LTC Bullet: Medicaid’s Plan to Fail

Friday, June 24, 2022


LTC Comment: AARP says too few people plan for old age even though most believe they’ll need long-term care, but it offers no clue as to why or what to do about it. Insights and analysis after the ***news.***

*** LTC CLIPPINGS are news items we send to Center Premium Members daily with news, data, studies, and information they need to know to stay at the professional forefront. Steve Moses scans the popular and scholarly media, condenses vital information, and forwards to you a message with the title, author, a link, a representative quote and his “LTC Comment” analyzing the significance. To subscribe to LTC Clippings, contact Damon at 206-283-7036 or Here are two examples of LTC clippings sent this week:

5/2022,Post-acute and Long-term Care Providers and Services Users in the United States, 2017–2018, Analytical and Epidemiological Studies,” by Sengupta, Manisha, et. al., National Center for Health Statistics
: Key Findings [excerpts]
In 2018, about 69,000 paid, regulated post-acute and long-term care services providers in seven major sectors served more than 9.5 million people in the United States.
   Post-acute and long-term care services were provided by 4,200 adult day services centers, 11,500 home health agencies, 4,700 hospices, 15,600 nursing homes, 31,400 assisted living and similar residential care communities, 1,200 inpatient rehabilitation facilities, and 400 long-term care hospitals (Appendix III, Table IX).
In 2018, an estimated 251,100 current participants were enrolled in adult day services centers; 1,321,200 people were current residents in nursing homes; and 918,700 current residents were living in residential care communities. In 2017, about 4,940,300 patients were discharged from home health agencies; 1,562,500 patients received services from hospices; 380,400 patients received services from inpatient rehabilitation facilities; and 115,800 patients received services from long-term care hospitals (Appendix III, Table XII).
LTC Comment: Consult the report for much more data on the LTC continuum. Center friend Bill Comfort observed that “the CDC data notes that Home HEALTH Care is for Medicare-paid skilled care at home.  From my first look at the report, it appears that this doesn’t address at all private-duty, private-pay, custodial home care. The 11,500 home HEALTH agencies do not include the likes of Home Instead, Right At Home, Comfort Keepers, and all the mom and pop home care agencies at all! We continue to get a distorted view of post-acute and just basic custodial care from this oversight.”

6/23/2022,Many Retirees Wish They'd Planned, Saved Earlier: EBRI Survey,” by Dinah Wisenberg Brin, ThinkAdvisor
Quote: “Half of surveyed retirees said they would have changed their financial habits during their working years. But those who paid a professional to develop a financial plan were satisfied and felt the service was worth the expense. Unexpected medical expenses, preventive health spending, inadequate retirement savings and inflation led the list of retirees' pre-retirement financial concerns.”
LTC Comment: Yet few people plan for old age. To learn why and what to do about it, read tomorrow’s [now today’s] “LTC Bullet: Medicaid’s Failure to Plan.”


LTC Comment: There are few people in the LTC profession I’ve known longer and respect more than John O’Connor. He is editorial director, vice president and associate publisher at McKnight’s Long-Term Care News and sister publication, McKnight’s Senior Living. I’ve been reading John’s thoughtful commentaries since 1989 when I left government LTC research to join the private sector.

O’Connor’s “Editor’s Column” yesterday made several points that form a fine foundation for a crucial conclusion. Read “Worse than a bad plan for senior living” and then rejoin me for some observations.

He begins: “Even though Ben Franklin uttered the words more than two centuries ago, they still ring true today: ‘If you fail to plan, you are planning to fail.’ I was reminded of his gentle warning while reading about the AARP’s latest ‘Long-Term Care Readiness’ survey.

Who in the insurance side of the LTC business hasn’t heard that Franklin quote and probably used it in sales?

The AARP study John refers to, titled “Long-Term Care Readiness: An AARP Survey of Adults 50+,” is available here. Read its “Key Findings” below and then we’ll see what John does with them. 

