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Long-term
care is a very expensive proposition. Private
nursing home rates in Texas can easily run $150 to $200 per day. You
might find an assisted living facility for half that, but it still adds up fast
and you may end up needing a nursing home in time anyway. Rather
get your care at home? Even someone
to help with chore or attendant services will set you back $16 per hour.
Figure on more than double that if you need skilled nursing care at home. And
if you think long-term care is expensive today, just wait two or three decades
until the baby boom generation starts needing it. Whew! Of
course, you only have to worry about the cost of long-term care if you'll have
to pay for it yourself, right? Nowadays,
in Texas, and across the United States for that matter, the vast majority of all
professional long-term care services are paid for by government programs. The
lion's share of long-term care costs are paid by Medicaid.
Medicare's a big factor too. Private
insurance and so-called out-of-pocket expenditures are really minimal. That's
why public policy makers are so worried about long-term care financing. The
Texas Public Policy Foundation asked me and my organization, the Center for
Long-Term Care Reform, to study Medicaid and long-term care financing in Texas
and to recommend some measures to meet this challenge. Mary
Katherine Stout and I spent a week in December interviewing 58 experts on every
aspect of Medicaid and long-term care in Texas. Our
report will be published in a couple weeks and posted on the Foundation's
website at TPPF.org and on the Center for Long-Term Care Reform's website at
centerltc.com. But
here's a sneak peek at what we discovered and recommend. Long-term
care in Texas is extremely expensive. Medicaid
nursing home expenditures went from $602
million in 1980 to $2.7 billion in 2004. Home
care costs rose even faster in the same time period: from $11 million to $819 million, almost 20% per year for 25
years. I
reckon this is what led Executive Commissioner Albert Hawkins of the Texas
Health and Human Services Commission to tell us: "When
I look forward to the future aging of the population, especially the growth of
the oldest old, I see us straining even to cover the [the relatively lower] cost
of HCBS. The problem is the gross numbers, not just the per-recipient costs.
It's just the raw number of people getting older in Texas." Texas
Medicaid has been very progressive and proactive in funding long-term care. Following
the lead and recommendations of academics, federal officials and other states,
Texas has moved aggressively to finance lower cost home and community-based
services and to reduce the relative utilization of more expensive nursing home
services. But
two things are obvious to anyone who looks at the facts. First,
overall Medicaid long-term care expenditures have continued to increase despite
the greater focus on home care. And
second, Medicaid remains the predominant payor for professional LTC services
whether in a nursing home or at home. In
fact, we found very little private financing of long-term care.
Out-of-pocket spending for nursing home or home care in Texas is the
exception instead of the rule. Less
than five percent of people over the age of 50 in Texas own private insurance
that will pay for long-term care. The
use of reverse mortgages to tap the enormous home equity wealth of seniors in
order to fund their long-term care is virtually unknown. Why
is it that the lion's share of long-term care financing falls on a fiscally
strained public assistance program like Medicaid? We
found the answer by studying Medicaid eligibility rules and by speaking with the
field workers who make the eligibility determinations. Bottom line, Medicaid-financed
long-term care in Texas is easy to obtain.
Despite the conventional wisdom that Medicaid is welfare with draconian
income and asset spend-down requirements, the truth is very different. Anyone with income below the cost
of nursing home care can qualify based on income. There is no limit on assets held
in exempt form, such as home equity up to $500,000 plus a car, term life
insurance, home furnishings, and prepaid burial expenses of any value. Married couples get even more
generous income and asset eligibility rules allowing a healthy spouse in the
community to retain more than $2500 per month of the institutionalized spouse's
income and sometimes hundreds of thousands of dollars in otherwise countable
assets because of a program called the Extended Protected Resource Amount (EPRA). And
of course, if you have way too much money for Medicaid, you can hire one of the
legal or financial advisors who specialize in artificial self-impoverishment to
qualify. We
Googled "Medicaid planning in Texas" and got over one million hits.
Here's an example: "With
proper Medicaid Planning, you and your loved one can keep either all or most of
your assets and still qualify for Medicaid. We NEVER charge a fee!! We have
helped families save hundreds of thousands of dollars each year, keep their
assets, keep their homes and ranches, keep their rental properties, pass their
property on to their kids and grandkids AND STILL qualify for Medicaid in a
Nursing Home or an Assisted Living Community in Texas!!" Medicaid
long-term care eligibility is way too complicated for me to explain in the 12
minutes available to me today, but my goal right now is only to pique your
interest and persuade you to read our report when it comes out. So,
here's what we concluded and what we recommend. Long-term
care in Texas IS hugely expensive and will become far more so as time goes on
and the Baby Boom generation ages. Government
programs like Medicaid and Medicare can't continue to pay most of the cost of
formal long-term care. Medicare,
for example, has a $71 trillion unfunded liability. It won't continue to cover as much long-term care as it has
in the past. Social
Security has a $15 trillion unfunded liability. It won't be able to offset such a large portion Medicaid
long-term care costs as it has in the past. Something
must be done to attract new sources of long-term care financing into the system
to supplement and relieve the fiscal pressure on Medicaid and Medicare. There
are only three such sources of new financing:
out-of-pocket expenditures, long-term care insurance, and home equity
conversion or reverse mortgages. But
no one can reasonably expect the public to plan early and save, invest or insure
for long-term care when they can ignore the risk, avoid the premiums for private
insurance, wait to see if they every need long-term care and then easily pass
most of the financial liability on to Medicaid while passing their wealth,
mostly home equity, on to heirs. So,
the solution is to target Medicaid to people most in need, tighten income and
asset eligibility rules, recover from recipients' estates, and use the savings
to educate the public and incentivize them to insure privately for long-term
care or use reverse mortgages to fund their care. To
do anything else is to leave Medicaid what it has become today:
free inheritance insurance for the baby boom generation. Now,
Texas has already taken some steps in the right direction.
The state has implemented the new restrictions on eligibility passed in
the Deficit Reduction Act of 2005. For
example, limiting the previously unlimited exemption for a home and all
contiguous property to half a million dollars and stopping some of the most
egregious "Medicaid planning" abuses. And
the state has finally implemented an estate recovery program that was mandated
by federal law in 1993. But
much remains to be done. To find
out precisely what, we urge you to read our new report when it is released. And
if this subject interests you, feel free to visit the Center for Long-Term Care
Reform's website at www.centerltc.com
where you'll find many articles and reports explaining these issues in much
greater detail. Thanks
for your attention. |
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