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############################# Updated, Monday, December 9, 2013, 1:20 PM (Pacific) Seattle— ############################# ANNUITY ABUSE AND LTC NEWS AND COMMENT LTC Comment: Today's lead article is about an appeals court case argued by Bill Browning, a former President of the National Academy of Elder Law Attorneys whom I debated eleven years ago at one of Jesse Slome's national conferences: "Listen to "The Great Debate": Steve Moses v. NAELA (National Academy of Elder Law Attorneys) President-Elect Bill Browning, held at the National LTCi Producers Summit, November 18-19, 2002 - St. Louis, Missouri." The net result of Mr. Browning's "win" in this case is that his client diverted $175,000 from Medicaid spend down rules thus transferring the cost to taxpayers at the expense of a program intended to help the poor. In the greater scheme of annuity abuses, this one is small potatoes. I've documented examples of $450,000 and $900,000 annuities in recent reports available here and here. In fact, there is no limit on how much money can be divested through Medicaid compliant annuities. This is a quote from a Virginia Medicaid eligibility worker frustrated by the problem of annuity abuse: "Medicaid is a program that pays for pretty much anyone who needs care and knows how to get it, not just for the poor." (Source: Stephen A. Moses, "The Index of Long-Term Care Vulnerability: A Case Study in Virginia," The Thomas Jefferson Institute for Public Policy, November 2013, p. 7; http://www.thomasjeffersoninst.org/files/3/LongTermCare.pdf.) December 2013, "Community Spouse's Purchase of Annuity Before Medicaid Determination Is Not Improper Transfer [link]," ElderLaw Answers Quote: "In a case argued by Ohio ElderLawAnswers member attorney William Browning, the U.S. Court of Appeals for the Sixth Circuit rules that an annuity purchased by a community spouse before a Medicaid eligibility determination is not an improper transfer and that the annuity does not need to name the state as a remainder beneficiary. Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25, 2013)." LTC Comment: Waste, fraud and abuse are rampant in Medicaid's long-term care financing program, but the worst of these is abuse that is legal. Waste can be fixed and fraud can be prosecuted, but legal abuse goes on and on unless and until Congress acts. Yet, year after year, nothing happens to close this gaping loophole and the Centers for Medicare and Medicaid Services (CMS) remains silent about Medicaid annuity abuse. ############################# 12/7/2013, "Long Term Care Insurance Association Praises Virginia LTC Vulnerability Report [link]," by Jesse Slome, American Association for Long-Term Care Insurance Quote: "The Association director praised a new report researched and written by Stephen Moses, president of the Center For Long-Term Care Reform and presented by the Thomas Jefferson Institute. 'This is a very well prepared look at the current environment that draws some very dire conclusions if we continue to hide our heads in the sand,' Slome explains. 'Kudos to Moses and the Center for another excellent look at the problem in an extremely fair and balanced way.'" LTC Comment: Thanks to our friends at AALTCI for this endorsement. ############################# 12/6/2013, "Government Role in Long-Term Care: It's Getting Old," by Stephen A. Moses," Georgia Public Policy Foundation Quote: "Georgia should seek ways to return Medicaid to its original intent: a long-term care safety net for people in need. Without that, Medicaid will remain free inheritance insurance for relatively prosperous heirs, deflating their sense of urgency about long-term care risk and cost, and resulting in too many ending their lives on Medicaid for that program to survive." LTC Comment: This is the op-ed I wrote for the Georgia Public Policy Foundation announcing publication of our report titled "The Index of Long-Term Care Vulnerability: A Case Study in Georgia [link]." ############################# 12/6/2013, "2014 Long Term Care Insurance Tax Guide Published by AALTCI," by Jesse Slome, American Association for Long-Term Care Insurance Quote: "Long term care insurance premiums remain one of the tax deductible expenses few individuals are aware of according to the American Association for Long Term Care Insurance. A new guide produced by the organization explains the current rules and the new IRS tax deduction limits for 2014." LTC Comment: Heed and lead. ############################# 12/5/2013, "Nursing home $10,000 suicide fine upheld," by Dave Surico, McKnight's LTC News Quote: "A federal appeals court has upheld a $10,000 fine against a skilled nursing facility for leaving a suicidal patient unattended, who then walked out of the facility and killed himself. The U.S. Court of Appeals for the Ninth Circuit said the Department of Health and Human Services' ruled that the decision (Del Rosa Villa v. Sebelius, 2013 BL 330965, 9th Cir., No. 12-71685, 11/26/13) to fine petitioner Del Rosa Villa was supported by substantial evidence. The court denied a petition to overrule decisions that led to the fine." LTC Comment: Care to make a guess whether this facility was mostly Medicaid or mostly private pay? ############################# 12/5/2013, "Russian diplomats charged in $1.5M Medicaid scheme," by Associated Press, Politico Quote: "More than three dozen Russian diplomats and their spouses enjoyed luxury vacations and spent tens of thousands of dollars at the finest stores as they lied about their incomes to get the government to pay their health care bills, federal prosecutors in New York said Thursday." LTC Comment: Medicaid planning: it's not just for elder law attorneys anymore. ############################# 12/4/2013, "How is Medicare Advantage really doing?," by Allison Bell, LifeHealthPRO Quote: "Two witnesses painted completely different pictures of the state of the Medicare Advantage program today at a House Energy & Commerce health subcommittee hearing." LTC Comment: Who are you going to believe? An employee of a research firm that depends on government grants or the former chief of the Congressional Budget Office? ############################# 12/4/2013, "Nursing homes lagging in palliative care, researchers say," by Dave Surico, McKnight's LTC News Quote: "Nursing homes have lagged in the area of palliative care, and need to take a seat at the table, according to researchers in a Health Affairs blog. The lack of intertwinement between nursing homes and palliative care is due to a number of factors: regulations that favor rehabilitation, inadequate staff education around palliative care, financial disincentives, lack of reimbursement and misconceptions, write authors Mary Ersek, Ph.D., RN, David Stevenson, SM, Ph.D., and Justine Sefcik." LTC Comment: All sorts of perverse incentives are built into government financed long-term care which makes providers, instead of patients, the customers. ############################# 12/4/2013, "Genworth Says Higher Premiums Blunt Long-Term Care Errors," by Dan Reichl, Bloomberg Quote: "Genworth Financial Inc., the largest seller of long-term care coverage, is counting on periodic rate increases of 2 percent to 4 percent to maintain profit targets, after larger insurers retreated from the business to limit risk. 'I don't think it's prudent to be in this business unless you can, over time, re-rate policies to reflect the difference between how actual reality played out versus your original assumptions,' Chief Executive Officer Tom McInerney said today in an interview. 'You have to ultimately have a return in the mid-teens range. If it's less than that, on a risk-adjusted basis, investors shouldn't invest in the business.'" LTC Comment: "If at first you can't succeed, try, try again." The irony is that government has set aside nothing to ensure it will be able pay its entitlement promises. Yet the private sector is criticized for doing the responsible thing, i.e., making sure reserves will suffice to pay future claims. ############################# 12/3/2013, "Carriers slam Medicare Advantage moves: AHIP says carriers should be able to cut MA networks [link]," by Kathryn Mayer, BenefitsPRO Quote: "Because of the Patient Protection and Affordable Care Act, seniors enrolled in Medicare Advantage plans are paying higher premiums and experiencing a reduction in benefits and disrupted coverage. And that's just the beginning. That's the dire message from America's Health Insurance Plans, which predicts will hit seniors even harder over the next two years." LTC Comment: Unfortunately, the insurance industry cozied up to the Administration to help pass the Affordable Care Act (aka ObamaCare) and now we're all living with the disastrous consequences: higher premiums for worse coverage. The private sector (Charlie Brown) never seems to learn that government (Lucy) always offers a sweet deal (the football) and then reneges after companies adapt to take advantage. ############################# 12/3/2013, "Post-hospital care spending jumps," by Dave Surico, McKnight's LTC News Quote: "Bundled payment experiments are growing while Medicare spending on nursing homes continues to come under scrutiny, according to a Kaiser Health News/Washington Post report. Widely varied care, additional services and costs from state-to-state have drawn the attention of regulators." LTC Comment: The risk is that cutting Medicare payments to nursing homes will undermine access to and quality of care funded (at less than the facilities' cost of care) by Medicaid. ############################# 12/3/2013, "North Dakota drafts short-term care insurance regs," by Allison Bell, LifeHealthPRO Quote: "The North Dakota Department of Insurance may add a section on short-term care insurance (STCI) to the state administrative code." LTC Comment: Better some insurance than none. ############################# 12/2/2013, "NIH deposits first batch of genomic data for Alzheimer's disease [link]," NIH News and Events Quote: "Researchers can now freely access the first batch of genome sequence data from the Alzheimer's Disease Sequencing Project (ADSP), the National Institutes of Health (NIH) announced today. The ADSP is one of the first projects undertaken under an intensified national program of research to prevent or effectively treat Alzheimer's disease." LTC Comment: One more step in a Sisyphean effort to conquer Alzheimer's. ############################# 12/2/2013, "Doctors Face A 24% Pay Cut In Both Medicare And Medicaid Reimbursements [link]," by Merrill Matthews, Forbes Quote: "In 1997 Congress passed legislation, known as the 'sustainable growth rate' (SGR), to try and reduce Medicare spending. If Medicare spending grew faster than a predetermined amount, doctors' Medicare reimbursements would be cut the next year by enough to offset the overspending. Not surprisingly, Medicare spending didn't hit the target rate, and, again not surprisingly, Congress didn't want doctors to take the financial hit. So Congress has passed legislation, known as the 'Doc Fix,' multiple times to postpone the cuts and keep the reimbursement levels roughly the same. But those postponed deficits keep piling up, and come January doctors will see, on average, a 24 percent cut in Medicare reimbursement levels. And here comes the double whammy: Medicaid reimbursements will face the same 24 percent cut." LTC Comment: The Center for Long-Term Care Reform proposed a solution to the "Doc Fix" problem that would save $30 billion per year and solve the LTC financing problem too. Read it here. ############################# 12/1/2013, "Oversight of nursing home trust funds limited," by Peter Eisler, USA TODAY Quote: "Many states do not require criminal background checks on nursing home staff who manage residents' trust funds, and few demand audits of those accounts - a regulatory gap that contributes to scores of cases in which the money is stolen or mismanaged. Nearly every state requires background checks for nursing home staff in caregiving roles, but 20 states don't apply that requirement to office workers who do not routinely have direct patient contact, a USA TODAY review of state laws finds. Those office employees typically manage the trust accounts that nursing homes must maintain for residents who request that the facility safeguard their money." LTC Comment: And why must nursing homes maintain "trust accounts" for residents? Because 2/3 of their residents are on Medicaid and the nursing homes have to help ensure that Medicaid residents' assets never exceed $2,000 and throw them off the program that pays for their care. Private-pay patients don't need nursing home trust accounts and don't have to worry about crooked nursing home employees ripping them off. ############################# 11/29/2013, "Why your clients need a care coordinator," by Margie Barrie, LifeHealthPRO Quote: "Q. The policies I'm selling contain a care coordinator benefit. How can I explain the value of that benefit to clients? A. Having hired a care coordinator for my mother, I am a big advocate of that benefit. When I tell my mother's story to clients, they really understand how valuable a benefit caregiving is." LTC Comment: Someone should do a study that compares the care coordinator benefit in a private long-term care insurance policy with whatever benefit, if any, is available under Medicaid. ############################# 11/28/2013, "Large discrepancies found in Medicare spending on post-hospital care [link]," by Jordan Rau, Washington Post Quote: "After years of trying to clamp down on hospital spending, the federal government wants to get control over what Medicare spends on nursing homes, home health services and other medical care typically provided to patients after they leave a hospital." LTC Comment: Great idea except that the only thing enabling nursing homes to provide custodial long-term care to two-thirds of their residents--who rely on Medicaid at less than the cost of providing the care--is that Medicare has paid very generously in the past. Take that away and the whole government LTC financing scheme collapses. ############################# 11/27/2013, "Long-term care: The silent Medicaid killer," by Kathryn Watson, Watchdog.org Quote: "ALEXANDRIA, Va. — A silent threat to the commonwealth looms as the baby boomer generation gets older — long-term care costs like nursing home expenses, paid for by taxpayer-funded Medicaid. "'Income, I found, is almost never an obstacle to qualifying for Medicaid,' said Stephen Moses, a former Medicaid state representative who is now president of the Center for Long-Term Care Reform and recently wrote a report on the state of long-term care in Virginia. [Emphasis in the original] "Moses said Virginians need to take personal responsibility to save and find ways to finance nursing home care in the future, and lawmakers need to put more restrictions on eligibility so long-term care doesn't cripple the system." LTC Comment: This article reviews and recommends the first of our three state-level studies introducing a new analytical tool: "The Index of Long-Term Care Vulnerability." Watch for subsequent reports applying the index to Georgia and New Jersey. ############################# 11/26/2013, "Group wants Virginia to tighten Medicaid rules," by Chelyen Davis, The Fredericksburg Star Quote: "A conservative think tank is advising Virginia to tighten its rules for Medicaid coverage of long-term care to discourage reliance on the public program. The Thomas Jefferson Institute for Public Policy, which advocates for public policy 'based on a philosophy of limited government, free enterprise and individual responsibility,' said in a report Tuesday that Virginia is going to see big growth in the over-85 population in the next 40 years." LTC Comment: The Thomas Jefferson Institute, which published our report reviewed by this article, is more accurately described as a libertarian, not as a conservative, think tank. ############################# 11/26/2013, "Inspector General Scrutinizes LTC Industry on Rehospitalizations," by Jason Oliva, Senior Housing News Quote: "Government inspectors say there's not enough attention being paid to the readmissions problem in long-term care settings, specifically nursing homes. A recent study by the Office of the Inspector General (OIG) found that of the 825,765 Medicare residents who stayed in nursing homes for at least one day in fiscal year 2011, 24.8% experienced hospitalizations." LTC Comment: Frail, infirm and elderly people need a lot of care, both acute and long-term. It's very hard to say how much is too much. ############################# 11/26/2013, "How a toddler's brain may indicate if they'll get Alzheimer's in old age: Children with a genetic risk have brains that develop differently [link]," by Anna Hodgekiss, MailOnline Quote: "Toddlers who have a genetic risk from Alzheimer's have brains that develop differently, new research suggests. Infants who carry a gene associated with increased risk of the condition tend to have differences in brain development compared to children without the gene. The gene variant is called APOE-E4 - a known risk factor for late-onset Alzheimer's - and researchers say this study shows some of the earliest differences in people who have it." LTC Comment: A whole new age demographic for the LTCI market to target.
############################# Updated, Friday, December 6, 2013, 1:10 PM (Pacific) Seattle— ############################# LTC BULLET: "THE INDEX OF LONG-TERM CARE VULNERABILITY: A CASE STUDY IN VIRGINIA" PUBLISHED LTC Comment: Can the Commonwealth of Virginia's Medicaid-based long-term care system survive? Hard questions asked, analyzed and answered after the ***news*** *** SEND STEVE TO HEALTH CARE ROUNDTABLE in Richmond, VA. The Thomas Jefferson Institute for Public Policy (TJI) published our major report titled "The Index of Long-Term Care Vulnerability: A Case Study in Virginia." This study introduces the public policy world to our new "Index of Long-Term Care Vulnerability" which enables analysts to answer objectively the question: can LTC financing survive in its current and tending form? TJI is sponsoring an important "Health Care Roundtable" on December 12. Steve Moses will present our report's findings and join the discussion with some of the top health care policy analysts in the country, including Grace-Marie Turner of the Galen Institute, Michael Tanner of the Cato Institute and Bob Helms of the American Enterprise Institute. The Center for Long-Term Care Reform seeks to raise funds to support Steve's trip to give this presentation and contribute to this important health policy conversation. Special deal: Pledge any amount $25 or above to support this important project and we'll comp you for a year of the Center's clipping service (usually $120 minimum; valid for new clipping service subscribers only) at no extra charge. Pledge $50 or more and we'll upgrade your Center membership to the next higher individual level, e.g. Regular membership ($150 per year) goes to Premium Membership (usually $250 per year); Premium goes to Premium Elite or Regional Representative ($500 per year, for those who qualify). Check out our "Membership Levels and Benefits" for details on all membership levels. If you can help, let Damon know at firstname.lastname@example.com or 206-283-7036. He'll subscribe you to the Clippings or upgrade your membership immediately, even while your check is in the mail. We'll gladly make similarly attractive special offers to corporate donors willing to pony up somewhat larger amounts. Just email Steve at email@example.com or call him at 425-891-3640 to discuss and negotiate a bonus benefit most attractive to you and your company.
How to contribute: Make your check out to Center for Long-Term Care Reform and send to: 2212 Queen Anne Avenue North, #110 / Seattle, WA 98109 -- Or contribute online here. Our goal is to raise $1,500 to support this trip and opportunity. Thanks in advance for your consideration and support. *** *** IF YOU'RE NEAR RICHMOND, VA ON 12/12/13, YOU CAN ATTEND THE SAME EVENT and join Steve's cheering section (free registration required, see below): Leadership Roundtable On Health Care Reform — Register today for the next Leadership Roundtable hosted by the Thomas Jefferson Institute for Public Policy! This Roundtable, on Health Care Reform, is sponsored by Verizon-Virginia and will take place on Thursday morning, December 12 in the Shenandoah Room of the SunTrust Building, (919 East Main Street in Richmond), from 8:30 am until noon. The first half of the session will cover an update on Obamacare and possible reforms; the second half will discuss reforming or expanding Medicaid in Virginia. Among the expert speakers confirmed – Grace Marie Turner, President of the Galen Institute Michael Tanner, Healthcare expert for the Cato Institute Kevin Kuhlman, Manager of Legislative Affairs for the NFIB National Office Robert B. Helms, Resident Scholar, American Enterprise Institute, and Stephen Moses, Center for Long Term Care Reform (and author of a new Jefferson Institute study here) Registration for this Leadership Roundtable is Free, but there is limited space available. To register at no charge, please click here. *** *** PUBLICATION ANNOUNCEMENT: "The Index of Long-Term Care Vulnerability: A Case Study in Virginia — Virginia is faced with a serious problem as are all states: The aging population requires us to determine how to handle the additional costs this will bring to government and personal budgets. Long Term Care is one of the more important problems facing all parents, as parents, siblings, aunts and uncles live longer and longer. What are the costs today? What are the projections for these costs in the future? And how should we consider restructuring this need for Long Term Care? These are the questions and concerns examined by this new study on Long-term care funded by Medicaid. Read It Here!" *** *** KEY NUMBERS UPDATED: The Centers for Medicare and Medicaid Services (CMS) has updated the critical Medicare and Medicaid numbers for 2014. For example, the home equity exemption for Medicaid increases from a minimum of $543,000 ($500,000 in 2010) to a maximum of $814,000 ($750,000 in 2010). For all the new numbers, including the Community Spouse Resource Allowance (CSRA) and the Minimum Monthly Maintenance Needs Allowance (MMMNA) see our updated chart here. It shows the year-by-year increases in all the key numbers as adjusted annually for inflation going back two decades. You'll need your Center Member's-Only User Name and Password. Need a reminder? Or want to join the Center, receive our weekly publications and get access to The Zone? Contact Damon at 206-283-7036 or email@example.com. *** ############################# LTC BULLET: "THE INDEX OF LONG-TERM CARE VULNERABILITY: A CASE STUDY IN VIRGINIA" PUBLISHED LTC Comment: As ObamaCare doubles down on Medicaid for national acute-health-care policy, the beleaguered welfare program continues to undermine long-term care throughout the country. After three decades of analyzing America's long-term care financing system and proposing policy solutions in dozens of national and state-level studies here, we realized it may be too late to avoid a catastrophic meltdown of the system. So we decided to ask a different question in three studies this year. Instead of "What's wrong and how can we fix it?," we asked "What is the probability today's LTC system can survive the challenges it faces?" Step one was to ask: What are the main challenges our long-term care financing system(s) face? We broke them into seven key questions: 1. How many older people are coming in the next few decades? (The "Age Wave") 2. How sick will they be? (Morbidity) 3. How viable is Medicaid as a long-term care payer? 4. How reliable is federal revenue on which Medicaid mostly depends? 5. How reliable is state revenue on which Medicaid secondarily depends? 6. How much private-pay revenue is available to relieve LTC financing pressure on Medicaid? 7. How strong is dependency on public programs (i.e., the entitlement mentality)? To measure those challenges, we developed an "Index of Long-Term Care Vulnerability." The Index enables a user to assign percentage weights of importance to each of the challenges and then to score and rank the national and state levels of achievement on each of several sub-issues within each challenge using objective metrics. Not quite sure what we mean by that? Then take this opportunity to read our first of three forthcoming reports that apply the Index of Long-Term Care Vulnerability to specific state Medicaid and long-term care financing systems. You'll find a full explanation of our methodology, a sample "Index" filled out by the author for Virginia, and an Index worksheet you can use to assign your own weights, ranks and scores to your own state. The Thomas Jefferson Institute for Public Policy and the Center for Long-Term Care Reform published "The Index of Long-Term Care Vulnerability: A Case Study in Virginia" last week. You can read it at TJI's website or the Center's. To whet your appetite for the full report, what follows is the "Foreword," written by Michael Thompson, president of the Thomas Jefferson. You can also read two media articles about our study here and here. ############################# "Foreword" by Michael W. Thompson Virginia is faced with a serious problem as are all states: the aging population requires us all to figure out how to handle the "costs" that this is going to bring to government and personal budgets. Long Term Care is one of the more important problems facing all families as parents, brothers and sisters and aunts and uncles live longer and longer. What are the costs today, what the projections for these costs in the future, and how should we consider restructuring this need for Long Term Care in order for those who need it receive it, and that the burden on government – on the taxpayers – is kept within reasonable bounds? It is these questions and concerns that prompted the Thomas Jefferson Institute to ask Stephen Moses of the Center for Long Term Care Reform to look into our program and, with his expertise from doing similar work in other states, to suggest what we ought to do here to prepare for this growing need within our society. Four concerns popped out to me in this study that need to be opening and frankly discussed. They are: 1) Long-term care is expensive, funded mostly by Medicaid (considered part of our nation's welfare program), heavily dependent on already strained state and federal revenue, and facing an on-coming wave of aging boomers who will test the adequacy of scarce public resources. 2) Virginia is one of only seven states in which the age 85 plus population, the cohort most likely to need LTC, is projected to more than quadruple between 2012 and 2050, up 307%! So financing long-term care in Virginia will become a huge problem. 3) The Commonwealth has doubled down on its Medicaid-financed LTC system by implementing major new programs to (a) "rebalance" services from nursing home care to home care (making Medicaid more desirable) and (b) to "manage" care by turning it over to large managed care organizations (making Medicaid recipients more vulnerable to cost cutting and quality problems). 4) While ramping up Medicaid for long-term care, Virginia has not done enough to encourage private sources of LTC financing that could relieve financial pressure on the tax-financed program. Asset spend down, estate recovery, home equity conversion and private long-term care insurance could and should contribute far more to financing quality LTC services. This study, "The Index of Long-Term Care Vulnerability: A Case Study in Virginia," focuses on this problem and offers some policy alternatives. At the end (in the Appendix) there is worksheet/an index process that policy makers, policy influencers and others can use to determine long term care needs depending on the variables outlined in this report. This is a serious problem that needs to be confronted sooner than later. Michael W. Thompson, President, Thomas Jefferson Institute for Public Policy November 2013
############################# Updated, Wednesday, November 27, 2013, 11:13 AM (Pacific) Seattle— ############################# ILTCI CONFERENCE NEWS, A NEW CENTER REPORT AND LTC NEWS AND COMMENT
LTC Comment: Registration is now open for the Fourteenth Annual Intercompany Long Term Care Insurance Conference to be held from March 16-19, 2014 at the Rosen Centre, in Orlando, Florida. Details and conference website here.
Once again, the ILTCI conference will be hosting and subsidizing the cost for a special 2-day pre-conference CLTC Master Class (only $195 extra). Harley Gordon will personally conduct this class on Saturday March 15 (8AM to 6PM) and Sunday March 16 (8AM to 4PM).
If you are an agent selling long term care (or other insurance) directly to consumers, you can apply for a Scholarship. The Scholarship application is available at www.ILTCIConf.org/Scholarship.htm. All Scholarship applications that are approved, will qualify the attendee for the $295 Scholarship rate (plus an additional $195 if you are attending the CLTC class).
If you are a government employee, please go to https://LTCIDB.com/Registration-Government/ and register for the conference using the Government Employee rate of $95.
For those who have never attended ANY of the previous thirteen annual conferences, there is a special new attendee rate of only $395 (instead of the $895 early bird rate). Please go to https://LTCIDB.com/Registration-Introductory/ and register before January 16th.
Next, ILTCIC strongly recommends that you make your Hotel reservations by clicking on the "HOTEL AND TRAVEL" button. The Hotel has very attractive rates of only $125 (for the Rosen Centre Hotel). If the Hotel is already fully booked for a room for any date that you want to stay at the hotel, please contact Jim Glickman at 818-867-2223, so that you can be placed on a waiting list (which usually clears) for those days.
If you have any questions, please contact Jim Glickman at 818-867-2223.
*** CENTER REPORT RELEASED. The Center for Long-Term Care Reform and the Thomas Jefferson Institute (TJI) of Virginia released today a report titled "The Index of Long-Term Care Vulnerability: A Case Study in Virginia." Center president Stephen Moses and TJI president Michael Thompson participated this morning in a "tele-press conference" attended by 13 reporters to answer questions about the report's findings and recommendations. Read the new report here. Experiment with the generic Index/Worksheet which enables you to predict the likely survivability of LTC financing in your own state. We'll have much more to say about this report and two others we conducted in Georgia and New Jersey in an LTC Bullet next week. ***
############################# 11/26/2013, "NAIC to consider LTCI market conduct forms," by Allison Bell, LifeHealthPRO Quote: "Top bodies at the National Association of Insurance Commissioners (NAIC) have put three items related to private long-term care insurance (LTCI) on their agenda for the NAIC's upcoming fall meeting. The NAIC's executive committee and its plenary -- a body that includes all voting NAIC members -- plan to consider adopting the widely discussed Long-Term Care Premium Rate Increase Model Bulletin at a joint session Dec. 18." LTC Comment: Oh good, more help from the government. ############################# 11/25/2013, "Pressure ulcer treatments should be re-evaluated, expert says," by Elizabeth Leis Newman, McKnight's LTC News Quote: "Nursing home staff should adopt evidence-based approaches to pressure ulcer prevention and treatment, and significantly more research is needed, a geriatric medicine professor said Saturday. 'We don't know as much as we think we know,' said David Thomas, M.D., FACP, AGSF, GSAF, CMD, a professor at the Saint Louis University School of Medicine, where the International Nursing Home Research Conference was held last weekend. 'What we have been facing in the care of pressure ulcers in nursing home is dogma. We desperately need people in nursing homes to do clinical research.'" LTC Comment: Research is fine but the real solution to most problems with care in nursing homes is adequate reimbursement, which means more private financing and less dependency on Medicaid. ############################# 11/25/2013, "The $234 billion job that goes unpaid," by Elizabeth Shell, PBS News Hour Quote: "Nearly 9 in 10 Americans who need some form of long-term care (LTC) get that assistance from family members or friends who volunteer their time. More than a third of these 'informal' caregivers are taking care of an aging parent, and assist with tasks like getting in and out of bed, going to the bathroom, eating, housework and transportation." LTC Comment: The solution to this problem is not bigger government programs to pay families for providing the care they give for free now. The solution is to target scarce government resources to the truly needy and incentivize middle-class and affluent people to insure privately. That's the only way we'll ever relieve the huge and growing burden of elder caregiving on families across the land. ############################# 11/25/2013, "OIG promises more in-depth anti-fraud efforts, further auditing of providers [link]," by James M. Berklan, McKnight's LTC News Quote: "The Office of Inspector General may have delayed the announcement of its detailed 2014 annual Work Plan from October until January, but providers now know where the overall focus of investigative efforts will lie for the next four years. The OIG has announced it is committing to maximizing fraud recoveries and the protection of patient data for 2014-2018." LTC Comment: Maybe the OIG should also pay attention to poor estate recoveries by most state Medicaid programs. My report in 1988 for the OIG laid out findings and recommendations, most of which were adopted by Congress and President Clinton in the Omnibus Budget Reconciliation Act of 1993. Medicaid Estate Recoveries: National Program Inspection is still a useful manual for states seeking to increase non-tax revenue from their estate recovery programs. You can still read the 25-year-old report on the OIG's website here. ############################# 11/24/2013, "Exploding Medicaid bills will threaten budgets and health: So get ready for more Obamacare trouble [link]," by Paul Howard and Stephen Parente, New York Daily News Quote: "While the persistent problems with Obamacare's health exchanges have captured media headlines, a more troubling underlying story is the law's historic and unsustainable expansion of Medicaid. For every one person that has enrolled in private coverage under Obamacare to date, four have enrolled in Medicaid. That portends an astronomical rise in Medicaid spending in state and federal budgets - and worse health outcomes for millions of Americans." LTC Comment: Never mind the incident with the iceberg, let's add more deck chairs to the Titanic. ############################# 11/22/2013, "Liability costs climb for long-term care, analysis finds," by Elizabeth Leis Newman, McKnight's LTC News Quote: "A nursing home operator with 100 beds can expect $194,000 in liability expenses in 2014, according to a new analysis from the American Health Care Association and Aon Global Risk Consulting. Liability costs for long-term care providers are expected to increase by 5% next year, while claims frequency also is expected to climb, says the '2013 Long Term Care General Liability and Professional Liability Actuarial Analysis.' The projected national 2014 loss ratio is $1,940 per bed." LTC Comment: Low Medicaid reimbursement for most of their residents and lawyers lined up to sue at any opportunity bode poorly for nursing homes' liability risk. ############################# 11/21/2013, "When Mom And Dad Move In: The 'Granny-Flat Tax Exemption' For The Sandwich Generation [link]," by Kelly Phillips Erb, Forbes Quote: "My brother and I understand that we will eventually become part of the 'sandwich generation' – adults who are charged with taking care of their parents while also taking care of their own children. That doesn't make us special: in fact, far from it. Accordingly to a recent study published by the Pew Foundation, nearly half (47%) of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child (age 18 or older). And while those numbers are creeping up just slightly, the financial and other burdens associated with caring for parents and children are increasing quickly. "It's an economic reality that takes some adjustment – and politicians are just now beginning to feel the pressure from their constituencies to make changes in the law to ease that burden. That's exactly what just happened this week in Jefferson County, Florida. Jefferson County is located in the state's panhandle, bordered by Georgia and the Gulf of Mexico. In terms of age, it tracks pretty closely with the nation as a whole with a median age of 39 while 14.50% of all residents are age 65 years or older. With those demographics in mind, the Jefferson County Commission recently passed a 'granny flat tax' – the name for the law that makes it tax-exempt to build onto or remodel a home if taking care of an elderly family member." LTC Comment: Now, how about a tax incentive for LTCI? ############################# 11/21/2013, "CMS too burdened and focused on cost to be the epicenter of long-term care reform, experts say [link]," by Tim Mullaney, McKnight's LTC News Quote: "Most long-term care reforms rely on the Centers for Medicare & Medicaid Services for implementation, but the overburdened agency cannot manage all the needed changes in this area, according to a panel of experts." LTC Comment: Why would we expect CMS to do a better job on LTC reform than it's done on ObamaCare implementation? ############################# 11/21/2013, "Aging Baby Boomers And Higher Health Care Costs To Impact Long-Term Care [link]," by Partnership for Long-Term Care Quote: "University of California, Berkeley researchers state in a new study that an unprecedented increase in seniors over the next decade could nearly double Medi-Cal long-term care costs, from $6.6 billion to $12.4 billion annually by 2023." LTC Comment: To understand just how disastrous this news is read our California report titled Medi-Cal LTC: Safety Net or Hammock? ############################# 11/20/2013, "Hospital admission rates show need for new nursing home quality measure , OIG and CMS say [link]," by Tim Mullaney, McKnight's LTC News Quote: "One in four nursing home residents on Medicare was hospitalized in 2011, costing the program $14.3 billion, according to a new report from the Department of Health and Human Services Office of Inspector General. In light of its findings, the OIG has recommended a new quality measure to track hospital admissions." LTC Comment: "Dual eligibles" are old, frail, infirm and extremely vulnerable to hospitalization, especially because Medicaid pays less than the cost of their care to LTC providers. This problem is endemic to government-financed LTC. ############################# 11/20/2013, "LTCI deduction limits creep higher," by Allison Bell, LifeHealthPRO Quote: "Taxpayers who can use the federal long-term care insurance (LTCI) premium deduction in 2014 may still get substantial benefits from the deduction. Analysts at LTC Tree, an LTCI agency network, looked at how the latest LTCI premium deduction limits might affect policyholders who own a policy that provides a total of up to $219,000 in lifetime benefits with a 3 percent automatic inflation increase." LTC Comment: Federal below-the-line LTCI deductions benefit few people unfortunately. ############################# 11/20/2013, "Planning for saving in the face of terminal illness," by Paul Sullivan, MarketPlace, New York Times Quote: "Patrick Skeldon, a commercial airline pilot, started having trouble walking in the autumn of 2003. His doctor thought he had a vitamin deficiency and prescribed supplements. When those didn't work, the doctor referred him to a neurologist. The next year, he was told he had amyotrophic lateral sclerosis, more commonly known as Lou Gehrig's disease. He was 59. "Through some shrewd financial planning, Mrs. Skeldon was able to continue working for the United States Marshals Service and adding to her own retirement while still getting care for her husband. Several years before Mr. Skeldon was found to have A.L.S., the couple had purchased long-term care insurance. They did so out of a fear that they might run out of money, as her father had. "To date, she said, the policy has paid $213,000 to cover a home health care aide and still has $349,000 or five years left in benefits." However: "Depending on the state, there may be help short of running out of money. New York, for one, has a generous program for home care. LTC Comment: There are mixed messages in this article. It begins with an LTCi success story, but ends with a message encouraging long-term care planning indolence. "Abandon all logic, ye who enter here." Indeed. ############################# 11/19/2013, "Gaming Medicaid has potential consequences for the aging," by Kerry Peabody, Portland Daily Sun Quote: "People trying to avoid the responsibility of providing for their own long-term care by transferring assets as they age is a mine field of risk not to mention a moral dilemma. "Unfortunately, some people continue to game the system - attempting to protect assets to benefit their family members while transferring the cost of care to the taxpayers. Put another way, it is the practice of engineering one's own poverty. "With the federal debt now exceeding $17 trillion and the interest on that debt absorbing evermore of our tax dollars, our government simply will not have the ability to fund the crushing demand for these services. Based on public policy discussions, means testing for all social services is likely to become more aggressive and the threshold for eligibility will be higher. Ultimately, the burden is ours to provide for our future. One mechanism is long-term care insurance." LTC Comment: Hear, hear! ############################# 11/19/2013, "'Self-reliance' a key to long-term care financing reform, experts say," by Tim Mullaney, McKnight's LTC News Quote: "The United States is likely to favor an approach to long-term care financing reform that values self-reliance but includes some form of social safety net, according to a new report from a panel of experts." LTC Comment: Great, but the current system falls far short of that. It undermines self-reliance by making the Medicaid LTC safety net available to people who could, should and would insure privately otherwise. ############################# 11/19/2013, "5 Financial Lessons from Retirees," by Donna Fuscaldo, FoxBusiness Quote: "Whether it's not saving enough, or being too conservative with their investments, people already in retirement make many mistakes that adversely impact their lifestyle that can tarnish their so-called golden years. But that doesn't have to happen to you. Before you let history repeat itself, check out these five lessons financial planners and their retired clients:" LTC Comment: Lesson #5 includes a strong recommendation to purchase LTC insurance. ############################# 11/18/2013, "Watchful Eye in Nursing Homes," by Jan Hoffman Quote: "A pretty nightie, a new lipstick, a fresh toothbrush: Doris Racher noticed that small things she had bought for her 96-year-old mother, Eryetha Mayberry, a dementia patient at a nursing home in Oklahoma City, had been disappearing. Ms. Racher assumed the culprit was another resident who sometimes wandered into her mother's room and fell asleep in her bed. So in 2012, Ms. Racher placed a motion-activated camera in her mother's room. It looked like an alarm clock, and Ms. Racher nearly forgot about it. About two months later, the family decided to pore through the recordings." LTC Comment: A new source of horror movies. ############################# 11/18/2013, "Most People Misunderstand Long-Term Care Insurance Coverage, Costs [link]," by Mark Chalon Smith, FoxBusiness Quote: "Most people are woefully unprepared to cope with long-term care needs and expenses, according to a study released this week by a major insurer. Northwestern Mutual's report, based on a Harris Interactive survey of more than 2,000 people nationwide, found that 41% of those questioned admitted they're confused about how to approach future long-term care challenges. They are also failing to actively build a strategy for long-term care needs, despite the possible personal and financial consequences." LTC Comment: An open invitation to LTCI producers to fill the information gap and provide the needed coverage. ############################# 11/18/2013, "It's time frivolous lawsuit filers were held more accountable," by John O'Connor, McKnight's LTC News Quote: "We live in a world where the luckiest among us get old and sick before we die. Fortunately, senior living options exist to make the endgame more comfortable and less painful than it otherwise would be. And while it's one thing to hold operators responsible for bad care, it's another to blame them for life's inescapable realities. Yet all too often, that's the driving factor behind many cases that never should have been filed." LTC Comment: Such as the cases that come into vulture lawyers from their highway billboards urging people to sue nursing homes. Sometimes the same people who sue are ones who used the same lawyers to impoverish their parents to qualify them for Medicaid. Low Medicaid reimbursements for their parents' care may have caused the problems they're now suing to correct. What a system! ############################# 11/17/2013, "Survey: Americans do not like to discuss finances," by Annika McGinnis, USA Today Quote: "American families may not be saving enough for retirement but even worse, they're not talking about it with each other, show the findings of a new study out Monday. 'Family & Retirement: The Elephant in the Room,' a representative survey of 5,400 adult Americans conducted by Merrill Lynch and consulting firm Age Wave in August shows 70% over the age of 25 have not had a discussion with their parents about retirement. "Not discussing these emotionally delicate topics is preventing many Americans from facing the facts together as a family. More than 90% say they would not be prepared financially if an aging parent or close relative needed long-term care. And just 37% of people age 50 or older believe they'll need long-term care before they die. The reality: 70% eventually will need the costly services, the new study says." LTC Comment: Moral of the story? Have "the talk" with aging parents. ############################# 11/7/2013, "Doctors In Venezuela Say Their Universal Health Care System In Collapse [link]," by Dr. Susan Berry, Breitbart.com Quote: "Almost everything needed to mend and heal is in critically short supply: needles, syringes and paraffin used in biopsies to diagnose cancer; drugs to treat it; operating room equipment; X-ray film and imaging paper; blood and the reagents needed so it can be used for transfusions." LTC Comment: So why am I sending you news about health care in Venezuela? My late wife and I were Peace Corps Volunteers there from 1968 to 1970. It always seemed ironic to me that the country's constitution guaranteed "free" health care to all citizens . . . but free health care was virtually unavailable to anyone. So much for "social health insurance."
