LTC Bullet: Let’s Fix Long-Term Care Once and for All

Friday, August 11, 2023

Seattle--

LTC Comment: If you had to diagnose and cure what ails LTC in a single page, what would you say? Steve’s answer follows.

LTC BULLET: LET’S FIX LONG-TERM CARE ONCE AND FOR ALL

LTC Comment: Policy makers’ attention spans are extremely short. So one pagers are grist for the policy mill in DC and state capitals. But writing short is much harder than writing long. Mark Twain said “I didn't have time to write a short letter, so I wrote a long one instead.” These LTC Bullets aim to say what they want to say in less than 1000 words. But we often blow through that target. So let’s take the time today to keep it short. Here’s everything you need to know about what’s wrong with LTC, why, and what to do about it in one page. But if this précis leaves you wanting more, read “Long-Term Care: The Problem” and await “Long-Term Care: The Solution,” coming soon.
 

Let’s Fix Long-Term Care Once and for All

Step One: Understand the Cause. People who ignore LTC planning but end up needing catastrophically expensive care later in life routinely transfer that liability and cost to taxpayers via Medicaid.

Step Two: Understand the Problem. As the dominant LTC payer, Medicaid caused most of LTC’s deficiencies including nursing home bias, access and quality problems, inadequate reimbursement, caregiver shortages, and excessive reliance on “free” care by friends and family.

Step Three: Understand the Solution. As long as most people can ignore LTC risk and cost, wait to see if they ever need expensive care, and shift the cost to Medicaid, few will plan early to save, invest or insure for LTC. That must change for more private revenue to fix long-term care.

Step Four: Understand the Plan. Medicaid allows people who failed to prepare privately for LTC to shelter unlimited wealth in trusts, annuities, five-year asset transfers and exempt assets including, over $1 million in home equity. This must end for consumers to take LTC seriously.

Step Five: Understand the Reasoning. If we remove those major loopholes by which people qualify for Medicaid LTC benefits late in life, consumers will have no choice but to plan for LTC earlier. WA Cares proved that by threatening a LTC tax that unleashed a LTCI fire sale.

Step Six: Understand the Practicality. It is unrealistic to expect younger people and families to plan for LTC at a time in their lives when they’re also saving for retirement and children’s education, making house and car payments, etc. So we must offer a way to ease that burden.

Step Seven: Understand the Research. The LTC financing burden may be more manageable than we previously believed. $70,000 invested by a 65-year-old now will cover his/her average LTC cost of $138,000 later. Aging Americans have enough saved already to cover two years of LTC.

Step Eight: Understand the Potential. If people only had to cover their individual average LTC risk by setting aside or earmarking resources they already have or are in the process of saving, they could do so more easily and while simultaneously covering their other financial needs.

Step Nine: Understand the Options. Purchase less LTC insurance at lower premiums to cover average LTC risk instead of catastrophic potential as now. Carve out enough home equity, life insurance, Individual Retirement Account balances or estate wealth to cover average risk.

Step Ten: Retain Medicaid as the payer of last resort for anyone who cannot or will not prepare privately for LTC and to cover catastrophic costs. But make this resource available only after all personal income and assets of applicants/recipients are consumed by private LTC costs.

Summary and Conclusion: If we recognize these facts and implement these measures, America’s failing LTC service delivery and financing system can be saved and improved. There is ample wealth to ensure access to quality long-term care for all Americans. Simply replace perverse incentives to ignore LTC that prevail now with positive incentives to plan for LTC.