 LTC Bullet: LTC Policy Goes Around and Comes Around Friday, September 26, 2025 Seattle— LTC Comment: The last year long-term care financing policy and Medicaid LTC reform were major political issues was 2005. What goes around comes around, after the ***news.*** *** ATTENTION: ILTCI ’26. The next Inter-Company Long-Term Care Insurance Conference will be held March 8-11, 2026 in Orlando, Florida. Exhibitor and sponsor applications are available now and attendee registration opens online with early bird pricing October 1st. As usual, Steve and Damon from the Center for Long-Term Care Reform look forward to attending this essential LTC industry event. Join us, and in the meantime, go to ILTCICONF.ORG for further information. *** *** “What goes around comes around,” and thanks to our members, the Center for Long-Term Care Reform stays around. Please join us in our mission to ensure quality long-term care for all Americans. We do this by promoting public policy that targets scarce public resources to the neediest, while encouraging people who are young, healthy and affluent enough, to take responsibility for themselves. To find out how you can "do well by doing good," consider supporting our work by joining us at the Premium Membership level. Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including:
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sign up for as little as $21 per month. *** LTC BULLET: LTC POLICY GOES AROUND AND COMES AROUND LTC Comment: Join me today for a ride in the Cato Institute’s way-back machine. The libertarian think tank has recovered a long-lost video of a 2005 debate. The battle of wits pitted free-market advocate Steve Moses against Medicaid estate planner Vincent Russo. Cato’s Director of Health Policy Studies, Michael F. Cannon, introduced the program. Marilyn Werber Serafini, then an award-winning journalist with the National Journal, moderated. Watch the debate here. (Click the picture on the right when the website comes up.) Watch the video and you’ll note I got some things wrong. I predicted that federal and state budgets were approaching a breaking point. I said Medicaid and Medicare were at risk. In the future, I thought people would not be able to ignore the risk and cost of LTC until they need care and then turn the liability over to Medicaid. Home equity would become the main funder of LTC for the majority of elderly who were home owners. The only path to quality LTC, especially in home and community-based settings, would lead through private financing from savings or insurance. Boy was I wrong back then. What happened instead was that Medicaid LTC spending continued to grow. Medicaid financial eligibility remained easy. LTC insurance sales slumped dramatically. Medicaid’s giant home equity exemption continued to crowd out private LTC financing through home equity conversion. All the things I warned were ruining LTC access and quality back then only became worse over the next two decades. How can we explain the last twenty years? 2005 was a heady year for LTC financing policy. The economy was good, but politicians fought over Medicaid spending, especially LTC expenditures. The big LTC issues were resolved when the Deficit Reduction Act became law in March of 2006. The DRA established the first ever cap on Medicaid’s home equity exemption and made asset transfer restrictions longer and stronger. It seemed like my predictions and recommendations were coming true. Unfortunately, 2005 was the last year that Medicaid and LTC financing costs dominated political discussion. Since then, there have been studies and proposals, mostly advocating big new state and federal LTC entitlements, but spending has surged instead in the existing dysfunctional system with no relief. For the past twenty years, worries about budget deficits and escalating debt subsided, enabling the status quo to continue and worsen. Consequently, the national debt exploded from $8.1 trillion in 2005 to $37.5 trillion today. But politicians’ casual attitude about deficits and debt is changing now. Budget constraints that dominated in 2005 are finally returning in 2025. Inflation has exceeded the Fed’s 2% goal for nearly five years and will continue high until 2028 at least. In FY 2024, the federal government spent $6.75 trillion, but collected only $4.92 trillion in revenue, causing a $1.83 trillion deficit. Analysts worry the U.S. will be unable to service the national debt as interest payments alone already exceed spending for national defense. So, I stand by my predictions and recommendations from that long-ago debate. The economic reckoning I predicted then is finally upon us. We may flounder on a little longer, but by the mid-2030s, the end will come for the LTC financing system that has prevailed since Medicaid’s founding in 1965. 2031 marks the year boomers start turning 85. Social Security’s trust fund is exhausted in 2034; Medicare’s in 2033. Both those entitlements prop up Medicaid LTC, but won’t help as much going forward. If you want to know what all that means, watch that 2005 debate again. What goes around, comes around, and, boy, is it coming at us fast and hard right now. |