############################# Updated, Monday, November 18, 2013, 12:25 PM (Mountain) Santa Fe, New Mexico— ############################# MEDICARE RUN AMUCK AND LTC NEWS AND COMMENT LTC Comment: Medicare has a $43 trillion unfunded liability. Yet, the program eagerly encourages seniors to take maximum advantage of its wide ranging benefits. Last week I received the following personal email message from the Centers for Medicare and Medicaid Services (CMS): "Happy Birthday from Medicare! We wish you well in the upcoming year and want to remind you of the preventive services Medicare offers to help you stay healthy. Our records show that you have not taken advantage of some of the preventive services which are available to you now or in the future and listed in the table below. Please talk with your doctor to decide which ones are right for you." Here are some of the preventive services Medicare's boilerplate email urges me to use: OBESITY COUNSELING
I'm not obese. I work out regularly. I don't misuse alcohol. I'm not depressed. And last time I saw a doctor, he told me biannual check ups would suffice. The nurse marveled that, at 67 years of age, I didn't use a single drug prescription. But Medicare is looking after me and insists I should avail myself of all eligible services whether I need them or not. The message ended: "Remember, Medicare is your partner in health. Sincerely, Centers for Medicare & Medicaid Services." As ObamaCare implodes, the commonest "solution" proposed is "Medicare for all." Out of the frying pan, into the fire. ############################# 11/15/2013, "CBO analyzes Medicaid caps to curb federal healthcare spending," by Tim Mullaney, McKnight's LTC News Quote: "The federal government could reduce its Medicaid contributions to states as a deficit reduction measure, but the move likely would achieve savings only by putting seniors at risk, according to the Congressional Budget Office." LTC Comment: A better approach to Medicaid savings is to change the program's LTC eligibility rules to prevent the non-poor from taking advantage of the program and encourage them to plan early and responsibly for long-term care. ############################# 11/14/2013, "Better Medicaid managed care oversight needed to protect providers serving high-risk populations: OIG [link]," by Tim Mullaney, McKnight's LTC News Quote: "States are not doing a good job of monitoring how Medicaid managed care enterprises handle providers serving high-risk populations, according to a new government report." LTC Comment: Across the USA states are converting their fee-for-service long-term care systems into managed care. They transfer the responsibility for providing complicated care for vulnerable populations such as the aged, blind and disabled, and in some states even the highest-risk "dual eligibles," to giant managed care companies that have little or no experience delivering such care to such groups. Senior advocates worry it's a disaster ready to happen. The USDHHS Inspector General (my former employer) finds in this report that states are not adequately monitoring managed LTC. Risks due to Medicaid managed LTC conversions are a component of the Center for LTC Reform's "Index of Long-Term Care Vulnerability," about which, more, in future messages. ############################# 11/14/2013, "Caring For Elderly Parents Is A Daily Choice," by Edgar B. Herwick III, WGBH News Quote: "Ward, who lives in Rhode Island, said before his father died he did something simple and extraordinary. 'My father began to realize at a certain point that his health was declining, and he made a decision at that point that he wanted to prepare for the fact that my mother was going to outlive him,' he said. 'So he pulled us together and he gave us a task: to be responsible and to take care of her.'" LTC Comment: More aging Americans should do what Ward's Dad did and more adult children should partially fulfill such commitments by helping their parents obtain LTC insurance. ############################# 11/13/2013, "LTC community fights for attention: The silver tsunami," by Allison Bell, LifeHealthPRO Quote: "Insurance groups, insurance companies and insurance producers are trying to tap Americans on the shoulder this month and remind them that long-term care (LTC) planning is much more of a mess than acute health care planning." LTC Comment: Long-Term Care Awareness Month is afoot! ############################# 11/13/2013, "Price increases, not a larger senior population, are responsible for exploding healthcare costs: analysts [link]," by Tim Mullaney, McKnight's LTC News Quote: "Escalating healthcare costs in the United States cannot be pinned on an aging population demanding more services for chronic conditions. Instead, higher costs are primarily the result of price increases, according to a new analysis in the Journal of the American Medical Association." LTC Comment: The Age Wave has only begun to crest. It won't crash until boomers reach the age when acute and long-term care risk peak. Then age-related health expenditures will exceed and exacerbate "higher costs." ############################# 11/13/2013, "Major insurers say they will hike premiums on long-term care policies," by Tim Mullaney [link], McKnight's LTC News Quote: "A number of issues have necessitated the rate modifications, including miscalculations about how many people would maintain their policies and the true costs of claims, as people are receiving benefits longer than the insurers anticipated when designing these products." LTC Comment: The other major reason, totally outside the control or reasonable anticipation of the private insurance industry, is the Federal Reserve's policy of forcing interest rates down to near zero artificially. ############################# 11/12/2013, "An Alzheimer's reality check," by Tim Mullaney, McKnight's LTC News Quote: "Alzheimer's researchers - or the public relations machines trumpeting their work - should chill out. Frequent breathless reports about major breakthroughs are giving false hope to anyone who believes the hype about an imminent cure. . . . It's perhaps too easy to be cynical about Alzheimer's research, thanks to how the results often are presented. In addition to creating false hope, the hype around promising findings also threatens to make people complacent, thinking that the Alzheimer's research machine is well-oiled and firing on all cylinders. This new report does a service by pointing out the huge challenges that remain. Signing your name to the declaration might be a merely symbolic gesture, but hopefully the report will remind everyone that Alzheimer's research still needs - and merits - our attention and activism." LTC Comment: Well said. ############################# 11/11/2013, "None Dare Call It...," by John Goodman, National Center for Policy Analysis Quote: "But what threatens the foundations of a free society most of all is when it is the government (and its allies in the private sector) who are doing the attacking, and when the reason there is no response is that the victims of the attacks have been threatened and bullied into silence. I believe that is where we are today--not just with respect to health insurance, but with respect to health care generally. I'm afraid other industries are not far behind." LTC Comment: This is an excellent column on the current status of health policy intimidation by the government and its ramifications. ############################# 11/11/2013, "Nursing homes are the most dangerous workplaces in America, government data shows [link]," McKnight's LTC News Quote: "Last year's illness and injury incidence rate for private sector nursing and residential care facilities was 7.3%, the BLS reported Thursday. This was the highest overall, and it far eclipsed the illness and injury rates for workplaces that might seem more dangerous. The rate for miners (except oil and gas) was 2.7%, and the rate for construction was 3.6%. State-run nursing homes are even riskier places to work, with a 13% incidence rate. Of all the illness and injury rates published by the BLS last week, this was the only one to reach double digits." LTC Comment: Medicaid pays nursing homes less than the cost of providing the care and nursing home caregivers are paid some of the lowest wages of any workers in the country. Having the highest injury rates adds injury to insult. ############################# 11/9/2013, "Blame game as insurers dump doctors," by Carl Campanile, New York Post Quote: "The nation's largest health insurer, UnitedHealthcare, claims the Affordable Care Act is responsible for forcing it to boot doctors from its Medicare Advantage program that serves thousands of elderly patients in the New York metro region." LTC Comment: The ACA is from the government and it's here to help you. ############################# 11/8/2013, "Routine assessment predicts when Alzheimer's patients will need nursing home care, researchers report [link]," by Tim Mullaney, McKnight's LTC News Quote: "The variables include the patient's ability to take part in daily activities, estimated time of symptom onset and level of rigidity. A healthcare professional can gather this information in a single patient visit, the researchers noted. They also said the assessment has proven highly accurate even when not all 16 variables can be collected." LTC Comment: Possibly a valuable new assessment worth adding to the underwriting tool chest. ############################# 11/7/2013, "How Social Security redistributes money from minorities to whites [link]," by Brad Plumer, Washington Post Quote: "Specifically, for every $100 that white beneficiaries pay in taxes, they receive $113 in benefits, blacks receive $89 and Hispanics receive $58. The gap is particularly pronounced for retirement benefits, although the Disability Insurance program narrows the gap somewhat. The disparity will continue to widen in the next ten years. Whites will receive $120 in benefits for every $100 they paid in taxes, while blacks will receive $91 and Hispanics $62." LTC Comment: Unintended consequences? One wonders, given how skewed Medicaid LTC benefits are toward the middle class and affluent. ############################# 11/7/2013, "Speaking more than one language may delay dementia," by Kim Painter, USA Today Quote: "The latest evidence that speaking more than one language is a very good thing for our brains comes from a study finding dementia develops years later in bilingual people than in people who speak just one language." LTC Comment: Bueno, pues! ############################# 11/6/2013, "New Study Examines Who's Really Living in Assisted Living Communities [link]," by Alyssa Gerace, Senior Housing News Quote: "Small assisted living communities were nearly three times more likely to house 'non-senior' residents under the age of 65, the study found, with more than 21% of residents falling into that age group compared to about 7% in larger communities. "However, the smallest communities were also more likely to house residents with Alzheimer's disease or other memory care needs, at 53%, compared to 41% of large communities, even though those conditions are typically associated with the 'oldest old,' or seniors aged 85-plus. "Still, larger assisted living communities were more likely to house older, 'traditional' residents: nearly 85% were over the age of 75, while more than half (56%) were older than 85." LTC Comment: Disturbing evidence that the most frail, infirm and vulnerable patients are ending up in smaller care homes which may be less equipped to provide quality care and much harder for quality control inspectors to reach. ############################# 11/6/2013, "Young people becoming more realistic about future long-term care needs, survey finds [link]," by Tim Mullaney Quote: "Out of more than 2,000 people surveyed, about 30% said they were saving for future long-term care needs. The number was highest (36%) for those between 18 and 34 years old. Only 21% of people between the ages of 45 and 54 said they were saving." LTC Comment: Evidently caring for Grandma takes its toll on youthful complacency more than on middle-aged anxiety. ############################# 11/5/2013, "Why it's time to embrace asset-based long-term care products," by Chris Coudret, LifeHealthPRO Quote: "With all the recent negative news, it would be easy and natural for the financial services industry and the financial media to be sour on the prospects of finding a worthy approach to funding long-term care. However, the sustained growth of asset-based long-term care products indicates there is a sea change occurring in the industry and a story that needs to continue to be told." LTC Comment: A major benefit of private insurance vs. "social insurance" is that the private market allows and encourages many different kinds of coverage. Consumers can pick and choose what's best for them. Social insurance imposes a one-size-fits all program that usually fits no one especially well. ############################# 11/5/2013, "Retirement: Make long-term care coverage more affordable," by Kimberly Lankford, Chicago Tribune Quote: "Until recently, people bought long-term-care policies to cover 100 percent of the cost of care. But rates for new policies have shot up and it has become a lot more difficult to qualify for coverage if you have health issues. Fortunately, insurers are offering new options that shift more risk to you but make policies less costly." LTC Comment: This Chicago Tribune article quotes Center-corporate-supporter Claude Thau. ############################# 11/4/2013, "The Biggest Risk to Your Retirement," by Shelly K. Schwartz, CNBC Quote: "You can create an additional financial safety net with long-term care insurance. Such policies are designed to cover long-term services and support, including assisted living, home care, adult day care and hospice-things traditional health insurance doesn't cover. . . . Not everyone requires assisted living in their later years, however, and long-term care coverage does not come cheap. As such, it's important to consider how much money you already have set aside for health-care costs and purchase only the amount of coverage you actually need, according to the Department of Health and Human Services." LTC Comment: Sound advice to insure only for LTC risk that exceeds your ability to pay otherwise. Properly used, insurance replaces catastrophic risk with affordable premiums rendering peace of mind to the insured and well-earned profit for the insurer. ############################# 11/4/2013, "Long Term Care Insurance Applications Cost Insurers Reports AALTCI [link]," by Jesse Slome, Expert Quote: "An individual applying for long term care insurance costs the insurer between $400 and $600 even if they are not accepted according to a study from the American Association for Long Term Care Insurance. The approximate cost to the industry was $200 million in 2012, AALTCI reports." LTC Comment: Due diligence in establishing eligibility for coverage and estimating the level of risk each insured brings to the risk pool is a major benefit of private insurance over "social insurance." The latter lets everyone in, charges everyone the same and thus rewards poor behavior, punishes good behavior, and becomes insolvent over time. ############################# 11/3/2013, "We need to stop coddling the elderly," by Robert J. Samuelson, Washington Post Quote: "No one wants to be against Grandma, who — as portrayed in the media — is kindly, often suffering from some condition, usually financially precarious and somehow needy. But projecting this sympathetic portrait onto the entire 65-plus population is an exercise in make-believe and, frequently, political propaganda. The St. Louis Fed study refutes the stereotype. Examining different age groups, it found that since the financial crisis, incomes have risen for the elderly while they've dropped for the young and middle-aged." LTC Comment: We're getting closer and closer to a time when views like Samuelson's will prevail. Social Security, Medicare and the defacto entitlement Medicaid LTC will be means-tested. The imbalance of government benefits flowing from the young to the old will equalize. And private insurance will rise again to fulfill its rightful role in retirement planning.
############################# Updated, Friday, November 15, 2013, 12:48 PM (Mountain) Santa Fe, New Mexico— ############################# LTC BULLET: ANNUITY BLUES
LTC Comment: Medicaid planners use annuities to disappear megabucks and they (the planners and the annuities) drive the good Medicaid lawyers crazy. After the ***news.***
*** NOVEMBER IS LONG-TERM CARE MONTH SEVEN TIMES OVER according to a press release today highlighting these seven programs: Long Term Care Awareness Month, National Home Care Month, National Family Caregivers Month, National Hospice and Palliative Care Month, National Alzheimer's Disease Awareness Month, Warrior Care Month and the 3 in 4 Need More campaign. LTC Awareness month (November) gets all too little attention in the national media. Thanks to LTCFP for pushing these important programs into the limelight. ***
*** SEND STEVE TO HEALTH CARE ROUNDTABLE in Richmond, VA. The Thomas Jefferson Institute for Public Policy (TJI) is about to publish our major report titled "Medicaid and Long-Term Care Financing: A Case Study in Virginia." This will introduce the public policy world to our new "Index of Long-Term Care Vulnerability" which will enable analysts to answer the question objectively: can LTC financing survive in its current and tending form? TJI is sponsoring an important "Health Care Roundtable" on December 12. They'd like Steve Moses to present our report's findings and join the discussion with some of the top health care policy analysts in the country, including Grace-Marie Turner of the Galen Institute, Michael Tanner of the Cato Institute and Bob Helms of the American Enterprise Institute.
The Center for Long-Term Care Reform seeks to raise funds to enable Steve to make this trip, give this presentation, and contribute to the important health policy conversation.
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LTC Comment: I'm just back from the 46th Annual Training and Continuing Education Conference of the American Association of Public Welfare Attorneys. Dan Hart, Assistant Attorney General from Iowa, and I presented a program titled "Medicaid Eligibility for Long-Term Care: If You Build It, They Will Come." We explored the collateral damage done to the long-term care safety net by aggressive Medicaid planning. Evidently we succeeded. Two members of the audience came up to me afterwards to say they'll keep their LTC insurance coverage after all, despite harboring recent doubts.
In the course of the conference, I learned about extraordinary efforts some states have made to curtail the abuse of one especially egregious Medicaid planning technique.
Special Medicaid-friendly annuities make hundreds of thousands of dollars disappear from spend down scrutiny. While conducting state-level studies of Medicaid and long-term care financing, I've frequently encountered examples of this loophole. Search for "annuities" in any of our many state reports here and you'll see what I mean. Here's one example from our November 2012 study titled "The Maine Thing About Long-Term Care Is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net [link]."
The use of annuities to qualify affluent Mainers, even "millionaires" according to eligibility workers interviewed for this study, is pervasive. This technique is used in two ways. For married applicants, the couple's otherwise disqualifying wealth is transferred into an annuity for the community spouse strictly in keeping with allowable federal guidelines, which require actuarial soundness and making the state the beneficiary of residual funds. Virtually any amount of money can be transferred into such an annuity rendering the institutionalized applicant immediately eligible. The annuity pays out to the community spouse within the life expectancy of the institutionalized spouse, often in less than one year. Workers cited one example of a $450,000 annuity which paid out at a rate of $17,000 per month until all the sheltered funds were back with the community spouse and hence uncounted, the eligibility determination having already been made.
The second way annuities are used to qualify otherwise ineligible applicants for MaineCare involves single people with excess assets. The "reverse half-a-loaf" strategy works as follows. The applicant gives away half his or her disqualifying assets thus creating an eligibility penalty equal to the amount of assets transferred for less than fair market value divided by the average cost of a nursing home in Maine. With the other half of the assets, the applicant creates an annuity in his or her own name and uses the proceeds of the annuity to pay for care during the duration of the penalty period. When the penalty period expires, the annuity runs out, and the applicant is eligible for MaineCare LTC benefits having protected half the original assets from MaineCare's spend down requirement. (pps. 10-11, footnotes omitted)
There is virtually no limit to the amount of assets that can be divested in this way. But wait, you demur. Didn't the Deficit Reduction Act of 2005 (DRA '05) fix the Medicaid annuity problem? Well, yes, partially. It put some new restrictions on the use of annuities to qualify for Medicaid long-term care benefits. Here's how I summarized the new provisions in a contemporaneous "LTC Bullet: The Brave New World of LTC Financing."
ANNUITIES AND OTHER LARGE TRANSACTIONS * Medicaid recipients and community spouses must disclose annuities at eligibility and recertification * State must be named as remainder beneficiary * State must notify annuity issuer of its status as remainder beneficiary * States may require annuity issuer to report income or principal withdrawals * States may deny Medicaid eligibility based on such withdrawals * Purchase of an annuity is a penalizable TOA unless state is listed as remainder beneficiary in first position for at least total of Medicaid payments or in second position to community spouse or minor or disabled child * Effective at enactment
So, how is it that Medicaid planners can still use annuities to make huge amounts of assets go poof? The method discussed at the conference depends on the difference between Medicaid's treatment of income and resources for married couples. Spousal impoverishment rules protect a certain amount of a couple's joint assets for the healthy community spouse. But, as long as it is done before the Community Spouse Resource Allowance (CSRA) is determined at the time of Medicaid application, the rules also allow the transfer of an unlimited amount of assets from an ill, institutionalized spouse to the community spouse for the "sole benefit" of the community spouse.
So, to get around the spousal impoverishment CSRA limits, Medicaid planners have their clients do a sole benefit transfer before applying for Medicaid. Then they have the community spouse purchase an annuity that meets all the federal requirements delineated above. They argue this is not a penalizable transfer of assets because fair market value, in the form of an income stream from the annuity, has been received. Now, however, instead of having resources which would be limited by the spousal impoverishment rules, the community spouse has an income stream, which federal Medicaid rules consider unavailable to the institutionalized spouse. At this point, the ill spouse can apply for Medicaid with impunity having transferred literally unlimited amounts of money into the sole ownership of the healthy, community spouse.
Three states have challenged such annuities in three different court cases. They argued variously that such annuity machinations are really inappropriate asset transfers or that they violate the letter and intent of the Medicaid law in other ways. It seems to most stewards of the Medicaid LTC safety net that for the wealthy to be able to shift a million dollars or more out of the way of spend down requirements is a distortion and perversion of Medicaid's avowed purpose, to be a safety net for people genuinely in need. But the courts did not agree. The law is the law, they said. Efforts to persuade the Centers for Medicare and Medicaid Services to fix the problem and appeals to Congress to fix it in statute have gone nowhere. So the practice continues, rendering big fees to Medicaid planners and diverting desperately needed public funds from the poor to the affluent.
We at the Center for Long-Term Care Reform see the annuity problem and many other abuses of Medicaid's loose eligibility rules day in and day out. Fighting for laws and public policy that preserve scarce public resources for the needy and encourage everyone else to plan responsibly for long-term care is our stock in trade. It's sad to see the highly qualified and superbly competent attorneys who represent America's public welfare programs struggle in frustration to make those programs work to the benefit of their rightful beneficiaries. I applaud their efforts and we'll continue to do what we can at the Center to support them with thoughtful and persuasive public policy research and analysis.
############################# Updated, Friday, November 8, 2013, 11:02 AM (Pacific) Seattle— ############################# LTC BULLET: PBS'S 6 LTC TIPS MISS THE MARK
LTC Comment: What's wrong with the conventional wisdom about how to resolve America's long-term care crisis? After the ***news.***
Here is the latest from the president of LTC Consultants, Phyllis Shelton: *** "I've been saying since my 2010 Worksite and Combo Tour that Medicaid is the real threat to our economy. May I say 'I told you so' now with this Oct. 25th 2 1/2 minute CBS video?" *** *** In "Why Caregivers are an Endangered Species", US News & World Report 9/4/13 says: "The nation's bill for Medicaid is already projected to rise substantially due to the expansion of health insurance under Obamacare. Imagine what a caregiving crisis would do." Critical related reading: "Why Medicaid Could Be the Real Threat to Our Economy". *** *** Cover Story: Life Insurance Selling ***
*** 2014 LTC SUMMIT. AALTCI has seemingly worked a miracle. Next year's LTC Summit costs only $69 to attend in person if you register by November 30. If you still can't afford to participate in person, you can watch the program streamed live online. How can they do it? Check out the details here. ***
*** CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including: our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries. Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources. Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments. Contact Damon at 206-283-7036 / firstname.lastname@example.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***
LTC Comment: Millions watch the Public Broadcasting System's NewsHour every night. So when that show addresses long-term care it's worth paying attention.
You can read about and view videos from a forum, titled "Global and Regional Models for Long-Term Care: Can They Work Nationally?," that MacNeil/Lehrer Productions (the NewsHour's parent company) and the SCAN Foundation sponsored on Monday.
But if you have better things to do, such as advising consumers on how to protect themselves from LTC risks and costs without depending on tottering government programs, let me save you some time.
Following are quick summaries of PBS's "6 tips for averting America's looming long-term care crisis" followed by our critique of each.
PBS Tip #1: "Keep it Local" The Urban Institute's Howard Gleckman says don't seek a "single answer." Rather work from the bottom up with friends, neighbors and families taking the lead. "To the degree that we can, government can at least try to stay out of the way of those solutions . . .."
LTC Comment: Hear, hear! Finally something from this writer with which I can agree. But true to form, he reverts to form a few sentences later, advocating more and bigger government programs.
PBS Tip #2: "Change the Financing" Former CMS Administrator Dr. Mark McClellan, currently with the Brookings Institution, says "let people control how [Medicaid] money is spent on their behalf. That's what's behind our 'Money Follows the Person' [MFP] initiatives in states around the country . . .."
LTC Comment: Terrific. MFP programs are a vast improvement over the current LTC financing system which makes providers--not patients--the program's customers. But "Money Follows the Person" still depends on payments coming from an unsustainable welfare program. Making Medicaid more attractive to more people is not a solution.
PBS Tip #3: "Focus More on the Poor" Dr. E. Percil Stanford, president of Folding Voice and the KIND Corporation, says "Unfortunately, considerable [LTC policy] attention from the most well-intentioned institutions and organizations has focused primarily on the middle and upper classes." Instead, he says, they should focus laser-like on the poor elderly.
LTC Comment: Right on, but how? No answer from this source. Research shows Medicaid's LTC program benefits the middle-class and affluent as much or more than the poor. The solution is to target scarce public benefits to the needy and use some of the savings to incentivize early and responsible LTC planning by more prosperous people.
PBS Tip #4: "Build a Comprehensive National Strategy" AARP's Debra Whitman wants us to spend more government money to help family caregivers, grow Medicaid, expand "affordable" housing and transportation, "integrate" health care services, and eliminate LTC impoverishment.
LTC Comment: Typical AARP eyewash. Not a word about where the money will come from to pay for such wishful public program expansions. The federal government already borrows a third or more of everything it spends. It forces interest rates to near zero to make such borrowing feasible temporarily. Watch out when this bubble bursts.
PBS Tip #5: "Begin the Conversation" Jennie Chin Hansen, CEO of the American Geriatrics Society [AGS], thinks we should "chat and chew" LTC issues with our friends and colleagues creating a "study group" opportunity to "discuss the universal journey." She says "Let's proactively help each other build greater confidence, clarity and capacity."
LTC Comment: Doesn't that advice sound vacuous coming from the head of the AGS? We've been jaw-boning long-term care for decades without addressing the real problem, i.e. government pays for most high-cost LTC which anesthetizes consumers to the risk and crowds out responsible LTC planning and private financing.
PBS Tip #6: "Make It a Human Right" Dr. Laura Gitlin of the Center for Innovative Care in Aging says "We need to grow a long-term care system based on . . . [the] principle . . . that long-term care is a basic right."
LTC Comment: Of all the empty rhetoric in this program, the prize for thoughtless irresponsibility goes to this proposal. If people have a basic human right to long-term care whether or not they are able or willing to pay for it, their "right" means someone else must provide LTC whether or not they are compensated for their effort. That is the definition of slavery, which is what this ostensibly caring academic actually advocates.
Closing LTC Comment: When I see the subterranean quality of LTC policy analysis displayed in program's like this one, I'm nearly ready to despair. The one thing that keeps me going is that a few of you AMGs (altruistic, masochistic geniuses) are still out there having truly valuable conversations with real consumers about how actually to protect themselves from escalating LTC risks and costs.
The whole wobbly Rube Goldberg apparatus of government-financed LTC puts enormous obstacles in your way. It gives away what you're trying to sell. It makes your product unprofitable by manipulating interest rates so that its programs are artificially viable. It falsely assures citizens they'll be taken care of by bankrupt social programs already under-funded by trillions of dollars. Yet you soldier on. Somehow.
Hail to the AMGs!
############################# Updated, Monday, November 4, 2013, 11:08 AM (Pacific) Seattle— ############################# OBAMACARE STUMBLES AND LTC NEWS AND COMMENT
LTC Comment: What a week for "ObamaCare." Everything its critics predicted is beginning to happen. It will get worse. We begin today's LTC E-Alert with this link to the best critique of the government health care take over I've seen so far. It isn't just the software, folks.
10/23/2013, "Top Ten Obamacare Disasters to Come," by Grace-Marie Turner, National Review Online
Quote: "[E]ventually, software can be fixed. Obamacare's epic policy flaws can't. The problems increasingly are going to be up close and personal, as people see for themselves the impact it has on their lives and pocketbooks. The top ten debacles to come:
1. Deductible shock . . . 2. Will people pay? . . . 3. Attracting the sickest . . . 4. Less expensive plans vanish . . . 5. Families lose out . . . 6. Repaying subsidies . . . 7. Public health-care costs are going to explode . . . 8. More jobs lost . . . 9. Identity theft and fraud will explode . . . 10. Federal-exchange subsidies eliminated? . . . If you thought Healthcare.gov was bad, just wait. This article is available online at: National Review Online."
LTC Comment: Read it and weep.
December 2013, "How to Make Long-Term Care More Affordable: We help you navigate the maze of choices to get the best deal [link]," by Kimberly Lankford, Kiplinger
Quote: "The average cost of a private room in a nursing home is now about $248 per day (or about $90,000 per year), and 12 hours a day of home care costs even more, according to the MetLife Mature Market Institute. But for many baby-boomers, it takes more than the threat of financial catastrophe to be prodded into buying a long-term-care insurance policy."
LTC Comment: Gee, wonder why, when the government pays for most expensive long-term care after the insurable event occurs and without requiring spend down of most assets. See How to Fix Long-Term Care for more.
11/1/2013, "IRS Announced Increased Tax Deductible Limits for Long Term Care Insurance [link]," by Jesse Slome, ExpertClick
Quote: "November 1, 2013. The American Association for Long Term Care Insurance announced today release of increased deductibility levels for long-term care insurance policies purchased in 2014.
"'For taxable years beginning in 2014, the limitations have been increased again,' explains Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI), the industry's trade association. 'Tax advantaged long-term care insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners.'"
LTC Comment: See our Members-Only Zone archives for LTCi tax deductibility limits for each year dating back to 1997 here.
11/1/2013, "Analyst expects insurer loss on overhaul exchanges," by Tom Murphy, Bloomberg Business Week
Quote: "Health insurers will lose money for the first couple years on business they get from the health care overhaul's public exchanges, according to a Goldman Sachs analyst. He says the hits won't be big enough to change earnings forecasts, however.
"Borsch said a bigger concern for health insurers will be rate cuts for Medicare Advantage plans, the privately run versions of the federal government's Medicare program. Insurers will receive less reimbursement next year for these plans due to overhaul-mandated reductions."
LTC Comment: And thus the Medicare Advantage plans favored by consumers will be forced to subsidize ObamaCare's expansion of high-cost coverage to subsidized public dependents.
10/31/2013, "Why Art Therapy is Good for the Brain," by Jennifer Wegerer, A Place for Mom
Quote: "Art therapy has proven a powerful tool for treating Alzheimer's. More than giving patients something pretty to look at it or an exercise to keep them busy, it stimulates the brain. It stirs memories and can bring language back into the life of someone who struggles to speak.
"Studies show that art therapy gives back to Alzheimer's patients, in some part, what the disease has taken away. It stimulates the senses, can trigger dormant memories and encourages conversation. Whether they're viewing or creating art themselves, Alzheimer's patients can use it as a form of expression, particularly individuals who can't communicate verbally."
LTC Comment: How much "art therapy" do you think Medicaid patients in nursing homes or waivered home care programs receive? The best and most creative care will always be available first and foremost to people who can afford to pay privately.
10/31/2013, "Advance Planning for Eldercare Saves Money, A New Study Shows [link]," by Sally Abrahms, AARP Blog
Quote: "When it comes to planning for long-term care, the early bird does get the worm, according to a new study : The report shows that families who anticipate their needs can save close to $11,000 a year in out of pocket expenses by planning in advance instead of waiting until a crisis."
LTC Comment: Just be sure you aren't trading poor care for savings by planning for Medicaid eligibility by deliberately impoverishing yourself.
10/31/2013, "Nursing home arbitration agreements force consumers to 'sign away legal rights,' trial lawyers argue [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Arbitration agreements in long-term care contracts are harming consumers and eroding the U.S. civil justice system, according to a prominent association of trial lawyers."
LTC Comment: Maybe trial lawyers would have more credibility if they hadn't abused nursing home liability cases for so long. Have you seen the billboards in Florida urging drivers to sue their parents' nursing homes? First the Medicaid planning attorneys take their cut by impoverishing the parent and enriching themselves and their adult-children clients. Then the litigators extract a fortune from the LTC financing system by suing nursing homes that can't afford to provide good care because they have too many Medicaid recipients paying rates less than the cost of providing their care. Yeah, these lawyers really have our best interests at heart.
10/30/2013, "Social Security benefits up just 1.5% in 2014," by Chris Isidore, CNNMoney
Quote: "Social Security benefits will rise only 1.5% next year, one of the smallest increases ever in the program's annual cost-of-living adjustment. The increase is down from the 1.7% increase for 2013. There was no cost-of-living increase at all in 2010 and 2011 because prices fell in the wake of the recession. A 3.6% adjustment in 2012 has been the only significant rise in benefits in recent years."
LTC Comment: And that little increase will likely be wiped out by increases in Medicare costs.
10/30/2013, "Healthcare Continues To Rank as Top Financial Fear in Retirement in National Investor Survey [link]," Press Release, Wall Street Journal
Quote: "A new survey of investors who are currently working shows concerns about rising health care costs, changes to Social Security and/or Medicare and running out of money are among the greatest financial worries in retirement, and the percentage citing them has increased since prior surveys.
"'Though being able to afford healthcare isn't a new issue, the fact that more affluent workers are very worried about it than not, points to the value advisors can provide to help clients develop strategies to manage it,' said Matt Rigatti, vice president, Signator Investors, Inc. 'We've already seen movement in the direction of tools that address healthcare, specializations -- or including a healthcare finance-oriented specialist on a client's team and I suspect we'll continue seeing growth in that area.'"
LTC Comment: Well, yes, and including a long-term care specialist.
10/29/2013, "How to transfer IRAs to LTC insurance Opinion," by Brent Welch, LifeHealthPRO
Quote: "Nearly 10,000 baby boomers are turning 65 every day, and they will for the next 16 years. Where will they get the money to purchase long-term care insurance (LTCI)? Most LTCI owners are deeply concerned about the shocking price increases in policies this past year. Forbes reported that the increases in LTCI premiums may be between 45 percent and 85 percent in 2013 alone! The question I am asking you this month is: How can one use IRA assets to pay for long-term care insurance? Is it really possible to transfer IRA money into tax-free LTCI?"
LTC Comment: Does this work and is it a good idea?
10/29/2013, "Medicaid enrollment surges ahead of ACA sign-ups," by Jennifer Haberkorn, Politico
Quote: "HealthCare.gov may be limping along to full viability, but Medicaid is flying off the shelves. New Medicaid enrollment is far outpacing new insurance customers under Obamacare so far, a subtle sign that the program could play a greater role in the law's coverage expansion than first anticipated. Some people are signing up for the Medicaid expansion created by the president's health law. Others were already eligible for their state's current Medicaid program, but until this outreach campaign about health coverage, they had never signed up."
LTC Comment: There's an old saying in the business world: "When you're losing money on every customer, you can't make up for it with greater volume." Welcome to Medicaid, a bankrupt public welfare program that is crowding out health care and LTC providers with dismally low reimbursements.
10/28/2013, "Another perspective on the Virtual Dementia Tour: Guest Column," by Lassie Pappas, McKnight's LTC News
Quote: "Several years ago, I attended a seminar on how to decorate an Alzheimer's unit in a skilled nursing facility. While fascinated by what patterns, textures, and nuances should and should not be used in that situation, I never really knew how the residents FELT about their surroundings. I simply took the information as factual based on research, and moved forward with an internal renovation. A recent experience at the American Healthcare Association Convention really changed my perspective on how our elderly population may view their environment, and how we as care givers or visitors may unknowingly make them feel."
LTC Comment: Read this for a vicarious sense of what being a dementia patient might be like.
10/28/2013, "What the Voyager space program can teach you about preparing for long-term care," PBS News Hour
Quote: "At first glance, comparing a 36-year-old, one-ton spacecraft hurtling through interstellar space at about 37,075 miles per hour to the realities of planning for our long-term care needs seems ... odd. But the more we thought about it, it made sense. We brought together the wisdom of NASA scientists and health experts to highlight 10 lessons the Voyager spacecraft can teach us about planning for long-term care.
"Like the Voyager engineers, make sure your plans have fallback options in case your intended future doesn't materialize. Consider a long-term care insurance policy in case investments and Social Security are not enough to cover your medical needs after you retire. Understand the availability and kinds of care options your state and local government provides, and make plans should you need additional support."
LTC Comment: Hmmm. Maybe those who preferred to call the Center's "Silver Bullet" a "space capsule" were right all along.
10/28/2013, "Breakthrough study identifies 11 new genes linked to Alzheimer's disease [link]," FoxNews
Quote: "Researchers have identified 11 new genes linked to an increased risk of developing Alzheimer's disease, Medical News Today reported. In a study published in Nature Genetics, researchers from 145 academic centers around the world collected genetic data from 74,076 people in 15 countries in an attempt to identify more genes linked to the neurodegenerative disease."
LTC Comment: The more we know about the "Big A" the better, but who needed 11 more genes associated with Alzheimer's Disease?
10/28/2013, "The real cost of (not having) LTCI: Sales strategy," by Ed McCarthy, CFP, LifeHealthPRO
Quote: "Many clients who reject long-term care insurance (LTCI) or consider dropping their coverage do so on the argument that it's too expensive. But that attitude overlooks several important aspects of the costs of not buying the coverage, including the financial and personal burdens imposed on long-term care (LTC) recipients' families. We asked several LTCI experts for their thoughts on the cost issue and how they approach it with prospects and clients."
LTC Comment: This article cites Premier Elite Center members Honey Leveen and Phyllis Shelton. Well done!
10/25/2013, "The future of LTCI: Options, opportunities and urgency," by Tom Riekse, Jr., LifeHealthPRO
Quote: "Luckily, in the United States, we have many private LTC insurance solutions. Despite media perceptions, Americans have more opportunities than ever to plan for LTC through insurance. Will baby boomers heed the message and actually engage in planning? Financial professionals are the most likely group to influence them.
"There are four key types of coverage: traditional health-based LTC insurance, linked life/LTC plans, life insurance with LTC or chronic care riders, and finally annuity LTC plans. Let's look at the future of these product categories."
LTC Comment: Congratulations on this fine article to long-time Center supporter Tom Riekse, Jr., managing principal of Center-corporate-member LTCI Partners.
10/25/2013, "Strokes affect more young people, could double by 2030: study," The Associated Press, New York Daily News
Quote: "The incidence of stroke in people aged 20-64 jumped by a quarter, according to a new analysis of more than 100 studies published between 1990 and 2010. Stroke is the second-leading cause of death worldwide, though the death rate from stroke is actually falling due to better treatment options."
LTC Comment: As stroke is one of the leading causes of LTCI claims, this finding should be a wake up call to younger prospects who now face a higher LTC risk.
10/25/2013, "Greater family involvement in care improves resident outcomes but increases guilt, researchers find [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Programs to boost family involvement in caregiving can improve quality of life for long-term care residents and decrease the burden on staff, but might also increase family members' feelings of guilt, researchers have found."
LTC Comment: Caregiving is fraught with mixed emotions: pride and satisfaction for doing what you can, but worry and guilt that you could and should have done more. Very natural feelings.
10/24/2013, "Medicaid could be the next headache for Obamacare," by Kyle Cheney, Politico
Quote: "A new phase of the Obamacare launch is coming, this one involving Medicaid. And it could be déjà vu all over again. On Nov. 1, the health law's malfunctioning enrollment system is supposed to send reams of data to states so they can begin placing thousands of people into Medicaid. But state officials say that transfer system has barely been tested and could be vulnerable to technical failures like those that have crippled the broader Obamacare sign-up process.
"Under Obamacare, millions of low-income uninsured people are expected to enroll in Medicaid, which will be expanded significantly in about half the states on Jan. 1. Plus, the health law's enrollment push is expected to bring out of the woodwork people who are currently eligible but haven't already signed up for Medicaid. Early data from states running their own enrollment systems are reporting tens of thousands of new Medicaid enrollees so far this month, a potential indicator of strong interest."
LTC Comment: Solving America's health care problems by placing millions more people on Medicaid is like adding deck chairs to the Titanic after the incident with the iceberg.
10/24/2013, "Health-care help from an unlikely source: As clients' health costs rise, financial advisers scramble to become Medicare experts [link]," by Elizabeth O'Brien, WSJ MarketWatch
Quote: "Most financial advisers spend years developing expertise in the likes of asset allocation and investment fund selection. Until recently, they barely addressed the second-largest budget item of their older clients: health-related costs. This is beginning to change, though, as demand for help with health-care planning drives more advisers to add another line to their resume: Medicare consultant."
LTC Comment: When will financial advisors get around to becoming "LTC consultants?" More of them should advise their clients to consult genuine LTC insurance experts.
10/23/2013, "3 ways to pitch worksite LTCI," by Jeff Sadler, LifeHealthPRO
Quote: "Say what you will about the Patient Protection and Affordable Care Act (PPACA), but it is having a positive effect on the voluntary worksite marketplace. The majority of Americans seem to feel that health insurance coverage will never be the same and that future coverage will be less comprehensive and more costly. This would continue a decade-long pricing trend where employers passed more of the premium responsibility for health coverage on to the employee even as deductibles and out-of-pocket costs were increasing. Concerned that the underlying health care coverage may not be enough or even affordable in the years to come, employees have embraced the supplemental products employers are making available to them through both Section 125 cafeteria plans and payroll deduction. Whatever health insurance ends up looking like post-2014, there will be ample opportunity for additional supplemental sales to make up for whatever an employee feels the core benefit package is lacking. Enter long-term care insurance."
LTC Comment: A dim silver lining at best, but any port in a storm.
10/22/2013, "Survey: Third of Americans expect to work until they drop," by Eric Rosenbaum, CNBC
Quote: "You've heard the story about America's retirement crisis. Young people don't save enough. Older people have to work longer. Public pension benefits are always on the verge of being slashed, and Social Security's future is anyone's guess. And now it has come to this: In its annual retirement study of middle-income Americans (income of $25,000 to $100,000), Wells Fargo asked participants if they expect to work until they die. 'This is the first time we asked if people thought they would work until they die or become too sick,' said Laurie Nordquist, head of Wells Fargo Institutional Retirement and Trust. Thirty-seven percent of middle-income Americans surveyed by Wells Fargo said they have that expectation. 'If 80 is the new 60, it's looking like six feet under is the new 65 for a significant percentage of Americans.'"
LTC Comment: The reality is that most people will not work until they die. They may work until they need long-term care, but then they'll "retire." The bad news is that traditional retirement is disappearing. The somewhat better news is that more people will have higher incomes longer so they can afford the LTC insurance they'll need to gain access to better private LTC services when that time comes.
10/22/2013, "7 health insurance blogs you should know about," by Lauren Jaeckel, LifeHealthPRO
Quote: "From health care reform to sales and marketing, the insurance landscape is constantly evolving. Throughout every change, industry thought leaders provide essential tips and insights into new policies and trends to keep us on top of our game. Without further ado, here are seven of the industry's most influential insurance blogs that you should be following."
LTC Comment: All good, but we scan everything and deliver the best of it to you in the Center for Long-Term Care Reform's "Clippings" and LTC E-Alerts. Congratulations to Center supporters Honey Leveen (Premier Elite) and Stephen Forman (Bronze Corporate) for publishing free public blogs that made the list of the health care industry's best!
10/21/2013, "GAO analysts eye Medigap effects," by Allison Bell, LifeHealthPRO
Quote: "Holders of Medicare supplement insurance who said they had health problems spent an average of about $30,000 on care in 2010. The ailing Medigap holders spent about 2.5 times as much on care that year as consumers who said they had health problems but only had traditional Medicare fee-for-service (FFS) coverage, without help from a Medigap policy, a Medicare Advantage plan, or employer-sponsored retiree health benefits."
LTC Comment: Government ruined Medi-Gap insurance by forcing it into limited, structured plans and eliminating most of the choices consumers used to have for supplementing their Medicare coverage.
10/21/2013, "The cost of not planning for long-term care: Study pinpoints financial cost of caregiving [link]," by Maria Wood, LifeHealthPRO
Quote: "Numerous studies have underscored the physical and psychological strain of taking care of an aging, ailing loved one. However, a recent study by Genworth quantifies the monetary loss that caregiving could entail without the benefit of long-term care insurance (LTCI) or some form of pre-planning. The new report, 'Beyond Dollars: A Way Forward,' calculated that, on average, families would be able to save nearly $11,000 yearly in out-of-pocket expenses if long-term care arrangements were made prior to a loved one actually needing long-term care. Moreover, 53 percent of family members that acted as the primary caregiver have lost income due to their caregiving duties."
