LTC Bullet: The Crisis on Top of the Crises

Friday, July 17, 2020


LTC Comment: What could be worse than the current cataclysm of nursing-home coronavirus deaths? More of the same if we keep doing what caused them. Explanation after the ***news.***

*** THE DEBT CLOCK shows the U.S. national debt exceeds $26.5 trillion, up more than another quarter trillion dollars since our last LTC Bullet nine days ago. Total unfunded liabilities, including $20.6 trillion for Social Security and $31.9 trillion for Medicare, are $153.3 trillion. Every citizen owes $80,387. The federal budget deficit was $2.7 trillion in the first nine months of fiscal year 2020. Where is the federal government getting all this lucre to spend? It’s printing the money, creating it out of thin air, and borrowing it by purchasing its own and private companies’ bonds, even their junk bonds. At some point, maybe not far off, printing more money won’t work because more money will no longer buy the same quantity of goods and services which are not being produced because of the lockdown-induced recession. Borrowing more won’t work because our own people, foreigners and other countries will lose confidence that America will ever be able to repay the loans, which it can’t. They’ll stop lending to us. Higher taxes won’t help because they would only stymie the real economy even further. In the end, inflation—the most grievous tax of all—will wipe out most government and private debt, effectively confiscating most private wealth held in dollars. Borrowers benefit; savers suffer. That is the danger of the course we are on. ***

*** THE TRAGIC IRONY of the Covid-19 crisis is that government responded by locking down the businesses and people least vulnerable to the virus while exposing the most vulnerable of all, residents in nursing homes, to sick and recovering patients from overburdened hospitals. For months, nursing homes begged for more personal protective equipment, testing, and funds to little avail. But as we pointed out in this LTC Clipping, that’s finally beginning to change.

7/16/2020, “Nursing facilities in ‘hot spots’ to receive first batch of COVID-19 test equipment,” by Alicia Lasek, McKnight’s LTC News

Quote: “Nursing homes with three or more COVID-19 cases will be the first to receive on-site diagnostic test equipment from federal health agencies — starting in regions where infections are spiking. The news was announced Wednesday by the Centers for Medicare & Medicaid Services, a day after Administrator Seema Verma revealed a new federal plan to deploy rapid point-of-care COVID-19 testing capabilities to eldercare facilities nationwide.”

LTC Comment: Harvard professor David Grabowski found that nursing home coronavirus deaths were highest in geographic areas with the highest Covid-19 incidence. Other factors, such as Medicaid census or for-profit status, didn’t seem to matter much. Businesses have to prioritize. Governments rarely do. So this new focus on protecting nursing home residents is a promising development. See tomorrow’s LTC Bullet titled “The Crisis on Top of the Crises” for more on this aspect. [Read it today below.]

To receive LTC Clippings in real time, join the Center at the “Premium” level. Steve Moses will become your research assistant. He reads everything related to long-term care services and financing; he culls out what’s most important for you to know; then he emails you with the title, author, a representative quote, a link to the source, and his brief analysis. In this way, you can stay abreast of all the news, reports, articles, data and stories about LTC that you need to know without having to do so much research yourself. Spend your time doing what you do best; let Steve do the time-consuming, painstaking research. Contact him at 425-891-3640 or or simply join here. ***


David Grabowski is everywhere these days describing and explaining the Covid-19 disaster in nursing homes. The Harvard professor aptly documents how an epidemiological crisis on top of a long-term care financing crisis has devastated America’s nursing homes and the people who depend on them. But there is another crisis on top of those two, which poses greater danger than either. That is the risk and likelihood that public policy will make these problems worse instead of better.

Dr. Grabowski observed in a recent presentation that “deaths in long-term care facilities account for a majority of COVID-19 deaths in most states.” The US average is 45%, close to the OECD average of 42%. I note that Canada is even worse with 80% of coronavirus deaths in nursing homes. To stem this viral tide, U.S. nursing homes locked down, allowed no visitors, closed communal dining, and took staff temperatures at the start of each shift. Yet 66,000 staff with very limited personal protective equipment, testing, hazard pay, benefits, and sick leave, contracted the virus. Hundreds have died doing these very dangerous jobs.

What caused this awful situation? Grabowski says it’s a combination of things: low Medicaid reimbursement; poor staffing and infection control; clinicians “missing in action”; ineffective regulations; lack of quality transparency; and fragmented ownership structures. I’d summarize in one word—government—because government is responsible for all of these shortcomings including the “fragmented ownership structures” that private sector firms set up to take advantage of the perverse financial and operational incentives that public policies require.

Now consider Dr. Grabowski’s counter-intuitive research findings. Covid-19 nursing home deaths do not correlate with a higher or lower rating on CMS’s nursing home compare five-star quality rating scheme, nor do they correlate with having a prior infection violation, nor with whether a facility is for-profit or part of a chain. Even a high Medicaid census, despite that program’s notoriously low reimbursement and poor facility staffing levels, doesn’t signal greater nursing home virus risk. Grabowski summarizes that what matters is where you are—in geographic areas with higher Covid incidence—not who you are—such as a Medicaid recipient in a low quality nursing home. Bottom line, residing in a nursing home during the coronavirus contagion is deadly. It’s just more deadly if you live in an area with a higher incidence of Covid-19 in the local population.

So, we can extract two key points from Dr. Grabowski’s analysis. First, government funding and regulation of long-term care are responsible for the problems, such as poor funding, staffing, infection control, and quality, which killed so many people in nursing homes. Second, residing in a nursing home is dangerous during the contagion and much more so if your nursing home happens to be in a geographic area heavily stricken by Covid-19. How can we address both of those problems effectively?

The obvious answer is to divert people away from nursing homes as much as possible in the future. But that just begs the larger question: Why are so many people living in nursing homes in the first place, sharing underfunded “semi-private” rooms with potentially contagious roommates? The answer to that question is that Medicaid started making nursing home care virtually free for the poor, middle class and affluent in 1965 and has continued to do so ever since. Efforts to rebalance Medicaid from institutional to home care have partially succeeded but totally failed to save money as they were intended and expected to do. The only permanent answer is to end the perverse incentive of easy access to Medicaid long-term care after it is too late for people to save, invest or insure for the risk. To do that, save Medicaid money, improve care, and support more people in their own homes requires only clear thinking, objective analysis, and better public policy. I’ve provided those in Medicaid and Long-Term Care.

Thus the “crisis on top of the crises” is that we’ll keep doing what we’ve always done, which has caused the human tragedy in nursing homes that we’re now experiencing, and we’ll get ever more of the same. Instead, stop trapping people in Medicaid nursing homes by luring them away from early and responsible long-term care planning. Eliminate or radically reduce Medicaid’s gargantuan home equity exemption, upwards of $900,000 in some states but no less than $595,000 in any state, so that middle class and affluent people will use the wealth in their homes to fund care leaving more in Medicaid for the actually needy. Enforce estate recoveries, which have been mandatory since 1993, but largely unenforced. Use some of the savings to incentivize the purchase of private long-term care insurance. Legislate, implement and enforce these and the other recommendations in Medicaid and Long-Term Care.

The only good news in this whole tragic mess is that it has been self-inflicted by terribly counterproductive public policy and could be easily reversed with the better, more efficacious policies we’ve identified and recommended in that monograph.