidized nursing home care anesthetized consumers to the risk and cost of long-term care. Few people know who pays for it and fewer still worry or prepare as a result. Once they need long-term care, the path of least resistance is to qualify for Medicaid, preserve most of their assets for heirs, and take whatever Medicaid has to give. That’s usually nursing home care in facilities too heavily dependent on the impecunious public welfare program to provide high quality care.

That’s why so many frail, elderly people are trapped in poor nursing homes vulnerable to the ravages of Covid-19.

For the solution, read “Covid-19 and Long-Term Care: Part 2, Save Long-Term Care with Medicaid Reform.”

Stephen Moses is co-founder and president of the Center for Long-Term Care Reform and the author of Medicaid and Long-Term Care (2020).

  

“Covid-19 and Long-Term Care, Part 2: Save Long-Term Care with Medicaid Reform”
by
Stephen A. Moses

Too many infirm elderly people are trapped in beleaguered nursing homes inadequately funded by a public welfare program, Medicaid. They are vulnerable to the ravages of Covid-19, forcibly cut off from friends and family, and dying in droves. Part 1 explained why this is so. Part 2 proposes a solution. As bad as the nursing home problem is, there’s good news. It is easy to fix.

Fifty-five years of easy access to Medicaid financing when expensive extended care becomes necessary desensitized consumers to long-term care risk leaving them with a Hobson’s choice. Do we spend our life’s savings, including home equity, to pay for long-term care privately? Or do we accept welfare-financed nursing home care and preserve most of our wealth for a surviving spouse and heirs? In the end, most people choose the latter course.

That’s how Medicaid became the dominant long-term care payer for the middle class and affluent as well as the poor. Medicaid planners did a land office business artificially impoverishing people to qualify them for the program. Heirs received windfall inheritances, diverted from their parents’ long-term care expenses by a taxpayer-financed public assistance program originally intended only for the poor.

Analysts and policy makers study the serious problems afflicting America’s long-term care system—the poor access and quality, nursing home bias, too little preferred home care, inadequate financing, excessive dependency on unpaid family caregivers causing enormous financial and emotional distress. They propose measures to alleviate these symptoms, usually more government spending and regulation. But they rarely ask what caused the problems in the first place.

What if government interference in long-term care is exactly what caused long-term care’s problems? Wouldn’t that suggest a different approach than more of the same?

How about this? Remove the perverse public policy incentives that trap people on Medicaid. Don’t exempt their biggest asset, home equity, from long-term care risk. Let people who fail to plan, save, invest or insure for long-term care use reverse mortgages or other assets to pay for the home care they prefer. Perhaps losing their inheritances to their parents’ long-term care costs will make adult children more likely to plan responsibly for their own future. In other words, stop using Medicaid to subsidize people for ignoring the risk and cost of long-term care.  

Do not delay making these changes. Budget shortfalls from the current recession will impair the states’ ability to fund Medicaid, further devastating nursing home finances and damaging care quality. In past economic downturns, Medicaid imposed asset transfer restrictions, mandated estate recovery, and closed eligibility loopholes to control costs. More of the same will be necessary in the current economic downturn. The poor will suffer most.

Directing Medicaid long-term care benefits only to the genuinely needy would ensure more resources and better care for them, achieving the original intent of the program. With Medicaid long-term care harder to get, consumers will do the right thing. They’ll plan for long-term care, save, invest and insure for it. New waves of private financing will surge through the long-term care market improving quality and choice for everyone. Care will quickly evolve away from nursing homes toward the home and community-based care people vastly prefer.

Stephen Moses is co-founder and president of the Center for Long-Term Care Reform and the author of Medicaid and Long-Term Care (2020).