LTC Comment: There's more to LTC expenses than the cost of the patient's care itself, especially for caregivers.
10/21/2013, "Report: Providers should prepare for managed care partnerships for dual-eligibles services [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Managed care organizations are set to play a bigger role in how long-term care is provided for people currently eligible for both Medicare and Medicaid, and providers should focus on having the right capabilities in place for them, according to a new report. Released by merchant bank TripleTree, it also identifies technology vendors enabling these capabilities in the long-term and post-acute care settings."
LTC Comment: Moving the aged, blind and disabled—even including the most frail, infirm and expensive dual eligibles—into care managed by giant corporations that are more accustomed to dealing with preventive and acute care of mostly healthy people is a huge trend nationally. Advocates worry it will not work even as well as the poor system already operated by Medicaid and Medicare.
############################# Updated, Friday, November 1, 2013, 1:06 PM (Pacific) Seattle— ############################# LTC BULLET: THE INSURANCE DILEMMA LTC Comment: Why are we losing the benefits of insurance and suffering the inevitable consequences of compulsory government benefit programs? After the ***news.*** *** FREE LTCI CONFERENCE: Jesse Slome and the American Association for Long-Term Care Insurance have announced that key portions of their May 2014 long-term care insurance solutions conference in Kansas City will be streamed live for free to 5,000 virtual attendees. Read all about it here. You can watch two hours of sessions each day, including a special one-hour workshop by Corporation for Long-Term Care Certification president Harley Gordon. Tweet questions to presenters. Says Slome: "Nothing can replace face-to-face networking but technology will allow us to reach thousands of professionals who can't dedicate the time or expense involved with attending a conference." Congratulations to Jesse and AALTCI for another creative effort to promote responsible LTC planning and to support the producers who make it possible. *** LTC BULLET: THE INSURANCE DILEMMA LTC Comment: What a mess! The roll out of "health care reform," AKA the Affordable Care Act, AKA ObamaCare is almost universally panned in the media. But most coverage misses the real story. Real insurance is disappearing. Insurance is a financial tool that allows purchasers to replace the small risk of a catastrophic loss with the certainty of an affordable premium. Because it spreads risk, insurers can sell the product to many vulnerable customers, taking a loss on some and a profit on most. But insurance does more than spread risk. It also prices risk. By actuarially estimating the amount of risk each insured brings to the risk pool and pricing each individual's coverage accordingly, insurance ensures that reserves collected from premiums will suffice to pay reasonably anticipated claims. But pricing risk does something else of enormous importance. When smokers pay more for life insurance than non-smokers, smoking is discouraged. When poor drivers pay more for car insurance, bad driving is discouraged. When older people pay for more long-term care insurance, failure to plan early is discouraged. In other words, when insurance prices risk it performs a valuable role for individuals and for society by encouraging responsible behavior and discouraging irresponsibility. Now consider the misnomer "social insurance." Social insurance programs such as Medicare and Social Security spread risk very effectively. Everyone pays in and everyone receives benefits, equally in its pure form. Thus social insurance does not price risk. It has no way to determine what premiums are adequate to meet total claims in the future and it entirely lacks the valuable benefit of rewarding responsible behavior and discouraging irresponsible behavior. In fact, how has social insurance played out in the United States and elsewhere? Everywhere accumulated reserves are vastly inadequate compared to reasonably anticipated future costs. Social Security has a $23 trillion unfunded liability and Medicare a staggeringly irresponsible $43 trillion shortfall. As bad or worse, the false hope that social insurance will somehow provide future benefits has replaced the public's sense of personal responsibility with a widespread entitlement mentality. It's really pretty clear what is happening to the personal values of hard work, self-reliance and individual responsibility that made this country great in the first place. We've chipped away at them for decades and we're now about to pay a tragic price for the inevitable results of social insurance. So, why not confront that reality, explain it clearly, and advocate a return to true insurance? Therein lies the insurance dilemma. Imagine what would happen to the politician who advocates that insurance should price risk. You mean people with pre-existing conditions should pay more? How cruel. Women should pay higher premiums for health insurance and men, for life insurance? How unfair. People who don't want or can't afford insurance should remain uninsured? How socially irresponsible. Never mind that everyone was better off when real private insurance prevailed. Forget that everyone is and will be worse off as social insurance and the entitlement mentality lead to their inevitably destructive outcomes. Bottom line, social insurance requires responsible (insurable) people to pay more to offset the cost of irresponsible (uninsurable) people. Responsible people will not voluntarily pay more to support the irresponsible, so government has to compel citizens to participate. That's why the Affordable Care Act forces citizens to buy insurance and penalizes them if they do not. It substitutes personal responsibility with a false hope of social security. Easy to see all around us. Ah, but make that case and you'll be reminded that social insurance not only subsidizes the irresponsible, it helps the poor and unfortunate, who may be in that condition through no fault of their own. Don't you care about them? How long will a politician survive without taking the needy into account? Ironically, the poor fare much better in a society that rewards personal responsibility and encourages freedom. Without the economic drag of social insurance and compulsory wealth redistribution, the economy would thrive and all, including the poor, would fare better. Voluntary charity could and would provide for the needy better than government dependency. But that argument is complicated and difficult to make. Which is why few politicians who understand and believe it actually try to convey it publicly. Thus the opposing argument that government has to force citizens to act against their own best interests prevails. Only strong principles, grounded in human nature, could turn the tide. But it is those principles of independence, self-reliance, personal responsibility and hard work that have been corrupted over time. Sadly, we may have to suffer the increasingly inevitable collapse of the current system before better values can prevail again. Whether the USA follows the dismal history of previous economic powerhouses or rises again depends on whether or not and to what extent those fundamental values have survived. In the meantime, the relentless political efforts to destroy them, grounded in the threat of government force, continue apace. For a more detailed account of the difference between social insurance and real insurance, see Stephen A. Moses, "The Inherent Individualism of Insurance," Navigator, Vol. 5, Nos. 10-11, November-December 2002, pps. 10-12, 14-16, published in January 2003.
############################# Updated, Friday, October 25, 2013, 11:15 AM (Pacific) Corning, California— ############################# LTC BULLET: THE LTC BLIND LTC Comment: "There are none so blind as those who will not see." That proverb applies perfectly to a recent column about long-term care, after the ***news.***
*** AALTCI: The American Association for Long-Term Care Insurance has announced their 11th National Long-Term Care Solutions Sales Summit will be held May 18-20, 2014 at the Westin Hotel in Kansas City, MO. Over the past decade we've attended many of these conferences and have always found them to be of high value in terms of professional development through educational content and networking opportunities. Early registration is only $69. See http://www.aaltci.org/2014summit/index.html for further details and to register. ***
*** CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including: our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries. Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources. Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments. Contact Damon at 206-283-7036 / firstname.lastname@example.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. *** ############################# LTC BULLET: THE LTC BLIND "There are two ways to be fooled. One is to believe what isn't true; the other is to refuse to believe what is true." ― Søren Kierkegaard LTC Comment: Case in point? A Forbes column last week by a perennially insightless writer. Excerpts and our analysis follow. ############################# Excerpts from "Americans Worry About Long-term Care Costs, See Insurance and Government Solutions [link]" by Howard Gleckman "Americans have little idea how long-term supports and services are paid for, according to a new poll by Harris Interactive HPOL -0.51% and the medical publishers HealthDay. Yet, they are worried about the cost, believe most people should buy long-term care insurance, and also favor a new government program to pay some or all of the costs of LTC. "It is hard to make much sense of these results, although the public's confusion in this poll seems consistent with past surveys. "For instance, although Medicaid pays for as much as 60 percent of long-term care costs, only about one in five of those surveyed believe the program is the major payer of these services. One-third think Medicare is the biggest funder, though the program pays for almost no LTC costs. Half think individuals pay the most. In reality, families pay only about one-fifth of the cost of paid services, though of course they do provide the vast bulk of uncompensated care. "When asked who should pay these costs, 29 percent said individuals and their families while 27 percent said the federal government. Interestingly only 9 percent thought state and local governments should pay even though states are already a major payer through their share of Medicaid. Fully one-third said they don't know who should pay. . . . "The survey also asked if people were worried about the cost of long-term supports and services. Overall, 68 percent said they were very or somewhat worried. Women more much more likely to be concerned than men by 74 percent to 61 percent. By age, those least likely to be concerned were 18-24 (not surprising) and those 65 and older (very surprising). Those most likely to worry were aged 40-49. . . . "What's the take-away of all this? Americans recognize that long-term supports and services are a major financial risk, yet they are deeply uncertain about how long-term care is paid for today and what to do about it. And they seem open to some sort of new government program to help, perhaps one that is insurance-based in some way." ############################# LTC Comment: If the findings of this poll leave you stumped like the Forbes columnist, you haven't been reading your LTC Bullets. Let's review. Survey after survey and poll after poll produce the same results: Americans don't know who pays for long-term care. Nevertheless, they do know LTC is high risk and high cost. But they don't do much about it, such as buying LTC insurance. Academics, pundits, policymakers and even some LTCI marketers scratch their heads, throw up their hands and whine: "What's wrong with the American people? How can they be so dense? It must be denial, self-delusion, or early onset Alzheimer's." Guess what? The public has a better grasp of reality than the "experts" who "refuse to believe what is true." Here's what's true and why it explains the poll findings that befuddle so many analysts. (1) Americans don't know who pays for long-term care because they haven't needed to know. Since 1965 Medicaid has paid for most expensive long-term care. It still does. It pays after the insurable event occurs and without significant income or asset limits as we've explained so many times before. Ending up on Medicaid is a terrible outcome because of the program's access and quality problems, but consumers don't confront that reality until after it is too late to prepare responsibly. By then their heirs are so relieved their inheritances are safe that they blank out about their own need to plan for LTC risk. (2) Americans know LTC is high risk and high cost? Of course. It's been drummed into them by newspapers, magazines, TV specials, "Own Your Future" campaigns, and every altruistic, masochistic genius who's ever survived for more than a few weeks selling long-term care insurance. A truly strange poll finding would be that Americans hadn't gotten the message of LTC's high risk/cost and somehow thought long-term care was an emotional and financial cakewalk. Now, all you have to do is add paragraph one to paragraph two to get paragraph three. (3) When asked who pays for LTC, Americans either don't know or say "Medicare." Well good guess, but the real payer is Medicaid. The only thing that matters is that somebody pays, and Medicaid does. So, even though people do know that LTC may hit them with huge costs, it's all just theory to them because in fact somebody really does pay if LTC becomes high-cost. Why don't they plan to save, invest or insure for LTC? Simple. Consumers have many demands on their attention and finances. They only focus on real risks and costs and they prioritize which risks and costs on which to focus. End result? You get the survey and poll findings that baffle deniers. They refuse to acknowledge how Medicaid works in reality and cling to the myths that (1) it requires impoverishment and (2) LTC wipes out life savings nationwide. To resolve their conundrum is as easy as opening their eyes and accepting reality. But they have clamped their eyes shut. Want some good eye-openers? Read just about anything at www.centerltc.com, especially our "Articles, Speeches, and Reports." We've provided the evidence to back up the argument in this Bullet often and irrefutably. We'll gladly debate anyone publicly who disagrees.
############################# Updated, Monday, October 21, 2013, 11:27 AM (Pacific) Seattle— ############################# LTC E-ALERT #13-033: LTC NEWS AND COMMENT LTC Comment: It was a slow news week for LTC, with reportorial and editorial content aimed mostly at the debt ceiling and government shutdown stories. Coverage of the challenges facing ObamaCare will ramp back up now. That won't be pretty. Everything critics of the Affordable Care Act have warned would happen is beginning. It will be entertaining political theater. We'll stick to our knitting here with a focus on LTC news and policy, but we won't entirely neglect the bigger, acute care policy drama that is unfolding. It does have a long-term care component, in that ObamaCare pushes state Medicaid programs toward more home care (which increases costs) and more managed care (which risks access and quality problems). More on those issues will follow as we publish our three new state reports over the next month and a half. ############################# 10/18/2013, "Family caregivers live longer than their peers," by C. E. Huggins, Reuters Quote: "In a nationwide study, adults who provided care for a chronically ill or disabled family member had a lower death rate than a similar group of non-caregivers. The finding is something of a surprise. In the past, researchers have found just the opposite - an increased risk of death as well as poorer mental and physical health among caregivers." LTC Comment: Seems counter-intuitive, but anyone who has cared for a chronically ill loved one knows how personally rewarding the experience can be . . . if it isn't too hard and doesn't go on too long. ############################# 10/17/2013, "PPACA premiums, state-by-state Infographic," by Nichole Morford, LifeHealthPRO Quote: "It's mid-October and the exchanges have launched — clunkily, in most cases, and with many unknowns still to be answered. One question that has been answered is an important one: How much will health care cost under the Patient Protection and Affordable Care Act (PPACA)?" LTC Comment: And the answer is . . . it depends. ############################# 10/18/2013, "Common blood pressure drugs cut the risk of Alzheimer's dementia by 50%, researchers find [link]," by Tim Mullaney, McKnight's LTC News Quote: "People older than 75 who had normal cognition and took diuretics, angiotensin-1 receptor blockers (ARBs) and angiotensin-converting enzyme (ACE) inhibitors demonstrated a 50% reduced risk of Alzheimer's dementia, the researchers found. Among those with mild cognitive impairment, diuretic use was associated with a 50% reduced risk." LTC Comment: Almost makes you want high blood pressure. ############################# 10/17/2013, "Don't Let Health Care Squeeze Your Retirement," Military.com Quote: "In 2012, 82% of all long-term care insurance policy buyers were under age 65, according to the financial research organization LIMRA. And, most likely because of longer life expectancy, women make up 57% of long-term care insurance purchasers, according to a 2012 LIMRA study." LTC Comment: USAA promotes LTC insurance for the "military community." ############################# 10/16/2013, "Thefts from nursing home trust funds target the elderly," by Peter Eisler, USA Today Quote: "Thousands of residents in U.S. nursing homes and other long-term care institutions for the aged and disabled have had their personal savings raided or mismanaged after relying on the facilities to safeguard the money in special trust fund accounts, a USA TODAY investigation shows." LTC Comment: Most people in nursing homes are funded by Medicaid. Medicaid limits their cash assets to $2,000. Nursing homes manage those assets in trust accounts to ensure they do not exceed $2,000 and cause the resident to become ineligible for Medicaid. So, as new revenue comes into the accounts, they spend money to keep the accounts below the limit. Hopefully, the money is spent on the resident, but evidently that's not always the case according to this article. Another big question, unaddressed in this article, is what happens to the money in these accounts when a resident dies. It should go to the state's Medicaid estate recovery program to reimburse Medicaid for the cost of caring for the resident. But that's not what happens often. Someone shows up, claims to represent the deceased, and takes the money, leaving Medicaid (and taxpayers) with the full cost of the departed's care. ############################# 10/15/2013, "Seniors Cautioned To Pay Close Attention To Details As Enrollment Begins In Medicare Plans [link]," by Susan Jaffe, Kaiser Health News Quote: "The seven-week enrollment period for next year's Medicare prescription drug and managed-care plans begins Tuesday, but seniors shouldn't simply renew their policies and assume the current coverage will stay the same. There's a likely payoff for those who pay close attention to the details." LTC Comment: Government makes everything so simple. ############################# 10/15/2013, "'Landmark' discovery brings a pill for Alzheimer's closer to reality, researchers say [link]," by Tim Mullaney, McKnight's LTC News Quote: "In Alzheimer's and similar diseases, the brain responds to the buildup of 'misfolded' proteins by shutting off production of new proteins altogether, which leads to cell death. An orally administered compound has been found to intervene in this process and restore protein production in mice with neurodegenerative disease, according to researchers at the Medical Research Council Toxicology Unit at the University of Leicester." LTC Comment: Another false hope or "this time is different?" ############################# 10/14/2013, "Beneficiaries of Medicare Left Confused by Exchanges," by Robert Pear, New York Times Quote: "Medicare beneficiaries can sign up for private health plans starting Tuesday, but federal officials fear that many of them, out of confusion, might go to the new federal insurance exchange." LTC Comment: How tangled the web of confusion becomes with government in charge. ############################# 10/14/2013, "Most Americans expect to work for pay in retirement, poll says," Associated Press Quote: "Stung by a recession that sapped investments and home values, but expressing widespread job satisfaction, older Americans appear to have accepted the reality of a retirement that comes later in life and no longer represents a complete exit from the workforce. Some 82 percent of working Americans over 50 say it is at least somewhat likely they will work for pay in retirement, according to a poll released today by the Associated Press-NORC Center for Public Affairs Research." ############################# 10/13/2013, "Baby boomers fueling wave of entrepreneurship ," Associated Press Quote: "Every passing month an unanswered resume dimmed Jim Glay's optimism more. So with no job in sight, he joined a growing number of older people and created his own. In a mix of boomer individualism and economic necessity, older Americans have fueled a wave of entrepreneurship." LTC Comment: If there is a silver lining to the dark economic clouds, it's that boomers working longer and becoming entrepreneurs will be sensitized to the importance of preserving principal as they generate income longer, which they can put to good use with LTCI.
Updated, Friday, October 18, 2013, 11:32 AM (Pacific)
LTC Comment: The Wall Street Journal says professional kids should buy LTC insurance for their parents. It's a perfect solution. So why doesn't it happen more often? The answer after the ***news.***
*** LTC COVER UP: By hiking the debt ceiling and reopening government yesterday without corrective action, Congress covered up the underlying cause of America's financial malaise: too much spending; too much debt; too little private economic incentive. They applied a band-aid to a suppurating malignant tumor. Long-term care is part of the cover up because most expensive LTC in the USA is financed in large measure by federal borrowing, money printing and deficits. As the time approaches when this funny money finally runs out, we face huge demographic challenges that legislators, policy makers, and bureaucrats have ignored for decades. There is not much individuals and families can do to protect themselves beyond maximizing personal savings, investments and insurance. ***
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LTC Comment: Yesterday's Wall Street Journal had an article titled "Protecting a Family from Long-Term Care Costs." It's available here to online WSJ subscribers. If you'd like a copy forwarded to you, see the ***news*** above. Articles like this one, appearing in national publications, are a godsend for the struggling LTC insurance industry. Following are excerpts to give you a sense of the piece followed by our commentary.
Excerpts from Austin Kilham, "Protecting a Family from Long-Term Care Costs," Wall Street Journal, October 17, 2013 [link].
"The husband and wife were successful physicians in their late 30s, but they were worried about the husband's parents, who had saved only about $100,000 for retirement.
"The couple was especially concerned about the cost of medical expenses falling to them should the parents' health deteriorate. . . .
"The adviser [Ms. Horvath] realized that even though her client's parents had relatively little saved for retirement, they wouldn't be eligible for long-term care coverage through Medicaid, which requires recipients to have less than $2,000 in assets. That meant that even if they purchased LTC insurance, they would be responsible for additional expenses once the policy ran out.
"But Ms. Horvath devised a solution that protected the parents and their children from the high cost of long-term care, while improving the parents' chances of qualifying for assistance from Medicaid.
"First, the adviser suggested that the parents purchase LTC insurance from Georgia's Long-Term Care Partnership program-one of 31 state partnership programs to encourage individuals to buy LTC insurance. . . .
"Ms. Horvath found a policy with a $6,300 annual premium and would pay up to $4,500 a month for long-term care for three years. . . .
"But Ms. Horvath had a second part to her plan: The son and daughter-in-law could pay the premiums on behalf of the parents. Not only could the successful couple afford the payments, she showed them how it might be less expensive than paying for long-term care down the road.
"Above all, Ms. Horvath adds, both the children and the parents are relieved to have a plan in place that addresses potential long-term care needs without putting either couple's finances in jeopardy."
LTC Comment: Great plan. Slam dunk. That's why everyone's buying LTCI for Mom and Dad, right? Hardly.
Adult children purchasing LTC insurance policies for their parents is not unheard of, but it is rare. Why?
Most people don't think about LTC protection until they need it and then it's too late.
Well, sure, but why don't they think about it? After all, the risk of needing LTC someday is high and the potential cost is astronomical.
If the risk and cost is so high, why are most people unconcerned? "They're in denial," you say. OK, true, but that explains exactly nothing.
The key question is "What enables their denial?"
Do you really think most Americans would remain in denial, oblivious of long-term care's risk and cost, if one of every ten families in the country were being wiped out financially by long-term care?
No, there is a simple reason for this seemingly peculiar circumstance that most people ignore long-term care until they need it.
Since 1965, Medicaid and Medicare have paid most of the cost of expensive long-term care. Sure, families provide huge amounts of free care at considerable emotional and financial distress. But once care costing thousands of dollars per month becomes necessary, public funding kicks in.
Now, if the public funding didn't start until personal finances were wiped out, as most media coverage and academic writing incorrectly assumes, then people would worry about LTC and plan ahead.
But that's not how it works in the real world. Income doesn't interfere with Medicaid LTC eligibility because people who have too little income to pay privately for all their LTC and medical expenses qualify based on income. Assets don't interfere despite the $2,000 limit, because people's biggest assets are exempt, such as a home, business, IRAs, term life insurance, an automobile, etc. Those who still have too much wealth to qualify consult Medicaid planners. They make the excess go away artificially and get their affluent clients into the nicest facilities by holding back some "key money" to buy their way into the best care.
Do you see why the LTC Partnership Program, promoted in the article, has not attracted as many clients as it was expected to do? People don't buy insurance to avoid a catastrophic spend down liability that does not actually exist. They don't intentionally plan to go on Medicaid. They just don't plan or think about LTC at all. Their denial is the logical outcome of nearly five decades of Medicaid's operating as a de facto LTC entitlement.
The Wall Street Journal article cited above describes a situation in Georgia. The Center for LTC Reform recently completed a study of Medicaid and LTC financing in "The Peach State." Our report, titled "The Index of Long-Term Care Vulnerability: A Case Study in Georgia" will be published soon by the Georgia Public Policy Foundation and the Center. It will provide a much more detailed explanation than we have space for in this LTC Bullet. Stay tuned.
LTC Comment: Last Friday's LTC Bullet, titled "Shutdown Irony," pulled some compliments. Thanks.
But I'm not the only analyst to see the key issues in the current political morass as the debt (not the ceiling) and excessive government spending (not the shutdown).
Today, editorial cartoonist Glenn McCoy portrays a growling King Kong (labeled "debt") atop the Empire State Building. Kong grasps Uncle Sam in a choke-hold with bi-planes circling. A frustrated elephant pilots one and the President the other saying "Gorilla? What Gorilla?" Check it out here.
Denial is not a river in Egypt.
10/11/2013, "What's the Deal with the Exchanges?," by Greg Scandlen, John Goodman's Health Policy Blog
Quote: At e.Healthinsurance.com: "All you have to do is enter your zip code to find out what is available in your area and the world of choices opens up. You can see what the benefits and costs will be. Only after you have made your selection do you have to start filling out the paperwork. That is not how the ObamaCare exchanges operate. You can't see any actual insurance plans until you first fill out a whole lot of paperwork. Even Kentucky, the state with the best performance so far, requires you to complete a form including your name, address, phone number, and social security number, which must then be verified by 'public records and consumer credit information.'"
LTC Comment: Big Brother wants your personal information before revealing subsidized health insurance options. Is this about expanding health insurance or capturing email addresses and increasing dependency?
10/10/2013, "Some Good News About Saving For Retirement Health Costs," by Ankita Rao, Kaiser Health News
Quote: "A new report from the Employee Benefit Research Institute found that Medicare beneficiaries, who are 65 years or older, would need to save six to 11 percent less in 2013 than they did in 2012. Men hoping for a 50-percent chance of having enough money saved for retirement health costs would need an average of $65,000. For women, who have longer life expectancies and related costs, the savings goal would be about $86,000. . . . Even so, saving for retirement won't necessarily be easier in coming years. The report notes that its analysis doesn't account for long-term care expenses like nursing home care, or for costs incurred by those who retire before they're eligible for Medicare." (Emphasis added)
LTC Comment: Such a minor oversight, not accounting for LTC expenses.
10/11/2013, "Strokes drastically reduce quality of life, showing need for better care systems, researchers say [link]," by Tim Mullaney, McKnight's LTC News
Quote: "They found that in the five-year period after having a stroke, participants lost 1.71 years due to earlier death and an additional 1.08 years due to reduced quality of life, on average, totaling a loss of 2.79 'quality-adjusted life years.' Those who had severe strokes lost just over 4 quality years. . . . Last month, the American Heart Association/American Stroke Association issued a policy statement calling for universal access to post-stroke skilled nursing and rehabilitation services, regardless of how an individual is paying for healthcare." (Emphasis added.)
LTC Comment: It always comes down to funding in the end. Can you or your insurance pay for the care you need or do you have to depend on government or charity?
10/9/2013, "A New Way to Pay for Long-Term Care," by Paula Span, New York Times
Quote: "I was visiting an assisted living facility recently with my sister, whose disability made that a prudent choice, when the marketing manager handed us a brochure. It asked, 'Did you know a life insurance policy can pay for long-term care expenses?'"
LTC Comment: Life settlements come to the attention of the New York Times.
10/9/2013, "Top 20 Most Expensive Inpatient Conditions," by Bob Herman, Becker's Hospital Review
Quote: "Here are the top 20 most expensive inpatient conditions from 2011 across all payers, according to the AHRQ brief.
1. Septicemia (except in labor) - $20.3 billion 2. Osteoarthritis - $14.8 billion 3. Complication of device, implant or graft - $12.9 billion 4. Liveborn (general childbirth) - $12.4 billion 5. Heart attack - $11.5 billion 6. Spondylosis, intervertebral disc disorders, other back problems - $11.2 billion 7. Pneumonia (except caused by tuberculosis and STDs) - $10.6 billion 8. Congestive heart failure - $10.5 billion 9. Coronary atherosclerosis - $10.4 billion 10. Adult respiratory failure - $8.7 billion 11. Acute cerebrovascular disease - $8.4 billion 12. Cardiac dysrhythmias - $7.6 billion 13. Complications of surgical procedures or medical care - $6.9 billion 14. Chronic obstructive pulmonary disease and bronchiectasis - $5.7 billion 15. Rehab care, fitting of prostheses and adjustment of devices - $5.5 billion 16. Diabetes mellitus with complications - $5.4 billion 17. Biliary tract disease - $5.1 billion 18. Hip fractures - $4.9 billion 19. Mood disorders - $4.8 billion 20. Acute and unspecified renal failure - $4.7 billion"
LTC Comment: And then comes long-term care.
10/9/2013, "ACSIA Long Term Care Leader Rob Cohen Joins the 3in4 Association Advisory Board [link]," DigitalJournal
Quote: "Today Rob Cohen, CPA, a long-term care insurance leader with ACSIA Long Term Care, announced his commitment to LTC education by accepting a position on the Advisory Board of the 3in4 Association. Rob has over 21 years of progressive experience in the LTC industry, including running the largest division of a major national long term care insurance carrier, founding a national LTC brokerage, and testifying in his state Congress on consumer advocacy and advancing the impact of the state LTC Partnerships."
LTC Comment: Congratulations, Rob.
10/8/2013, "Why spouses should 'split up' for Medicare," by Anne Tergesen, WSJ MarketWatch
Quote: "Just a week before Medicare's annual enrollment period is set to begin, here's something for married couples to consider: Just because you were on the same health insurance plan during your working years doesn't mean you should opt for the same coverage in Medicare."
LTC Comment: This advice to "split up" to choose the best Medicare plan for each spouse is a far cry from the advice Medicaid planners give elderly couples to separate or divorce to facilitate eligibility for welfare-financed LTC benefits.
10/8/2013, "Obamacaid: Democrats ask: Why not expand the worst insurance in America? [link]," Wall Street Journal editorial
Quote: "In reality, Medicaid is now mostly a middle-class entitlement for nursing homes. Almost two-thirds of Medicaid spending flows to the elderly, and 60% of people in long-term care institutions are on the program.
"Some 20% of the people under 65 who are eligible for the program today also haven't signed up. One reason might be the scandalously poor quality of care as states squeeze down provider reimbursements. Only this May an important randomized, controlled trial in Oregon concluded that the program generates no discernible improvement in health compared to being uninsured.
"If the sojourners for Medicaid were serious about helping the least fortunate, they'd try to repair its current dysfunctions. Start by prioritizing spending, and then give Governors waivers to manage case loads and make operations more efficient.
"But the truth is that liberals view Medicaid as a national model, not a national disgrace. Coverage on ObamaCare's nominally private exchanges largely clones Medicaid's narrow networks of doctors and hospitals, low reimbursements, limited patient choice and heavy federal regulation. It might be more accurate to call it Obamacaid.
"Meanwhile, the Administration is closing off state Medicaid experimentation with 'maintenance of effort' rules that guarantee state costs are higher than they need to be. Most Governors, even Republicans, are pragmatic about living with Medicaid, but the White House's control-freak instincts are making it impossible for them to participate."
LTC Comment: This excerpt from a Wall Street Journal editorial is unusually accurate and perceptive about the real nature of Medicaid. The rest of the piece is even more highly political. You may not be able to click through to it without an online subscription to the WSJ. If you really want to read the whole editorial, just respond to this email and I'll forward it to you, which the WSJ allows for one week or so.
10/7/2013, "Costliest 1 Percent Of Patients Account For 21 Percent Of U.S. Health Spending [link]," by Sandra G. Boodman, Kaiser Health News
Quote: "Five percent of patients accounted for 50 percent of all health-care expenditures. By contrast, the bottom 50 percent of patients accounted for just 2.8 percent of spending that year, according to a recent report by the federal Agency for Healthcare Research and Quality."
LTC Comment: Dramatic findings and they suggest that real, private insurance works, i.e., exchanging catastrophic risk for affordable premiums. But that kind of insurance is disappearing, replaced by "social insurance" that forces everyone to pay leveled premiums so that anyone can collect benefits regardless of the risk they bring to the pool. Hence articles like this one focus only on managing care for the tiny minority of heavy health care users. Health care financing will not step back from the fiscal cliff until public policy focuses on preventing people from entering the high-risk, high-cost, predominantly publicly financed category. The way to do that is to return to the traditional principle of private insurance with a strictly means-tested, welfare-based public safety net.
10/7/2013, "When it comes to paying for long-term care, public and private options can both fail [link]," by John O'Connor, Editorial Director, McKnight's LTC News
Quote: "Our lawmakers' incompetence leaves many concerned about future Medicare and Medicaid funding, which just happens to pay for most of our nation's long-term care services. But before the privatize-everything crowd completely takes over, let's remember this salient fact: The private sector doesn't always get payments right either."
LTC Comment: Not a happy read and it contains some errors about LTCI, but this editorial in a widely read LTC provider magazine gives insight into how that industry views public and private LTC financing.
10/4/2013, "The Employer Mandate of the Patient Protection Affordable Care Act: An Alliance for Health Reform Toolkit [link]," by Bara Vaida, Alliance for Health Reform
Quote: "Fast Facts
"Employers with more than 50 full-time employees (those who work 30 or more hours a week) must offer insurance to workers beginning in 2015 or pay a $2,000 per employee penalty, if any worker gets a coverage subsidy through a state health insurance exchange.
"Employer-provided insurance coverage must be affordable and cost no more than 9.5 percent of the employee's income. If it is more, the employee may seek coverage on the exchange and the employer will pay a $3,000 penalty for each of those workers.
"The mandate was originally scheduled for implementation in 2014, but the Obama administration in July 2013 delayed it for one year to give employers more time to comply with the law.
"Small employers (those with fewer than 50 workers) are exempt from the penalties.
"The percentage of individuals with employment-based coverage was 55.1 percent in 2011, down from 55.3 percent in 2010, 56.1 percent in 2009, and 65.1 percent in 2000."
LTC Comment: Anybody out there want to hire your 50th "full time" employee? So much for a focus on job creation!
LTC Comment: Default gestalt hides reckless debt bet.
LTC Comment: How ironic that most government shutdown news and analysis despairs about the consequences of default now, but ignores the debt itself, its causes and the hugely greater risk of a nearly inevitable, much bigger default later. Most media coverage focuses on the symptoms, not the disease.
Writing this yesterday with the stock market soaring over hopes of a temporary debt ceiling compromise, I knew it might be old news by publication time today. But this morning, as I apply the finishing touches, little has changed although "talks" with the White House have begun.
While I mused about writing a Bullet on this subject, I read an op-ed in yesterday's Wall Street Journal that did the job admirably for me: "David Malpass: The Bigger Battle Behind the Shutdown" (gated). Following are a few summary excerpts from what Malpass had to say followed by my thoughts on the situation's relevance to long-term care policy.
From "David Malpass: The Bigger Battle Behind the Shutdown," Wall Street Journal, October 10, 2013
"At its core, the shutdown is part of a much bigger battle to restrain the federal government. It is spending $3.6 trillion per year without a budget, and its expenditures are expected to increase rapidly in the years ahead.
"Meanwhile, the government has piled up $17 trillion in debt and $60 trillion more in unfunded spending promises. The Federal Reserve will borrow $1.1 trillion in 2013 alone to buy bonds-and it reserves the right to borrow unlimited amounts for future bond purchases without congressional or presidential permission." . . .
"Much federal spending can't be justified. The government shutdown is giving more insight into the problem-a staggering $250 billion per month, 80% of spending, runs on autopilot without any congressional involvement or control. So much for the Constitution's bedrock principle that 'No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.'" . . .
"Rather than discuss restraint, the administration has increasingly turned to the Federal Reserve as a crutch. The Fed is borrowing and spending $85 billion per month on bonds, and it claims the legal authority to increase its debt at will. Wall Street is intensely focused on supporting this profligacy and profiting from it." . . .
"The Fed is choosing to buy long-term bonds with short-term debt. The result is a rapid shortening in the effective maturity of the national debt that benefits current politicians but puts taxpayers at risk. Like an adjustable-rate mortgage, the borrower, in this case the government, gets a lower interest rate now but will have to refinance at higher rates later." . . .
"The upside is clear: Growth, jobs, the dollar and financial markets would surge if the shutdown leads to restraint."
LTC Comment: That's the big picture. Now here's our focus on long-term care.
What Malpass calls "a staggering $250 billion per month, 80% of spending, [that] runs on autopilot" includes government spending on long-term care. Since 1965, Medicaid and Medicare have paid for most expensive LTC with three major consequences. First, by paying mostly for nursing home care, government created "institutional bias" and crowded out a private market for home and community-based care. Second, by making most expensive long-term care virtually free, government discouraged responsible private LTC planning and impeded markets for private insurance and home equity conversion products to fund LTC. Third, by forcing interest rates to near zero, government (i.e., the Fed) administered the coup de grace to market-based LTC financing and delayed indefinitely the reckoning for government's profligacy.
Now we all find ourselves on the edge of a fiscal cliff. By hiding from financial reality for so long, public policy has brought us to the cusp of a Hobson's choice about long-term care. Back off voluntarily from paying for most long-term care with non-existent (i.e., borrowed or printed) government funds now or be forced to do the same by deteriorating economic and monetary conditions a little later. Take it or leave it. The end game is the same and it's getting nearer day by day.
To illustrate just how grave this situation is, the Center for Long-Term Care Reform developed an "Index of Long-Term Care Vulnerability." We provided an outline of the Index in an LTC Bullet last August. In the meantime, we've refined the index and applied it to the United States and to three states: Virginia, New Jersey and Georgia. The results are not encouraging. The country as a whole and all states face staggering challenges to the sustainability of their long-term care financing systems. We've summarized the demographic, economic and social challenges in these seven questions:
Stay tuned to LTC Bullets for answers. It may already be too late for solutions short of public funding default and market-based reconstruction.
LTC Comment: The government shut down and the shaky implementation of ObamaCare seem to have sucked all of the journalistic oxygen out of the room. LTC-related clippings were relatively sparse this past week. The shut down and ObamaCare coverage, however, are a welcome reminder of the massive problems that arise when parties do through politics what can only be done well and efficiently through markets. The jury is out on whether government failures, inevitably becoming much worse, will lead to a total collapse or, by default, to market-based solutions. If to avoid defaulting on debt payments, the feds were forced to cut popular programs, the public would soon be forced to see hard choices for what they are. Sooner or later, there'll be no more monetary wool over their eyes. Expect Congress- and fed-watching to become as entertaining and violent as a demolition derby.
10/7/2013, "Your guide to Medicare: What Medicare Advantage plan is best for you? [link]," by Phyllis Furman, New York Daily News
Quote: "Medicare Advantage plans are on a tear: Enrollment in Medicare Advantage plans has been growing at a 10% annual clip for the last few years as seniors have warmed to their convenience and potentially lower costs, while growing more comfortable with the idea of managed care."
LTC Comment: Medicare Advantage sales help support LTCI distributors who confront a more challenging market.
10/7/2013, "Shutdown update: DC cuts off Medicaid payments, CMS confirms limited surveys [link]," by Tim Mullaney, McKnight's LTC News
Quote: "'Due to the failure of the United States Congress to pass a budget for fiscal year 2014 and the District's resulting budget difficulties, at this time, the Department of Health Care Finance is not in a position to pay the managed care organizations or fee-for-service providers for the healthcare services delivered to the District's Medicaid and Alliance beneficiaries,' the department stated Friday."
LTC Comment: The nursing home industry is accustomed to long delays in Medicaid reimbursement. How much of that will giant managed care organizations put up with? We're likely to find out as managed care continues to spread into long-term care for aged, blind and disabled Medicaid recipients, especially the highly vulnerable and extremely expensive "dual eligibles."
10/4/2013, "99% of Obamacare applications hit a wall," by Dan Mangan, CNBC
Quote: "As few as 1 in 100 applications on the federal exchange contains enough information to enroll the applicant in a plan, several insurance industry sources told CNBC on Friday. Some of the problems involve how the exchange's software collects and verifies an applicant's data."
LTC Comment: Anybody surprised?
10/4/2013, "Don't wait to plan long-term care: Most of us will need help as we age. Here's what to do-and how to pay for it [link]," Orly Avitzur, M.D., ConsumerReports.org
Quote: "So unless you have ample savings to cover prolonged care, it's worth considering at least partial coverage through a long-term-care policy."
LTC Comment: A positive article on LTC insurance in long-time basher Consumer Reports? Did Hades freeze over?
10/4/2013, "Texas Medicaid Law Could Transform Life Insurance Industry," by Wm. Scott Page, Huffington Post
Quote: "Texas dramatically changed its Medicaid eligibility law recently, in a move that is already having a profound effect on the life insurance industry -- yes, the life insurance industry. Traditionally, to enroll in Medicaid, the state-run health insurer of last resort, individuals needed to be nearly destitute. So to qualify, many people spent down or surrendered their assets (including life insurance) in order to become eligible for this needed medical coverage. The new law in Texas, however, enables individuals with a life insurance policy to enter the Medicaid program provided they obtain a life insurance settlement and use the proceeds specifically for long-term care."
LTC Comment: Good for Medicaid, elders and care providers. Not so good for life insurers who lose lapsers.
10/4/2013, "Health Reform FAQs," Kaiser Family Foundation
Quote: 189 "frequently asked questions" about ObamaCare answered!
LTC Comment: And they say LTC insurance is complicated.
10/4/2013, "CMS: Medicare will not cover PET scans for Alzheimer's," by Tim Mullaney, McKnight's LTC News
Quote: "Seniors will not be able to receive Medicare coverage for imaging scans to help diagnose Alzheimer's disease, the Centers for Medicare & Medicaid Services recently announced. ... The CMS decision has sparked criticism from some quarters. Opponents say it contradicts an Alzheimer's action plan released earlier this year by the Department of Health and Human Services itself, noted the Assisted Living Federation of America."
LTC Comment: Government jerkily at work. One foot on the brake and the other on the accelerator.
10/3/2013, "How PPACA affects long-term care insurance," by Tom Nawrocki, LifeHealthPro
Quote: "PPACA eliminates an insurance company's ability to impose a lifetime maximum on how much it can pay out. That means that end-of-life medical issues will be more likely to be covered, which eliminates part of the cost of long-term care. When your clients are shopping for long-term care insurance, that's something important to keep in mind."
LTC Comment: An interesting observation, but I wonder to what extent it will prove true.
10/2/2013, "Long-Term Cognitive Impairment Too Common After Critical Illness [link]," Science Daily
Quote: "Patients treated in intensive care units across the globe are entering their medical care with no evidence of cognitive impairment but oftentimes leaving with deficits similar to those seen in patients with traumatic brain injury (TBI) or mild Alzheimer's disease (AD) that persists for at least a year, according to a Vanderbilt study published in the New England Journal of Medicine."
LTC Comment: No wonder hospitals always leave me feeling a little crazy.
