"The Mote in LTC's
Eye"
by
Stephen A. Moses
Stephen
Moses, President of the Center for Long-Term Care Financing in Bellevue,
Washington, delivered a prototype of the following keynote address at a
luncheon on Thursday, November 16, 2000 before 600 plus long-term care
insurance agents and brokers attending the National LTC Forum at Caesar's
Palace in Las Vegas, Nevada.
Disclaimer: The following speech defends private
long-term care insurance against excessive and biased criticism often leveled
against it by well-meaning senior advocates, public officials and members of
the media. As a 501(c)(3) charitable
nonprofit organization, the Center for Long-Term Care Financing does not sell
or market long-term care insurance or any other commercial product. We advocate objective scrutiny and
legitimate criticism of both private long-term care financing alternatives
(such as LTC insurance) and public financing alternatives (such as Medicaid and
Medicare), because both revenue sources are critical to restore a healthy
long-term care service delivery system.
Good
afternoon, ladies and gentlemen:
I
guess it's a little ironic to convene a meeting intended to help people avoid
impoverishment … at a casino in Las Vegas.
But then, those of us who work in long-term care have always known it's
a crap-shoot.
I
want to acknowledge Greg Luque and the LTC Forum (www.ltcforum.com). It has been my privilege to speak at all but
one of Mr. Luque's regional forums this year.
I think these high-quality training sessions for long-term care
insurance agents and brokers go a long way to improve the knowledge,
competence, and reputation of this business and its practitioners.
I'm
from the Center for Long-Term Care Financing in Bellevue, Washington. The Center's mission is to pursue public
policy that targets scarce public resources to the neediest while encouraging
everyone who is young, healthy and affluent enough to take responsibility for
their own long-term care by saving, investing and insuring.
In
a nutshell … our mission is to get the government to save Medicaid for the
indigent by encouraging private insurance for everyone else. I'll have more about the Center for
Long-Term Care Financing later.
I
usually talk about public policy and specifically about what we need to do to
assure quality long-term care for all Americans, to save Medicaid and Medicare,
and, by the bye, to grow the long-term care insurance market in the process.
But
you can read about that in our published reports and in "LTC
Bullets," our free online newsletter at www.centerltc.org. I want to talk about something completely
different today.
Maybe
you've heard this quote from the Bible before:
"And why beholdest thou the mote that is in thy brother's eye, but
considerest not the beam that is in thine own eye?"
Now,
don't worry, I'm not going to go religious on you today, but that passage says
a mouthful. I always took it to mean
that most people tend to be far more judgmental about minor deficiencies in
others than they are critical of major shortcomings in themselves.
That
got me thinking about one of my biggest pet peeves. I think that criticism of the long-term care insurance industry,
including its agents, brokers and carriers is often, overblown, biased, and
unfair.
It
seems to me that the media, senior advocates, politicians and bureaucrats are
excessively critical of private long-term care insurance and not nearly
critical enough about Medicaid and Medicare
In
other words, I think they behold the mote in the private sector's eye
(especially private insurance and most especially long-term care), but they
ignore the beam in their own.
Frankly,
those of you who work so hard at the honorable profession of protecting people
from long-term care risk and welfare dependency should stop taking it sitting
down … instead, stand up and fight back.
My
purpose in this talk is to explain why and how I believe long-term care is
being unfairly attacked; who is doing the attacking and why; and what I think
ought to be done about it.
Surely,
you've noticed the problem. Slanted,
inaccurate coverage of long-term care insurance and of long-term care service
delivery is closer to being the rule rather than the exception in the national
and local media.
The
Center for Long-Term Care Financing has published several LTC Bullets in our
"Reality Check" series correcting gross errors and misinterpretation
in numerous national media including Money Magazine, SmartMoney, Barrons, the
New York Times, the Wall Street Journal and many others over the years. (Thanks to Eileen Tell of the LTC Group for
her contributions to that series.)
Even
if we don't publish a Bullet, we usually write letters to the authors of
articles on long-term care financing, whether good or bad, positive or
negative. We thank them for covering
such an important subject. We tactfully
explain what they may not have gotten exactly right in the article. We give them some interesting new ways of
looking at the subject. We send them
our reports, sign them up for the "LTC Bullets," and encourage them
to interview us next time they write on the subject.