“Key findings
“Uncertainty about Medicare coverage of long-term care services is common among adults 50-plus
.  Roughly half (46%) incorrectly believe Medicare covers care in a nursing home or care in the home from a home health aide.
“Recognizing that they may need assistance as they get older does not mean that adults 50-plus have really thought about *how* they will live independently. Nearly seven in 10 (68%) believe that they will need assistance with their daily activities as they get older, yet fewer than three in 10 (28%) have given a lot of thought to how they will continue to live independently if they need such assistance.
“The COVID-19 pandemic has had little effect on one’s thinking about independent living, with more than six in 10 (62%) thinking about the topic about the same now as two years ago.
“Roughly six in 10 adults 50-plus are concerned about multiple issues regarding aging, with concerns about not being able to live independently and becoming a strain or burden on family topping the list. Slightly fewer say they are concerned about not having enough money saved, needing to live in a nursing home or assisted living facility, or not being able to remain in their own home.
“When it comes to planning for their futures, half have discussed their end-of-life plans with family and have written a will. More than four in 10 have also planned for their funeral expenses and have designated a legal Power of Attorney, but far fewer say they have researched or made plans for in-home, community-based, or nursing home care.”

Back to John O’Connor’s column: “Consider, less than a third of the respondents (28%) have given much thought to how they will live independently should a need for assistance arise. That’s right, 28%. It’s a safe bet the percent of people in this crowd planning their next vacation is considerably higher. And it’s not like those who are 50 or older are unaware bad things might happen later in life. In fact, more than two-in-three (68%) believe they will need help with their daily activities at some point. For those who have reached age 65, the number spikes to 75%.”

He concludes: “If I’m running a senior living organization, these findings scare the heck out of me. Because what they strongly suggest is that more and more senior living services will need be paid for by states and the federal government going forward. Many potential prospects in the suddenly popular middle market may not have the means to pay their own way.”

What does he advise senior living providers to do? If you don’t want to be a “publicly subsidized enterprise” subject to the “regulatory hoops” and less than “generous” payments skilled nursing facilities endure, then consider waging “a campaign to get people to actually prepare for the decline old age will surely bring.”

He continues: “But be warned, your work is cut out for you. … it’s probably safe to say the fail-to-plan crowd is pretty dug in. Which is very unfortunate. Their eat, drink and be merry mentality may be OK for a night of celebration. But it’s no way to prep for the challenges of old age. As many will discover, once the party ends.”

LTC Comment: What I don’t find in John O’Connor’s column, nor in the AARP study, is the question “Why don’t people plan?” much less an answer. So let me try to provide both.

What could possibly explain why so few people worry or plan for old age? Why will their failure to plan leave future senior living providers as dependent as nursing home operators on meager government reimbursements? What could possibly be done to reverse this unfortunate outcome?

To me the answers are as glaringly obvious as the questions themselves. People don’t plan for old age because they’ve been assured the don’t need to by (1) Social Security, (2) Medicare, and (3) Medicaid. Read Medicaid and Long-Term Care for a full explanation.

Senior living providers are doomed to follow nursing homes down the primrose path of Medicaid dependency, including excessive regulation and inadequate payments, because of the moral hazard (“lack of incentive to guard against risk where one is protected from its consequences”) the entitlement program caused.

What could/should be done to fix this mess? Stop doing what government has always done. Stop giving easy access to Medicaid-funded care after the insurable event has already occurred. In other words, end “The Entitlement Put.”

Instead, move the LTC responsibility forward to a time when it’s not too late for people to plan. Enforce it then, but not by channeling everyone into compulsory payroll-funded government programs that are no better than the ones that caused LTC’s problems in the first place. Let people choose how to meet their LTC obligation—through insurance, or a home equity carve out, or an investment set aside, or a formal, recorded lien on their estate, or some other legitimate, trackable means—as a way to avoid government interference altogether instead of as an escape from a public program that traps everyone like WA Cares.

Closing LTC Comment: Hey John, how would you answer those three questions? What do you think of my answers? I’ll keep an eye out for that “Editor’s Column.” Thanks for the important contribution you and sidekick Jim Berklan make toward our common objective of improving long-term care.