LTC Bullet:  LTC at Sundance

Friday, December 9, 2011

Seattle--

LTC Comment:  The 13^th annual Health Sector Assembly brought together 70 thought leaders to discuss LTC services and financing.  Our message was heard loud and clear.

Details follow the ***news.***

*** TOP TEN REASONS WHY MEDICAID NEEDS REFORM:  Check out this press release from Senators Orrin Hatch (R, UT) and Dr. Tom Coburn (R, OK) listing "ten examples of the fundamental flaws and problems confronting the Medicaid program that illustrate why this program needs to reformed."  They include:

1.  You can own a Rolls-Royce and still qualify for Medicaid today.
(Source: The Code of Federal Regulations: 20 CFR 416.1218.)

8.  You can own a half a million dollar luxury home and still qualify for Medicaid.
(Source: The Social Security Act: Section 1917(f).)

And especially this one citing the Center for Long-Term Care Reform:

9.  An entire consulting industry now teaches how to do financial planning around Medicaid’s long-term care offerings, and not surprisingly, taxpayers now finance 40 percent of long-term care services in America through Medicaid.
(Sources: The Center for Long-Term Care Reform: Medicaid Planning Quotes and Kaiser Commission on Medicaid and the Uninsured:  Medicaid and Long-Term Care Services and Supports.  March 2011) *** 

LTC BULLET:  LTC AT SUNDANCE

LTC Comment:  It's been a little over a month since our last LTC Bullet.  Capping three months of hard work on the Hill and in the policy trenches of Washington, DC, I'm just back from three weeks of much-needed rest, respite and vacation in Southeast Asia, specifically Borneo, Singapore and a wide-ranging air and road tour of the Philippines.  But now it's time to dive back into the LTC policy fray.

In between DC and the wilds of Borneo, I spent three days (with Damon) at the 2011 "Health Sector Assembly" which convened at the Sundance resort near Salt Lake City, Utah.  This invitation-only, all-expense-paid, annual meeting focused this year on "Long-Term Care:  The Unacknowledged Elephant in the Room."  Organizers described the event thus:

The Health Sector Assembly of America is a gathering of health leaders from virtually every segment of the health universe.  Bringing together a wide range of philosophical opinions, experiential dimensions, and varying approaches to the future of health care in the United States, it has become an annual occasion when these individuals bond around the discussion table.  Without outside pressures, they are able to exchange openly and frankly often in a spirited manner.

Discussion at the Assembly was definitely open, frank and spirited, reflecting the widely divergent views of attendees representing leading national think tanks, trade and professional associations, consumer groups and including public officials and scholars.  Eight of the attendees were invited to offer formal, seven-minute "challenge remarks" from the podium to get the broader discussion started.  I was asked to speak on "Challenges to Effective Long-Term Care:  Cost and Affordability."

Following is a transcript of my remarks to the Health Sector Assembly.  At the end of those comments, I mentioned that I had prepared six "Briefing Papers" which ask and answer key questions about long-term care "from a perspective clearly at odds with conventional long-term care analysis."  Staff of the event distributed a summary sheet with links to all six essays to all of the attendees.  In the coming weeks and months, we will share the same material with you in forthcoming LTC Bullets.

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Health Sector Assembly Presentation
Sundance, Utah
November 4, 2011
Session:  "Challenges to Effective Long-Term Care"

"Challenge Remarks:  Cost and Affordability of Long-Term Care"
by
Stephen A. Moses

First some facts.  Long-term care is very expensive.  A private nursing home room for custodial care in 2011 averages $239 per day or $87,000 per year; a semi-private room runs $205 per day or $78,000 per year.  Both are up 4.4 percent from last year.  Base rates for assisted living climbed 5.6 percent to $3,500 per month or $42,000 per year.  Private-pay hourly rates for home health aides and homemaker/companion services remained unchanged from 2010 at $21 and $19 respectively.[1]  At these levels, few Americans could pay privately for very long which leads analysts to conclude that long-term care is unaffordable.

According to the Centers for Medicare and Medicaid Services (CMS), the United States spent $137 billion in 2009 for care provided in skilled nursing facilities or continuing care retirement communities.[2]  The country expended another $68 billion for home health care in the same year.[3]  The total of $205 billion for institutional and home care is up 47 percent from $139 billion in 2003.  As the Health Sector Assembly "Topic Statement" suggested, public and private long-term care expenditures are an unacknowledged fiscal elephant in the room.  Clearly unaffordable.

What's most interesting about these huge and expanding long-term care expenditures, however, is "who pays for what and why?"

For example, the percentage of nursing home costs paid by Medicaid and Medicare nearly doubled from 27 percent in 1970 to 53 percent in 2009.  In the same period, out-of-pocket expenditures declined two-fifths from 50 percent to 29 percent.[4]  Furthermore, half of the out-of-pocket costs reported by CMS are actually spend-through of Social Security income by Medicaid recipients who are required to contribute most of their income to offset Medicaid's costs for their care.  Clearly, direct and indirect government financing of expensive institutional care has increased dramatically over the past 39 years while personal financial liability for such care has declined substantially.

Government financing also predominates in home health care expenditures.  According to CMS, Medicare paid 44 percent and Medicaid, 36 percent for a total of 80 percent of home health care expenses in 2009.  Private insurance paid 7 percent.  Only 9 percent of home health care costs were paid out of pocket.[5]  Assisted living is another matter altogether.  Private payers account for roughly 90 percent of assisted living costs.  Government financing of the sector is very limited.  CMS doesn't even report assisted living costs among National Health Expenditures.

Now for my challenge remarks.  What questions should the hard facts of long-term care's high cost and unaffordability lead us to ask?  I suggest five.

1.  How did the USA come to have a welfare financed, institutionally biased long-term care system in the wealthiest country in the world where no one wants to go to a nursing home?  If heavy public financing created that problem, maybe less government and more private funding is the solution.

2.  Does qualifying for Medicaid long-term care benefits really require people to spend down into impoverishment as the popular and academic media suggest?  If not, maybe Medicaid rules cause the program's overuse and crowd out private long-term care services and financing.

3.  Will "rebalancing" Medicaid from mostly nursing home care to mostly home and community-based care save the program money?  If not, rebalancing might make Medicaid more desirable, expand its utilization, and further discourage private long-term care planning and financing alternatives.

4.  Is it inevitable that millions of Americans will become Medicaid's most expensive recipients or could different public policy incentives prevent or delay people from becoming dual eligibles?  So called "duals," people who receive both Medicaid and Medicare benefits, are heavy users of long-term care and, although they are only 15 percent of recipients, they account for 39 percent of Medicaid's expenditures.

5.  If long-term care is such a huge risk and cost, why don't more Americans save, invest or insure against it?  Perhaps Medicaid's large home equity exemption and relatively easy income and asset eligibility rules inhibit private long-term care financing alternatives such as reverse mortgages or insurance.

I have prepared six short "Briefing Papers" that ask and answer these questions from a perspective clearly at odds with conventional long-term care analysis.  With these remarks, in those briefs, and during the coming discussion, I challenge you to reconsider government's proper role in financing long-term care. 

Thank you.

End Notes