It's
like planting seeds and we ultimately reap a harvest of good publicity. So, we're proactive and positive, but I think
we all need to get even tougher in standing up to the critics when they are
unfair and misleading.
Let
me give you a few examples of bias against long-term care insurance and in
favor of Medicaid estate planning.
I
was invited to speak at the annual financial planning conference of the Society
of American Business Editors and Writers in Tampa, Florida recently.
What
a great opportunity! I had 20 minutes
to regale 150 of the leading business journalists in the USA about the merits
of long-term care insurance and about the downsides of Medicaid planning abuse.
The
message seemed very well received, indeed.
But then the other two speakers on the panel got their chance. Here's what they said:
Alan
Kanner, a law professor from Tulane University, who has litigated against a
handful of long-term care insurance companies for raising rates on in-place
business said … "Long-term care insurance is fraud." He gave no explanation. He made no qualification. Just, your product is fraudulent.
Well,
so, I'm sitting there in shock, eager to get my chance for rebuttal, when the
next speaker begins.
That
was Martin Weiss, the guy who rates insurance companies. You are probably familiar with his
company. Martin said, to paraphrase,
"All LTC agents dupe the public."
Again,
no explanation and no qualification.
Just, you're all a bunch of greedy, slimeballs (my word not his, but his
connotation) who tell the public whatever lies or misrepresentations it takes
to sell your product.
By
now, I'm starting to become more than a little upset, so I grab back control of
my feelings and calmly and methodically acknowledge the grain of truth in their
criticism while rebutting the overkill and neutralizing the thrust of their
arguments.
Are
these people stupid and malicious?
(Pause for audience reaction.)
Wait, wait, ladies and gentlemen.
That was a rhetorical question.
You're not supposed to answer.
No,
they aren't stupid and malicious, but they are ignorant and irresponsible.
They
remind me of the blind men trying to describe an elephant. It all depends on what part of the elephant
they touch.
Attorney
Kanner sues insurance companies for raising rates on in-place business. Does the long-term care insurance profession
have a challenge with rate stability?
Yes. For sure. But you're working on it and you are making
progress, as witness the National Association of Insurance Commissioners'
action to discourage rate increases.
Mr.
Weiss is upset because agents aren't always as well-trained as they should be
and the insurance industry does have a few bad apples. But that is true of any profession.
Is
there a mote in LTCI's eye?
Yes,
rate stability and agent education do stand out as challenging problems. But the industry and individual companies
and agents are taking action to solve these problems
The
reality is very different from the hype.
Here's a quote from a brand new report from the Health Insurance
Association of America …
"The
overwhelming majority of buyers and non-buyers alike felt that the agent was knowledgeable,
adept at the available coverage options, and a good listener. They also believed that the agent
recommended the policy best suited to their needs."
The
point is that critics like Attorney Kanner and Mr. Weiss know just enough about
some narrow range of long-term care insurance issues to be dangerous.
They
don't see the big picture. They advance their own interests with the media by
being as critical of you as possible.
And they never apply the same level of scrutiny to LTCI's biggest competitor--government
financing of LTC.
Of
course, the media eats it up. There's
no story in telling people what's right with long-term care insurance or what's
wrong with free government long-term care entitlements.
It
serves their purpose for you to be the bad guys and the government and
advocates to be the good guys.
When
the media fails in its responsibility to be objective, bashes private insurance
and gives public long-term care financing a pass, the result is a dangerous and
mistaken message for the public:
"Don't worry about insuring for the risk of long-term care. The government will provide."
OK,
so at least I turn a few of the reporters in the audience around, make a lot of
good contacts, sign up several folks for "LTC Bullets," and develop
some long-term relationships with key national business columnists.
I
get a good night's rest, wake up in the morning ready to forge on against all
odds, when I switch on the TV and catch a snatch of the Today Show.
Who's
on but Vincent Russo, former president of NAELA, the National Academy of Elder
Law Attorneys, the trade association of lawyers who artificially impoverish the
elderly to get them on Medicaid so they don't need long-term care insurance.
Now,
I've known Vinnie for years. He's a
nice guy and very sincere, but he makes his living putting people on welfare
who could afford to pay for their own long-term care.