10/2/2013, "Long-term statin use reduces dementia risk by 30%, researchers discover [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Last year, the U.S. Food and Drug Administration ordered that statin labels include a warning about memory problems associated with short-term use. A research team from Johns Hopkins Medicine found no evidence of this, based on their analysis of prior studies. In addition, they found that statin use for longer than one year reduced the risk of dementia by 29%."
LTC Comment: Hmmm. The FDA protects us from problems that don't exist and from solutions that do.
10/1/2013, "Long Term Care Insurance Leader, Mark Goldberg Joins LTC Financial Partners As National Sales Manager [link]," Sacramento Bee
Quote: "LTC Financial Partners, LLC (LTCFP) https://www.ltcfp.com today announced the addition of Mark Goldberg, a leader in the long-term care planning field, as new National Sales Manager. For the past 8 months, Goldberg has held the role of Chief Operating Officer for American Senior Services Incorporated (ASSI) http://www.truefreedomhomecare.com, and will continue supporting ASSI's efforts in a modified position as Senior Distribution Director."
LTC Comment: Congratulations, Mark.
10/1/2013, "Covering Health Issues: A Sourcebook for Journalists: Fall 2013," Alliance for Health Reform
Quote: Table of Contents:
* CHAPTER 1 - PATIENT PROTECTION AND AFFORDABLE CARE ACT (Updated: 10.03.2013)
* CHAPTER 2 - HEALTH CARE COSTS (Updated: 10.02.2013)
* CHAPTER 3 - HEALTH INFORMATION TECHNOLOGY (Updated: 10.02.2013)
* CHAPTER 4 - QUALITY OF CARE (Updated: 10.02.2013
* CHAPTER 5 - INNOVATION AND DELIVERY SYSTEM REFORMS (Updated: 10.02.2013)
* CHAPTER 6 - EMPLOYMENT-BASED HEALTH COVERAGE (Updated: 10.03.2013)
* CHAPTER 7 - HEALTH INSURANCE EXCHANGES (Updated: 10.03.2013)
* CHAPTER 8 - MEDICARE (Updated: 10.02.2013)
* CHAPTER 9 - MEDICAID AND CHIP (Updated: 10.02.2013)
* CHAPTER 10 - DUAL ELIGIBLES (Updated: 10.02.2013)
* CHAPTER 11 - LONG-TERM SERVICES AND SUPPORTS (Updated: 10.03.2013)
* CHAPTER 12 - DISPARITIES IN HEALTH AND HEALTH CARE (Updated: 10.02.2013)
* CHAPTER 13 - MENTAL HEALTH AND SUBSTANCE ABUSE (Updated: 10.03.2013)
* CHAPTER 14 - PUBLIC HEALTH AND PREVENTION (Updated: 10.03.2013)
* GLOSSARY - GLOSSARY (Updated: 10.01.2013)
LTC Comment: This is a convenient source for data on all aspects of health care financing including long-term care, or as they prefer to call it "long-term services and supports," a real mouthful. Take it with a grain of salt, though. The sources are heavily biased against private financing alternatives, including insurance. The list of experts for the LTSS section reads like a "who's who" of government takeover advocates, with only a few more-objective, "go-along-to-get-along" exceptions.
10/1/2013, "Government shutdown will not cripple long-term care, leaders say," by Tim Mullaney, McKnight's LTC News
Quote: "A shutdown could lead to dramatic consequences, such as furloughs of up to half the staff at the Department of Health and Human Services. However, it should not immediately impact long-term care providers too severely. LeadingAge and the American Health Care Association reassured members that Medicare and Medicaid reimbursements should continue to flow, at least in the short term. . . . The shutdown likely will lead to fewer initial and recertification surveys for Medicare and Medicaid providers and interrupt the work of healthcare fraud and abuse strike forces, wrote Barbara Gay, director of governmental affairs at LeadingAge."
LTC Comment: Actually, the shutdown did stop Medicaid payments in DC. The bigger problem long term, however, is the hopelessly unfunded entitlement programs and the massive and rapidly growing federal debt, compounded of course by huge, unfunded pension liabilities. If shutting down the government leads to greater scrutiny of those issues, it will be well worth the minor inconveniences that ensue.
9/29/2013, "When to Recommend Medicaid," by Elliot M. Kass, Financial Planning
Quote: "The difficult part, says Steve Mathieu, a Manchester, New Hampshire-based financial and estate planner specializing in clients age 55 and up, comes down to loss of control, 'Because once you go on Medicaid, the government dictates many aspects of your life, including the level and type of care that you'll receive and where you'll live.' 'Some people no longer care. They don't have any assets to protect and they're okay with the government making all their decisions,' Mathieu says. They may transfer ownership of what few assets they have to a loved one in order to qualify for the program."
LTC Comment: He's right about losing control when you go on Medicaid, but wrong about transferring those last few assets to loved ones. That would create a transfer of assets penalty . . . if done for the purpose of qualifying for Medicaid and if the eligibility workers catch it.
LTC Comment: We've updated the "Almanac of Long-Term Care" in The Zone. More on the LTC Almanac and today's update after the ***news.***
*** LTC COMMISSION falls flat. As many predicted, including LTC Bullets, the federally sponsored Commission on Long-Term Care--created by the "fiscal cliff" legislation, oxymoronically named "The American Taxpayer Relief Act"--came and went with barely a ripple of interest. Amid universal laments that long-term care is a huge personal and financial, private and public problem, the Commission could not agree on the only thing that really matters: how to pay for quality LTC for an aging population. We believe it's time to change the focus of LTC research. Instead of asking "What's wrong and how can we fix it?" it's time to ask "How did we get into this mess and what can we do to keep it from getting even worse?" In other words, the time has come to focus on our Rube Goldberg LTC system's vulnerability and unsustainability. Keep an eye out for new research from the Center for LTC Reform that does exactly that. ***
*** HE'S BACK. After four months on the road (in the Silver Bullet) conducting field work in Virginia, New Jersey and Georgia and another month hunkered down writing the reports on those studies, Steve Moses is back at Center headquarters in Seattle. He says: "I look forward to refocusing on our Clippings Service, LTC E-Alerts, and LTC Bullets and I thank Damon for picking up the slack while I was fully engaged in report writing." Those three reports, titled "The Index of Long-Term Care Vulnerability: Case Studies in Virginia, New Jersey, and Georgia" have been submitted to the state think tanks that commissioned them. We look forward to posting them and telling you more about their findings soon." ***
*** CLIPPING SERVICE subscribers receive news items from us, individually and in real time, as short emails with a link, a quote and occasionally some brief commentary. We keep our Clipping Service subscribers on the forefront of LTC knowledge. We spend the time and effort gathering current, critical information on long-term care issues so you don't have to. By dividing the labor in this way, we all work more efficiently. If you like what you read in our LTC E-Alerts, please subscribe to our Clipping Service. It's free to all "Premium Members" ($250/year). Find all the details here. Contact Damon at 206-283-7036 or firstname.lastname@example.com to subscribe. ***
LTC Comment: Center members know and appreciate our "Almanac of Long-Term Care" in The Zone, our password-protected website.
*** SPECIAL: We are making access to The Zone, including the "Almanac of Long-Term Care," free for seven days—today through Friday, October 11, 2013. To access this introductory peek into The Zone, go to http://www.centerltc.com/members/index.htm and use the following case-sensitive user name and password: UN: IntrotoZone / PW: FreeTrial. Like what you see? Then join the Center for Long-Term Care Reform here. Or contact Damon at 206-283-7036 or email@example.com. ***
The LTC Almanac is divided into 11 sections:
Aging Demographics
Unfunded Liabilities--Social Security, Medicare, and Budgets
Long-Term Care
Long-Term Care Financing
Long-Term Care Insurance
Reverse Mortgages
Long-Term Care Providers
Medicaid Planning
Each section is divided into sub-sections and under each sub-section we provide a list by date of the most important reports and articles published on the topic, usually with a few highlights and sometimes with analysis.
The Almanac of Long-Term Care is a great way to find statistics you need quickly or to get current on topics you need to know the latest information about.
The Zone and the LTC Almanac are for Center for Long-Term Care Reform members only, except during the current free trial offer. Join the Center here: http://www.centerltc.com/support/index.htm. Call or email Damon at 206-283-7036 or firstname.lastname@example.com. He can give you a user name and password to open up The Zone even before your annual dues payment arrives. Individual annual memberships are $150. Premium memberships with access to our "Clipping Service" start at $250. Premium Elite and "Regional Representative" membership (if you qualify professionally) are $500. Corporate memberships with many extra benefits start at $1,000. See our "Membership Levels and Benefits" schedule here.
Caveat: With time, some hyperlinks go bad. In a huge document like the "LTC Almanac," we can't keep all the links current all the time. If you find a bad link, but want to get to the material, contact us. We often have an electronic copy of the document and we can usually find a current live link. We'll also fix the link in the LTC Almanac so it will be current again for others.
Suggestion: Read through the following update to stay current on new resource materials. Then browse the full LTC Almanac at your leisure. When you need a quick fact or the latest research on a particular topic, you'll know right where to go. Enjoy.
Chapter 1: Aging Demographics
United States
General Stats
"Rising Demand for Long-Term Services and Supports for Elderly People"
CBO on LTC 0613 URL
"By 2050, one-fifth of the total U.S. population will be elderly (that is, 65 or older), up from 12 percent in 2000 and 8 percent in 1950. The number of people age 85 or older will grow the fastest over the next few decades, constituting 4 percent of the population by 2050, or 10 times its share in 1950. That growth in the elderly population will bring a corresponding surge in the number of elderly people with functional and cognitive limitations. Functional limitations are physical problems that limit a person's ability to perform routine daily activities, such as eating, bathing, dressing, paying bills, and preparing meals. Cognitive limitations are losses in mental acuity that may also restrict a person's ability to perform such activities. On average, about one-third of people age 65 or older report functional limitations of one kind or another; among people age 85 or older, about two-thirds report functional limitations. One study estimates that more than two-thirds of 65-year-olds will need assistance to deal with a loss in functioning at some point during their remaining years of life. If those rates of prevalence continue, the number of elderly people with functional or cognitive limitations, and thus the need for assistance, will increase sharply in coming decades." (p. 1)
See also "Methods for Analysis of the Financing and Use of Long-Term Services and Supports": http://www.cbo.gov/publication/44370
Profile of Older Americans, 2012 AOA URL
• The older population (65+) numbered 41.4 million in 2011, an increase of 6.3 million or 18% since 2000.
• The number of Americans aged 45-64 – who will reach 65 over the next two decades – increased by 33% during this period.
• Over one in every eight, or 13.3%, of the population is an older American.
• Persons reaching age 65 have an average life expectancy of an additional 19.2 years (20.4 years for females and 17.8 years for males).
• Older women outnumber older men at 23.4 million older women to 17.9 million older men.
• In 2011, 21.0% of persons 65+ were members of racial or ethnic minority populations--9% were African-Americans (not Hispanic), 4% were Asian or Pacific Islander (not Hispanic), less than 1% were American Indian or Native Alaskan (not Hispanic), and 0.6% of persons 65+ identified themselves as being of two or more races. Persons of Hispanic origin (who may be of any race) represented 7% of the older population.
• Older men were much more likely to be married than older women--72% of men vs. 45% of women (Figure 2). 37% older women in 2012 were widows.
• About 28% (11.8 million) of noninstitutionalized older persons live alone (8.4 million women, 3.5 million men).
• Almost half of older women (46%) age 75+ live alone.
• In 2011, about 497,000 grandparents aged 65 or more had the primary responsibility for their grandchildren who lived with them.
• The population 65 and over has increased from 35 million in 2000 to 41.4 million in 2011 (an 18% increase) and is projected to increase to 79.7 million in 2040.
• The 85+ population is projected to increase from 5.7 million in 2011 to 14.1 million in 2040.
• Racial and ethnic minority populations have increased from 5.7 million in 2000 (16.3% of the elderly population) to 8.5 million in 2011 (21% of the elderly) and are projected to increase to 20.2 million in 2030 (28% of the elderly).
• The median income of older persons in 2011 was $27,707 for males and $15,362 for females. Median money income (after adjusting for inflation) of all households headed by older people rose by 2% (not statistically significant) from 2010 to 2011. Households containing families headed by persons 65+ reported a median income in 2011 of $48,538.
• The major sources of income as reported by older persons in 2010 were Social Security (reported by 86% of older persons), income from assets (reported by 52%), private pensions (reported by 27%), government employee pensions (reported by 15%), and earnings (reported by 26%).
• Social Security constituted 90% or more of the income received by 36% of beneficiaries in 2010 (23% of married couples and 46% of non-married beneficiaries).
• Almost 3.6 million elderly persons (8.7%) were below the poverty level in 2011. This poverty rate is not statistically different from the poverty rate in 2010 (8.9%). During 2011, the U.S. Census Bureau also released a new Supplemental Poverty Measure (SPM) which takes into account regional variations in the livings costs, non-cash benefits received, and non-discretionary expenditures but does not replace the official poverty measure. The SPM shows a poverty level for older persons of 15.1% (more than 6 percentage points higher than the official rate of 8.7%). This increase is mainly due to including medical out-of-pocket expenses in the poverty calculations.
*Principal sources of data for the Profile are the U.S. Census Bureau, the National Center for Health Statistics, and the Bureau of Labor Statistics. The Profile incorporates the latest data available but not all items are updated on an annual basis.
Chapter 3: Unfunded Liabilities--Social Security, Medicare, and Budgets
National Health Expenditures
"National Health Expenditure Projections, 2012-22: Slow Growth Until Coverage Expands And Economy Improves"
National Health Expenditure 2012-2022 URL
"Expected growth for 2014 is 6.1 percent, with an average projected growth of 6.2 percent per year thereafter. Over the 2012-22 period, national health spending is projected to grow at an average annual rate of 5.8 percent. By 2022 health spending financed by federal, state, and local governments is projected to account for 49 percent of national health spending and to reach a total of $2.4 trillion." (p. 1)
"National Health Spending In 2011: Overall Growth Remains Low, But Some Payers And Services Show Signs Of Acceleration" Health Aff January 2013 32:187-99
NHS for 2011 URL: http://content.healthaffairs.org/content/32/1/87.full.pdf+html
"ABSTRACT In 2011 US health care spending grew 3.9 percent to reach $2.7 trillion, marking the third consecutive year of relatively slow growth. Growth in national health spending closely tracked growth in nominal gross domestic product (GDP) in 2010 and 2011, and health spending as a share of GDP remained stable from 2009 through 2011, at 17.9 percent. Even as growth in spending at the national level has remained stable, personal health care spending growth accelerated in 2011 (from 3.7 percent to 4.1 percent), in part because of faster growth in spending for prescription drugs and physician and clinical services. There were also divergent trends in spending growth in 2011 depending on the payment source: Medicaid spending growth slowed, while growth in Medicare, private health insurance, and out-of-pocket spending accelerated. Overall, there was relatively slow growth in incomes, jobs, and GDP in 2011, which raises questions about whether US health care spending will rebound over the next few years as it typically has after past economic downturns." (p. 87)
2013 Medicare Trustees Report URL: http://downloads.cms.gov/files/TR2013.pdf
"From the 75-year budget perspective, the present value of the additional resources that would be necessary to meet projected expenditures, at current-law levels for the three programs combined, is $39.6 trillion. To put this very large figure in perspective, it would represent 4.2 percent of the present value of projected GDP over the same period ($944 trillion)." (p. 228)
Chapter 4: Long-Term Care
"Five Key Facts About the Delivery and Financing of Long-Term Services and Supports"
KFF on 5 Key Facts on LTC 0913 URL
Fact #1: People of All Ages Require Long-Term Services and Supports
Fact #2: Many People Who Need Long-Term Services and Supports Rely on Unpaid, Informal Care
Fact #3: When Paid, Formal Care is Needed, Many People Cannot Afford to Cover These Expenses
Fact #4: Medicaid is the Primary Payer for Long-Term Services and Supports
Fact #5: With the Aging of America, the Demand for Long-Term Services and Supports is Expected to Increase in the Coming Decades
Chapter 6: Long-Term Care Financing
"After CLASS: The Long- Term Care Commission's Search For A Solution," Health Affairs
Josh Wiener on the LTC Commission 0513 URL: http://content.healthaffairs.org/content/32/5/831.full.pdf+html
"A heavy reliance on Medicaid has persisted, despite deep unhappiness with rising costs, routine catastrophic out-of-pocket costs that often leave people impoverished, the stigma that goes with a means-tested program, the lack of Medicare or private long-term care coverage, and the disconnect between acute and long-term care financing." (p. 831
Our critique of this article is in "LTC Bullet: After CLASS and the LTC Commission," Friday, May 10, 2013: http://www.centerltc.com/bullets/archives2013/998.htm
"The Long-Term Care Financing Crisis," Diane R. Calmus
Heritage on LTC Crisis 0213 URL: http://www.insideronline.org/summary.cfm?id=19251
"Abstract. Long-term care (LTC) in the United States is in crisis. The current system is not meeting the needs of the frail elderly and disabled populations. As the 77 million baby boomers enter retirement, the LTC crisis will likely grow, both because of the sheer number of the baby boomers and because of medical advances that have increased longevity. Regrettably, few have prepared to pay for their LTC, either through insurance or savings. Policymakers need to move swiftly to reform the current system to ensure that tomorrow's retirees have access to high quality care without bankrupting future generations." (p. 1)
Will HCBS Save Money? (See also similar section under LTC Providers)
"How is the Affordable Care Act Leading to Changes in Medicaid Long-Term Services and Supports (LTSS) Today? State Adoption of Six LTSS Options"
KFF on ACA and LTC 0413 URL
"With the passage of the Affordable Care Act (ACA) in 2010, states are afforded a number of new and expanded opportunities, including enhanced federal financing, to improve access to and delivery of Medicaid long-term services and supports (LTSS). This policy brief provides an overview of six key Medicaid LTSS options created or enhanced by the ACA and state adoption of these options to date. To date, nearly every state (47 states and DC) has taken steps forward with at least one of the six options (Table 1). Many states are pursuing or plan to pursue multiple new LTSS options. The most popular state options have been the Money Follows the Person (MFP)demonstration grants (45 states and DC) and financial alignment models for dual eligible beneficiaries (26states)." (p. 1)
"Long-Term Care for Older Adults: A Review of Home and Community- Based Services Versus Institutional Care" AHRQ on HCBS vs NH 1112 URL
Conclusions. Determining whether and how the delivery of LTC through HCBS versus NHs affects outcome trajectories of older adults is difficult due to scant evidence and the methodological limitations of studies reviewed. More and better research is needed to draw robust conclusions about how the setting of care delivery influences the outcomes and costs of LTC for older adults. (p. vii)
LTC Clipping January 27, 2013: http://seniorhousingnews.com/2013/01/27/is-community-care-better-than-nursing-homes-survey-says-its-hard-to-tell/ "Home- and community-based services (HCBS), initially touted as a cost-saving method of delivering long-term care compared to institutional settings, may not actually be a significantly superior setting in which to receive care, suggests a report from the Agency for Healthcare Research and Quality (AHRQ). AHRQ reviewed several studies comparing different long-term care models and concluded there's not enough evidence to truly assess their relative effectiveness in relation to each other. It may be more accurate to simply consider HCBS as a preferred model among consumers, rather than one that provides better care at a lower cost, the report's authors say."
LTC Comment: Academics, policy makers, politicians and senior advocates have pushed the idea for decades that home and community-based care saves money and gives people who need LTC what they want. Now finally comes research that shows no evidence that HCBS saves money or improves outcomes. Nevertheless, Medicaid financing of HCBS continues to skyrocket, crowding out private financing alternatives.
Who Will Pay for LTC? (includes "Not the VA")
"Who Pays for Long-Term Care in the U.S.? (Updated)," Fact Sheet • January 2013
SCAN on Who Pays for LTC 0113 URL
"Medicare, Medicaid fight could take center stage after debt ceiling extension" - McKnight's Long Term Care News
"Long-term care operators have a stake in any changes to Medicare and Medicaid, which together pay for more than 70% of annual long-term care costs, according to the SCAN Foundation."
LTC Comment: The SCAN report referenced here is an eye-opener. But reality is even worse. When you realize that half the 21.9% of LTC costs called "out of pocket" are really just Social Security income of people already on Medicaid, you see that over 80% of LTC expenditures in the US come from sources other than asset spend down. No wonder people are not as worried about LTC risk and cost as they should be; the government pays for the vast majority of expensive LTC. When that stops, as it must, the poor will suffer most, the affluent will pay their own way, spend down of home equity to fund LTC will skyrocket, and demand for LTC insurance will explode. Likely, interest rates will soar around the same time further pinching government budgets and hopelessly undermining Social Security, Medicare, and Medicaid, but unleashing LTCI profitability. Bank on it!
"National Spending for Long-Term Services and Supports (LTSS), 2011"
LTC Spending 2011, 0211 URL
"Medicaid is the dominant source of payment for LTSS, followed by out-of-pocket payments by individuals and families. Of all U.S. spending on LTSS, the federal-state Medicaid program is the principal payer. In 2011, Medicaid paid for 62.3 percent ($131.4 billion) of all LTSS spending. Out-of-pocket spending by individuals and families accounted for about 21.6 percent ($45.5 billion) of spending. Private insurance and other private and public sources paid the balance (Figure 1)."
Chapter 7: Long-Term Care Insurance
General and Data
American Taxpayer Relief Act of 2012 URL
From LTC Bullet #983, Friday, January 4, 2013
*** AMERICAN TAXPAYER RELIEF ACT OF 2012: President Obama signed the "fiscal cliff" legislation on Wednesday, January 2, 2013. Following is a link to the statute that repeals CLASS and sets up a "Commission on Long-Term Care": URL. . . .***
Chapter 10: Medicaid
Medicaid is the 800-pound gorilla of LTC
"Medicaid's Role in Meeting the Long-Term Care Needs of America's Seniors"
KFF on Medicaid LTC 0113 URL: http://www.kff.org/medicaid/upload/8403.pdf
"Given the high cost of long-term care services, few elderly people can afford these services. For seniors with long-term care needs, Medicaid, as a complement to Medicare, serves as an essential safety net for institutional and community-based services not fully covered by Medicare or private insurance."
LTC Comment: A key principle in economic analysis is the difference between the seen and the unseen. It's easy to see the benefits Medicaid LTC provides to people who take advantage of it. What reports like the one cited here do not identify or explain are the unseen negatives of Medicaid. Medicaid distorts the LTC marketplace in critical ways. Easy access to Medicaid-financed nursing home care crowded out markets for privately financed home care, for home equity conversion to pay for LTC, and for private LTC insurance. The result is our LTC system's institutional bias and over-reliance on a bankrupt welfare program that pays LTC providers less than their cost to deliver the care. Also unmentioned in the article and unseen to most people is that Medicaid is easy to obtain for people with substantial incomes and assets even without legal gaming. Abuse of annuities and promissory notes that we've highlighted recently in Center publications expand Medicaid access even to the rich, but they too go unacknowledged. Ironically, these unseen aspects of Medicaid LTC are ruining Medicaid as a safety net for the poor AND simultaneously inhibiting private insurance as a resource for the middle class and affluent. Double jeopardy. But the Kaiser Family Foundation hides this reality by focusing only on the benefits easily seen and ignoring the critical unseen deficiencies of Medicaid.
"How Much Will Medicaid Cost in the Future and Why?: A Look At Federal Projections" 0813 URL
"Over the next decade, federal Medicaid expenditures are expected to grow by an average annual rate of about 8% (including the effects of the ACA), with acute care growing slightly faster than long-term care.
"Medicaid enrollment is expected to grow from 71 million in 2012 to 91 million by 2023, an average annual rate of about 2% per year. Enrollment for adults is expected to increase significantly due to the expansion of Medicaid under the ACA. Over time, the elderly and persons with disabilities will continue to account for the majority of Medicaid spending." (p. 1)
Medicaid Eligibility
"Medicaid Insurance in Old Age," Mariacristina De Nardi, Eric French, and John Bailey Jones_ June 13, 2013
Chicago Fed on Medicaid 1212 URL
"Medicaid was primarily designed to protect and insure the poor against medical shocks. Yet, poorer people tend to live shorter lifespans and incur lower medical expenses before death than richer people. Taking these and other important dimensions of heterogeneity into account, and carefully modeling key institutional aspects, we estimate a structural model of savings and endogenous medical expenses to assess the costs and benefits of Medicaid for single retirees.
"We show that even higher-income retirees benefit from Medicaid, if they live long enough for their resources to be depleted by medical expenses. We also find that all retirees value Medicaid insurance coverage highly, compared to the value of the Medicaid transfers that they actually receive on average." (p. 1)
"Medicaid and the elderly"
Chicago Fed on Medicaid and the Elderly 0613 URL
"Although Medicaid is available only to 'poor' households, middle-income households with high medical expenses usually qualify for assistance also. Given the ongoing growth in medical expenditures, Medicaid coverage in old age is thus becoming as much of a program for the middle class as for the poor (Brown and Finkelstein, 2008)." (p. 17)
"Medicaid Spend Down: Implications for Long-Term Services and Supports and Aging Policy," Joshua M. Wiener, Wayne L. Anderson, Galina Khatutsky, Yevgeniya Kaganova, and Janet O'Keeffe (RTI International) and Anne Tumlinson, Eric Hammelman, and Elana Stair (Avalere Health)
SCAN on Medicaid Spend Down 0313 URL
"The high cost of long-term services and supports (LTSS) results in catastrophic out-of-pocket costs for many people needing services, some of whom spend down to Medicaid eligibility. For people who have been independent all of their lives, transitioning to Medicaid means depending on a means-tested welfare program for their health and long-term care services. Moreover, people transitioning to Medicaid are a substantial portion of state Medicaid expenditures. In an effort to avoid exhausting their resources and relying on Medicaid, others depend on unpaid family support or go without needed services." (p. 1)
Our critique of this paper was published as "LTC Bullet: SCAN the LTC Possibilities," Friday, April 5, 2013: http://www.centerltc.com/bullets/archives2013/993.htm
"The Medicaid Medically Needy Program: Spending and Enrollment Update"
KFF on Medically Needy 1212 URL: http://www.kff.org/medicaid/upload/4096.pdf
"In federal fiscal year 2009, there were 2.8 million medically needy enrollees who spent a total of $36.7 billion. The medically needy accounted for 5 percent of total Medicaid enrollment, but 11 percent of total Medicaid spending.
"Among the 34 states with medically needy programs, there is variation between states. New York and California each provide Medicaid coverage to over 700,000 medically needy individuals - one quarter of the total medically needy population. Sixteen states do not offer medically needy coverage.
"The elderly and individuals with disabilities comprise 41 percent of medically needy enrollment, but make up nearly 88 percent of total medically needy spending. In contrast, non-disabled children and adults comprise the majority (59%) of medically needy enrollment, but only account for 12 percent of total medically needy spending.
"Dual eligible beneficiaries account for 28 percent of medically needy enrollees, but 68 percent of medically needy spending."
Dual Eligibles
"Medicaid's Role for Dual Eligible Beneficiaries"
Medicaid's Role for Dual-Eligible Beneficiaries 0813URL
"Medicaid fills in the gaps in Medicare's benefit package for many low-income Medicare beneficiaries. These "dual eligible" beneficiaries are individuals who are entitled to Medicare and are also eligible for some level of assistance from their state Medicaid program. Such assistance ranges from help paying for Medicare's premiums and cost-sharing to coverage of benefits not offered under Medicare, such as long-term care and at state option, hearing, vision, and dental services. Because dual eligible beneficiaries have significant medical needs and a much higher per capita cost on average than other beneficiaries, they are of great interest to both Medicare and Medicaid policymakers and to the state and federal governments that finance and manage the programs.
"This brief provides an update on Medicaid enrollment and spending attributable to dual eligible beneficiaries through fiscal year 2010." (p. 1)
Chapter 11: Medicaid Planning
"Concepts and implications of altruism bias and pathological altruism," Barbara A. Oakley Pathological Altruism 0413 URL: http://www.pnas.org/content/early/2013/06/04/1302547110.full.pdf
"Presented here are the mechanistic bases and potential ramifications of pathological altruism, that is, altruism in which attempts to promote the welfare of others instead result in unanticipated harm. A basic conceptual approach toward the quantification of altruism bias is presented. Guardian systems and their over arching importance in the evolution of cooperation are also discussed. Concepts of pathological altruism, altruism bias, and guardian systems may help open many new, potentially useful lines of inquiry and provide a framework to begin moving toward a more mature, scientifically informed understanding of altruism and cooperative behavior." (p. 1)
Criticism of Medicaid Planning
"Billions of Federal Tax Dollars Misspent on New York's Medicaid Program," Committee Report, U.S. House of Representatives, 113th Congress, Committee on Oversight and Government Reform,
February 14, 2013
Oversight Report 0213 URL: http://oversight.house.gov/wp-content/uploads/2013/02/Bipartisan-Medicaid-Oversight-Report-ordered-reported-by-Committee.pdf
"The Committee has learned that Medicaid estate planning is a long-standing practice and significant problem across the nation and in New York State. The Committee has learned that relatively affluent people in New York artificially impoverish themselves in order to qualify for Medicaid and have taxpayers pick up the cost of their long-term care services and supports. At least in Suffolk County, New York, a relatively affluent part of the State, a legal technique called spousal refusal, which is essentially when one spouse abandons all financial care of a sick or disabled spouse and leaves him or her as a ward of the State, is widely used." (p. 3)
Updated: Wednesday, October 2, 2013 2:04 PM (Pacific)
LTC E-Alert #13-030: LTC News and Comment
LTC Comment: Subscribers to our Clipping Service received the following news items, individually and in real time, in the form of short emails with a link, a quote and occasionally some brief commentary. In order to keep our Clipping Service subscribers on the forefront of LTC knowledge, we spend the time and effort gathering current, critical information on long-term care issues so they don't have to. By dividing the labor, we can all work more efficiently. If you like what you read in our "LTC News and Comment" E-Alerts, please consider subscribing to our Clipping Service. Find all the details here. Contact Damon at 206-283-7036 or email@example.com to subscribe.
09/30/2013, "Survey finds financial professionals lack focus on retirement income," IFAwebnews.com
Quote: "The latest quarterly edition of the Financial Professional Outlook survey estimates that while retirement income has become a core part of business for 73% of financial advisors, there is no clear consensus on how to measure whether clients are on track to achieve sustainable retirement income."
LTC Comment: Retirement income is important. So is protecting against the devastating and numerous risks and costs of long-term care.
09/30/2013, "Many Americans Worry About Cost of Long-Term Care: Poll," by Amy Norton, US News and World Report
Quote: "A new Harris Interactive/HealthDay poll released Monday finds that more than two-thirds of Americans are anxious and uncertain about how they'll meet nursing home or home care costs should they need them. Most people were also wrong about how most of these costs are covered under the current system. About half (49 percent) mistakenly thought the bulk of the bill was paid by individuals, while one-third guessed Medicare. Only 19 percent understood that the major funder of long-term care is actually Medicaid, the government agency that covers health services for the poor."
LTC Comment: To the 19 percent mentioned above: How long do you think Medicaid can continue to be the primary funder of LTC services?
09/26/2013, "Long-term care insurance and your taxes – TaxWatch," by Bill Bischoff, MarketWatch
Quote: "If you or a loved one turns out to need long-term care, you don't want to see a big chunk of hard-earned savings go down the drain to pay for it. Long-term care (LTC) insurance can help. As a bonus, qualified LTC policies deliver some tax breaks. Before getting to the tax angles, let's first cover the basics on LTC insurance."
LTC Comment: Center members can click here to access the latest deductibility limits for long-term care insurance all the way back to 1997.
Quote: "As a neurologist with patients who include those affected by Alzheimer's disease, Parkinson's disease, and strokes, I'm all too aware that, like it or not, many of us will need help caring for ourselves someday. And we can't always predict when that day might come. I worry about my older patients who need to move into assisted living and lack the funds to do so. But I also worry about my younger patients—those age 45 to 60—who might need help someday (potentially very expensive help) and haven't made any provisions for it."
LTC Comment: This is relatively warm treatment of LTCi for Consumer Reports. Please see our LTC Bullets archives for these two reality checks: "Consumer Reports Targets LTCI, Hits Self" and "More Bad Advice from Consumer Reports."
09/25/2013, "Suze Orman's Advice On Managing Long-Term Care Costs," by Sherri Snelling, Forbes
Quote: "Suze Orman is one of the nation's best-known, most-trusted personal finance experts. A best-selling author and award-winning TV personality, she's become a guru for frugality and planning, advising millions to save for retirement, get out of debt and start a healthier relationship with money. And yet, Orman now confesses, when it came time to become a caregiver for her late mother, she was as unprepared, emotionally and financially, as the rest of us.
"'I filled out the paperwork on long-term care plans and gave it to my mom on several occasions, but she never signed them,' Orman says. She believes it's typical for parents, especially mothers, not to want their children to worry about them. But without robust savings or a good long-term care plan, the financial burden will most likely fall to adult daughters and sons.
"I spent $25,000 a month the last two years of my mom's life to have around-the-clock care for her,' Orman says. 'I was lucky because I was in a position to afford the cost, something most Americans cannot do.'"
LTC Comment: A Clippings Service subscriber reminded me that in an article from 2012, Orman mentions trying to purchase an LTCi policy for herself, but was denied due to health issues. She continues by making the connection that if she would have applied for that policy one year earlier—before the onset of her health issues—she may have been accepted for that policy. This is just another example of the necessity of planning early.
09/25/2013, "Fewer Medicare Advantage plans in 2014, analysis finds," by Elizabeth Leis Newman, McKnight's Long Term Care News
Quote: "There will be fewer Medicare Advantage plans in 2014, according to a new analysis. The number of plans will drop to 2,522, which is around a 5% decrease, according to Avalere Health. Medicare Advantage can cover skilled nursing stays, and enrollment was up in 2012."
09/24/2013, "Genworth Financial Begins Filing For Premium Rate Increases On Certain Privileged ChoiceR & Classic SelectR Policies [link]," MarketWatch
Quote: "Genworth Financial, Inc. GNW +0.25% announced today that it has begun filing for long term care insurance in force premium rate increases on certain Privileged Choice® and Classic Select® policies sold between 2003 and 2012. The premium rate increases requested will range between six and thirteen percent on more than $800 million in annualized in force premiums. Although these policies have generated positive operating earnings to date, the premium rate increase on these policies will help offset lower than priced-for returns, primarily due to improvements in life expectancy and lower-than-anticipated lapse rates. These premium rate increase requests are being made in addition to the premium rate increase filings announced in 2012 on certain older blocks of in force long term care insurance policies."
09/24/2013, Forgetting Marie, by Bill Coffin, LifeHealthPro
Quote: "Here's the thing, though. I don't ever recall my grandparents having long-term care insurance. If they had, I am certain I would have heard about it, especially during my grandfather's care. My mother had been given control of his finances, and I watched as she had to sell her family's home in order to pay for my grandfather's care. That was hard, seeing that old, historic house leave the family's hands. I had secretly nurtured a desire to live there one day. As it was, my grandparents had enough resources to afford (barely) their nursing home stays. They were Depression-era people who worked and saved hard so they could give something to their children and their grandchildren. In the end, what they gave us most was the understanding that long-term illness is real, and you must prepare for it, or else those long, final years might be the worst ones of your life, even if you can't remember the reasons why."
LTC Comment: So many stories like this one.
09/24/2013, Five LTC commissioners issue full alternative report, by Tim Mullaney, McKnight's Long Term Care News
Quote: "Five members of the Congressional Commission on Long-Term Care have released a full report, providing an alternative to the commission report released last week. The five commissioners split with nine other panel members over that report, saying it should not be presented to Congress as the broad agreement of the group."
LTC Comment: See also: "LTC Commission final report provides Congress with a detailed picture of challenges and potential solutions [link]."
09/24/2013, "New Study Finds Boomers are Redefining Retirement Care Expectations," PR Newswire - The Sacramento Bee
Quote: "A majority of our country's middle-income Boomers expect their retirement to be defined by greater mental stimulation, more physical activity and more personal satisfaction than the retirement of previous generations. However, they also anticipate their retirement to include less retiree health insurance from former employers (60%), less financial security (47%) and less care provided by family members (47%), according to a latest study by the Bankers Life and Casualty Company Center for a Secure Retirement ® (CSR)."
LTC Comment: One of the greatest risks for Boomers who want to enjoy more satisfaction in retirement is being hit with catastrophic long-term care expenses.
09/23/2013, "Closing in on better LTCI close rates," by Margie Barrie, LifeHealthPro
Quote: "Question: I want to improve my closing rate for both face-to-face and Internet appointments. Plus, I would like to increase my one-call closes. Help is desperately needed.
"Answer: Yes, this month's question is from me. In the 14 years I have been writing this column, I have always used questions from agents who have contacted me. Now it's my turn.
"To answer my questions, I turned to Mary Ann DeKing, an agent with ACSIA Long Term Care. She is one of the most successful agents I have ever met."
09/23/2013, "Some personality types are more likely to receive nursing home care, researchers find [link]," by Tim Mullaney, McKnight's Long Term Care News
Quote: "Researchers from various institutions, including the University of Rochester Medical Center Department of Public Health Sciences and the University of Chicago, examined data from 1,000 seniors participating in a Medicare demonstration project. Based on a self-report questionnaire, these seniors were classified under five personality traits: neuroticism, extraversion, openness to experience, agreeableness and conscientiousness. These are traits commonly used as a conceptual framework by psychologists.
"The findings support the idea that interventions tailored to different types of people could reduce the use of unnecessary high-cost care, the researchers stated."
09/20/2013, "Long-term care is becoming primarily about dementia, report states," Tim Mullaney, McKnight's Long Term Care News
Quote: "The number of people with long-term care needs is set to triple by 2050, and dementia care will be increasingly at the forefront for providers, according to a new report from Alzheimer's Disease International. 'Long-term care for older people is, mainly, about care for people with dementia,' the report states. Already, about half of all older people who need care have some form of dementia, and 80% of older nursing home residents have dementia, according to 'Journey of Caring: An analysis of long-term care for dementia.'
"The report, released yesterday, takes issue with whether home care is better. Current evidence suggests the 'subjective quality of life' for those with dementia is about the same regardless of whether they are in a facility or at home, and facility-based care is likely better for those with advanced dementia, the report notes."
LTC Comment: Long-term care may be becoming primarily about dementia, but good LTC has always been about options.
09/19/2013, "With Alzheimer's rising, study says dementia strongest predictor of need for nursing home care [link]," The Washington Post
Quote: "David Hilfiker knows what's coming. He was diagnosed with Alzheimer's so early that he's had time to tell his family what he wants to happen once forgetfulness turns incapacitating. 'When it's time to put me in an institution, don't have me at home and destroy your own life,' said the retired physician, who is still well enough that he blogs about the insidious progress of the disease. 'Watching the Lights Go Out,' it's titled.
"This week, the U.S. National Institutes of Health announced $45 million in new Alzheimer's research, with most of the money focused on finding ways to prevent or at least delay the devastating disease. The Obama administration had hoped to invest $100 million in new Alzheimer's research this year, a move blocked by the budget cuts known as the sequester. Overall, the nation has been investing about $400 million a year in Alzheimer's research. But the disease's financial toll is $200 billion a year in the U.S. alone, a tab expected to pass $1 trillion by 2050 in medical and nursing home expenditures — not counting unpaid family caregiving. The world report puts the global cost at $604 billion."
09/19/2013, Long Term Care Insurance Solutions Conference Announced by AALTCI, PR.com
Quote: "Plans to hold the 12th National Long Term Care Solutions Sales Summit were announced today by the American Association for Long-Term Care Insurance. The conference will take place May 18-20, 2014 in Kansas City, MO.
"'There has never been a better time for insurance professionals to see what's new and different in the world of long term care solutions for consumers,' declares Jesse Slome, executive director of the American Association for Long-Term Care Insurance. 'It's very much a new world in terms of finding prospects, selling insurance protection and in terms of the many new products being introduced by insurers.'"
LTC Comment: Always an excellent industry event. Click http://www.aaltci.org/2014summit/index.html for further details and to register.
09/19/2013, Obamacare Won't Cover Long-Term Care, by Dan Caplinger, Business Insider
Quote: "With the coming implementation of Obamacare, many Americans believe that all of our health-care needs will soon be taken care of. But the coverage mandated by the Patient Protection and Affordable Care Act doesn't address one critical type of health-care cost -- and could leaving you with a huge and expensive challenge to deal with on your own."
09/18/2013, "LTC Commission final report provides Congress with a detailed picture of challenges and potential solutions [link]," by Tim Mullaney, McKnight's Long Term Care News
Quote: "The Commission on Long-Term Care has issued its full report to Congress, fleshing out recommendations that it released last week addressing LTC service delivery, workforce issues and financing systems. The 114-page document provides an in-depth assessment of challenges facing the current U.S. long-term care system and offers a broad array of potential solutions, based on public comments and hearings, and the 15 members' expertise in the field.
"However, the commissioners were divided on the best ideas related to financing for long-term services and supports, and rather than making recommendations offered two different 'approaches.'"