One
time, I saw him stage a comical skit at a NAELA conference in New York in front
of hundreds of Medicaid planners. In
the skit, an elder law attorney found a way to get Medicaid benefits for a
family by making $652,000 disappear virtually overnight. That included a vacation home in Florida
that went legally poof! for purposes of Medicaid planning.
Some
of these attorneys in major cities charged upwards of $275 an hour back in
1996. I’d be afraid to guess what
they’re charging now to artificially impoverish people.
Matt
Lauer, the interviewer, asked him a series of questions about long-term care
risks and costs. Every one of Vinnie's
answers encouraged Americans to plan early to qualify for Medicaid. Not one of his answers mentioned saving,
investing or insuring to be able to pay privately for LTC.
I'm
going to share with you an extended quote from that interview, because I
believe you need to know what your are up against and why we all need to work
together to fight this kind of thing:
Having
established that LTC could cost as much as $100K per year, here's how the
interview proceeded:
LAUER: When you
talk about careful estate planning as a way to pay for these situations, what
exactly are you talking about?
Mr. RUSSO: Well,
we're talking about Medicaid planning because the only program that covers
long-term care is Medicaid. And the
government has told us that the eligibility standard for Medicaid is poverty
level, so you can only have a few thousand dollars in your name. So in order to protect yourself, you need to
implement Medicaid planning so that your assets can be protected while you
access Medicaid to pay for long-term care.
LAUER: One of
the ways to do that is to transfer assets to a spouse. Is this complicated?
Mr. RUSSO:
It's--it's not complicated in concept.
Assets can be transferred between spouses without affecting the Medicaid
eligibility of the ill spouse…
LAUER: What
about people who are single and don't have a spouse to transfer assets to?
Mr. RUSSO: Then
we need to look at 'rule of halves' planning.
It's another option for seniors.
LAUER: What
exactly is that?
Mr. RUSSO:
OK. The senior transfers half of
his assets to his children while keeping the other half to pay for nursing home
care. When the money runs out--the half
that was kept--then the senior can go on Medicaid.
LAUER: And
that's legal? The government allows you
to do that?
Mr. RUSSO:
Absolutely legal.
LAUER: Retaining
a life estate. What exactly is that?
Mr. RUSSO: This
is a wonderful opportunity for seniors.
The American dream is to own a house.
So here the senior can protect their home by transferring it to their
children while retaining the right to live there. That is called a life estate.
The senior then can access Medicaid without losing their home.
LAUER: What's an
irrevocable trust?
Mr. RUSSO: An
irrevocable trust is a trust that cannot be changed or revoked once it is
established.
LAUER: Is this
something you put assets into?
Mr. RUSSO:
Yes. You would put in--assets
into an irrevocable trust to protect them while keeping the right to get the
income. Seniors live on their income,
so this is a wonderful opportunity to put assets into a trust and retain the
right to keep the income.
LAUER: But,
again, you need time to set that up.
You can't do that at the moment of crisis.
Mr. RUSSO:
That's correct. There's a
waiting period.
LAUER: What's an
exempt transfer?
Mr. RUSSO: An
exempt transfer is when a senior can take assets out of their name without any
waiting period…
LAUER: And
finally, spend-down rules. What does
that mean?
Mr. RUSSO: OK,
seniors in crisis. They have
money. They are allowed to spend that
money on certain items. The two common
ones are prepaying a funeral. Medicaid
says that when the senior goes on Medicaid, they're not going to have enough
money to pay for their own funeral, so prepaying the funeral is important. The other would be to make repairs in your
home so that your spouse or a child who is disabled or a minor child can
continue to live there.
LAUER: But,
again, all of these things take careful planning. You need time. You
shouldn't wait until the last minute, and it's important to see probably an
elder-care attorney to help you along the road?
Mr. RUSSO:
That's absolutely right. Elder
law attorneys can help seniors protect their assets.
LAUER: Vincent
Russo. Mr. Russo, thanks very much.
Ladies
and Gentlemen: have you ever heard such
a puffball interview for long-term care insurance? Anyone advocating private insurance would have been raked over
the coals.
But
someone advocating Medicaid planning gets the royal treatment.
Just
a reminder: Medicaid is a means-tested
public assistance program, welfare. It
has a dismal reputation for problems of access, quality, reimbursement,
discrimination and institutional bias.
Attorneys
who artificially impoverish affluent seniors to get their clients (usually the
seniors' heirs) an early inheritance and themselves a big fee do a major
disservice to the elderly, to the taxpayers, and to the reputation of the bar.
A
few days later, I attended an elder care financial planning conference
sponsored by the AICPA, the American Institute of Certified Public Accountants.
Some
CPAs don't like to see Medicaid planning attorneys and insurance agents getting
all the business from long-term care so they are looking for ways to get in on
the action too.
At
this conference, they had two speakers talk about long-term care financing
options. These speakers were
brothers. They are in business
together. They are both members of
NAELA. Their name is spelled
KROOKS.
I
call these fellows the "Medicaid Krooks."
Now
brother Bernie Krooks speaks about Medicaid Planning which is an important part
of their practice. He encourages the
audience to move into this lucrative field.
Brother
Howard Krooks speaks on long-term care insurance. Instead of encouraging and promoting the private insurance
alternative, however, his message is that most people are "too rich or too
poor; too young or too old" for long-term care insurance. So insurance is a solution only for very few
people, he says.
The
message is pretty obvious. If you're in
this business to make a lot of money, you need to work the Medicaid side of the
street, not the long-term care insurance side.
Now,
long-term care insurers take a lot of criticism, but it's nothing like what
long-term care providers take … nursing homes, especially. You've heard the horrible stories and seen
the awful pictures.
You
may have heard speakers even from the long-term care insurance industry railing
about how nursing homes, assisted living companies, and home health agencies
have "abused their public trust" and ripped off Medicaid and
Medicare.
I
don't think any industry has a bigger problem with biased media and bad public
relations than long-term care service providers … maybe the tobacco industry.
Is
it fair and balanced? No way. Sure they have their bad apples, just like
long-term care insurance does and every other business. But consider what they are struggling
against…
The
vast majority of all formal, professional long-term care services in the United
States are paid for by Medicaid or Medicare.
Medicaid
often pays less than the cost of providing the care. Medicare has cut back severely over the past few years.
When
you're operating at a loss, you can't make it up in volume. (Pause for effect.) Yet 80% of all patient days in nursing homes
are paid for by Medicaid.
[NB: Medicaid pays half the dollars and
contributes toward two-thirds of the residents, but because Medicaid recipients
tend to be long-stayers, Medicaid pays something toward the cost of four-fifths
of all nursing-home patient days. That
is the critical number, because if Medicaid pays even one dollar per month of a
resident's care, the nursing home gets nothing more than the Medicaid
reimbursement rate, which is often less than the cost of providing the care.]
Consequently,
the long-term care service delivery industry is struggling. Between 10% to 20% of nursing home beds are
in bankrupt facilities. Government
reimbursements are low and not rising.
The Boren Amendment, which used to assure a minimal level of financing,
has been repealed.
Furthermore,
the heavy hand of government regulation weighs oppressively on long-term care
providers. As one told me recently,
Uncle Sam demands "Ritz Carlton care at Motel Six rates."
The
same attorneys who put their well-to-do clients on Medicaid turn right around
and sue the Medicaid nursing facilities when they provide poor care.
Liability
insurance premiums for nursing facilities are skyrocketing because of these
lawsuits to the point where many homes are forced to drop coverage altogether.
Staffing
is also a huge problem. When people can
make more money working with fresh vegetables and soda pop at a Taco Bell, how
are you going to get them to work in a nursing home with blood and feces?
Now,
in spite of all these challenges, thousands of wonderful people struggle to
provide competent and compassionate care to our frail elders in long-term care
facilities throughout the United States.
I've
been attending the national and state conferences of the American Health Care
Association, the American Association of Homes and Services for the Aging, and
the Assisted Living Federation of America for many years.
I
know these people. They are sincere,
hard-working, dedicated professionals struggling to do the best they can
against enormous odds. Yet, they too
receive terrible publicity.