LTC Comment: See also: "Five LTC commissioners issue full alternative report."
Updated: Friday, September 27, 2013, 10:13 AM (Pacific)
LTC Comment: Our guest columnist for today's LTC Bullet is Liz Taylor. No, not that one. Rather, the Liz Taylor who has raised the standards and written wisely about long-term care for decades. After the ***news.***
*** AALTCI: The American Association for Long-Term Care Insurance recently announced their 11th National Long-Term Care Solutions Sales Summit will be held May 18-20, 2014 at the Westin Hotel in Kansas City, MO. Over the past decade we've attended many of these conferences and have always found them to be of high value in terms of professional development through educational content and networking opportunities. Early registration is only $69 and ends October 31st. See http://www.aaltci.org/2014summit/index.html for further details and to register. ***
*** IN THE MEANTIME, don't forget about the Fourteenth Annual Intercompany LTCI Conference scheduled for March 16 to March 19, 2014 at the Rosen Centre Hotel in Orlando, FL. Check out the details here: http://www.iltciconf.org/. And if you're contemplating an Exhibit Booth and/or a Corporate Sponsorship, act now! The early bird deadline for those applications is October 4, 2013. Contact Jim Glickman for that. ***
*** ANNOUNCING: CLTCR Premium Membership -- Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including: our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries. Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources. Premium Membership is $250 per year, paid up front or monthly by automatically recurring credit card payments. Contact Damon at 206-283-7036 / email@example.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***
LTC BULLET: The Tarnished Name of Assisted Living
LTC Comment: Today's guest columnist, Liz Taylor, has worked almost 40 years in the aging field. As an author, former Seattle Times columnist, and public speaker, she advocates for "aging deliberately," having coined this phrase to express the importance of planning ahead and maintaining control of our lives as we age. She can be reached at email@example.com.
"The Tarnished Name of Assisted Living," by Liz Taylor
The Frontline PBS television program about assisted living communities that ran July 30 promised to be a barn burner. The media is at its best or worst (depending on your point of view) when it shows blood and gore. From advance clips, this was its intent.
I hate to sound jaded, but where has the media been lo these last 50 years? In 1976, when I headed up a federal investigation of the nursing home industry, images of horrible bed sores, people tied in their wheelchairs screaming, and lack of warm blankets and heat in winter were a dime a dozen – in nursing homes. There were no other care options then; nursing homes were all we had.
Levels of care…
The same poor care exists today (though usually more muted). Then, and now, there are exceptions to the rule — some nursing homes and some assisted livings do extraordinarily good jobs. Further, some older people don't need the kind of extensive care that invites abuse. The less care you need, the less you're likely to run into trouble.
But the rule remains the same: mediocre to poor care exists in far too many care facilities, similar to a half century ago. The culprit is also the same: the government says it's in charge and tries to control quality from "the top down" – through regulations. Over the years, nursing homes have become one of the most highly-regulated industries in this country. We've seen some quality improvement, but not nearly enough.
During my nursing home inquiry four decades ago, we looked at the very best providers. We figured, if we could find a few excellent nursing homes — when the country was rife with awful ones — it was possible to do better. Since then I've seen exceptional care providers at all levels — home care, retirement communities, adult family homes, assisted livings and nursing homes. Most providers don't hold a candle to the good ones, though all are operating under the same regulations and conditions.
Conditions Can be Better
For at least ten years, we've known how to make care better, a lot better. I wrote about this in a dozen or so of my Seattle Times columns, giving real life examples. If you'd like to receive a summary of their links, email me.
I believe that the only way we're going to get better eldercare is "from the bottom up" – arming consumers with the information to help us make informed decisions, showing us how to "kick tires" to get the care we need, alerting us to pay attention and do our homework before there's a crisis, and providing the tools to do the job – with regulations as a back-up.
Imagine if the computer industry had operated in lock-step to the dictates of the federal government and 50 states for the last 30 years – where would it be today? Well, that's what we've done in eldercare. As consumers, WE have to become educated and demand better services – the government will never be able to do it for us.
So what happened to my 1970s nursing home investigation? The knee-jerk reaction then, as now, was to demand more regulations. Instead we called for consumer education and information to help consumers choose care wisely – to give older people and their families huge amounts of information about their choices – management track records, inspection reports, staffing ratios, consumer complaints, staff turnover, and other important facts.
The reaction: thunderous, widespread yawns. Consumer education? How boring!
Selecting good quality eldercare is one of the most complicated, expensive and emotional decisions most of us will ever make. As the PBS documentary made clear, relying on lofty advertising promises is foolish. As is choosing a place based on how pretty it is. We have to do our homework, as we would for anything important – with tools that don't exist now. As 80 million baby boomers grow old, we need an entirely new way to deal with the entire care industry.
Updated: Thursday, September 19, 2013, 3:18 PM (Pacific)
LTC E-Alert #13-029: AALTCI Conference and LTC News and Comment
LTC Comment: The American Association for Long-Term Care Insurance recently announced their 11th National Long-Term Care Solutions Sales Summit will be held May 18-20, 2014 at the Westin Hotel in Kansas City, MO. Over the past decade we've attended many of these conferences and have always found them to be of high value in terms of professional development through educational content and networking opportunities. Early registration is only $69 and ends October 31st. See http://www.aaltci.org/2014summit/index.html for further details and to register.
*** Subscribers to our Clipping Service received the following news items, individually and in real time, in the form of short emails with a link, a quote and occasionally some brief commentary. In order to keep our Clipping Service subscribers on the forefront of LTC knowledge, we spend the time and effort gathering current, critical information on long-term care issues so they don't have to. By dividing the labor, we can all work more efficiently. If you like what you read in our "LTC News and Comment" E-Alerts, please consider subscribing to our Clipping Service. Find all the details here. Contact Damon at 206-283-7036 or email@example.com to subscribe. ***
9/17/2013, "Relocate Your Parents, or Get Them a Robot?," by Megan McArdle, Bloomberg
Quote: "No matter the economic downsides of the world's coming demographic transition, one industry will boom: eldercare. Now that mom is less likely to die at the age of 60 from pneumonia or a sudden stroke, she's more likely to require years of intensive care as time slowly saps her ability to take care of herself. She's also less likely to have multiple children who can chip in to provide that care."
9/17/2013, "Most are without a financial plan: Natixis," by Paula Aven Gladych, BenefitsPro
Quote: "Fewer than half of investors have a financial plan, while even those who do may be seriously underestimating the amount of money they need to save for retirement, according to Natixis Global Asset Management's Global Investor Insights Survey.
"While investors may not be saving enough, they are thinking ahead about potential costs in retirement, including long-term healthcare. Americans expect they will need five years of long-term care and are confident they will be prepared to meet these costs. Nevertheless, 40 percent of U.S. investors consider long-term care costs not covered by insurance to be the biggest threat to their financial security in retirement. According to those surveyed, long-term care costs not covered by insurance is the top financial threat to their retirement, followed by a reduction in retirement savings due to market conditions, insufficient proceeds from retirement plans and unemployment."
9/17/2013, "Long-Term Care Panel Chief Speaks About Looming Crisis," Forbes
Quote: "Roughly 70% of Americans who reach age 65 will need long-term care for at least three years during their lifetimes and the cost of this care — in nursing homes, assisted living facilities, at home and elsewhere — can be staggering. (A private room at a nursing home costs $81,030 a year, on average, according to the Genworth 2012 Cost of Care study.) Since the bipartisan federal Commission on Long-Term Care just finished its 100-day assignment to offer recommendations about this significant national concern, Next Avenue interviewed the panel's chair, Dr. Bruce Chernof.
"An internist and president and chief executive of The SCAN Foundation, a nonprofit based in Long Beach, Calif., that focuses on 'improving the quality of health and life for seniors,' Chernof discussed the commission's takeaways for Americans receiving long-term care, their children and their caregivers; why the panel couldn't agree about ways to pay for the high cost of long-term care and what needs to happen next. The commission's final report will be released Wednesday, Sept. 18."
9/17/2013, "Interest, Social Security to Eat Up Increasing Share of U.S. Budget," Michael S. Derby, Real Time Economics, WSJ
"Given the projected path of interest rates and the level of government debt over coming years, federal spending to finance government borrowing will rise from 1.3% of GDP today, to 6.4% in 2050, the report said. This projection is based on interest rates moving back toward 'historic levels,' the group said in its report."
LTC Comment: A reality check is in store for anyone who assumes they will be able to live comfortably on Social Security in retirement, without further financial planning.
9/16/2013, "LTC commission leaves 'em wanting more," by Allison Bell, LifeHealthPro
Quote: "The federal Commission on Long-Term Care is getting sympathetic but weak reviews for an early version of its policy recommendations. Congress created the 15-member, bipartisan commission earlier this year. The commission is supposed to send its recommendations to Congress in a few days and then disband. In a preliminary set of recommendations released Friday, the commission called for a longer-lasting committee to look at LTC financing.
"Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), said the commission had little hope of resolving an issue as complex as LTC financing, given that Congress gave the panel so little time to develop its recommendations and that the commission has been operating in such a heated political climate. 'In terms of long-term care insurance, those who were hoping the commission might recommend a new social program must be disappointed,' Slome said. 'The private marketplace will continue.'"
9/16/2013, "Germans Export Grandma to Poland as Costs, Care Converge," by Naomi Kresge, Bloomberg
Quote: "Germany's migrating seniors are an early warning sign of a challenge of global proportions. As birth rates drop, life expectancies increase and the baby boomer generation heads into old age, the United Nations estimates the world's population of people older than 60 will more than triple to almost 2 billion by 2050. Meanwhile, even for seniors cushioned by government aid in countries like Germany, the cost of nursing home care is rapidly becoming prohibitive. German spending on long-term care for seniors is expected to increase from 1.4 percent of gross domestic product to 3.3 percent of GDP by 2060, the European Commission said in a report last year."
LTC Comment: Look deep into the archives of our LTC Bullets and you will find "Don't Look to Germany for a Long-Term Care Model" (2003) and "LTCI in Germany" (2002).
9/16/2013, "Why Obamacare Shouldn't Force Poor Seniors Into Medicaid," by Scott Gottlieb, Forbes
Quote: "Finding better ways to serve the needs of these 'dually eligible' Americans has been a bi-partisan goal that's eluded successive administrations. Whenever the issue was broached, one of the questions was whether these Americans would end up in Medicare or Medicaid — and which program would better serve their needs. The Obama Administration is betting heavily on states to take control of these patients. The states, in turn, are looking to their Medicaid systems."
LTC Comment: Medicaid reform is key to fixing our looming (and many would say current) LTC financing crisis.
9/13/2013, "LTC commission eyes educational accounts," by Allison Bell, LifeHealthPro
Quote: "The federal Commission on Long-Term Care seems to be leaving private long-term care insurance (LTCI) out of a package of long-term care (LTC) system recommendations it will be sending Congress."
LTC Comment: To learn about the critical link between private financing and quality LTC services (for all), see our recent LTC Bullet: "LTC Services: Thousand Bullets Retrospective."
9/13/2013, "Divided Congressional LTC Panel Will Urge Modest Delivery Reforms, Deadlocks on Financing [link]," by Howard Gleckman, Forbes
Quote: "A divided congressional long-term care commission has adopted a package of recommendations aimed at improving the nation's long-term supports and services. However, while a majority of the panel agreed on some modest delivery and workforce reforms, it could not reach a consensus on all-important financing solutions. In effect, the commission will recommend changes that would effectively retain the current framework of financing and delivering supports and services. Not surprisingly, it was unable to agree on the fundamental restructuring of the nation's supports and services system that many believe is necessary."
LTC Comment: It's no surprise they couldn't tackle the LTC financing challenge; it's complicated, to say the least. Your Center for Long-Term Care reform recommends ensuring quality long-term care for all Americans 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. Most of you know we have a vast website full of thousands of articles, speeches and reports based on that recommendation here www.centerltc.com.
9/12/2013, "Video - Why You Need Long-Term Care Insurance" - WSJ.com
Quote: "Financial advisor Missy Spickler explains why you are likely to get far more in benefits than you pay in premiums [in this video]."
9/12/2013, "Reluctant states face Medicaid: Yes? No? Punt?," by Kyle Cheney and Jason Millman, POLITICO.com,
Quote: "Obamacare sign-up starts less than a month but a few states are still answering a basic question: Are they in, or are they out of the law's massive expansion of Medicaid? Legislatures in pivotal swing states like Ohio and Pennsylvania are dusting off their gavels from summer recess and diving back into the high-stakes Medicaid debate over whether to extend health coverage to hundreds of thousands of low-income Americans. Others are looking at ballot measures to spur action because lawmakers won't convene again until next year. The prolonged uncertainty stems from the Supreme Court's 2012 decision to make Medicaid expansion optional for states. Most have decided what to do, generally along predictable partisan lines, but several are stuck."
LTC Comment: More on this seemingly never-ending saga.
9/12/2013, "Caregiving Can Hurt Employee Health -- and Increase Employer Costs," Stacy Lu, HuffPost
Quote: "'Four in 10 adults in the U.S. are caring for an adult or child with significant health issues, up from 30 percent in 2010,' according to a recent national survey by Pew Research Center. Given our aging population, that number is almost certain to increase, with employers taking a chunk of the burden, at least financially: A 2011 Gallup study says full-time employee absenteeism due to caregiving duties costs employers some $25 billion annually.
"Caregiving measurably impacts employer health costs, too; according to a 2010 study of the MetLife Market Institute and the National Alliance for Caregiving, health care costs for caregivers are roughly eight percent more than non-caregiving employees, costing employers an estimated $13.4 billion per year extra."
LTC Comment: More analysis on the heavy toll placed on family caregivers and how that affects employers in terms of financial cost.
9/12/2013, "Think Social Security is guaranteed? Think again," by Dennis Miller, MarketWatch
Quote: "Good financial planners use sophisticated computer programs to help us set retirement savings goals. They input dozens of variables based on assumptions about how the world works, and out pops a number telling us how much we should save during our working years. That number, combined with Social Security and any pension we're lucky enough to have, is supposed to be the Holy Grail of retirement. Reach it and you're set for life. Not so fast. That thinking can spell disaster. The assumptions that go into those programs are just that, assumptions. They are educated guesses at best, but they could be plain wrong. Your math isn't the problem, and neither is your financial planner — it's the faulty assumption that Social Security, your government pension, or even your 'guaranteed' private pension is guaranteed."
LTC Comment: Articles such as this abound in the media today. To be wary of Social Security's solvency is understandable and prudent, but it should be mentioned that even if you are able to collect your full SS benefit, it still would not be nearly enough to finance the cost of long-term care.
9/11/2013, "Northwestern MutualVoice: 5 Health Risks That Can Cost You," Forbes
Quote: "You have a vision for retirement and a detailed budget to help plan your finances. You also need to understand and prepare for risks that could derail your plans. Watch for these health-related issues and protect against the risks before and during retirement:
"Long-term Care – Nearly 70% of people will need some form of long-term care during their lifetime, according to the National Clearinghouse for Long-term Care Information. Since Medicare does not cover long-term care costs, you need to understand the costs involved with long-term care and create a game plan for managing long-term care risk."
LTC Comment: "Costs involved with long-term care" are myriad: emotional, physical, psychological, professional (etc.) and, of course, financial.
9/11/2013, "Gender-distinct pricing," by Claude Thau, LifeHealthPro
Quote: "Before 2013, insurers always charged the same long-term care insurance (LTCI) price to males and females who were the same age; in the same rating class and jurisdiction; and had the same marital status, product design and association/work-site affiliations. Of course, for decades, actuaries favored differentiating price by gender because women use much more commercial long-term care (LTC) than do men. If you have any doubt about that fact, just walk into any nursing facility other than a Veterans Affairs home. Those who live in nursing facilities are overwhelmingly female."
LTC Comment: An interesting article on gender-distinct pricing by Claude Thau.
9/11/2013, "5 reasons to buy long-term care insurance now," by Anisha Sekar MarketWatch
Quote: "Some decisions can be put off until just before retirement, when you're in your mid-60s. How you pay for long-term care is not one them. Even if you're running marathons at 55, you should have The Talk with your family and your lawyer before it's too late. Here are five reasons you should start planning for 30 years from now, today."
LTC Comment: With longevity and long-term care costs on the rise, that 55-year-old marathon runner—if they are a wise planner—should already have an LTC financial plan in place.
Updated: Friday, September 13, 2013, 1:22 AM (Central)
Alpine, Texas--
LTC Comment: What's better? Traditional LTCI or linked products? It depends, says guest columnist Shawn Britt after the ***news.***
*** TODAY IS FRIDAY, THE 13TH : Of course, we're scientific, not superstitious. But, hey, it never hurts to be careful. ***
*** CONGRESSIONAL QUARTERLY Health Beat News reported today that the federal LTC Commission has completed its deliberations but deadlocked on long-term care financing recommendations. According to an anonymous leaker: "With respect to financing long-term care . . . some liberals on the commission favored an approach involving new taxes and new government programs, while conservatives pushed for incentives to encourage people to plan for their own long-term care, such as promoting products combining life annuities with long-term care insurance." Bipartisan agreement was reached on some unspecified recommendations related to LTC workforce issues. LTC Comment: This is probably the best outcome we could have hoped for from this panel which was stacked in favor of government financing advocates. It looks like a new CLASS Act modified to make it compulsory, which we feared a majority of the Commission would favor, didn't make the cut. ***
*** THE GOOD MEDICAID LAWYERS: Thanks to an anonymous grant from a staunch corporate supporter of the Center for Long-Term Care Reform, Steve Moses is headed to the American Association of Public Welfare Attorneys national conference in November. We made an appeal for funds to support Steve's participation in the event a few weeks ago: "LTC Bullet: Meet the Good Medicaid Lawyers." Steve will share what's he's learned about the latest techniques used by Medicaid planners to impoverish their affluent clients artificially. Animated discussion will likely ensue as the audience of lawyers who represent state Medicaid programs share their experiences fighting against fraud and abuse of the LTC safety net program. ***
*** SPOTLIGHT ON: Take our "virtual tour" of the Center for Long-Term Care Reform's website here. You'll learn how to navigate the Center's indispensable website. Get easy access to critical information--in our public website and in our popular Members-Only Zone. Whether you are new to the Center for Long-Term Care Reform or a seasoned Center member, you'll find a wealth of valuable content on our website by taking this virtual tour. Take this tour and if you find you need your user name and password, or are not yet a member and would like to join, contact Damon at 206-283-7036 or email@example.com. ***
LTC Comment: There's a lot of buzz lately about linked or hybrid products for long-term care coverage. With all the challenges traditional LTCI has faced, are these equity-based products a better choice for consumers? As to any such question, the best answer is "It depends." The better question is "What is the most suitable protection against long-term care risk and cost for each individual and family?"
Shawn Britt of Nationwide Financial opined on this topic one day in a telephone conversation. So, I asked her to write a piece expressing her views. She submitted the following. LTC Bullets will consider publishing replies of one 1000 words or less, especially if they take a different point of view.
As we've reported before, I'm deeply in the throes of writing four major reports on the studies we've been conducting all summer long in Virginia, New Jersey, and Georgia. Damon's at the helm in Seattle doing our LTC Clippings, LTC E-Alerts, and LTC Bullets. Publishing guest columns this week and possibly next week gives him and me some breathing room. Thanks for your patience. – Steve Moses
And now, here's Shawn Britt's essay.
"Linked LTC Products – How They Provide Alternative LTC Solutions" by Shawn Britt, CLU
I was recently challenged by a financial professional who asked me why anyone would sell linked long-term care solutions such as life insurance or annuities with a long-term care rider. He was of the opinion that selling a single product with combined purposes creates confusion - that life insurance and annuities should be used for the purposes they were originally designed - and long-term care needs should only be handled with dedicated LTC products.
I surmised he had the ideal set of clients – older (but not too old), healthy and relatively affluent. And in a world of perfect clientele, he might be right. However, I routinely speak to financial professionals who have clients with objections and obstacles pertaining to long-term care coverage, and they're looking for solutions their clients qualify for and/or are willing to purchase.
While traditional LTC policies do offer the most comprehensive choices for coverage, and may be the best choice for many people, there are common obstacles to these sales.
There is now a growing marketplace of LTC solutions attached to financial products, and these alternative products may be able to address the concerns listed above.
Alternative LTC Solutions Linked to Financial Products
Solutions that combine LTC coverage with a financial product provide a way to avoid the "use it or lose it" (loss of premium) objection since the premium paid, and usually more, will be recovered either through use of the product for LTC benefits, a death benefit, or an annuity income stream. Thus, these products may counter some of the objections people have to a traditional LTC policy. While long-term care solutions linked to life insurance require some form of underwriting, there are a few solutions in the annuity space that do not, and provide a possible answer for uninsurable clients. All of these alternative products have similarities to traditional long-term care policies in the fact that they pay LTC benefits by indemnity or reimbursement, and may have an elimination period. Otherwise, the structure varies, and features are generally not as customizable. The trade off to customization is cost recovery that can be counted on.
Asset Based LTC (also known as a linked benefit) – With this product line, choice of benefit periods vary two to eight years (depending on the carrier), but one common choice of this type plan is a 6-year benefit period sold as a "two plus four" option, which we will illustrate here. The first bucket is an amount that is available for LTC benefits, but any amount not used for LTC is paid as a life insurance death benefit. This bucket lasts for two years when collecting the full benefit amount and it must be exhausted first when going on LTC claim. Once the first bucket is exhausted, the insured begins collecting from the second bucket, which is only available as LTC benefits and lasts 4 years when collecting full benefit. Any uncollected benefits from the second bucket are forfeited, however, when the insured passes away. There is a guaranteed residual death benefit that is paid to the beneficiary.
This solution avoids the "use it or lose it" objection by offering a death benefit that is higher than the investment that is collected via LTC benefits and/or death benefits. There is also a guaranteed return of premium feature. While customization is limited, there is the ability to purchase substantial LTC benefits with coverage periods and inflation protection similar to traditional LTC policies. These policies are typically paid for with a single premium (though 3, 5, 7 and 10 pays are available), so the product is a better fit for people with assets to reposition, and who want LTC coverage in an amount closer to a traditional policy, as well as some of the features such as inflation protection. Such people are also looking for cost recovery and a guaranteed return of premium should their needs change. This type of product generally uses simplified underwriting for life insurance and long-term care (including cognitive testing).
Life Insurance with LTC Rider (also known as Living Benefits)
This solution is accomplished by adding a LTC rider (for an additional charge) to a life insurance policy a person is purchasing. The death benefit from the life/LTC combo product creates a pool of money that can be used, while alive, to help pay for qualifying LTC expenses. If LTC is never needed or only partially used, any remaining death benefit is paid to the beneficiary. The benefit is normally paid monthly and is a percentage of the death benefit, typically 2% of the death benefit per month. Long-term care riders are generally offered on permanent life insurance contracts and offer the following:
People who are typically interested in this type of solution will vary. This may appeal to people with LTC concerns who have excess assets they wish to use to create a tax efficient legacy. This solution also appeals to people who voice the typical objections to stand alone long-term care policies and like the idea that the entire benefit pool will be paid to either the contract owner or beneficiary. Other potential prospects come from younger clients not ready to discuss purchasing full fledged LTC coverage.
Please keep in mind that these products are fully underwritten for life insurance and long-term care and it is possible to be offered the life insurance yet declined for the LTC rider.
Annuity/LTC Linked Solutions
Clients who lack the necessary LTC health qualifications may have options through annuity products with LTC riders. While these products generally offer less LTC coverage compared to other solutions, they offer an alternative that may be welcome to certain people. These products vary greatly, but generally, the contract value or the guaranteed income is doubled (sometimes tripled) when the annuitant qualifies for the LTC claim. And there are some companies offering annuity/LTC linked products that don't require underwriting. Instead, there is an exclusion period in which the client will not be eligible to file a claim. Depending on how rich the LTC benefits are, these exclusion periods tend to run between two and seven years. Some of these products qualify in their design to pay a tax free benefit for qualifying LTC conditions (per provisions in the Pension Protection Act of 2006, effective January 1, 2010).
The annuity/LTC linked solution may also appeal to clients who lack liquid assets for annual premiums. The annuity will provide either income for retirement or LTC benefits. For example, some contracts will allow the client to start taking a guaranteed income, then if qualifying LTC needs arise, the income is doubled. Be sure to inquire how the LTC benefits will interact with the income benefits as provisions vary greatly among companies and some LTC riders drop once income commences. Also keep in mind that not all annuity solutions are designed to qualify for tax free benefits. But when a person is in a position of few choices for LTC coverage, the annuity can offer some assistance.
For those who believe product sales should remain dedicated to the product category – that would be great in an ideal world where all is black and white. But the world I work in sees a lot of grey, and I am grateful linked solutions exist so we can still accommodate objections and obstacles with a LTC solution that a people are willing and able to put in place.
Shawn Britt, CLU is Director, Long-term Care Initiatives, Advanced Consulting Group
Nationwide Financial. Reach her with feedback or questions at firstname.lastname@example.com
Updated: Thursday, September 12, 2013, 10:01 AM (Pacific)
Seattle, WA--
LTC News and Comment
9/10/2013, Regulators consider LTCI lapse benefits, by Allison Bell, LifeHealthPro
Quote: "Insurance regulators are trying to decide when long-term care insurance (LTCI) policyholders should get 'contingent benefits' as the result of a policy premium increase. An LTCI contingent benefit proposal is part of a package of recommendations under discussion by arms of the Health Actuarial Task Force at the National Association of Insurance Commissioners (NAIC)."
LTC Comment: We'll keep you posted as this story progresses.
9/10/2013, Top 10 Most Important Features You Should Look For In An LTCI Policy
Quote: "A recent survey on long term care insurance agents found the top ten features they recommend a policy should have. 76% of respondents, however, answered that the ratings and reputation of the insurance company is the most important."
LTC Comment: Important findings in this survey—company reputation is key.
9/09/2013, Nursing homes as human habitats, by Jean Dobay, McKnight's Long Term Care News
Quote: "In 1975, the nursing home regulations came into play and continued to become more and more stringent until the nursing home industry was the most heavily regulated industry in the United States. Suddenly, nursing homes looked and ran more like a hospital, elders came to us sicker and sicker, and the medical model became the accepted practice. Our nursing homes became sterile, institutional, and regimented. Reimbursement became more complicated and the focus went from caring for our elders to meeting state and federal regulations while still jumping through all the hoops to be reimbursed. The 'Mom and Pop' homes could no longer survive in the industry and sold out to the mega chains. Caring for the elders became an industry where only the business savvy could survive.
"Thomas discovered that caring for the human spirit is far more important than treating their medical ailment. He discovered that creating a human habitat in a nursing home where plants, animals, and children surround elders is vital to caring for the human spirit. Nursing homes should not mimic their sister hospitals, but be the 'citadel of caring' where an elder can continue to grow: A garden of compassion and caring."
LTC Comment: Anyone interested in receiving long-term care in their home, or in a setting that could be described as a "citadel of caring," should set a financial plan in place to pay for this care well in advance. Your Center for Long-Term Care Reform has been publishing LTC Bullets covering the link between private financing and quality LTC services for over 15 years. Read our LTC Services: Thousand Bullets Retrospective for more information on this important topic.
9/09/2013, Big questions lurk in LTC's future, by Melanie Waddell, LifeHealthPro
Quote: "Long-term care specialists are at odds over what they believe the Long-Term Care Commission will submit to Congress on Thursday as part of its first set of recommendations to better ensure LTC coverage is available for the elderly and disabled."
9/07/2013, Book Offers Readers "CliffsNotes For Obamacare"
Quote: "In her column for the Washington Post (9/7, 4.53M), Michelle Singletary reviewed the 'Color of Money' book club selection 'The Best of ObamaCare Guide: For You, Your Family and Your Business,' published by Adams-Hall Publishing, and Singletary says personal finance author Don Silver has avoided the public-policy debates and written 'a guide for what you'll need to know before open enrollment for the healthcare exchanges starts. Think of it as CliffsNotes for Obamacare.' To allow for the latest information, the book is available for $7.95 only as an e-book from Amazon."
9/06/2013, Insurers Support Long-Term Care Consumer Awareness Effort by Association, PR.com
Quote: "A national long-term care insurance awareness print ad campaign made possible by John Hancock Insurance and Mutual of Omaha Insurance Company will run during Long-Term Care Awareness Month (November)."
LTC Comment: Kudos to AALTCI, John Hancock and Mutual of Omaha for this crucial outreach.
9/05/2013, "8 Tips to Help 40-Somethings Manage Their Health Care Costs," by Selena Maranjian, DailyFinance
Quote: "5. Think about long-term-care health insurance. It might sound crazy to someone who's just 40-something, but its not too early to consider. Such policies are designed to pay for home-care services or nursing home expenses when needed. Sure, you aren't likely to need this coverage for several decades, but eventually, the odds are good that you will. (Close to 7 in 10 Americans will need long-term care at some point after they turn 65.) And when you do, it can be extremely expensive. In fact, it's getting so expensive that many older folks are advised not to buy it, and to just try to put money aside for that purpose instead. But since the coverage is much cheaper if you buy it when you're young, it's worth considering whether it makes sense for you, now or later. For example, per a Genworth Financial (GNW) calculator, a policy paying $100 per day for three years sold to a 49-year-old in Colorado would cost around $950 annually, versus $2,990 for a 70-year-old."
LTC Comment: Planning for future long-term care needs is critical to successfully financing a long and enjoyable retirement.
9/05/2013, "Alzheimer's extracts a high price on caregivers, too," by Linda Carroll, NBCNews.com
Quote: "Even his job as an emergency room nurse didn't prepare 55-year-old Jim Crabtree for the overwhelming triple burden of caring for a wife with Alzheimer's, a father descending into dementia and a mother with crippling arthritis. Those burdens are so great they can shave years off the life of caregivers, experts say. In fact, one study showed that compared to others, caregiver spouses aged 66 to 96 had a 63 percent higher mortality rate, Ercoli said."
LTC Comment: Exploring the myriad costs of Alzheimer's, this article portrays the grim reality of the enormous toll placed on family caregivers.
9/05/2013, "Top 10 Reasons to Get Long Term Care Insurance," PRWeb
Quote: "ACSIA Long Term Care Inc. recently surveyed insurance experts on what they think are the best reasons to get coverage for long term care. Overwhelmingly, more than 95% responded with the top reason: to protect your assets and hard-earned savings from the high costs of care in the future."
LTC Comment: Medicaid eligibility rules are generous enough that most people qualify without significantly spending down—but for how long? See Briefing Paper #2: Medicaid Long-Term Care Eligibility for further information.
9/05/2013, "Mutual of Omaha Launches Group Critical Illness Insurance," Business Wire
Quote: "Mutual of Omaha, a leading provider of group benefits, has announced a new Critical Illness product that allows employers to enhance their benefits coverage, while providing employees and their loved ones with added protection if a critical illness occurs."
LTC Comment: Critical Illness Insurance continues to gain traction.
9/05/2013, "Study Finds Group Long Term Care Insurance 15-36% More Expensive Than Individual [link]," MarketWatch
Quote: "It can be tempting to buy the long term care insurance plan offered at work: it's convenient and sounds like a sensible idea, especially in midst of all the advertisement. Buyers may want to think twice, though, says long term care insurance marketplace LTC Tree. Examination of the latest policies and premiums shows that group plans typically aren't the best deal on price or benefits.
"LTC Tree also analyzed how the adverse selection in long term care insurance open enrollment periods at the workplace has led to consequences later for some large group plans. The unhealthy people opt for the group plans because they can't qualify for the individual and the healthy opt for the less expensive individual plans. Many have been forced to raise rates, some as high as 200%, in order to compensate for the increasing cost of care for the higher risk group. When these increases occur, a healthy person who was clumped in with these policyholders in the beginning sees their rates raise again, at no fault of their own. Skipping the group plan and choosing an individual plan if the person has relatively good health will place them into a more stable rate class, reducing the risk that their premium rates will increase later."
9/04/2013, "Kill inpatient eligibility requirement for skilled care, former CMS chief Berwick says [link]," by Tim Mullaney, McKnight's Long Term Care News
Quote: "The former head of the Centers for Medicare & Medicaid Services has said the agency should scrap a rule requiring three days as a hospital inpatient to qualify for Medicare coverage of skilled nursing care. Long-term care advocates praised the statement. In a recent interview with the Boston Globe, Donald Berwick, M.D., said he considered eliminating the rule during his tenure as acting administrator. However, other CMS officials worried this would lead beneficiaries to check into nursing homes unnecessarily, he said."
9/04/2013, "You might live to 100. Will your money?," by Danielle Andrus, LifeHealthPro
Quote: "What would you do if you lived to be 100? Vanguard asked that question in an interview with Olivia Mitchell, professor at The Wharton School of the University of Pennsylvania and executive director of its Pension Research Council, and Stephen Utkus, who directs Vanguard's Center for Retirement Research.
"Mitchell and Utkus stressed that in all the talk about crises — retirement shortfalls, the end of Social Security or Medicare — there are positives advisors and clients can focus on. People are living healthier and longer, Utkus said, and Mitchell noted that there are more jobs that are amenable to older people than there were 40 years ago — if you have to keep working, at least you can.
"Utkus noted that being able to work longer will also be important considering Social Security's uncertain future. 'Not only is there a need for people to consider working longer because of increased longevity, but also the demographic changes, people's increased life spans, are putting pressure on the public retirement programs, such as Social Security and Medicare.'"
LTC Comment: Living to 100 is generally a very costly blessing. It's critical to have a financial plan, including long-term care, established long in advance.
9/04/2013, "Debunking Long-Term-Care Myths," by Ben Mattlin, Financial Advisor Magazine
Quote: "Most of the news about long-term-care insurance has been bad. Carriers dropping out! Premiums skyrocketing! Even a federal long-term-care plan got scuttled as unfeasible. What's been missing are the success stories, or at least the hopeful signs. And there are some, say people in the industry. 'Based on our almost 40 years of [long-term-care insurance] experience, we have personally helped our clients receive millions of dollars in benefits,' says Brian I. Gordon, president of MAGA, a long-term-care specialist and broker in Riverwoods, Ill. 'We can truly say that the carriers we've worked with have paid 100% of all legitimate claims filed.'
"The underreported good news, then, is that this protection isn't exclusively a luxury item for the wealthiest of clients. In fact, says Hamm, 'it's easy to design [a long-term-care insurance] plan that fits a range of personal budgets and benefit levels to fit personal needs. Having some protection is better than having none—it doesn't have to be an all-or-nothing decision.'"
LTC Comment: Anybody reading this is familiar with the challenges LTCi has had. Nevertheless, it's still evolved to be a critical component to long-term financial planning.
9/03/2013, "It Takes a Family to Plan a Retirement," by Steve Cordasco, TheStreet
Quote: "It is no secret that we have an aging population: Each day 10,000 baby boomers turn 65 and start collecting Social Security and Medicare benefits. This trend is expected to continue for the next 19 years. However, what's less well known is that the vast majority of retirees are underfunded for retirement. The reasons for being underfunded are many: lack of savings, poor investment choices, excessive spending or unforeseen expenses. No matter what the cause, it is becoming clear that neither they nor we can rely on the federal government to take ample care of our senior citizens.
"One of the biggest financial burdens of a retiree is long-term care, which can run around $100,000 a year with an average stay of three years. Who is going to foot the bill? Who is going to manage the parents' transition into a nursing home? With the right planning, the next generation can provide the care needed without a slew of sudden emergency expenses."
LTC Comment: Long-term care is a family affair.
9/03/2013, "The Cost of Long-Term Care," by Donna Fuscaldo, Fox Business
Quote: "Dealing with a sick parent is emotionally draining, but it can also be financially devastating for adult children making health-care decisions. Whether children choose to put a parent in a nursing home, hire in-home professionals or go it alone, there are host of financial and emotional factors to consider.
"Long-term care, any way it's dished out, can be expensive so the type of care has to be balanced with the budget of the family. While finances should play a role in the decision-making process, it shouldn't be the only factor. 'You never want to let budget alone determine the choice of care because many aspects have emotional and mental tolls that can't be budgeted,' says Sun. 'You cannot put a price tag on family strain.'"
LTC Comment: This article addresses the cost of long-term care in different settings, focusing not just on the financial cost but the emotional toll on families as well.
9/03/2013, "Medical directors push for LTC-specific physician training, quality measures," Tim Mullaney, McKnight's Long Term Care News
Quote: "Nursing facility medical directors should receive more training specific to long-term care, according to the American Medical Directors Association. Residents of long-term care facilities often present particularly complex cases for clinicians, involving multiple chronic conditions, cognitive and functional loss and other debilities and illnesses. As a result, more investment is needed in training for medical directors of these facilities and physicians practicing in the LTC continuum, AMDA said in a letter to the Congressional Commission on Long-Term Care."
Seattle, WA—
LTC Comment: Once a week, usually on Fridays, we publish our latest LTC Bullet. The Bullets are often policy pieces, sort of like op-eds. You can always find the latest Bullets here and archives of the rest of the 1,000 Bullets (so far), by date here and by topic here. These 1,000+ articles are a valuable historical resource. Please make use of them. Search for key terms using Control-F on your keyboard.
This year, in celebration of the thousandth LTC Bullet (published last May) and the Center's 15th anniversary (April 1), we are releasing a retrospective of the most interesting and dramatic LTC Bullets that we've published since the Center's founding in 1998. We'll highlight one Bullet per year in each of seven major topics: "The LTC Problem and Solutions"; "Reality Check: The Facts on LTCI"; "Medicaid Planning"; "LTC Services"; "Politics and Legislation"; "Demographics and Other Data"; and "CLTCR News."
Today's Bullet is our "Thousand Bullets Retrospective" Number 4 covering "LTC Services." These "LTC Services" Bullets highlight the link between private financing and quality services. Read our summary and check out the original at the link provided. Enjoy this walk down memory lane.
July 22, 1998: Can NHs Make Gold Out of Straw?. "Evidence continues to mount that anyone who expects quality long-term care must be able to pay privately and avoid government financing.
The New York Times reported today that President Clinton will offer legislation to improve the quality of care in nursing homes. The legislation calls for new criminal background checks, a national abuse registry, improved nutrition and hydration training, and reauthorization of the Nursing Home Ombudsman program.
"Unfortunately, quality care is not something nursing homes can wish into existence. Quality costs money. Medicaid pays for 70 percent of all nursing home patient days, but reimbursement rates are typically 80 percent of private-pay rates and often less than the cost of providing the care. How can the government expect Medicaid dependent facilities to deliver high quality care when the government won't pay for it? It can't. The Administration should focus on encouraging private financing alternatives to Medicaid if improving quality is the real goal."
February 3, 1999: Perils of Medicaid. "A reporter from a prestigious financial planning publication contacted the Center for Long-Term Care Financing yesterday. She asked us to provide evidence that Medicaid nursing home care can be risky for consumers. Some Medicaid planning attorneys had told her that clients they artificially impoverish to qualify for the welfare program do not experience access and quality problems. We thought our readers would appreciate seeing the same evidence of potential Medicaid-related deficiencies gleaned from the gerontological literature that we provided to the reporter. That information follows [in this LTC Bullet]."
June 14, 2000: Shedding Tiers. "The following article was originally published in the March 1992 issue of LTC News & Comment. Since then, some conditions of the long-term care marketplace have changed. For example, private-pay assisted living facilities have co-opted nursing homes' light care residents. Most factors covered in the article, however, have stayed the same or gotten worse. Medicare cut-backs and Medicaid's parsimony have driven one in ten nursing home beds into bankruptcy. Nevertheless, public expenditures for nursing home care have increased ten percent in the past ten years, while out-of-pocket expenditures are down ten percent. In the meantime, the public's perception of nursing home quality has plummeted while litigation against nursing homes has skyrocketed. In other words, everything is playing out just as predicted in the article. That's why we think its argument needs to be re-stated. The secret to universal access to top-quality long-term care at the most appropriate level is to maximize private financing and target public financing to the genuinely needy. The result will be better care for rich and poor alike."
January 11, 2001: Triathlon Report Findings Resonate. "Based on interviews with 119 of the leading private financiers, providers and insurers of long-term care, The LTC Triathlon study is a penetrating analysis and critique of long-term care public policy. (See the full press release announcing publication of the report at www.centerltc.org/triathlon_release.htm.) Don't assume, however, the opinions and insights of the largest LTC players covered in the report are necessarily related to the scale of their organizations. Smaller players are facing some of the very same challenges!"
July 24, 2002: New CLTCF Speech: "Insurance: Private vs. Social." "Life is full of uncertainties. Usually, that's a good thing. Who doesn't like a pleasant surprise? But some uncertain events are very bad indeed. Heart attacks, auto accidents, and house fires come to mind. Although unpredictable individually, life's terrible shocks are thankfully rare and highly predictable collectively. We cannot eliminate risk, but we can mitigate its impact on our lives. Insurance prices, transfers, and softens risk so we can relax and enjoy life. It replaces the small risk of a catastrophic financial loss with the certainty of an affordable payment or premium. Unfortunately, however, the many benefits of insurance are highly susceptible to corruption and destruction by public officials with altruistic, but counterproductive motives. This talk will explain how private insurance empowers individuals to protect themselves and how you can recognize and resist the damaging trends of community rating, welfarization and 'social insurance.'"