To
help you understand what the long-term care service delivery profession is up
against, I urge you to read the Center for Long-Term Care Financing's newest
white paper titled "The LTC Triathlon:
Long-Term Care's Race for Survival." That report will put meat on the mere bones of the problem, which
I've been able to share with you today.
You can read the report on the Center’s website in .pdf format with
Adobe Acrobat at:
http://www.centerltc.com/pubs/triathlon.pdf.
Now,
to close, let me try to make sense of all this for you.
The
media loves to attack the private sector.
They especially love to attack insurance and long-term care providers.
But,
ladies and gentlemen, the private sector is not the problem.
The
problem is public financing of long-term care and virtually no scrutiny is
directed toward that direction.
In
a nutshell, Medicaid and Medicare have anesthetized the public to the risk of
long-term care. By paying for most
nursing home care and much home health, they have sent the message that
long-term care is nothing to worry about.
Consequently,
people don't buy much long-term care insurance and they don't shop for it until
they are old and the product is more expensive.
More
importantly, many groups profit from the status quo in long-term care
including…
Government … bureaucrats and politicians whose
agencies and power grow proportionately with the failure of their programs.
The Entitlement lobby … senior advocates and
academics who advocate more and more public spending for long-term care while
slighting personal responsibility and debunking private financing.
Enablers … Medicaid planners, nursing home
litigators, and a minority of providers who abuse Medicaid and Medicare and
gainsay private insurance.
This
is what the private sector is up against in long-term care…a huge welfare-based
status quo, financed by tax-payers and supported by stakeholders who profit
from the system, while pursuing their own narrow interests, at the expense of
good public policy.
What
is the Center for Long-Term Care Financing trying to do about this situation
and how?
We've
published three major public policy reports that elucidate these problems and
propose solutions. All can be found on
the Center’s website in .pdf format.
These include:
"LTC
Choice: A Simple, Cost-Free Solution to
the Long-Term Care Financing Puzzle," 1998 (http://www.centerltc.com/pubs/CLTCF%20Report)
"The
Myth of Unaffordability: How Most
Americans Should, Could and Would Buy Private Long-Term Care Insurance,"
1999 (http://www.centerltc.com/pubs/Myth%20Report.pdf)
"The
LTC Triathlon: Long-Term Care's Race
for Survival," 2000
(http://www.centerltc.com/pubs/triathlon.pdf)
We
publish the free online newsletter "LTC Bullets" to which we
encourage everyone to subscribe and forward copies to reporters, legislators
and public opinion leaders.
We
call the Bullets "intellectual water torture." If we just keep dripping reason, logic and
evidence on the powers-that-be long enough, they are bound to respond sooner or
later.
The
Center's reports and an archive of nearly 250 "LTC Bullets" are
available on our website at www.centerltc.org
Center
for Long-Term Care Financing staff speak frequently at professional conferences
in the fields of insurance, gerontology, law, accounting, and financial
planning. We also exhibit at these same
conferences for the purpose of bringing a wide range of professionals into the
Center's public policy ambit.
So
come visit us at our booth and on the web at www.centerltc.org. Support the Center financially if you
believe in our mission and how we are pursuing it. The Center is a 501(c)(3) charitable non-profit organization.
But
most importantly, be proud of your profession.
Practice
it with the highest ethical standards.
And
learn everything you can about long term care service delivery and financing.
Then
… don't take it anymore … stand and fight … write letters to the editor … call
your state legislators and congressional representatives … get involved at the
local level … educate the public.
Use
the Center for Long-Term Care Financing's materials … route our LTC Bullets to
everyone you want to influence … encourage them to subscribe … tell reporters
to call and interview us.
In
time, you can improve the image of long-term care and long-term care insurance
agents, but even more important, you can improve the reality as well.
You
can change public policy.
You
can get more Americans insured.
You
can relieve the burden on Medicaid and Medicare.
You
can breathe more financial oxygen into the providers so they can give better
care.
You
can reduce the burden on taxpayers.
With
your support and encouragement, the Center for Long-Term Care Financing will be
around to help you achieve these objectives.
But
you must act fast. The boomers are
moving through history like a pig in a python.
America does not have a lot of time to win The LTC Triathlon!
So
get with it … spread the word … and you'll do very well while doing a lot of
good.
Thank
you for your attention today.