October 7, 2003: Medicaid, Nursing Homes, Quality Problems and Insurance: How to Connect the Dots [link]. "Fire killed ten people last week in a nursing home that was 'self-insured' for liability. What's the connection between long-term care reimbursement, quality of care, and private insurance?" Find out in this LTC Bullet.
March 10, 2004: LTCi Professional Liability for Financial Advisors. "What are the professional liabilities for financial advisors who fail to advise clients about long-term care risk, cost and solutions?" Read this critical LTC Bullet and find out.
September 13, 2005: Who Should Pay for Long-Term Care? "Here is a succinct explanation of America's long-term care crisis: how it came to be, where it's headed, and how to mitigate the damage."
March 7, 2006: What I Believe About Long-Term Care. "[W]hat follows is my [Steve Moses] address to a session at the meeting called 'Shaking the Money Tree' which was organized by LTCi veteran and MedAmerica Business Development Vice President Gail Holubinka. Gail's idea was to have four speakers representing different perspectives on the LTC financing issue describe their vision of the topic. She asked us to explain our underlying beliefs and to build from that foundation logically toward a description of our proposed solutions to the LTC financing crisis."
June 27, 2007: The Brave New World of Long-Term Care. "On November 9, 2006, I [Steve Moses] spoke at an 'Aging America Symposium' sponsored by the Notre Dame Law School. My remarks, titled 'The Brave New World of Long-Term Care,' were published in the latest issue of the Notre Dame Journal of Law, Ethics & Public Policy. To read the whole article, go to http://www.centerltc.com/pubs/Articles/Brave_New_World_of_LTC.pdf."
February 1, 2008: LTC Tour Touches LTC Providers. "Nursing homes are heavily dependent on Medicaid which pays them too little to ensure quality care. Home health care providers are heavily dependent on Medicare which has whipsawed them between generous and penurious coverage. Assisted living facilities are 90 percent private pay, but they're hurt by government subsidies of nursing home care and tempted by Medicaid's low reimbursements for beds that would otherwise remain empty. In a nutshell, the entire LTC provider profession needs responsible LTC planning and rational long-term care policy."
October 6, 2009: Medicare/Medicaid Meltdown Means More LTCI. "Following are recent developments that suggest the end is near for near-universal government financed long-term care. As you read these tales of woe, consider this take-away: IT IS TRUE TODAY AND WILL BE MORE TRUE IN THE FUTURE THAT TO ENSURE ACCESS TO QUALITY LONG-TERM CARE AT THE MOST APPROPRIATE LEVEL OF CARE, CONSUMERS MUST BE ABLE TO PAY PRIVATELY. That simple truth, backed up by abundant evidence, trumps every excuse for failing to plan for long-term care."
April 27, 2010: Private LTC Insurance Vindicated. "The national media and ideologically driven analysts love to bash LTCI based on anecdotes but solid longitudinal data belie their criticism. New evidence [in this LTC Bullet]."
April 20, 2012: How RCFs and Duals Impact Medicaid and LTCI. "Vital new information about residential care facilities and Medicaid/Medicare dual eligibles [and what it means for the quality of LTC services in this LTC Bullet]."
January 18, 2013, So What If the Government Pays for Most LTC?, 2011 Data Update, "Ever wonder why LTC insurance sales and market penetration are so discouraging? Or why reverse mortgages are rarely used to pay for long-term care? Or why LTC service providers are always struggling to survive financially and still provide quality care?" Steve Moses explains in this LTC Bullet.
Gulfport, Mississippi—
LTC Comment: Nationally syndicated Chicago Sun-Times financial columnist Terry Savage writes often and well about the importance of long-term care planning. Following is an expert from her September 1, 2013 e-letter titled "Savage Truth: Personal Finance Update." Congratulations to Center supporters Claude Thau, as well as Brian Gordon and Peter Florek of MAGA LTC, who are quoted in the piece.
"Yes, I know that LTC insurance premiums on existing policies have been rising. Insurers have admitted they set premiums too low in the first place, not expecting the usage that has occurred. So they've made some expensive premium adjustments. The good news is that we can expect most of the increases are behind us. . . . except for this new gender-based pricing, which most insurers will put in place starting in September.
"Women live longer, and thus are more likely to need care, and may be more likely to require a longer period of custodial care, as they age. And women are less likely to have 'free' family help to cover their needs, unlike men who may rely on their wives for an initial period of care.
"Since women use more benefits from their long-term care insurance policies, the insurance companies are deciding women who buy policies in the future will have to pay more for their insurance. If you're a single woman who is in the market for long-term care insurance, here's a link to my article with some price quotes: http://terrysavage.com/article_082613_long_term_care.html
"If you want to learn more, I highly recommend a short, online 'Brainshark' -- a series of slides explaining the issue from industry expert, Claude Thau of Target Insurance. Here's that link [link] It's well worth ten minutes of your time.
"And if you don't know where to turn for help in finding a policy, I suggest you go to www.Magaltc.com, or call 800-533-6242 and ask for Brian Gordon or Peter Florek -- two of the top independent LTC experts in the country. You don't have to use my name, as I get nothing from this recommendation, except the knowledge that you will be dealing with honest experts."
8/30/2013, "Boomers may benefit most from Obamacare," by Matthew Heimer, WSJ MarketWatch
Quote: "The Affordable Care Act could deliver a major windfall to some boomers who are self-employed or unemployed, and to early retirees, by sharply cutting the costs of their health insurance. And a new report this week by Christopher Weaver and Louise Radnofsky of The Wall Street Journal shows just how big a price break some of those older consumers could get. Reviewing filings by insurers in Ohio that reflect what they'll charge in 2014, the reporters find that, in some cases, older workers' share of their insurance premiums could plummet, leaving them paying less than younger, healthier people with similar incomes."
LTC Comment: If those boomer savings are real (highly dubious), we might have an idea what they could do with them, right?
8/30/2013, "Congress should increase funding for non-institutional care, link payment and performance, Medicaid directors tell LTC commission [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Congress should expand Medicaid funding for care in home- and community-based settings (HCBS), the National Association of Medicaid Directors stated in a letter dated Tuesday. The organization referred to 'widespread support' for HCBS and said states need more 'tools and resources' to shift seniors away from facility-based care. 'One of the biggest barriers for states is that under regular authority they cannot use federal Medicaid funding for even limited room and board costs in a community-based residential alternative setting, including housing,' the letter stated."
LTC Comment: While a laudable goal, "rebalancing" from mainly institutional care to far more home and community-based services does not save money, makes Medicaid more attractive than ever for consumers, and, in the absence of stricter eligibility controls and stronger estate recovery, further impedes the markets for private home care and LTC insurance.
8/28/2013, "Why Baby Boomers Are Facing A Caregiver Shortage," by Howard Gleckman, Forbes
Quote: "The math is brutal: The population in the prime caregiving ages of 45-64 will grow by only 1 percent from 2010 to 2030 but the numbers of those 80 and over (who are most likely to need care) will grow by nearly 80 percent."
LTC Comment: As usual this author completely misses the key point. We have a shortage of paid caregivers because Medicaid co-opted the market for private home care and forced reimbursement rates down to dreadfully low levels. I interviewed a caregiver association president in Georgia recently who told me Medicaid pays $12.91 per hour for home care aides. To replace the declining availability of family caregivers, we'll have to expand the market for private-pay caregivers by reducing dependency on Medicaid. The only way to do that is to get Medicaid out of the business of providing long-term care to middle class and affluent people.
8/28/2013, "Bankers Life: Medicare still has an LTCI image problem," by Allison Bell, LifeHealthPRO
Quote: "Consumers still think Medicare does something that it does not actually do: Cover ongoing long-term care (LTC) costs. A research arm of Bankers Life and Casualty Company has published new data on that misunderstanding in a report based on a Web-based survey of 1,299 U.S. residents ages 49 to 67. The survey participants had annual household income of $25,000 to $75,000. Only 11 percent said they would expect their children to provide care or pay for care, but just 13 percent said they had private long-term care insurance (LTCI)."
LTC Comment: The public is only half wrong. Medicare doesn't pay for LTC, but Medicaid does. No wonder people are confused about who pays for LTC and why they need LTCI.
8/29/2013, "Dementia patients face higher risk of urinary incontinence," by Ashley Carman, McKnight's LTC News
Quote: "Seniors with dementia are three times more likely to have urinary incontinence and four times more likely to have fecal incontinence, according to a new study. . . . The investigators found 42 out of 1,000 men with dementia had a diagnosis of urinary incontinence, compared to 20 out of 1,000 men without dementia. Men with dementia also had significantly higher rates of fecal incontinence. Among women with dementia, 34 in 1,000 had urinary incontinence and 10 in 1,000 had fecal incontinence."
LTC Comment: What struck me about this data is how low the incidence of incontinence is among seniors, with or without dementia.
8/28/2013, "Nursing homes beneficial for Medicare program, researchers find," by Tim Mullaney, McKnight's LTC News
Quote: "After analyzing 2005 data for seniors in seven states, the researchers determined that dual-eligibles had higher medical costs - covered by Medicare - if they were living in a community setting versus being in a nursing home. . . . Researchers hypothesized that some nursing home residents may be receiving better nursing care than dual eligibles in a community setting, or that nursing home residents are less likely to receive hospital care."
LTC Comment: Whether rebalancing from institutional care saves money is one question; whether it improves care is quite another.
8/27/2013, "Elder care planning: An important part of the long-term care message," by Shawn Britt, LifeHealthPRO
Quote: "Elder care planning is essentially a comprehensive strategy that helps define a senior's wishes and assists designated caregivers and/or advocates in handling the physical, personal and financial affairs of a senior aging into the last phases of life. Long-term care (LTC) is just one, very important segment of total elder care planning."
LTC Comment: Every LTCI producer should know enough about general elder care planning to recognize when other professionals, products, or documents should be brought into the mix.
8/27/2013, "Boomer Expectations vs. Reality of Adult Caregiving," Bankers Life and Casualty
Quote: "An overwhelming majority (88%) of our nation's middle-income Boomer caregivers find caregiving for a parent or spouse harder than they expected, requiring more emotional strength (57%), patience (55%) and time (52%), according to a new study released by the Bankers Life and Casualty Company Center for a Secure Retirement(r) (CSR). The study, Retirement Care Planning: The Middle-Income Boomer Perspective, which surveyed 505 adult caregivers ages 49 to 67 with an annual household income of between $25,000 and $75,000, also found caregiving to cost more (34%), impact their relationships (33%) and take more physical strength (32%) than previously thought."
LTC Comment: Public policy offers a way out from the strains of caregiving: hire an attorney, take an early inheritance, and put Grandma in a Medicaid nursing home. Having made that course the path of least resistance, policy makers should be unsurprised how many people take it.
8/26/2013, "LIMRA finds drop in LTCI sales," by Allison Bell, LifeHealthPRO
Quote: "Annualized new premiums from U.S. sales of individual long-term care insurance (LTCI) fell to $213 million in the second quarter. The total is down 20 percent from the total for the second quarter of 2012, according to LIMRA. LIMRA based those figures on results from a survey of insurers. The number of U.S. residents who bought individual LTCI fell 16 percent in the second quarter, to about 91,000, LIMRA said. But LIMRA found that eight of the 16 carriers that were active in the individual LTCI market reported an increase in sales, and that six report an increase greater than 10 percent."
LTC Comment: In the meantime, unfunded liabilities of Social Security, Medicare and Medicaid continue to rise dramatically.
8/26/2013, "Regulators see skepticism about LTCI actuaries," by Allison Bell, LifeHealthPRO
Quote: "Some state insurance regulators want to develop a new, multiline definition of the term 'qualified actuary.' The regulators cited questions about the value of long-term care insurance (LTCI) actuarial projections as one example of the need for the project."
LTC Comment: Sure, give away LTC through Medicaid after the insurable event occurs so few people buy LTCI, force interest rates to zero so reserves yield returns too low for anyone to have predicted, then blame the actuaries for missing the targets.
8/26/2013, "Huge shortage of caregivers looms for baby boomers, report says," by Tara Bahrampour, Washington Post
Quote: "Americans should expect an enormous shortage in caregivers for older people in the coming decades, with a dearth of friends and family members available to care for the baby-boom generation as it ages, according to a report released Monday by AARP."
LTC Comment: One more "drop in the bucket" to convince boomers they'll be on their own in old age without LTC protection.
8/19/2013, "The Work versus Welfare Trade-Off: 2013," by Michael D. Tanner and Charles Hughes, Cato Institute
Quote: "The current welfare system provides such a high level of benefits that it acts as a disincentive for work. Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour. If Congress and state legislatures are serious about reducing welfare dependence and rewarding work, they should consider strengthening welfare work requirements, removing exemptions, and narrowing the definition of work. Moreover, states should consider ways to shrink the gap between the value of welfare and work by reducing current benefit levels and tightening eligibility requirements."
LTC Comment: Is it any wonder the entitlement mentality is commonplace and growing?
7/29/2013, "Prudential Report Reveals the Impact of a Critical Illness on Financial Wellness [link]," Prudential Financial, Inc.
Quote: "As the health care landscape continues to evolve, Americans are grappling with ensuring their families are financially protected from a medical crisis, according to a white paper released today by Prudential Financial, Inc. (NYSE: PRU). The report, Critical Illness Protection: On the Road to Financial Wellness, explores the role critical illness insurance can play in closing health care coverage gaps."
LTC Comment: CI is getting more and more coverage and interest.
Lillian, Alabama—
LTC Comment: We've just completed the field work for our third state-level study this summer. Preliminary findings on Georgia follow the ***news.***
*** TODAY'S LTC BULLET is sponsored by Claude Thau, a GA whose insight into sex-based pricing can help you secure referrals. His proprietary sales tools enable clients to make informed final decisions about buying LTCi in 15-20 minutes, let you test a client's interest in a combo product immediately, and change work-site LTCi from a proposal-delivery process to interactive consultation. The lead author of the Milliman Broker World LTCi Survey, Claude was named one of Senior Market Advisor's 10 "Power People" in LTCi in 2007 and Chaired the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at email@example.com to ask questions or get references. ***
*** R&R for SAM: As explained below, Steve's been on the road for four months and he has four major reports to write in September. So he's hunkering down on the Labor Day weekend for a much needed rest. Then all this coming month will be devoted full time (and then some, he says) to preparing our Virginia, New Jersey, Georgia and "Index of LTC Vulnerability" reports for publication. While Steve's locked inside his "cave of composition," Damon will fill in to do most of our clippings service notices, LTC E-Alerts, and LTC Bullets during the month of September. Thanks, Damon, for taking on the extra workload. ***
LTC Comment: Steve Moses has been on the road in the Silver Bullet of Long-Term Care since May 1 conducting studies of Medicaid and long-term care financing in Virginia, New Jersey and Georgia. He's headed home now with the huge task to write reports on all three studies before the end of September. As if that's not enough, he's decided to add a fourth report on what we plan to call "The Index of Long-Term Care Affordability." See "LTC Bullet: The Index of Long-Term Care Vulnerability" for more on that new method to measure states' potential to sustain their existing LTC service and financing systems. For now, however, here's a quick overview of our findings regarding Georgia's Medicaid and long-term care financing system. We'll have much more to come about all three states as the final reports are written and published.
Preliminary findings of "How to Reduce Medicaid Expenditures and Improve Long-Term Care," a project conducted for the Georgia Public Policy Foundation by The Center for Long-Term Care Reform, August 29, 2013
Georgia has one of the tighter Medicaid long-term care financial eligibility systems in the country, when enforced. For example, it operates an "income cap" system meaning people with incomes over $2,130 do not qualify for Medicaid-financed nursing home care. They cannot deduct their medical and LTC expenses to "spend down" to the Medicaid income eligibility limit as in more liberal "medically needy" income eligibility systems. Georgians, however, can achieve the same purpose by setting up Miller income diversion trusts or "Qualified Income Trusts" (QIT). QITs allow people with excess income to qualify for Medicaid LTC benefits by diverting the excess income into a special trust designed for that purpose. We will explain how, why and how often this is done in the final report.
Georgia has already implemented a managed care system for most of its recipients (poor women and children) and intends to implement managed care for the aged, blind and disabled. People eligible for both Medicaid and Medicare (dual eligibles) may in time be included in the managed care program, although there has been some political push back from that objective. Georgia has already "rebalanced" its Medicaid long-term care program from mostly nursing home care to nearly half home and community-based care. It has made Medicaid long-term care more attractive as a long-term care funding source and delivery system and is continuing to do more of the same. Less planning has been done to prepare for the reality that a huge new older generation will soon flood the state's social programs, of which Medicaid long-term care is one of the most expensive. Our final report will develop this theme and suggest corrective actions.
Georgia, like most states, runs the risk of Medicaid long-term care crowding out other key state services, especially education. Certain measures can be taken, however, to reduce this risk. One such measure we'll recommend is to enhance DCH's [the Department of Community Health contains Georgia's Medicaid program] estate recovery efforts both to generate non-tax revenue but also and especially to awaken citizens that Medicaid LTC expenditures must be repaid after death. Currently Georgia exempts the first $25,000 of deceased recipients' estates from recovery. As average recoveries in successful estate recovery programs are much lower than that, Georgia is leaving a large amount of potential non-tax revenue unrecovered. Unless and until Medicaid eligibility spend down requirements become much stronger, failure to enforce estate recoveries aggressively turns the program into free inheritance insurance for baby-boomer heirs who should instead be getting the message that LTC is a personal responsibility for which they should prepare.
Unsurprisingly, Georgia's inconsistent enforcement of Medicaid financial eligibility "spend down" rules, numerous Medicaid planning firms helping affluent Georgians qualify, and lax estate recovery enforcement seriously discourage early and responsible long-term care planning. The state's Long-Term Care Partnership program, which allows purchasers of the product forgiveness of their Medicaid spend down liability to the extent of the private coverage they actually use, goes unpromoted. The state is moving toward a much more expensive Medicaid LTC program in the future because of the approaching baby-boomer Age Wave at the same time as it is making the program more attractive and private-financing alternatives less likely to succeed. Georgia's current intention to avoid Medicaid expansion under the Affordable Care Act may mitigate this risk somewhat, but some of our respondents indicated that the state may choose to expand Medicaid after all following the Gubernatorial election.
I believe our findings will be on point and very timely. As Senator Renee Unterman told us in an interview "it is imperative to do self analysis like your study" and this is a "sensitive issue but a good time to deal with it."
Rome, Georgia—
LTC Comment: We received the following message from a Center member. Very interesting. "If you missed Genworth's webinar on their claims history over the past 38 years, here are some interesting numbers: Youngest claimant: 27 years old Oldest claimant: 103 years old Longest claim: 19.6 years Most expensive claim (still ongoing): $1,300,000 71% of all claimants are females 29% of all claimants are male 51% went on claim due to dementia & cognitive issues 15% of all claims lasted more than 5 years Average length of claims, if on claim more than 1 year: 3.9 years 71% of claims started with home care 13% of claims started with assisted living facilities 16% of claims started with nursing homes 50% of claims lasted less than 1 year (conversely, 50% lasted more than 1 year) The reason claims closed: 61% death 28% Recovery 11% exhausted benefits Average age of claimant: 79 Who goes on claim? 38% Single women 28% Married Women 10% Single men 24% Married men
Most expensive claims: Dementia & Parkinson's
LTC Comment: Some of the most interesting of these findings to me are that 15% of claims lasted more than five years, half lasted less than a year, and the average length of claim was 3.9 years. Does that mean people are well-served by "short and fat" policies? Not if the purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. "Long and lean," e.g., lifetime institution-only (ALF and SNF) coverage, would better meet that definition, though unavailable or very scarce now. On the other hand, the ability to pay privately for even a short time at least provides "key money" for insureds to buy their way into nicer care settings that Medicaid is likely to provide.
8/25/2013, "Tighter Rules for Reverse Mortgages: Fewer borrowers will qualify and borrowing limits will drop [link]," by Anne Tergesen, Wall Street Journal
Quote: "The rules governing reverse mortgages are about to change, which could mean less money for borrowers. But it also may help reduce the program's high default rate. Congress recently gave the Federal Housing Administration, which insures virtually all reverse mortgages, the authority to make sweeping changes to the federal program for older homeowners. . . . Those who submit an application, complete a reverse-mortgage counseling program, and receive a case number by Oct. 1 will be able to qualify for the higher maximum amounts under the current rules."
LTC Comment: When Medicaid finally has to drop its half million dollar home equity exemption, reverse mortgages will likely become a big payer for home and community-based care.
8/23/2013, "Gray science: 4 lessons from LTCI research," by Allison Bell, LifeHealthPRO
Quote: "Many Americans who could buy long-term care insurance (LTCI) don't. Why? Are the decisions a matter of taste, the result of confusion -- or, perhaps, the result of a lack of understanding that LTCI exists? The SCAN Foundation, a think tank that aims to study and improve senior care, recently tried to get answers by working with Gary Langer, the former ABC director of polling, to do a survey with a little more depth than many other long-term care (LTC) planning surveys."
LTC Comment: The worst possible way to find out why people don't buy LTCI is to ask them. They don't know. The real reason they don't buy requires some understanding and thought. You need to understand that government pays for most expensive long-term care. You need to think: if government pays, why would people worry about long-term care until they need it? Voila. There's the answer for why polls don't work, people don't know, and educating the public about "facts" that aren't true has little effect on consumer behavior.
8/23/2013, "Long Term Care Insurance Association Offers Bonus Sourcebook," by Jesse Slome, PR.com
Quote: "Insurance and financial professionals seeking the latest data on long term care insurance can take advantage of a special offer from the American Association for Long-Term Care Insurance."
LTC Comment: The AALTCI "Sourcebook" is always a welcome annual contribution to our understanding of the facts about long-term care.
8/22/2013, "Medicare Does Not Pay for Long-Term Care," by Harriet Komisar, AARP Blog
Quote: "Many consumers and policymakers mistakenly believe that Medicare—the federal health insurance program for people age 65 and older and some younger people with disabilities—pays for long-term care. It does not, as stated in the official Medicare handbook. Millions of Medicare enrollees must pay for long-term care services (such as personal assistance at home, assisted living, and nursing home care) entirely from their own income and savings."
LTC Comment: Medicare does not pay for LTC, but Medicaid does. In fact Medicaid is the dominant payer of expensive long-term care not only for the poor but for the middle class and affluent as well. Denial of this reality by advocates like this author contributes to the denial of LTC risk and cost by consumers.
8/22/2013, "Direct-care workers may be best leaders of interdisciplinary senior care teams, expert tells LTC Commission [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Working on a tight schedule, the commission has already begun drafting its report to Congress, according to staff director G. Lawrence Atkins, Ph.D. . . . Members will meet privately on Aug. 19 and 29 to discuss policy recommendations, and must conclude all commission business by the end of September, Atkins said on a recent conference call."
LTC Comment: One more commission, one more report, likely one more misfire. This LTC Commission, like previous ones, spent no time analyzing how the LTC service and financing system became so messed up in the first place. Therefore, it's no more likely to propose helpful solutions than previous ones. Expect instead the only recommendation such commissions ever muster: more government spending. Which, ironically, is exactly what created the current mess.
8/21/2013, "LTCI Watch: Publications, Opinion," by Allison Bell, LifeHealthPRO
Quote: "Two publications of interest to members of the long-term care insurance (LTCI) community also surfaced. One is a DVD, The Completely Understandable LTCI Buyer's Guide, by Craig McCormick. It was published in 2012 and now needs an update, but it has great information about the likelihood that an individual will need long-term care (LTC) services, government LTC programs and even Veterans Affairs Department LTC programs."
LTC Comment: I wrote the preface to this book by Craig McCormick. It's very good to see the book receive some well-deserved recognition.
8/21/2013, "Caregiver asks for Medicare chronic care benefit," by Allison Bell, LifeHealthPRO
Quote: "Suzanne Mintz, the co-founder and former president of the National Family Caregivers Association, talked about health insurance and Medicare Tuesday during a meeting of the federal Commission on Long-Term Care. The commission spent most of the meeting talking about LTC delivery and workforce issues."
LTC Comment: Adding a chronic care benefit now to Medicare's $43 trillion unfunded liability would be like adding deck chairs to the Titanic after the incident with the iceberg.
8/21/2013, "County nursing home woes reach critical stage in New York, report shows," by Tim Mullaney, McKnight's LTC News
Quote: "County nursing homes customarily take on a higher proportion of Medicaid residents than privately operated facilities, and reimbursement rates have not kept pace with costs, the report states. The shortfall can be as much as $100 per resident day."
LTC Comment: Nursing home interviewees always tell me that source of payment makes no difference for access to and quality of care. That's probably true in a given facility because of cost shifting from private payers, but between 100% Medicaid nursing homes and 0% Medicaid nursing homes, there is nearly always a difference due to Medicaid's low reimbursement rates.
8/20/2013, "Long-Term Care Insurance Industry Leader Prepares to Serve Groundswell of New Clients as Claim Benefit Payments Quadruple [link]," Voluntary.com
Quote: "When today's 50 to 60-somethings turn 70 to 80-something, tens of billions of dollars per year will be paid to holders of long-term care insurance policies and related financial instruments. Will you be among them? Today LTC Financial Partners, LLC (LTCFP), offers a five-fold path for participation."
LTC Comment: Conversely, just imagine the financial hit to Medicare and Medicaid "when today's 50 to 60-somethings turn 70 to 80-something." Sustainable? Doubtful, which is one more reason for people to plan for long-term care.
8/20/2013, "Obamacare's Impact on Seniors: An Update," by Alyene Senger, Heritage Foundation Issue Brief #4019
Quote: "The Patient Protection and Affordable Care Act (Obamacare) makes dramatic changes in the country's health care system, especially in Medicare, that will seriously affect American seniors. Indeed, much of the health law's new spending is financed by spending reductions in the Medicare program."
LTC Comment: Maybe, but there sure has been a lot of news lately about Medicare coverage of SNF and home care expanding.
8/20/2013, "Can hybrid annuities solve the LTC insurance scarcity?: Opinion," by Robert Bloink and William H. Byrnes, LifeHealthPRO
Quote: "Fortunately, the product market is evolving so that a relatively new method of securing tax-preferred long-term care benefits has emerged. Hybrid annuity products that combine the estate and income planning features of an annuity with the protection of long-term care insurance are becoming increasingly popular among clients looking for replacement insurance. Because the available long-term care benefits under these contracts are based on a percentage of the annuity premium value and often offer optional inflation coverage, clients may need to triple their initial investment to ensure long-term care needs are met, but with the added bonus that those funds are not lost if care is never required."
LTC Comment: Every financial product has its pros and cons, but the more products available, the better chance that consumers' differing needs are met.
8/20/2013, "The Wild Card That Could Destroy Your Retirement," by Frank Armstrong III, Forbes
Quote: "I'd advise finding an agent that is an expert in long-term care insurance and working with him/her. Your average life agent may not have the necessary expertise. Look for an insurance company with extensive experience in long-term care, a commitment to that market and the financial resources to pay up when and if you need it. There are still a half dozen great carriers in the market that deserve your confidence. If you are in your forties to sixties, and still in reasonably good health there's a good chance they can tailor something to your needs."
LTC Comment: Sound advice.
8/20/2013, "Boomers beware when caring for dying parents," by Gwen Fitzgerald, USA Today
Quote: "A recent legal ruling emerging from a courtroom in rural Pottsville, Pa., could impact tens of millions of Baby Boomers nationwide caring for their aging and dying parents. This relatively obscure court's decision could chill good end-of-life medical care and diminish legal options nationwide."
LTC Comment: One more burden for boomer caregivers to carry.
8/20/2013, "CMS rule tightens hospital guidelines on granting inpatient status," by Tim Mullaney, McKnight's LTC News
Quote: "The Centers for Medicare & Medicaid Services has issued a final rule on hospital inpatient status, which is likely to boost the number of seniors receiving Medicare coverage for skilled nursing services."
LTC Comment: More Medicare money for nursing home care. With a $43 trillion unfunded liability, when does Medicare run out of money?
8/19/2013, "Obesity indeed increases seniors' risk of death, will be long-standing issue for LTC providers: study [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Prior studies also indicated that obesity is associated with a decreased mortality risk in seniors. However, the so-called 'obesity paradox' is based on studies that did not account for seniors living in nursing homes, assisted living communities or other facilities, Masters told the Los Angeles Times. He said his own research shows that mortality increases sharply as obese people age."
LTC Comment: This finding comports better with common sense.
8/19/2013, "Protein change explains why pressure ulcers are 'not entirely preventable' among seniors, researchers say [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Elderly people's lack of protective skin proteins makes pressure ulcer prevention difficult, according to newly published research."
LTC Comment: Yet if pressure ulcers develop even in spite of exemplary care, nursing home litigators are quick to sue.
Stone Mountain, Georgia—
LTC Comment: Sponsor a conference, get publicity, and send Steve Moses to address the "good Medicaid lawyers," after this message:
LTC Comment: The American Association of Public Welfare Attorneys (AAPWA) has honored Steve Moses with an invitation to speak at its 46th Annual National Training and Continuing Education Conference. We seek a sponsor to support the conference and send Steve to the meeting in Newport, Rhode Island this November. Details follow at the end of this message.
According to their invitation letter: "The American Association of Public Welfare Attorneys (AAPWA) is an organization of attorneys who represent state and local human services agencies, including most state Medicaid agencies." In other words, these are the lawyers who protect state Medicaid programs from all kinds of legal challenges.
Their letter continues: "As attorneys for state Medicaid agencies, we share the Center for LTC Reform's goal of targeting scarce public resources to those most in need, and its concern with abuses of Medicaid eligibility rules." Clearly, these are allies in our struggle to preserve Medicaid as a quality LTC safety net for people in need by diverting those who are financially able to early LTC planning and private payment alternatives.
That's the good news. Here's the bad news: "I must warn you that we have no budget for speakers' expenses. We have to rely on speakers' own funding sources." Not too big a surprise. Anyone fighting on behalf of Medicaid and the poor has trouble raising funds.
Your Center for Long-Term Care Reform is no exception.
But here's the best news. The AAPWA will earmark a conference sponsorship contribution for Steve's expenses. We estimate the cost for Steve to attend and present at the AAPWA's 2013 conference would be approximately $2,000. That's also the cost of a "Silver Sponsorship" of the meeting which comes with the following benefits:
You can find all the details and a "Sponsorship Registration Form" here: http://www.aphsa.org/conference/doc/2013/SponsorsAAPWA.PDF
Calling all friends of the Center for LTC Reform. Can you help us with this special project? If so, fill out the sponsorship registration form here, submit it as instructed on the form, and let us know at the Center that you're on board so that we can get your sponsorship earmarked for Steve's expenses. We'll recognize you for your support with an LTC Bullet sponsorship at no extra cost.
Don't feel left out if you can't sponsor the conference officially. We'll gladly accept special contributions to the Center in any amount to support this speaking engagement. Just send us an email with the subject line "Send Steve to the Medicaid Lawyers' Podium." Tell us the amount of your pledge and Damon will get in touch. Your contribution will be acknowledged (unless you ask to remain anonymous) in the LTC Bullets Steve authors to report on the meetings where he presents.
Thanks as always for your support and encouragement.
Atlanta, Georgia—
LTC Comment: We're experiencing interminable rain in Atlanta where I'm conducting the field work for our study of Medicaid and long-term care financing in Georgia. Interviews today with a state legislator at the Capitol, an expert on home and community-based care, and a nursing home association executive. In another week and a half, we'll wrap up the site work in Georgia, head home and start writing the reports on Virginia, New Jersey and Georgia that are due by the end of September.
8/16/2013, "Reverse Mortgages Can Benefit Retirees, Both Wealthy and Not," by Kelly Greene, Wall Street Journal
Quote: "Reverse mortgages aren't just for people struggling to keep their homes anymore. The loans also can work for well-heeled retirees looking for a buffer to keep them from selling investments at the wrong time, according to academic researchers. And Congress last month gave a boost to the type of reverse mortgage that works best for that purpose."
LTC Comment: Reverse mortgages could supplement income for people age 62+ so they can afford LTCI to protect all of their assets including home equity. Strong regulations against "cross selling" make it difficult, however, to use these products in tandem that way.
8/16/2013, "New Texas Medicaid Law May be Future of Life Settlements: A new horizon for seniors grappling with mounting healthcare costs [link]," by Stephen Terrell, Life & Health Advisor
Quote: "Many people in this country are currently fighting a two-pronged battle between their serious medical conditions and mounting hospital bills. Texas state legislators recently made history by passing the country's first Medicaid life settlement law. Texas House Bill 2383, which enables residents to use the proceeds of a life settlement to help fund their long-term healthcare needs without it barring them from enrolling in Medicaid, was voted into law last month. The law also grants the authority to the state's Medicaid department to inform and educate residents about their option to cash in their life insurance policies through a life settlement plan. This is the beginning of a new future for the life settlement industry, originally founded to help individuals in deep financial straits, which is now once again assisting Americans overwhelmed by seemingly insurmountable healthcare costs."
LTC Comment: Is it a proper role of government to compel private insurance carriers to pay life insurance benefits before the insured dies?
8/16/2013, "Lack of information prevents long-term care planning even for those with high incomes, SCAN report finds [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Among people earning more than $100,000 a year, only about half say they have planned financially for their long-term care needs, according to the report. And any planning usually does not involve long-term care insurance, which has been purchased by only 17% of this high earners group."
LTC Comment: But why do most affluent people fail to seek information for LTC planning? Maybe because historically many have been able to ignore the risk, avoid the premiums, and end up on Medicaid while their heirs keep most of their money.
8/15/2013, "Who will plan for long-term care?," by Allison Bell, LifeHealthPRO
Quote: "Analysts at Langer Research Associates have published . . . findings in a report on LTC planning based on results from a recent telephone survey of 1,019 adults ages 40 and older. The SCAN Foundation, an organization created by SCAN Health Plan, commissioned the survey."
LTC Comment: High income, well-educated people are more likely to buy LTCI. Not exactly earth-shaking news.
8/15/2013, "5 Tips on a Long-Term Care Plan for Your Cat," by Jane A. Kelley, Catster
Quote: "Almost every day I see cats surrendered to shelters because their owner died or had to go into long-term care, and nobody knew what to do with the cat. But illness and death don't just happen to old people: No matter how young and healthy you are, you need to have a plan to make sure your cat will be taken care of in case you become unable to do so."
LTC Comment: See, the LTC market IS expanding.
8/15/2013, "Paying for elder care, without insurance," by Matthew Heimer, WSJ MarketWatch
Quote: "Going uncovered amounts to a calculated risk that may not be as reckless as it may sound. Some research suggests that the number of people who will face really big nursing-care costs is relatively small."
LTC Comment: This is sloppy thinking that derives from corruption of the concept and principle of insurance. When the probability of an event occurring is high, it is by definition uninsurable. The purpose of insurance is to replace the small risk of a catastrophic loss with the certainty of an affordable premium. Otherwise, our car insurance could cover oil changes.
8/15/2013, "Long-term care insurer Genworth hints at higher prices," by Mark Miller, Reuters
Quote: "Policyholders, as it turned out, were smarter than the insurance companies thought. Once you buy one of these policies, it makes sense to hang on to it for dear life. Insurance companies have been forced to pay out more in claims than they expected. But newer policies are being written with more realistic lapse rate assumptions built into pricing from the start."
LTC Comment: Live and learn in the private sector to survive. In the public sector, Social Security and Medicare go on making the original promises and many new ones with no hope of keeping them. Where are the regulators when you need them?
8/15/2013, "Do the Rich Benefit from Medicaid?," by Don Redfoot, AARP Blog
Quote: "Do the rich benefit from the welfare-based Medicaid program? Not according to much of the testimony presented at a recent hearing of the federal Commission on Long-Term Care."
LTC Comment: Much more on this subject in Friday's LTC Bullet here: "LTC Bullet: Do the Rich Benefit from Medicaid?"
8/15/2013, "How to Pay for Senior Care with Limited Resources: Troubleshooting Health-Care Woes [link]," by Chris Orestis, Life & Health Advisor
Quote: "'Many people who need long-term care can't afford it, so they drop the [life insurance] policies they've been paying on for years in order to qualify for Medicaid. The life insurance companies profit from the fact that they get all those years of premiums and never have to pay out a death benefit.' Orestis, who's been lobbying state Legislatures - including Texas - to make the public aware of their legal right to use this option, says seniors can instead sell their policy for between 30 and 60 percent of its death benefit value. The money can be put into an irrevocable fund designated specifically for their care. He offers more tips for paying for a senior's health care: Don't go straight to Medicaid. If your first thought is skipping right to Medicaid, the government's health-care safety net for the very poor, then you may be heading for a trap. Once you have Medicaid paying the bills, you and your loved ones have little say in how you're cared for and by whom. This policy conversion option allows you to live in a place where you're happy and comfortable and it saves taxpayers millions of dollars every year. Also, with 30 percent of the Medicaid population consuming 87 percent of Medicaid dollars spent on long-term care services, more individuals will be forced to find their own resources to pay for those needs."
LTC Comment: Good for beneficiaries, Medicaid and providers. Not so good for life insurers.
8/15/2013, "National dementia care guidelines fall far short on ethics issues, researchers find [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Scotland's national guidelines ranked lowest, implicitly or explicitly addressing only 35% of ethical issues examined, while the United Kingdom as a whole ranked highest, addressing 91%. However, the United States scored highest with regard to recommendations on how to handle ethical issues, at 71%. Switzerland scored lowest in that group, at 10%."
LTC Comment: The ethics of dementia care is an important and difficult subject.
8/14/2013, "Watch Out for Long-Term Care Policies That Will Cost You Double," by Brian O'Connell, The Street
Quote: "Data from the American Association for Long-Term Care Insurance says that huge price differentials by big insurance companies can nearly double what Americans are charged for long-term care insurance, which can cost hundreds of dollars a year."
LTC Comment: Was that what you were intending to convey, Jesse?
8/13/2013, "Do your homework before buying long-term care," by Clark Howard, Atlanta Journal Constitution
Quote: "Long term care insurance is a smart decision for many people. It helps pay for long-term nursing home care or for health care assistance in your home when you get older. But far too few people choose to buy it."
LTC Comment: I'm in Atlanta working on a study of Medicaid and LTC financing in Georgia. Kelly McCutcheon, president of the Georgia Public Policy Foundation (the study's sponsor) brought this article to my attention. He says "Clark Howard is a very well respected consumer advocate in Atlanta. He appears daily on the number one radio and TV station in Atlanta."
8/13/2013, "Baby boomers now the largest source of charity gifts," by Heather Joslyn, The Christian Science Monitor
Quote: "'Baby boomers are now the dominant source of income for most nonprofits,' says Mark Rovner, a principal at Sea Change Strategies and the study's primary researcher. Together with the generation born before 1946, he says, they are responsible for the vast majority of giving to charities. The study, which is based on self-reported data, found that the two groups together are responsible for nearly 70 percent of the estimated total annual giving to charities by individuals."
LTC Comment: OK, so boomers and the "silent generation" have the dough, but they're giving it away instead of buying LTC insurance. Adding insult to injury, as long as they don't give away their money "for the purpose of qualifying for Medicaid" it doesn't even trigger a Medicaid transfer of assets penalty . . . not even if they give it away within five years of applying for Medicaid.
8/13/2013, "Better staffing means better care, new nursing home state rankings suggest [link]," by Tim Mullaney, McKnight's LTC News
Quote: "'States whose nursing homes staffed at higher levels ranked far better than those with fewer staffing hours,' said Brian Lee, executive director of FBC and former Florida long-term care ombudsman. This finding supports what many stakeholders have been saying for years, Lee noted."
LTC Comment: Better staffing means better care? Well, yeah. But what allows better staffing? Obviously, adequate revenue, which is not forthcoming from most residents (who are on Medicaid) and is amply forthcoming from private payers (who pay half again as much as Medicaid, but make up only part of the difference.)
8/12/2013, "Poll: Blacks, Latinos Worry Over Long-Term Care Crisis," by Bruce Chernof, MD, New American Media
Quote: "African Americans and Latinos were especially worried. Well over half of blacks (57 percent) expressed concern about being able to pay for needed care, compared to 45 percent of Hispanics and 41 percent of whites. Also, half or more of African Americans and Latinos said they worry about becoming a burden on their families, in contrast to just over one in three whites. And almost half of blacks surveyed were concerned that they may leave debts to family related to long-term care, compared to just over one in four Hispanics and whites. The prospect of ending up in a nursing home proved somewhat more troubling for African Americans (57 percent) than for Hispanics (44 percent) and whites (40 percent)."
LTC Comment: Apparently "denial" is stronger among whites than minorities. Interesting observation.
8/12/2013, "What's Keeping You Up at Night: Affording Medical Bills," by Gail Buckner, FoxBusiness
Quote: "Thirty-seven medical conditions meet the definition of 'critical illness,' according to the Life Insurance Association. They include 'major' cancers, heart attack, some (but not all) types of stroke, severe burns, blindness, kidney failure and a host of other illnesses you hope that you- or someone you love- never encounter. While having health insurance certainly reduces the financial burden, a number of expenses are either only partly covered, or not at all. According to Sun Life, on a weighted average basis, a critical illness will set you back $7,500. If you have a heart attack, or stroke your out-of-pocket cost will double--even if you have health insurance."
LTC Comment: Good national exposure for CI.
8/12/2013, "Connecticut rejects group LTCI rate change request," by Allison Bell, LifeHealthPRO
Quote: "The Connecticut Insurance Department has rejected efforts by John Hancock Life Insurance Company to increase rates on 1,800 long-term care insurance (LTCI) policies by an average of about 58.1 percent."
LTC Comment: What if the real choice is whether or not Hancock can pay claims when they come due? Not letting them raise rates creates the same problem the government has caused with Social Security and Medicare—unfunded liabilities which cannot be met and will hurt millions.
8/12/2013, "Are We Ready For A Massive Aging Population?," by Celeste Headlee, National Public Radio
Quote: "America's population is aging at a rapid rate: 20 percent of the country will be 65 or older by the year 2050. Guest host Celeste Headlee talks with experts about how the aging population will affect the American landscape."
LTC Comment: It's interesting that the age wave is finally getting heavy national media attention . . . now that the wave is about to crash and it may be too late to prepare. The same thing happened when America's educational system was totally unprepared for the tsunami of boomer babies reaching school age in the early 1950s. The aging challenge is even worse as we had 65 years to get ready, but didn't. Our country is famous for doing nothing until crises are upon us and this one is no exception.
LTC Comment: Biased reporting by AARP suggests the answer to the title question is "no," but solider peer-reviewed scholarship says "yes." Who's right? After the ***news.***
*** PAUL FORTE, CEO of Long Term Care Partners, LLC, which runs the federal long-term care insurance program, has submitted a white paper to the LTC Commission titled "The American Long Term Care Insurance Program (ALTCIP): A New Public-Private Model for Financing and Delivering Long Term Care Services and Supports." We'll post it temporarily so you can find it here. Mr. Forte says: "This paper argues that a properly designed voluntary insurance program could work. The ALTCIP combines simplified benefits, streamlined administration, self-service portals, and sustainable price. Hundreds of thousands—even millions—of Americans could secure meaningful protection against potential future LTSS needs, thus reducing the number of people who will rely on Medicaid to cover LTSS, a major problem for federal and state government budgets alike." Forte's thoughtful paper is well worth the attention of the LTC Commissioners. ***
*** MURRAY GORDON of Center-corporate-member MAGA Ltd. reports: "Out of tens of thousands of professionals nationwide who help consumers identify and purchase the best long term care insurance (LTCI) plans for their specific needs, two LTCI professionals in Riverwoods, IL. rank in the Top 10 nationally by the American Association for Long-Term Care Insurance (AALTCI). Peter R. Florek, vice president of MAGA Ltd., a family owned and operated insurance agency that focuses exclusively on LTCI, ranked 3rd for traditional and 3rd for asset based nationally on the AALTCI recently released 2013 sales achievement listing. MAGA president, Brian I. Gordon, ranked 6th for traditional nationally. The 12th annual awards program recognizes leading LTCI professionals working to meet the needs of consumers." Congratulations, MAGA, Florek and Gordon! ***
LTC Comment: The obvious answer to that question is: "Of course not. Medicaid is welfare. You have to be poor to qualify. People must spend down their life's savings for long-term care before Medicaid will help." That's what everyone has been taught. It's what most of the popular media articles say. Even academics, who ought to know better, repeat the litany in their publications. It's even what I believed many years ago.
Just one problem. It isn't true. Here's the puzzle that got me started studying Medicaid and long-term care financing way back in 1982. I was a federal Medicaid State Representative in the Health Care Financing Administration's Seattle Regional Office. My state was Oregon. During a routine state assessment I came across a program called Medicaid Estate Recoveries which purported to recover millions of dollars from the estates of deceased Medicaid recipients. That really got me thinking.
See the problem? If Medicaid requires impoverishment, how could people qualify for the program, spend years in a nursing home at enormous expense to the state and federal governments, and when they died, a little state like Oregon recovered, back then $5 million, more like $20 million today, from their estates!?
It didn't compute, so I set out to study Medicaid long-term care financial eligibility. What I found three decades ago is still true today despite statutory measures (that I successfully advocated) to tighten eligibility rules. Income almost never interferes with Medicaid LTC eligibility unless an applicant's income is higher than the cost of a private nursing home, $75,000 per year on average. Assets held in exempt form are practically unlimited: up to $802,000 of home equity goes uncounted, and with no limit at all, a business, a car, term life insurance, personal belongings, home furnishings, IRAs if they pay out a regular cash stream, and prepaid burial plans. Finally, if you still have too much money to qualify, cadres of Medicaid planners are eager to take thousands of dollars in fees to provide quick and easy artificial impoverishment.
In other words, if middle class and affluent people were NOT benefiting from Medicaid, that would be the surprise. The burden of proof falls on those who claim Medicaid does not benefit the "rich."
A couple weeks ago, the federal LTC Commission heard testimony from several academics on this subject. Read it here. Unfortunately, the Commission's Vice Chairman, Mark Warshawsky, who understands how Medicaid really works, was not present due to a death in the family. So a key questioner was missing who could have brought reason and understanding to the discussion.
According to an article by Don Redfoot of AARP published yesterday, the argument about whether the rich benefit from Medicaid was resolved in favor of the deniers. Think maybe AARP is a little biased on the topic having advocated expanded government financing of LTC for decades? Read Redfoot's article here and judge for yourself with the preceding and following content for context. He says "Do the rich benefit from the welfare-based Medicaid program? Not according to much of the testimony presented at a recent hearing of the federal Commission on Long-Term Care."
On what is that conclusion based? Ellen O'Brien testified that "There is little basis for the assertion that people with substantial incomes or assets are becoming eligible for Medicaid by improperly transferring their assets." I've debunked such careless conclusions for many years. See for example here, and here. The strategy of researchers with an ideological bias who seek to obfuscate the issue is to focus only on asset transfers. Asset transfers are significant, but they aren't the major problem. The major problem, as explained above, is that Medicaid's basic LTC financial eligibility rules are so generous that most people don't have to transfer assets to qualify. Simply buying exempt assets with otherwise countable resources will suffice. People with much more money can consult Medicaid planners who have many, more effective artificial impoverishment tools than asset transfers. Such tools include Medicaid-friendly annuities, reverse half-a-loaf strategies, life care contracts, systematically purchasing large exempt assets, special trusts, etc. But the obfuscators fixate on asset transfers as if showing the limited impact of a relatively minor Medicaid planning technique proved their case.
The other argument against Medicaid benefits for the affluent came from Richard Johnson of the Urban Institute who presented data showing that most people who experience disabilities and need Medicaid assistance not only had lower incomes and assets at the time they needed assistance, but overwhelmingly also had relatively low incomes and assets during their peak earning years. Well, hello, some people on Medicaid are poor? What a surprise. The program is supposed to be a safety net for people in need. That fact says exactly nothing about the real tragedy that affluent people are consuming scarce public resources that should go exclusively to help the poor.
Does this academic sleight of hand by ideological prestidigitators get on your nerves? Then have a look at the more serious presenters who testified the same day. Eric French, from the Federal Reserve Bank of Chicago, showed that rich people really do benefit from Medicaid . . . as much or more so than poor people. Jeffrey Brown of the University of Illinois summarized his research findings that between two-thirds and 90 percent of the market for private long-term care insurance is crowded out by the availability of Medicaid LTC benefits. Since poor people don't buy LTCI, that means that well-heeled people are also failing to buy because of easy access to Medicaid after the insurable event occurs.
According to the Redfoot piece: "Chairman Bruce Chernof said it best at the Commission hearing when he noted that he does not know anyone who wants to be on Medicaid, as Medicaid is a poverty program." One hopes the Chairman is only naïve and not simply ignorant. Medicaid planners lure their clients with the promise that they'll get great care on Medicaid because they can buy their way into the nicest facilities. How? By retaining "key money" so they can pay privately for awhile at rates half again as high as Medicaid's. Financially starved LTC providers roll out the red carpet for private payers. Once in, the lawyer flips the switch, converts the client to Medicaid, and the facility is stuck with another welfare patient paying less than the cost of the care because state and federal laws prohibit expelling residents if their source of payment changes.
Unfortunately, poor people don't have "key money." They're stuck with whatever Medicaid can afford which has been described as "low cost care of uncertain quality." That's the net effect of Medicaid's covering too many people who could, should and would have planned early and paid privately for long-term care if it were not for the perverse incentives in public policy that academic obfuscators hide and deny. Now they want the LTC Commission to double down on public financing of long-term care which caused the problem in the first place.
Recent media stories indicate the LTC Commission has already prepared the first two chapters of its report. It's hard at work on the final chapter which will include recommendations to Congress. We can only hope against hope that objectivity, clarity and reason will prevail. In the end, however, it likely won't matter much anyway, because bigger fiscal issues are about to capture lawmakers' attention as the fiscal cliff looms once again.
LTC Comment: The Fourteenth Annual Intercompany LTCI Conference will take place March 16 to March 19, 2014 at the Rosen Centre Hotel in Orlando, Florida. Follow development of the agenda and watch for registration details in November here: WWW.ILTCIconf.org. If you want a booth in the exhibit hall, now's the time to check with Jim Glickman at 818-867-2223 or firstname.lastname@example.com. Here's what the organizers have to say:
"Highlights of the 14th Annual Intercompany Long Term Care Insurance Conference include • Keynote Speaker Chris Gardner, whose life was the basis for the book and movie The Pursuit of Happyness • 48+ Educational Sessions, featuring a high level of education and access to all the different components of the LTCI industry • Excellent mix of content with 100+ exceptionally qualified speakers • Plenty of time to network - meet and collaborate with more than 800 attendees and long-term care industry experts • Pre and Post Conference Opportunities: CLTC Master Class and SOA Professionalism Course • Connect with other professionals and learn about the industry's challenges. The 14th Annual Intercompany Long Term Care Insurance Conference also offers sponsorship opportunities and a large exhibitor space where companies have the opportunity to showcase and demonstrate their products and service offerings to the diverse group of attendees."
8/10/2013, "Long-term Care Insurance Claim Payments to Quadruple," by Jesse Slome, Kansas City InfoZine
Quote: "The nation's long term care insurance companies are expected to pay $15 Billion annually to policyholders a decade from now and more than twice that amount in 2032 when today's 60 year olds reach their 80s."
LTC Comment: Dramatic numbers for the future as LTCI policies mature and claims increase. What happens after that depends on public policy regarding Medicaid and interest rates.
8/8/2013, "More Bad News for Long-Term Care Insurance: A Major Carrier Reassess the Business Amidst More Rate Hikes [link]," by Howard Gleckman, Forbes
Quote: "Industry sources say [Genworth] could withdraw from the market if it does not win regulatory approval for new rate hikes on about 650,000 older, existing policies. A company spokesman said the firm also needed states to approve changes that would allow the company to sell policies that are more tightly underwritten and that offer shorter benefit periods, lower daily benefits, and other changes."
LTC Comment: This author never misses a chance to pounce with glee on any sign of difficulty in the LTCI market. Yet he and his ilk are blind and silent regarding the government safety net's massively bigger problems.
8/8/2013, "Is critical-illness insurance worth the money?," by Elizabeth O'Brien, WSJ MarketWatch
Quote: "Now, more employers are offering a product called critical-illness insurance that's designed to fill some coverage gaps for people with certain costly ailments. But is such insurance the right financial solution for boomers?"
LTC Comment: Suitability is a good question to ask about financial products for individuals and families, but as it applies to broad groups like "boomers" the answer will always be "it depends."
8/8/2013, "LTCI Watch: Bitterness, Opinion," by Allison Bell, LifeHealthPRO
Quote: "One reason you could make an argument that the federal government ought to consider trying to do something for private LTCI, at least send a postcard, is that the government is responsible for the low interest rates that are suffocating the private LTCI carriers (and the pension plans, and the Medicare Part A hospitalization plan trust fund.)"
LTC Comment: Hear, hear!
8/8/2013, "As Resident Demographic Shifts, Assisted Living Adapts to Change," by Alyssa Gerace, ALFA Update
Quote: "As the assisted living resident demographic changes toward higher age and acuity, senior living providers are shifting care models with a clinical focus to accommodate emerging needs. A majority of assisted living residents are female, 85 or older, and need help with at least one activity of daily living (ADL), according to the CDC's 2010 National Survey of Residential Care Facilities. Nearly 40% need help with three or more ADLs."
LTC Comment: ALFs are accommodating higher acuity residents at the same time they are serving more and more Medicaid recipients. Higher care needs do not mix well with Medicaid's lower reimbursements, a bitter lesson nursing homes learned the hard way.
8/7/2013, "Lawsuit Says CalPERS Misled Long-Term Care Policyholders," California Healthline
Quote: "On Tuesday, three law firms filed a lawsuit against CalPERS on behalf of more than 125,000 long-term care policyholders alleging that the pension fund misled beneficiaries by saying premium rates for such plans would be stable, the Sacramento Bee reports (Kasler/Ortiz, Sacramento Bee, 8/7)."
LTC Comment: The sad saga of CalPERS's foray into private LTCI continues.
8/7/2013, "Study Shows Reasons People Buy Long Term Care Insurance," by Jesse Slome, ExpertClick
Quote: "'Planning for retirement or entering retirement was the primary motivator for 52.1 percent of buyers,' explains Jesse Slome, executive director of the American Association for Long Term Care Insurance. 'More than a third (34.7%) were influenced by an experience with a loved one who needed long-term care services.'"
LTC Comment: Both "primary motivators" for buyers, i.e., retirement planning and LTC experience with a love one, are on the increase for many years ahead.
8/6/2013, "Critical illness cover turns 30 years old," by Fiona Murphy, Mortgage Solutions
Quote: "The insurance product initially called 'Dread Disease' was developed as Dr. Barnard witnessed first-hand the financial impact of illness on his patients. The original policy, brought to market by Crusader Life Insurance, covered four conditions: heart attack, cancer, stroke, and coronary artery surgery and was soon adopted across the world."
LTC Comment: Dr. Marius Barnard, who invented critical illness insurance, is a brother of Dr. Christiaan Barnard who performed the first human-to-human heart transplant.
8/6/2013, "Live to 120? No thanks, many say in new survey," by Sharon Jayson, USA Today
Quote: "More than two-thirds (69%) of a nationally representative sample of 2,012 adults 18 and older say they'd like to live to somewhere between 79 and 100; the median ideal age is 90. That's about 11 years longer than the current U.S. average of 78.7 years (81 for women, 76.2 for men)."
LTC Comment: Findings like these must reflect the experience boomers are going through now with their frail, chronically ill parents.
8/6/2013, "Leveen speaks to Parkersburg Rotary Club about insurance," by Brett Dunlap, Parkersburg News and Sentinel
Quote: "The possibility of long-term care is a topic many aging people are not prepared to discuss yet even though many from the baby-boom generation are beginning to reach the age of 65, a long-term care insurance expert told the Parkersburg Rotary Club Monday."
LTC Comment: This article is about Center Regional Representative and clippings subscriber Honey Leveen of Houston, Texas.
8/5/2013, "Testimony for the Long Term Care Commission based on research by Mariacristina De Nardi: Federal Reserve Bank of Chicago and University College London; Eric French: Federal Reserve Bank of Chicago and University College London; and John Bailey Jones: SUNY-Albany [link]."
Quote: "Rich people live longer. They do receive Medicaid, especially when really old. When rich people receive Medicaid transfers, they tend to be big."
LTC Comment: After these researchers published their peer-reviewed findings, I contacted them to explain how it can happen that well-to-do people qualify easily for Medicaid. We carried on an extended exchange of correspondence. Hopefully, Eric French's testimony before the LTC Commission opened some eyes.
8/5/2013, "The Digital LTCi Sale: Have You Gone Digital? Three Ways it Can Grow Your LTCi Sales Image [link]," by Douglas Hamm, Life & Health Advisor
Quote: "If you think buying an ad in the yellow pages, sending postcards and direct mailers, or other traditional marketing methods sound a bit outdated, you're not alone. They may still be popular in the industry and have some value, but buyers of all ages are turning to the Internet to learn about financial products and make their purchases, according to LIMRA's 2013 Insurance Barometer Study, which found that the most important factors in actually purchasing insurance are related to knowledge, and consumers are filling this education gap online."
LTC Comment: Online LTCI sales are coming on and some producers are having great success with tech savvy.
8/5/2013, "Emeritus will respond vigorously to 'sensationalized' Frontline documentary, company leaders say [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Emeritus did provide extensive information to the reporters, but 'they used almost none it,' Vice President of Product Development and Communications Karen Lucas told McKnight's. After being contacted in June 2012, Emeritus worked with the Frontline reporters in a 'cooperative and supportive way,' Lucas added. She said the report was 'sensationalized and lopsided' in tone and singled out Emeritus due to its status as the largest assisted living provider in the country."
LTC Comment: LTCI people can understand Emeritus's frustration having been the target themselves of many "sensationalized and lopsided" media stories.
8/5/2013, "LTC commission meets for marathon hearing, receives public comments," by Tim Mullaney, McKnight's LTC News
Quote: "The Congressional Commission on Long-Term Care convened for its third hearing last week, focusing on how Medicare, Medicaid and long-term care insurance interact, and potential ways to strengthen these payment mechanisms."
LTC Comment: We had some allies on these panels including Gary Alexander, formerly Rhode Island Office of Health and Human Services; Joseph Antos, American Enterprise Institute; Lane Kent, formerly Univita; Eric French, Federal Reserve Bank of Chicago and University; and Jeffrey Brown, University of Illinois. But the dominant thrust of testimony came from advocates of more public financing of LTC.
8/4/2013, "Long Term Care Insurance Association Director Appears on PBS," PR.com
Quote: "The executive director of the American Association for Long-Term Care Insurance appeared on PBS television's Nightly Business Report yesterday as part of a three-part series exploring long term care."
LTC Comment: Nice work, Jesse.
LTC Comment: Broker World magazine has published its annual long-term care insurance survey for 2013. Highlights after the ***news.***
*** DAMON'S BACK. Turns out he was a jury "alternate" meaning he had to sit for all the proceedings and testimony, but he's excused during deliberation unless needed to replace one of the regular jurors. Welcome back, Damon. ***
*** BACK ON SCHEDULE. And now that Damon has returned, we'll try to get back on our regular publication schedule for LTC E-Alerts and LTC Bullets starting with today's Bullet. ***
*** IN THE MEANTIME, Steve's in Atlanta, near the famous Stone Mountain, living in the Silver Bullet and starting the field work for our study of Medicaid and long-term care financing in Georgia. We're working on this project under the auspices of the Georgia Public Policy Foundation (www.gppf.org.) More to come as the project progresses. ***
LTC Comment: Every year Broker World magazine publishes surveys of traditional and worksite long-term care insurance. The surveys' authors are well known LTCI experts, Claude Thau, Dawn Helwig, and Allen Schmitz. We've culled a few highlights from this year's surveys below. Check out all the details in the July and August issues of the magazine. Be sure to subscribe to Broker World if you haven't already.
It's clear from the following data that the private long-term care insurance industry continues to face daunting challenges. On the other hand, it is equally true that private LTCI is playing a bigger and bigger role in financing extended care as its policies mature and claims increase. What the future holds is anyone's guess, but a likely scenario is that publicly financed long-term care will face harder times, but pressure holding back LTCI will retrench.
Excerpts from "2013 Long Term Care Insurance Survey," Broker World, July, 2013
Excerpts from 2013 Analysis of Worksite LTC Insurance, Broker World, August, 2013
Updated Monday, August 5, 2013--
LTCI Sales Achievement Awards Announced and LTC News and Comment
LTC Comment: With Damon on jury duty for the past two weeks, we fell behind on our weely LTC E-Alerts. Today we catch up with a longer-than-usual compendium of LTC news and analysis since mid-July. Enjoy.
Jesse Slome at the American Association for Long-Term Care Insurance reports that "The complete listing of individual award recipients for the 2013 Long Term Care Insurance Sales Achievement Awards can be accessed via the Association's website at www.aaltci.org/2013awards."
The top-10 producers based on individual long term care insurance placed premium during 2012 are:
1. Todd Stein, San Francisco, CA
2. Mary Ann DeKing, Darien, IL
3. Peter Florek, Riverwoods, IL
4. Wayne Reynolds, Concord, OH
5. Susie Caspar, Dover, MA
6. Brian Gordon, Northbrook, IL
7. Steve Elliott, San Diego, CA
8 Richard Brief, Warren, NJ
9. Paul LeWinter, Miami, FL
10. Susan Sabella, Issaquah, WA
Congratulations all!
8/2/2013, "How do we fix private LTCI?," by Allison Bell, ProducersWeb.com
Quote: "Should the Federal Commission on Long-Term Care say anything to Congress about private long-term care insurance (LTCI)? Some members of the commission were asking that question recently at a hearing on efforts to strengthen public and private support programs for people who need long-term care (LTC) services."
LTC Comment: Predictably, the LTC Commission is drifting toward recommending an expansion of public LTC financing, exactly the strategy that caused the mess we're in.
7/31/2013, "Genworth conducting 'deep review' of LTCI business," by Allison Bell, LifeHealthPRO
Quote: "Genworth Financial Inc. needs to improve the way it manages its long-term care insurance (LTCI) business, according to Thomas McInerney, the company's president. 'We're conducting an intense, very broad and deep review of all aspects of our [long-term care] insurance business,' McInerney said during the company's second-quarter earnings call."
LTC Comment: All LTCI carriers are doing the same. One wishes public LTC financing programs would scrutinize their vulnerabilities and sustainability in the same way.
8/1/2013, "Planning for long-term care can have a big payout," by Bertha Coombs, CNBC
Quote: "Though the price was steep-$140 a month-she didn't hesitate, and paid $20,000 in premiums over 12 years. Now 85, Douglis has been collecting the benefit since 2010, when she moved into an assisted living facility. 'I think more people should have it because they don't appreciate what's going to happen to them.'"
LTC Comment: Welcome positive coverage.
7/30/2013, "How to Prepare to Financially Support Aging Parents," by Philip Moeller, U.S.News & World Report
Quote: "In taking the time to provide family care, MetLife said, working Americans lose an estimated $3 trillion in lifetime wages, with average losses of $324,044 for women and $283,716 for men. With these costs and other money issues in mind, MMI researchers put together 10 things to consider about the financial consequences of caregiving."
LTC Comment: Buying LTCI for parents should be at the top of the list, but it isn't on the list at all, whereas "Learn about Medicare and Medicaid" is. Go figure.
7/31/2013, "Book Review: Medicaid Planning: From A to Z," ElderLawAnswers
Quote: "Among other topics, the manual covers Medicaid's medical, income and asset qualification rules; the uses of trusts; planning ideas for the home; post-DRA half-a-loaf strategies like gift and return gift and annuity; converting IRAs to an annuity; and the taxation of trusts, estates and gifts. The 2013 edition also includes a 40-page section exploring Medicaid planning and attorney professional ethics, with case studies and ethics resources."
LTC Comment: "Medicaid planning and attorney professional ethics" is an oxymoron.
7/30/2013, "John Hancock National Study Finds Long-Term Care Costs Continue to Climb Across All Provider Options [link]," WSJ Market Watch
Quote: "To understand how long-term care costs are trending over time, John Hancock calculated a five-year average based on a subset of common providers from our 2008 and 2011 Cost of Care Surveys and our 2011 and 2013 Cost of Care Surveys. These five-year average annual increases are summarized below:
-- The 2013 average cost of a private nursing home room ($258 a day/ $94,170 annually) has risen an average 3.6 percent per year -- The 2013 average cost of a semi-private nursing home room ($227 a day/ $82,855 annually) has risen an average 3.6 percent per year
-- The 2013 average cost for a month in an assisted living facility ($3,427 a month/ $41,124 annually) has risen an average 2.0 percent per year
-- The 2013 average cost of adult day care ($71 a day/$18,460 annually) has risen an average of 1.6 percent per year
-- The 2013 average cost for a home health aide ($19 hourly/$29,640 annually) has risen an average 1.3 percent per year"
LTC Comment: Center for Long-Term Care Reform members can always find the latest "cost of care" surveys from all the companies that publish them as well as archives of past years' versions in The Zone here.
7/30/2013, "Frontline, ProPublica slam assisted living sector in documentary airing tonight [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Loose regulations are endangering the growing number of assisted living residents in the United States, according to a new Frontline documentary that focuses on Emeritus Senior Living facilities. The program airs Tuesday at 10 P.M. EST, and is accompanied by a series of reports published this week on ProPublica."
LTC Comment: We didn't start hearing about quality problems in assisted living until that industry started taking Medicaid residents. That's what ruined nursing homes which became dependent on Medicaid funding. Then the government ratcheted down reimbursement rates over time to hopelessly inadequate levels. Assisted living is following the same primrose path. Cost shifting from private payers will drive up private rates but won't make up the difference.
7/29/2013, "Optimistic Outlook For Long Term Care Insurance Companies Shared," by Jesse Slome, ExpertClick
Quote: "A rise of one percent in investment return on fixed interest instruments could generate an additional $100 million or more in annual revenue for insurance companies with blocks of long term care insurance."
LTC Comment: Likewise increasing interest rates will wipe out government programs that give Americans a false sense of security about retirement income and health. Look for the coming fiscal crisis to unleash the market for private LTCI.
7/29/2013, "More Doctors Steer Clear of Medicare, Some Doctors Opt Out of Program, Frustrated With Payment Rates and Mounting Rules [link]," by Melinda Beck, Wall Street Journal
Quote: "The number of doctors who opted out of Medicare last year, while a small proportion of the nation's health professionals, nearly tripled from three years earlier, according to the Centers for Medicare and Medicaid Services, the government agency that administers the program. Other doctors are limiting the number of Medicare patients they treat even if they don't formally opt out of the system."
LTC Comment: The same trend plagues Medicaid and looks to increase as funding problems for the two government behemoths mount.
7/26/2013, "Regulators eye effects of LTCI rate increase," by Allison Bell, LifeHealthPRO
Quote: "State regulators are talking about just what kind of pain long-term care insurance (LTCI) companies should feel when they increase premiums on in-force policies. The Senior Issues Task Force at the National Association of Insurance Commissioners (NAIC) has been looking at the allocation of rate increase pain in a draft LTCI rate increase model bulletin."
LTC Comment: Right, just what we need, more pain for private LTCI insurers while the public LTC programs skate unchallenged toward insolvency.
7/25/2013, "Government striving to get the word out on long-term care," by Bonnie Kraham, Times Herald-Record
Quote: "The best protection from long-term care costs is Plan A, long-term care insurance, which is private insurance which pays for home care, assisted living or nursing home costs without reliance on Medicaid rules or the need to 'spend down' assets to qualify for Medicaid. The U.S. Department of Health and Human Services is similarly hoping to remind families of the value of long-term care insurance.
"If you don't have adequate long-term care insurance, Plan B is the Medicaid Asset Protection Trust (MAPT). After assets are in the MAPT for five years, they will not go to the nursing home and Medicaid will pay for nursing home costs. Even if you can only afford partial protection through long-term care insurance, you may also, in a hybrid approach, create the MAPT. This way you have the less expensive cost of home care provided for and, if you need the more expensive nursing home care, you would qualify for Medicaid benefits. This approach can reduce long-term care insurance premiums by up to one-half."
LTC Comment: This is typical of modern-day Medicaid planning. Pay lip service to LTC insurance. You can't really afford it can you? Wink, wink. Then pivot to shifting the risk and cost to public welfare.
7/24/2013, "Long-Term Care Delivery Hobbled By 'Outrageous' Deficiencies," by Cyril Tuohy, InsuranceNewsNet.com
Quote: "Initial reports about the state of long-term care delivery in the U.S. paint a picture of a fractured, overlapping hodgepodge of services unevenly administered by states through federal insurance programs. In addition, much of the long-term care that gets to the elderly is unplanned, delivered with little structure and left to health aides laboring in the trenches for minimum wage, according to long-term care experts."
LTC Comment: Government programs pay for most expensive long-term care and that quote describes exactly what they're buying. Even private payers, who pay half again as much as Medicaid expends for care, can't always avoid the deficiencies because the government counts on cost shifting from them to make up for shortfalls in public financing. It's a house of cards about to fall.
7/24/2013, "Move Over Nursing Homes - There's Something Different," by Ina Jaffe, National Public Radio
Quote: "One thing just about everyone dreads as they age is the possibility of ending up in a nursing home. We all think we know what that's like: sharing a room with strangers, sitting slumped in a wheelchair all day, rigid schedules, bad smells. And for more than 1 million Americans, this is home. But there's an effort to change all that, and it's known as The Green House Project."
LTC Comment: OK, great, but why did nursing homes become the dominant venue for LTC if they're so bad? Because Medicaid made them virtually free in 1965 crowding out a private market for home and community-based care. America would have had "Green Houses" and many other better LTC solutions decades ago if government hadn't made such alternatives economically infeasible.
7/22/2013, "Boomer Sex With Dementia Foreshadowed in Nursing Home," by Bryan Gruley, Bloomberg
Quote: "At 8:30 p.m. on Christmas Day 2009, nurse Tiffany Gourley was called to a room at the Windmill Manor nursing home in Coralville, Iowa. She found a 78-year-old male resident who had just had intercourse with an 87-year-old woman. The man, a former college professor, was divorced. The woman, a retired secretary, was married. Both had dementia. What followed illustrates one of the most complex and unexamined issues facing elderly care facilities as the Baby Boom generation enters old age: How to determine if residents with dementia have the mental capacity to consent to sex."
LTC Comment: Whoever doubted that boomers, who ushered in "drugs, sex and rock 'n' roll," would shake up LTC also?
7/19/2013, "Are You Overpaying for Your Parents' Care?," by Kelly Greene, Wall Street Journal
Quote: "A child's work is never done—especially when it comes to caring for an elderly parent. Time isn't the only cost. Families often spend a small fortune even before their loved ones check into a long-term-care facility."
LTC Comment: A needful wake-up call.
7/19/2013, "Alzheimer's panel gets LTCI update: Low lapse rates, low interest rates [link]," by Allison Bell, LifeHealthPRO
Quote: "Marc Cohen met with a combination of warm interest, confusion and skepticism today when he gave a federal Alzheimer's panel a talk on the state of private long-term care insurance (LTCI).
"The panel, the Advisory Council on Alzheimer's Research, Care and Services is supposed to help the U.S. Department of Health and Human Services (HHS) coordinate a war against Alzheimer's disease and other forms of dementia."
"'Sales today are below levels from the 1990s,' Cohen said.
"Dozens of insurers have gotten out of the market, partly because they had a hard time making a profit, but partly because they decided that they could earn much higher returns from using the large amounts of capital needed to support an LTCI operation to write other products, Cohen said.
"But LTCI carriers have paid about $35 billion in claims over the years, they've paid about 95 percent of the claims they've received, and the policies they've sold are covering about 70 percent of the cost of nursing home care and about 90 percent of the cost of home care for the insureds who've filed claims, Cohen said."
LTC Comment: Capital migrates to its highest and best use. Public policy has substituted Medicaid and low interest rates for the free market in which a private LTCI market would flourish.
7/19/2013, "How Medicaid life settlements can help senior clients," by Robin S. Weinberger and Peter N. Katz, LifeHealthPRO
Quote: "There has been a great deal of news coverage about Medicaid life settlements since our article on that topic two months ago. During that time, Texas became the first state to enact such a law, and three more states — California, New Jersey and New York — have taken up consideration of Medicaid life settlements. Based on the inquiries and comments we have received regarding this news, there appears to be a need to review the practical implications of these laws."
LTC Comment: This trend bears watching as life settlements are not a substitute for real LTCI protection.
7/18/2013, "Researcher: Set up ACOs that include long-term care," by Allison Bell, LifeHealthPRO
Quote: "Policymakers could set up a volunteer 'Caregiver Corps' that would show people how to provide care for their loved ones at home. Policymakers also could try encouraging communities to set up accountable care organizations (ACOs) that would coordinate long-term care (LTC) services and social support services as well as medical care. Joanne Lynn, director of the Altarum Center for Elder Care and Advanced Illness, gave those ideas for improving LTC service delivery Wednesday at the second meeting of the Federal Commission on Long-Term Care."
LTC Comment: A "Peace Corps" for LTC? Add LTC to ObamaCare? Two meetings into their two remaining months and this is what the LTC Commission is hearing? Not hopeful.
7/18/2013, "Long-Term Care Commission seeking provider input," by Ashley Carman, McKnight's LTC News
Quote: "The 15-member committee met to hear recommendations regarding the topic 'Populations in Need of LTSS and Service Delivery Issues' and worker issues. Experts from various medical facilities, universities and research centers spoke."
LTC Comment: With its report due in less than two months, the LTC Commission had its second public meeting and posted a website: http://www.ltccommission.senate.gov/.
7/17/2013, "Costs of Long-Term Care Rise While Payment Options Narrow," by Howard Gleckman, Forbes
Quote: "It is a cruel paradox: As the cost of long-term care rises and the number of people needing it grows, traditional options for paying for these supports and services are narrowing."
LTC Comment: It boggles the mind how one writer can get so much wrong so often. Is LTC insurance struggling? Yes. But that's because of easy Medicaid eligibility after the insurable event occurs and interest rates forced to zero--both are government policies and government's responsibility. Is home equity rarely used to pay for LTC? Yes. But that's because Medicaid exempts up to $802,000 worth of it. Is Medicaid bankrupt? Yes, because it DOES NOT require impoverishment and IS the dominant payer of expensive LTC not just for the poor but for the middle class and above also. As long as analysts misdiagnose the problem, the hope for a solution will elude them.
7/17/2013, "Selling LTCI online, part 1, Sales ideas," by Margie Barrie, LifeHealthPRO
Quote: "Selling online really works. I'm now doing it and loving it. Agreeing with me is Katie O'Rourke, the managing partner of California Long Term Care Insurance Services, and she agreed to provide some really helpful tips to agents just starting to sell online."
LTC Comment: Online sales are the future as the social safety nets fray and people realize they need LTCI.
7/17/2013, "Rate of dementia has declined dramatically, but not in nursing homes, study finds [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Fewer people overall are going into care settings, but the prevalence of dementia within these facilities increased from 56% to 70% during the study period, the researchers found. Some Alzheimer's researchers in the United States have embraced these results, saying they are likely applicable to the U.S. population and show recent predictions about dementia rates may be too dire, The New York Times reported. However, other researchers expressed reservations, citing methodological concerns with the British study."
LTC Comment: Interesting follow up to the following story from the New York Times' front page.
7/16/2013, "Dementia Rate Is Found to Drop Sharply, as Forecast," by Gina Kolata, New York times
Quote: "A new study has found that dementia rates among people 65 and older in England and Wales have plummeted by 25 percent over the past two decades, to 6.2 percent from 8.3 percent, a trend that researchers say is probably occurring across developed countries and that could have major social and economic implications for families and societies."
LTC Comment: Great news if true, but dubious.
7/16/2013, "A crisis for the very old: They're outliving their assets. Nearly half of all Americans will die with practically no money at all. It's a problem that policymakers and financial services firms must address [link]," by Michael Hiltzik, Los Angeles Times
Quote: "As if you haven't been scared enough by the projections that most Americans haven't saved enough to maintain their lifestyles as they enter retirement, here's something even more terrifying: Nearly half of all Americans will outlive their assets, dying with practically no money at all. Even more worrisome, that's true even among households that met the traditional standards for secure retirement income. Economic factors and changes in employer pensions and in economic reality have made it much harder to stretch income and assets so they last, especially as people live longer."
LTC Comment: If you wanted another reason to doubt the social safety nets and take personal responsibility, this is it.
7/16/2013, "Where Are Baby Boomers Going to Live?," by Tom Sightings, US News and World Report
Quote: "There are many recommendations for the best places for baby boomers to retire, including the healthiest places, sunniest places, best places overseas, the most affordable places and the best places that you probably can't afford. But people are funny. Sometimes they just don't do what the pundits tell them to do. So where are baby boomers actually starting to retire? Here's what the facts say about where boomers are headed over the next 10 or 15 years."
LTC Comment: Turns out boomers are staying put or moving to be near grandchildren or relocating to less congested, more affordable areas or moving into senior living facilities.
7/16/2013, "Nursing home residents are allowed to designate organizations as authorized representatives for Medicaid enrollment, final rule affirms [link]," by Tim Mullaney, McKnight's LTC News
Quote: "After posting a proposed version of the regulation, CMS received 'a number of comments' addressing who may serve as an authorized representative. Some commenters called for organizations to be disallowed altogether or for states to decide whether organizations can serve as representatives, in the interest of better accountability and transparency."
LTC Comment: Lawyers and their para-legals frequently fill out Medicaid LTC applications for their affluent clients. Now the door is open for "organizations" to file on behalf of individuals. Which organizations and what accountability?
7/15/2013, "Prudential Group Insurance Offers Critical Illness Coverage Nationwide [link]," Daily Finance
Quote: "Prudential Group Insurance, a business of Prudential Financial, Inc. (NYS: PRU) , today announced the addition of Critical Illness insurance to its suite of products available through the workplace."
LTC Comment: CI grows.
7/1/2013, "Many workers fear critical illness more than death," by Warren S. Hersch, LifeHealthPRO
Quote: "When asked to identify their greatest concern in case of a critical illness, 47 percent of survey participants named 'finances.' That's a significantly higher percentage than the third (29 percent) who flagged 'dying' or the fifth (22 percent) who cited 'the emotional burden.' The report adds that middle-aged workers ages 40 to 50 are twice as likely to be more concerned with finances than with dying."
LTC Comment: That could be why CI grows.
7/12/2013, "Rules for Reverse Mortgages May Become More Restrictive," by Tara Siegel Bernard, New York Times
Quote: "Because of the turmoil in the housing market and because many borrowers in the program didn't have enough money to pay their property taxes and homeowners insurance over the long term, the F.H.A. wants to require borrowers to undergo a financial assessment. It may also factor in borrowers' credit scores, something it has not done in the past."
LTC Comment: Home equity will fund LTC someday after Medicaid can no longer exempt up to $802,000 while paying for most expensive extended care. That is, it will if there is any home equity left when the time comes.
LTC Comment: Is America's LTC services and financing system sustainable? We propose a way to measure LTC vulnerability state by state, after the ***news.***
*** MISS US? For the past couple weeks, you've heard a little less from the Center for LTC Reform. We've skipped an LTC E-Alert or two and this is our first LTC Bullet in two weeks. That's because Center VP Damon, who edits, formats, posts and sends all our publications, is doing his civic duty, serving on a jury for a trial expected to last three weeks. Center premium members ($250 per year and above) continue to receive our "clippings" service uninterrupted because those links to key articles and reports come directly from Steve's laptop wherever he is. We'll endeavor to give you the best possible service while Damon's jury duty proceeds. In the meantime, we very much appreciate your patience and support. ***
*** ON THE ROAD AGAIN., Have you watched our datelines from recent publications? What do Alpine, Texas, New York City, Cream Ridge, New Jersey, and Richmond, Virginia have in common? They're locations from which Steve Moses has reported since May. Steve's traveling in the Silver Bullet of Long-Term Care again. "Living on site enables me to spend more time at each of our three study states," he says. "That means I can interview more people and get more documentary evidence to support our analysis and recommendations." Stay tuned for Steve's LTC Embed reports from the long-term care policy front in Georgia, our next study state. ***
*** SPEAKING OF OUR CLIPPING SERVICE . . . The Center for Long-Term Care Reform's "clipping service" is the best way to stay abreast of critical professional news. Don't waste your valuable time and effort searching the internet and reading a lot of chaff just to locate what you really need to know. Steve Moses has to do that anyway and he'll save you the trouble, send you an average of three key items to review per day, and provide a representative quote and a link to the source so you can dig deeper if you wish. Premium members of the Center and higher ($250+ per year) receive our clippings at no extra charge. Corporate members receive one complimentary clipping service subscription upon request and are eligible for additional subscriptions at a discounted rate. For details, contact Damon at 206-283-7036 or email@example.com. ***
LTC Comment: Your Center for Long-Term Care Reform set out in May cross country toward the East (in the Silver Bullet) to conduct three state-level studies of Medicaid and long-term care financing. Target states are Virginia, New Jersey and Georgia. We've completed our field work in the first two and I'm headed to Atlanta next. But there's a problem.
The Affordable Care Act, aka ObamaCare, has a provision in it called "maintenance of effort" (MOE), which prevents state Medicaid programs from tightening their LTC financial eligibility rules. Targeting Medicaid to those most in need while diverting the middle class and affluent toward private financing alternatives should be states' most important LTC priority. Unfortunately, the MOE rule prevents states from implementing the critically needed corrective actions we'd likely recommend.
Furthermore, most state Medicaid programs aren't cutting back on growing Medicaid expenditures. They're doubling down. Initiatives to make Medicaid more attractive by "rebalancing" from nursing homes to home care are widespread. Efforts to shift recipients—even the high-risk, high-cost Medicaid/Medicare "dual eligibles"—into care managed by giant corporations are nearly universal. At the same time, most state budgets remain over-stressed, pinched most of all by growing Medicaid expenditures.
In the meantime, a huge age wave is rushing toward state Medicaid programs which are unprepared and failing to plan adequately for it. When the flood of frail and infirm boomers starts to hit, what will happen? Which states are more prepared? Which less? What are the key factors to consider? Can the current public programs such as Medicaid and Medicare survive as the dominant LTC payers? What is the potential for private financing alternatives like LTC insurance and home equity conversion? These are some of the questions we've set out to ask and answer in a new "Index of LTC Vulnerability."
We're still in the roughest draft phase of developing the index. Your thoughts and suggestions are welcome. Here's an outline of the top line factors we're beginning to consider for evaluating a state's ability to sustain its LTC services and financing system. Think of it this way. How would your state score if it were ranked on each of the following factors?
The Index of Long-Term Care Vulnerability
a. Measures of state economic potential:
i. Rich States, Poor States ranks states on economic competitiveness.
ii. Cato's Fiscal Policy Report Card ranks state governors on fiscal policy
b. State budget shortfalls measure current fiscal duress
a. Growth in 85+ population
b. People age 65+ with disabilities, 2010
c. Alzheimer's onslaught
a. Residents with dementia, 2010
b. Nursing facility residents with low care needs, 2008
c. Quality & Oversight of Nursing Facilities
a. Expenditure trends
i. Overall
ii. Percent of state budget for Medicaid: Distribution of State General Fund Expenditures (in millions)
iii. Medicaid LTC spending for older people and adults with physical disabilities (millions)
iv. Medicaid nursing facility spending (millions)
v. Medicaid HCBS (home and community-based services) spending for older people and adults with physical disabilities (millions)
vi. Medicaid HCBS as a % of LTC spending, for older people and adults with physical disabilities
b. FMAP (Federal Medical Assistance Percentage): the percent of Medicaid expenditures paid by the federal government
c. Medicaid Expansion under ACA? States that expand Medicaid under ObamaCare are vulnerable to higher future costs.
d. Medicaid LTC Eligibility and Medicaid Planning: how generous are the states Medicaid LTC financial eligibility rules? See our state-level LTC studies.
e. Low reimbursement vulnerability: How much below the cost of care are the state's Medicaid reimbursement rates? See Eljay Medicaid Shortfalls Report.
f. Dual eligibles vulnerability: See Briefing Paper #5: Dual Eligibles and Long-Term Care: How to Save Medicaid LTC $30 Billion Per Year and Pay for the "Doc Fix" -- (PDF for print)
g. Rebalancing vulnerability: the more states rebalance from nursing home care (which most people will avoid) to home care (which most people want), the more vulnerable they are to increased utilization and costs. See Briefing Paper #4: Rebalancing Long-Term Care -- (PDF for print)
i. Family caregivers; economic value of family caregivers likely to decline as Medicaid HCBS expands
h. Managed care vulnerability: advocates warn of impact on . . .
i. Access
ii. Quality
iii. Independence
a. Spend down lack: little spend down in lenient LTC financial eligibility programs
b. Estate recovery lack: few states enforce estate recovery strongly: See Maximizing Non-Tax Revenue from Estate Recoveries
c. Loss of home equity for LTC financing: Medicaid exempts up to $802,000
d. Long-term care insurance level
i. LTCI market penetration?
ii. LTC partnership?
iii. LTCI tax incentives?
a. Dependency on "provider taxes" used to leverage up FMAP
b. Social Security role in sustaining Medicaid
c. Medicare role in sustaining Medicaid
For now, "The Index of Long-Term Care Vulnerability" is just an outline. We plan to flesh it out with measureable ranking factors and apply the index to each of the states in our three current studies. After that a new goal will be to apply the index to all states as a means to warn those with the lowest scores of their risk and to recommend ways for them to sustain their long-term care social safety nets in the future.
New York, New York—
LTC Comment: Claiming "transitions" to Medicaid are evidence of catastrophic LTC asset "spend down" misrepresents the truth and should be publicly recanted. Who, what, when, where and why, after the ***news.***
*** WORK 'TIL YOU DROP to avoid dementia? "'For each additional year of work, the risk of getting dementia is reduced by 3.2 percent,' said Carole Dufouil, a scientist at INSERM, the French government's health research agency. . . . To rule out the possibility that mental decline may have led people to retire earlier, researchers did analyses that eliminated people who developed dementia within 5 years of retirement, and within 10 years of it." Read the AP story here. ***
*** Due to Damon getting selected for jury duty, your Center for Long-Term Care Reform will take a brief hiatus from publishing next week. But don't worry: there are thousands of publications for you to read online at www.centerltc.com. We'll be back soon. ***
*** FORBES COLUMNIST WRONG AGAIN. In "Costs of Long-Term Care Rise While Payment Options Narrow," Howard Gleckman states "Traditional private long-term care insurance is largely disappearing from the marketplace. Reverse mortgages, already something of a niche product, are likely to become harder to get–especially for those facing severe economic hardship. Medicaid, the insurer of last resort for those who impoverish themselves, faces growing financial pressures. And personal savings are falling behind the costs of retirement."
LTC Comment: It boggles the mind how one writer can get so much so wrong so often. Is LTC insurance struggling? Yes. But that's because of easy Medicaid eligibility after the insurable event occurs and near-zero interest rates--both are government policies and government's responsibility. Is home equity rarely used to pay for LTC? Yes. But that's because Medicaid exempts up to $802,000 worth of it. Is Medicaid bankrupt? Yes, because it DOES NOT require impoverishment and is the dominant payer of expensive LTC not just for the poor but for the middle class and above also. As long as analysts misdiagnose the problem, any hope for a solution will elude them. ***
*** DOUBT THE ARGUMENT in today's LTC Bullet? Here's where you'll find the evidence adduced and the argument articulated in more detail: "How to Fix Long-Term Care." ***
LTC Comment: Does Medicaid long-term care spend down catastrophically impoverish wide swaths of the American public? Do we need government to swoop in and "solve" the problem as it tried to do for retirement income (Social Security—unfunded by $21 trillion) and acute elder health care (Medicare—unfunded by $43 trillion)? That's what many analysts, public officials, legislators and reporters believe.
Their arguments and advocacy hang on the assumption that Medicaid really does require impoverishment. But anyone who understands Medicaid LTC eligibility knows that Medicaid spend down is a myth. Income rarely obstructs eligibility because Medicaid deducts private LTC and other medical costs from income before applying its income test. Assets are not a problem for most middle class people because exempt resources are virtually unlimited and countable assets are easily converted to exempt status. Affluent people with income and assets above these generous levels hire Medicaid planners to make their wealth disappear prematurely into the hands of premature heirs.
There is no empirical evidence of widespread Medicaid LTC spend down. Every time the usual suspects, i.e., researchers pushing for more government financing of LTC, try to prove Medicaid spend down devastates huge numbers of people, they come up short. They tried in the late 1980s and early 1990s and proved the opposite. They found that only 15% to 20% of people in Medicaid long-term care started as private payers and converted to Medicaid. The rest were eligible for Medicaid from the start. Furthermore, these researchers didn't bother to ask whether the few people who converted to Medicaid did so by actually spending money on their health or long-term care. Maybe they used countable assets to purchase exempt resources or hired a Medicaid planner. Who knows? They didn't ask. As low as the percentage of people who transitioned to Medicaid was, the researchers assumed without evidence that they spent down to qualify.
Today, we see another example of this intellectual sleight of hand regarding Medicaid spend down. Josh Wiener of RTI International and his co-authors published articles recently that purport to prove Medicaid spend down is devastating large numbers of people. Read those articles here and here. They're titled "Medicaid Spend Down: New Estimates and Implications for Long-Term Services and Supports Financing Reform" and "Medicaid Spend Down: Implications for Long-Term Services and Supports and Aging Policy," respectively. Do you get the idea from those titles, not to mention the articles' content, that they have something to do with spending down money on long-term care before qualifying for Medicaid?
That would be a reasonable assumption, but it would be wrong. What these papers call "spend down" is nothing more than "transition" from non-Medicaid status to Medicaid eligibility. Neither the articles nor the research they report contain any measurement whatever of money actually spent for health care, long-term care or anything else. I pointed this fact out when I served on an American Enterprise Institute panel recently with Dr. Wiener. (Watch C-Span coverage here.) Evidently, he took notice. He titled a recent presentation on the same research "What the Long-Term Care Commission Needs to Know about Transitions to Medicaid." Note the change: "transitions," not "spend down." Check out slides from that recent presentation to the DC-based LTC Discussion Group here. You'll find both terms (spend down and transitions) used interchangeably, so we haven't carried the day completely yet, but the change from misrepresenting the facts to presenting them accurately is at least underway.
Why does this matter? Consider some of the claims made in that presentation to the LTC Discussion Group last week. (NB: I attended that meeting, but I cannot report on what was said because the Group's policy embargoes reportage in order to encourage presenters to speak candidly. I do have permission, however, to reference the slides which are in the public domain here.) For example:
Slide #3: "High cost of long-term services and supports results in routine catastrophic out-of-pocket costs" and "People who have been independent all of their lives are impoverished and must depend on welfare"
LTC Comment: Oh? Where's the evidence? There is none. Wiener cites the high cost of nursing home and home care, but only assumes people are spending their own money for such services. The facts are that private-pay nursing home care is almost extinct; Medicare pays for most home care; and other assisted living and home care expenses are paid mostly from income, not assets. See "LTC Bullet: So What if the Government Pays for Most Long-Term Care, 2011 Data Update [link]."
Slide #4: "Study goals . . . Track transitions to Medicaid -- Not Medicaid spend down in technical sense, which relates to depletion of assets."
LTC Comment: Aha! There's the confession finally. Despite insisting that catastrophic out-of-pocket costs routinely impoverish people who were independent all their lives making them dependent on welfare, this research has nothing to say about "depletion of assets." So why imply and insist that it does? The only reason is to advance the ideologically biased objective to expand public financing of LTC and curtail private financing alternatives.
Slide #15: "Policy Implications . . . Medicaid spend down deserves to be higher on LTSS reform agenda"
LTC Comment: Well, yeah! I couldn't agree more. But how about actually studying spend down instead of transitions? How about analyzing actual expenditures for long-term care instead of pretending that everyone who transitions to Medicaid had to do so by spending down assets? How about looking at the Medicaid financial eligibility rules that allow people with substantial income and assets to qualify? How about considering the vast literature on Medicaid planning? Blank out!
Slide #16: "Policy Implications . . . Few people who transition to Medicaid are likely to be able to afford private LTC insurance without large subsidy"
LTC Comment: This research proves nothing of the kind. It excludes "IRAs." It does not identify actual spend down. It completely ignores the myriad ways people can shelter or divest assets. It does not consider the fact that people could and would buy LTC insurance when they're younger and it's less expensive if it were not for the perverse incentive to ignore LTC risk and cost created by easy access to Medicaid LTC after the insurable event occurs.
Unless and until the research community stops obfuscating and misrepresenting the reality of Medicaid LTC eligibility, it's unlikely the LTC Commission or anyone else will make much progress toward solving the LTC financing problem.
We know Medicaid LTC eligibility does not require significant asset spend down. Why pretend that it does?
We know from Brown and Finkelstein that Medicaid crowds out two-thirds to 90% of the potential market for private LTC insurance. Why pretend it doesn't?
We know from the Chicago Fed that affluent people gain as many or more benefits from Medicaid LTC as the poor. Why ignore such facts?
The only explanation I discern is that researchers who hide from the facts are viscerally opposed to private market-based solutions. They cling to the same government-based interventions that created the problems of poor access, low quality, stingy reimbursement, institutional bias and excessive cost in the first place. They bend over backwards to force facts into their models instead of building accurate explanations from evidence.
Consequently, they're exacerbating our long-term care problems, not contributing to their solution.
LTC Comment: News about health reform implementation seems to be dominating and crowding out other news. Hence sparse clippings on LTC lately. We don't usually cover the day-to-day battles over "ObamaCare," but this cartoon pretty much sums it up. Readers may be ready for a little humor at this stage: http://www.kaiserhealthnews.org/Cartoons/2013/July/Fixer-Upper.aspx.
*** AMERICAN INDEPENDENT MARKETING has announced a series of webinars for LTC specialists. Check out a list and calendar here: http://whyaim.com/news-events/. Topics include "LTC Multi-Life," "American General CI Product," "Medicare Supplements," "Innovative LTCI Plan Designs," and many others in July and coming months. Note that Steve Moses will be a guest speaker for the July 30 webinar with an update on the federal Long-Term Care Commission. ***
7/14/2013, "Have 'The Talk' With Mom and Dad About Their Finances; Get over the awkward feelings and start the conversations [link]," by Tom Lauricella, Wall Street Journal
Quote: "We are always our parents' children. That's especially the case when it comes time to talk to them about their finances and planning. When an older generation starts needing help, the role reversal can be difficult for all to stomach. But it's crucial to get over the awkward feelings, and have the important conversations ahead of time."
LTC Comment: More talk about the "The Talk" below.
7/12/2013, "Can critical illness sellers be navigators?," by Allison Bell, LifeHealthPRO
Quote: "The Obama administration has come up with a new batch of rules for the people who are supposed to help consumers and employers use the Patient Protection and Affordable Care Act (PPACA) health insurance exchange program. In the new final rule, 'Patient Protection and Affordable Care Act; Exchange Functions: Standards for Navigators and Non-Navigator Assistance Personnel; Consumer Assistance Tools and Programs of an Exchange and Certified Application Counselors' (CMS-9955-F), HHS sets rules for navigators -- independent PPACA exchange ombudsmen."
LTC Comment: What a tangled web they weave.
7/11/2013, "In Grandmother's Alzheimer's, Another Lesson in Family," by Jeanine Grimaldi, New York Times
Quote: "My grandmother is one of more than five million Americans who have Alzheimer's disease. Sometimes these patients experience sun-downing, a period of increased confusion and restlessness toward the end of the day, and my grandmother was having one of these episodes. It is hard to know how to handle these situations, but it is best to have family around because patients can say upsetting things or even become physical."
LTC Comment: As the Age Wave crests, these lessons are touching more people faster and a perfect storm of LTC is coming.
7/11/2013, "Making Peace with the End of Life," by Susan Ann Darley, Huffington Post
Quote: "As a society, we are now confronted with complex end-of-life challenges. Personal financial concerns, soaring medical costs, extension and quality of life issues, loss of independence and over-medicating, to name a few. And the recession's lingering aftermath is affecting both the elderly and the young dramatically."
LTC Comment: Get used to it. Ironically, it won't get better until government stops trying to solve the problem by taxing everyone to subsidize irresponsibility.
7/11/2013, "British health official: Cure for dementia could come by 2020," by Ashley Carman, McKnight's LTC News
Quote: "Advances in genetics and pharmaceuticals could lead to a cure for dementia by 2020, according to United Kingdom Secretary of Health Jeremy Hunt."
LTC Comment: Optimistic predictions like this one may further de-sensitize the public to real LTC risk.
7/10/2013, "The new solution for coping with critical illness," by Kenneth J. Smith, LifeHealthPRO
Quote: "The question of protecting our clients in the event of cancer, heart attack and stroke is the same as a generation ago, but now the answer is different. Today, the answer is both life insurance and critical illness protection. With the advent of critical illness insurance, there is now financial relief to aid patients and their families who are coping with recovery. Yet many people today aren't even aware that critical illness protection exists."
LTC Comment: CI advances.
7/10/2013, "Unable to Cope, Unwilling to Accept Aid," by Judith Graham, New York Times
Quote: "It is a surprisingly common problem in older adults; self-neglect is believed to account for nearly 40 percent of all cases of abuse and neglect in the elderly. . . . Once, elderly adults of this sort were considered eccentric or alarmingly idiosyncratic. Today, researchers believe they have underlying medical or mental health issues — depression, dementia and delirium top the list — that compromise their ability to function and care for themselves, according to a recent panel sponsored by the Institute of Medicine."
LTC Comment: It's hard to imagine anyone who has planned ahead for long-term care ever ending up like the examples in this column. But it isn't hard to understand at all how normal, middle-class, otherwise responsible people who don't plan for LTC might end up alone, without caregivers, demented, and behaving "eccentrically."
7/9/2013, "When to Buy Long-Term Care Insurance," by Dave Ramsey, FOXBusiness
Quote: "My advice, Toni, is to buy long-term care insurance. I believe in having this type of coverage, even if you can afford to pay for care out of pocket. It takes a lot of stress and worry out of growing older."
LTC Comment: Good advice but later in the article he suggests waiting until age 60 to buy, not such good advice.
7/9/2013, "Column: Long-term care clock ticking for U.S. Congress," by Mark Miller, Forbes
Quote: "Eighty-four days and counting. That's the time remaining that a new Congressional commission has to come up with solutions for one of the country's most vexing problems: how to properly fund long-term care."
LTC Comment: I've corresponded with the LTC Commission Vice-Clair to recommend potential witnesses and have been assured that my name will be put forward also.
7/9/2013, "Financial Disconnect Among Seniors A Harsh Reality Seven in 10 Have Difficulty Discussing Finances, Aging [link]," Life & Health Advisor
Quote: "Nearly every family in America has dealt with mental aging issues, from someone forgetting to pay a bill to experiencing the devastating fallout from Alzheimer's disease. Yet, despite the vivid reminders of what happens as we age, many avoid talking to their children and families about planning for what they hope will never happen. A survey by the National Endowment for Financial Education(r) (NEFE(r)) and conducted online by Harris Interactive in November 2012 among 2,059 U.S. adults, finds that seven in 10 say major barriers are preventing their families from openly communicating about who will make financial decisions on behalf of an aging family member if they become unable to."
LTC Comment: Expect many more stories like this one about "The Talk" adult children should have with their parents about finances and aging.
7/9/2013, "Reading and writing later in life wards off dementia, research says," by Ashley Carman, McKnight's LTC News
Quote: "Nearly 300 older adults were given annual memory and thinking tests for about six years, or up until their deaths, which averaged out at around age 89. The adults also answered questions about whether they read, wrote and participated in other mentally stimulating activities during childhood, adolescence, middle age and at their current age. Once they died, researchers examined their brains for physical signs of dementia, such as lesions, plaques and tangles. Participants who stimulated their minds throughout showed less tangible signs of memory decline than those who did not, the researchers found."
LTC Comment: Is this cause or correlation? Isn't it just as likely that people who read and write less in old age do so because they're experiencing early signs of dementia?
7/8/2013, "A downside of living longer: Oldest often disabled in last months," by Eryn Brown, Los Angeles Times
Quote: "Don't expect old age to be all golf and cruises: As Americans live longer and longer, more of us should expect to suffer some sort of independence-threatening disability in the final phase of life, two new studies published online Monday suggest."
LTC Comment: Very disturbing wake up call that all Americans should heed: "The older the subject was when he or she died, the more likely he or she was to wind up disabled in activities of daily living in the last two years of life -- needing help with at least one of six activities: dressing, bathing, eating, getting in and out of bed, walking across a room or using the toilet. The team wrote that half the people who die at 90 or older are disabled two years before their death; the prevalence of disability in people 70 or younger at the time of death was at least 35% lower than that of the oldest in the study, at all points in the final two years of life.".
7/8/2013, "Are We Underestimating How Much Help Aging Parents Need At Home?," by Carolyn Rosenblatt, Forbes
Quote: "Long term care insurance is the only private benefit that covers home help with activities of daily living, the kind of help most elders need. But most people in the U.S. don't have it. The Congressional Budget Office report cites statistics from America's Health Insurance Plans, Who Buys Long-Term Care Insurance in 2010–2011 (report prepared by LifePlans, March 012), www.ahip.org/ WhoBuysLTCInsurance2010-2011/. Among the adult U.S. population only about 3 percent had LTC insurance in 2011."
LTC Comment: Efforts to rebalance Medicaid from institutional to home care will not survive the coming Age Wave, but are the main impediment to private financing alternatives like LTC insurance and home equity conversion.
7/8/2013, "As U.S. Population Ages, ER Visits Will Lengthen And hospitalizations stemming from these visits will rise, study predicts [link]," HealthDay
Quote: "The researchers were surprised to find their analysis showed that the number of ER visits would increase at the same rate -- not higher -- as the population increased. However, the length of time that patients spend in ERs will rise 10 percent faster than population growth, and hospital admissions from the ER will rise 23 percent faster."
LTC Comment: Ominous.
7/8/2013, "'Scary' front-page story gave scant attention to benefits of long-term care insurance, industry group says," McKnight's LTC News
Quote: "Long-term care insurance has benefited policyholders more than a recent Wall Street Journal front-page story indicates, according to the nation's largest LTC insurance trade group."
LTC Comment: Jesse Slome and AALTCI fighting the good fight.
Cream Ridge, New Jersey—
LTC Comment: Easy access to Medicaid LTC benefits after care is needed and without spend down or estate recovery overloads the safety net and minimizes responsible LTC planning. Wisconsin is trying to fix that problem, but Medicaid planners object, after the ***news.***
*** CLIPPING SERVICE. The Center for Long-Term Care Reform's "clipping service" is the best way to stay abreast of critical professional news. Don't waste your valuable time and effort searching the internet and reading a lot of chaff just to locate what you really need to know. Steve Moses has to do that anyway and he'll save you the trouble, send you an average of three key items to review per day, and provide a representative quote and a link to the source so you can dig deeper if you wish. Premium members of the Center and higher ($250+ per year) receive our clippings at no extra charge. Corporate members receive one complimentary clipping service subscription upon request and are eligible for additional subscriptions at a discounted rate. For details, contact Damon at 206-283-7036 or firstname.lastname@example.com. ***
*** CLTCR PREMIUM MEMBERSHIP. Center for Long-Term Care Reform premium members receive our full suite of individual membership benefits including: our LTC Bullets and E-Alerts; access to our Members-Only Zone website and Almanac of Long-Term Care; subscription to our Clipping Service; and email/phone access to Steve Moses for 24-hour turnaround queries. Our Premium Membership is designed to give you a competitive advantage in your long-term care profession. Your increased knowledge of the critical issues and challenges we face in the field of long-term care service delivery and financing equals improved professional success for you and better LTC services for your clients and for those who have no choice but to rely on scarce public resources. Premium Membership is $250 per year ($500 for Elite Premium Members or Regional Representatives), paid up front or monthly by automatically recurring credit card payments. Contact Damon at 206-283-7036 / firstname.lastname@example.com to start your Premium Membership immediately or go directly to our secure online subscription page and sign up for as little as $21 per month. ***
LTC Comment: Twenty-one years ago I wrote the following in "The Senior Financial Security Program: A Plan for Long-Term Care Reform in Wisconsin [link]."
Medicaid nursing home eligibility is so generous in Wisconsin that most seniors who need long-term care qualify financially even without sophisticated legal planning. Anyone else can qualify quickly, often overnight, by using techniques such as joint accounts, trusts, purchase of exempt assets, or multiple divestment. Estate recovery is easy to avoid using joint tenancy with right of survivorship and other techniques. Formal, lawyer-assisted Medicaid estate planning is still fairly limited in Wisconsin, but it is growing rapidly. Predictably, private long-term care insurance is stunted. (p. 1)
Despite Wisconsin's having adopted some of the corrective actions we recommended in that report, the fundamental problem still exists. Easy access to Medicaid LTC benefits without significant spend down or estate recovery continues to plague the Badger State. Now, however, Wisconsin is trying to do something about it.
Following are quotes from a Wisconsin Medicaid planner's essay. She laments actions taken by the state to (1) ensure that scarce public resources go to the needy and (2) encourage affluent people to pay their own LTC expenses. We provide our "LTC Comment" after each of her remarks.
Quotes from "What the New Budget Bill Does to Elderly and Disabled Families," by Attorney Carol Wessels.
Medicaid planner: "On Sunday, June 30th, 2013, Governor Walker signed Wisconsin's 2013-2014 Budget into law. The New Budget Bill has changes to the Medicaid program that create severe consequences for the elderly and disabled, and for family businesses and farms."
LTC Comment: The need for expensive long-term care IS a severe consequence for which people should plan, save, invest and insure. They should not ignore the potential risk and cost until they seek indemnification from Medicaid. What does the new Wisconsin budget do?
Medicaid planner: "Prevents families from transferring family business or the family farm, if original owner needs Medicaid. . . . If he transfers it for nothing, or for less than fair market value, he will be penalized and disqualified from receiving Medicaid for a period of time for up to five years following the transfer. If the business stays in Joe's name, when he dies the state will be able to recover up to the amount paid out in Medicaid, as a lien on the business or from the proceeds of the sale. Elder Law Attorneys believe this provision is contrary to federal law."
LTC Comment: Is the purpose of Medicaid to be a long-term care safety net for the needy or free, publicly financed insurance for business owners and their families?
Medicaid planner: "Prevents the spouse ('community spouse') of a person in a nursing home or on Family Care ('institutionalized spouse'), from transferring the community spouse's assets to anyone else until the institutionalized spouse has been on Medicaid for five years. If the community spouse transfers assets in the first five years after an institutionalized spouse is receiving Medicaid, then the institutionalized spouse will be penalized."
LTC Comment: Did you know that under current federal law, the community spouse can give away everything, including the home, with impunity preventing Medicaid estate recovery? That's what Wisconsin is apparently trying to avoid.
Medicaid planner: "Provides that any property that was marital property within five years before the time that a spouse applied for nursing home Medicaid or Family Care, can be subjected to estate recovery. Where the state pursues estate recovery from the surviving spouse, there is no 'hardship waiver'. Hardship waiver is the process where a person can request that estate recovery provisions not be enforced due to circumstances that would cause a hardship. This provision is required by federal law but yet, Wisconsin's new budget eliminates it in certain cases."
LTC Comment: How could anyone consider deliberate self-impoverishment to be a "hardship" tax payers should compensate?
Medicaid planner: "Prevents a community spouse from transferring assets free and clear upon death of the community spouse. These assets will be subject to estate recovery first."
LTC Comment: That is the purpose of the estate recovery mandate added to Medicaid in 1993. The principle is that Medicaid LTC benefits received while preserving substantial assets for a surviving spouse should be repaid to Medicaid when the surviving spouse dies and no longer needs the wealth. Otherwise, the money passes to heirs and becomes a reward for failing to plan for long-term care.
Medicaid planner: "Puts very restrictive requirements on trustees of living trusts, where a grantor received Medicaid benefits. The trustee must provide specific notice prior to distributing any trust property, and must distribute assets to estate recovery within specific deadlines if a claim is made."
LTC Comment: Medicaid planning abuse of trusts is a loophole properly closed.
Medicaid planner: "Makes trustees of 'Special Needs Trusts' personally liable if they fail to follow the proper procedures for estate recovery."
LTC Comment: So improper trust management is OK? Come on.
Medicaid planner: "Allows estate recovery from living trusts, life insurance, POD [pay on death] accounts of either the Medicaid recipient or the surviving spouse."
LTC Comment: Did you know people could evade estate recovery using those financial products? Other states have already closed that loophole.
Medicaid planner: "Penalizes families who have loaned (not gifted) funds to other family members."
LTC Comment: The purpose of such loans is to dodge spend down requirements using a complicated technique called the "reverse half-a-loaf" designed to evade measures in the Deficit Reduction Act of 2005 (DRA '05) intended to prevent the "half-a-loaf" divestment gimmick.
Medicaid planner: "Prevents a return of funds that have been gifted by maintaining all divestment penalties unless the full gifted amount is returned, which in many cases is not possible."
LTC Comment: Ditto the LTC Comment immediately above.
Medicaid planner: "Creates very complicated procedures regarding transfers of real estate where a Medicaid recipient is involved. Allows the state to go so far as to void a transfer under certain circumstances. These changes will make it very complex for people on Medicaid to transfer real estate, give clear title, etc."
LTC Comment: Taking measures to prevent asset transfers for the purpose of self-impoverishment to qualify for Medicaid is not a problem. It is a solution.
Medicaid planner: "What this means . . . : It will be extremely important for couples to plan well ahead of the need for care, if the ability to leave anything to their families – or to maintain adequate financial resources for the spouse in the community - is important to them."
LTC Comment: We agree this means people need to plan early for long-term care. We disagree that the way to plan is to use a Medicaid planner to dodge rules intended to preserve the Medicaid safety net for people in need.
I've been fighting the Medicaid planners' self-serving arguments like those above for 30 years. We've had major successes in federal law including OBRA '93 and DRA '05, but clearly there is more to do. Thanks and kudos are due Wisconsin for taking action to discourage Medicaid dependency and encourage responsible LTC planning.
LTC Comment: We have completed our initial field work on the Center for Long-Term Care Reform's study of Medicaid and long-term care financing in Virginia. Our interim progress report has been submitted. At the end of July, we'll pass back through Richmond, conduct the remaining interviews, and begin to write the final report.
For now, Steve Moses and the Silver Bullet are near Trenton, New Jersey, about to begin our latest study of Medicaid and LTC financing. New Jersey is an interesting challenge as we conducted a similar study of the state in 1996, seventeen years ago. What's changed? Did the state heed our recommendations back then? If so? If not? What is the current state of long-term care? That will be the theme of the new study and report.
Following our New Jersey study, we head south to Georgia. But that will not be until August. Late August and throughout September we'll be writing and publishing all three final reports, just in time for the November elections. It's good to be on the road again. Click here for a short video synopsis of the Silver Bullet's earlier adventures.
7/5/2013, "LTCI rate wiggle room: How much is enough?," by Allison Bell, LifeHealthPRO
Quote: "Regulators, outside actuaries and others talked about possible LTCI rate margin requirements and other rate stability proposals recently during a Senior Issues Task Force LTCI issues meeting that took place recently in Reston, Va."
LTC Comment: They should be talking about getting the monkey of government interference off the back of LTCI. Target Medicaid only to the poor and let a free market determine interest rates. That's all it would take to save LTC insurance.
7/3/2013, "Nursing Home Use by Medicaid Seniors is Plunging," by Howard Gleckman, Forbes
Quote: "It is a remarkable story: Long-stay nursing home care by seniors enrolled in Medicaid has been plummeting for 15 years. It is not clear exactly why, but there are probably several reasons. First, state Medicaid programs have been shifting care from nursing facilities to home and community-based settings-a step that seniors themselves favor and one that may save money in the long-run. . . . The second reason . . . is that seniors' enrollment in Medicaid is growing very slowly even though the overall older population is growing rapidly. . . . A third reason may be that nursing homes themselves would rather provide post-acute and rehabilitation services instead of long-stay care."
LTC Comment: The reason fewer seniors use Medicaid nursing homes for long, custodial stays is no mystery. Medicaid made nursing home care free in 1965 which killed any market for private home care and crowded out private LTC insurance. In time Medicaid nursing home care became so expensive and reimbursement rates were cut so far as to impede quality and ruin nursing homes' reputation. It got so bad that people became willing to spend their own money for assisted living and that's why that care level has grown to replace "intermediate care" nursing homes. Medicaid tried to save money by "rebalancing" from nursing homes to home care on the mistaken assumption that doing so would save money. It didn't; it won't; and Medicaid's reputation for poor access and quality is now expanding to its home and community-based programs. This is what well-intentioned but poorly designed programs containing perverse incentives to ignore LTC risk and cost have wrought.
7/3/2013, "Wall St. Journal Didn't Go Deep Enough," by Phyllis Shelton
Quote: "The July 1, 2013 WSJ article about long-term care insurance rate increases entitled "Long-Term Care Insurance Gap Hits Seniors" throws the baby out with the bath water. It overlooks three important areas:
LTC Comment: This is Phyllis Shelton's response to the July 1 Wall Street Journal article that criticized LTC insurance.
7/2/2013, "Low Interest Rates Are Crippling Long-Term-Care Insurance," by Kelly Greene, Wall Street Journal
Quote: "In addition to the problems chronicled in today's Page One story "Long-Term-Care Insurance Leaves Customers Groping," there's another big culprit: long-term low interest rates. As the Federal Reserve has sought to rev up the economy, the slide in rates has hammered insurers' investment returns, which are needed to help cover payouts to policyholders."
LTC Comment: My comment follows the above Wall Street Journal article online:
"Interest rates didn't just 'decline' of their own accord as in a free market. Interest rates were forced down to near zero by the Federal Reserve. The big story, totally missed in this and yesterday's article, is that the private sector insurance carriers are preparing to be able to pay future claims despite the government-induced low interest rates, but the government is leaving everyone unprotected by its 'social insurance' programs. Medicare has a $43 trillion unfunded liability and Social Security is underfunded by $21.5 trillion. Of course, Medicaid, the dominant payer of long-term care in the USA due to eligibility criteria that allow affluent people to take more benefits from it than the poor, Medicaid doesn't even have a phony trust fund (filled with IOUs from future taxpayers) to pretend it's solvent. Criticizing the mote in the eye of LTC insurance without acknowledging the log of irresponsibility in government is a terrible disservice to the WSJ's readers."
7/2/2013, "Exchanging Medicaid for a Better Option," National Center for Policy Analysis
Quote: "Consider this: nationally, less than one-third of physicians accept new patients enrolled in Medicaid. This is nearly double the rate of doctors who have closed their practices to new Medicare patients (17 percent) and to new privately insured patients (18 percent). Physicians are four times more likely to turn away new Medicaid patients than those with no insurance (31 percent versus 8 percent)."
LTC Comment: Relying more and more on Medicaid is not going to end well.
7/2/2013, "Study links poor financial performance and 'de facto' nursing home segregation; raises questions about admissions [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Nursing homes with a high proportion of black residents tend to underperform financially, according to recently published research that raises difficult questions about admissions practices and healthcare disparities. . . . Previous studies have found that minorities rely on Medicaid in greater numbers than other demographic groups, so nursing homes that primarily serve minorities see bottom-line impacts . . . Financial strain on a facility is associated with lower-quality care, as measured by indicators such as bedsore prevention and total catheter use, the researchers found. Other studies have concluded black residents are less likely to get a flu shot and are more likely to be hospitalized, develop bedsores, and need help with activities of daily living. . . . Some facilities simply must maintain a certain proportion of private pay residents to remain solvent, Smith said. Race may not be a consideration in the admissions process for these facilities, but the net result is having financially stronger facilities that are not diverse."
LTC Comment: Medicaid pays nursing facilities substantially less than the cost of providing the care as we often report. High Medicaid census leads to deficient care. Minorities are more likely to rely on Medicaid. Not too hard to connect those dots, but it has amazed me for decades how few analysts do.
7/1/2013, "Long-Term-Care Insurance Gap Hits Seniors," Kelly Greene and Leslie Scism, Wall Street Journal
Quote: "The long-term-insurance industry now is shrinking, premiums are soaring and there is no fix in sight. At the same time, government safety-net programs, already under cost-cutting pressure, are bracing for demand from more of the 77 million aging baby boomers. . . . But insurers underestimated how fast medical costs would rise, and how many seniors would actually use the benefits. And they underpriced the insurance premiums. . . . Most of the actuarial assumptions made by insurers years ago turned out to be overly optimistic. , . . And many state regulators erred by routinely signing off on the premium on the new products and subsequent rate increases without questioning the companies' pricing assumptions, some officials say. . . . 'We have no way of knowing if these policies will self-destruct in the future,' cautions Mary Ahearn, a financial planner in Arizona."
LTC Comment: A formerly accurate and balanced reporter on long-term care issues wrote this biased and mistaken front-page article in today's Wall Street Journal. She and it fail to mention the real reasons LTC insurance is struggling. That is, that government took away the market by providing LTC through Medicaid after the insurable event occurs and took away the profits by forcing interest rates down to nothing. In truth, although they missed on lapse rates, actuaries got much more right than wrong about LTC utilization. Carriers are doing the responsible thing now, correcting for government-caused shortfalls in reserves by raising premiums. Government, which faces a hopelessly huge wave of aging Americans, is not doing the responsible thing to prepare. Entitlement "trust funds" are empty already and will never pay the "claims" it currently promises. Many people, especially the poor, will suffer when the public programs implode. But the people today biting the bullet, sticking with private insurance, and compensating for government's irresponsibility by paying higher premiums for their LTCI policies will come out all right.
7/1/2013, "Government report: Family size, obesity rate among question marks as long-term care spending surges [link]," by Tim Mullaney, McKnight's LTC News
Quote: "Medical advances and declining obesity rates could help control costs by limiting seniors' functional impairments. However, smaller average family size could drive costs up, as there will be fewer people to provide informal care to elders, who will go into facilities. Informal care accounted for 55% of the LTSS market ($234 billion) in 2011, and institutional care accounted for 31% ($134 billion), according to the CBO report."
LTC Comment: Declining obesity? Since when? A perfect LTC storm is brewing.
6/29/2013, "The Cost of Cashing Out Life Insurance Selling a policy to a third party has tax and other implications [link]," by Tom Lauricella, Wall Street Journal
Quote: "It seems like a simple solution to a big problem: Families struggling to meet the high costs of long-term care or other medical bills can sell unwanted life-insurance policies and instantly raise large chunks of cash. But going the route of a so-called life-settlement arrangement is a complex decision that shouldn't be made lightly or alone."
LTC Comment: The idea to tap life insurance benefits to help pay for LTC and to relieve fiscal pressure on Medicaid has taken hold recently. Texas passed a law to encourage the practice and other states have similar laws in their legislative hoppers. Thus, the media is taking an interest. Expect more such coverage.
6/27/2013, "The Real Cost of Long-Term Care (INFOGRAPHIC)," Huffington Post
Quote: "While the costs and the means to pay for long-term care can be daunting to think about, the one thing that can put one's mind at ease is preparedness. In the infographic below, you'll get some of the facts about actual costs, your options for long-term care, and tips on how you can prepare now."
LTC Comment: Unfortunately, this "infographic" is very difficult to read, even when expanded.
6/27/2013, "Two Web Sites to Visit," by Paula Span, New York Times
Quote: "LongTermCare.gov, well designed and clearly written, serves as a useful primer, an introduction to the basics.
"It's been around since 2005, so 'it was time for a refresh,' said Hunter McKay, program manager for the administration. 'We wanted to make the content digestible and manageable.'
"Now, the site has a pathfinder tool that allows you to enter your age or your parent's; it then tailors content according to whether a person needs long-term care right now or probably will in the future. You'll find a glossary of common terms, sections on advance care planning and information on how to pay for help, including long-term care insurance and reverse mortgages.
"Past traffic showed that consumers want to know about Medicaid, so you'll find a section that explains eligibility and benefits."
LTC Comment: Anything about private long-term care insurance and responsible LTC planning on that government website that points people to Medicaid?
6/27/2013, "A Surprising Health Insurance Option For Those Who Refuse ObamaCare [link]," by Merrill Matthews, Forbes
Quote: "The customer buys a life insurance policy that pays up to $250,000 upon death, which I believe is the current maximum available for this kind of policy.
"Along with life insurance coverage the policy includes what's called a 'critical illness' component. If the policyholder needs, say, surgery, the insurer writes the policyholder a check based on a schedule. Let's say, for example, it's $10,000.
"The policyholder has $10,000 in hand to pay for the medical care - or, frankly, anything else since the money belongs to the insured - but the value of his life insurance benefit is reduced by the same amount, to $240,000. Thus the critical illness component simply accelerates the benefit payout.
"One existing policy pays 100 percent for heart attack, stroke, life-threatening cancer, major organ transplant, kidney failure, Alzheimer's and paralysis, among other medical conditions."
LTC Comment: This article is written from the polemical perspective of "how to avoid ObamaCare," but it's interesting as it relates to the CI market.
6/27/2013, "Supreme Court's DOMA ruling expands long-term care insurance options in California [link]," by Tim Mullaney, McKnight's LTC News
Quote: "California same-sex couples who wed in 2008 did not receive all the same benefits as heterosexual couples, due to the federal Defense of Marriage Act. For example, gay couples were not allowed to receive long-term care insurance through the California Public Employees Retirement System (CalPERS), which is governed by federal tax laws. This led to a lawsuit filed last year by a nurse seeking coverage for his husband. Under Wednesday's 5-4 decision, the federal government must grant full marriage benefits to same-sex couples in states that allow gay marriage. This means CalPERS will begin to offer its long-term care coverage to same-sex couples, the fund confirmed to the Sacramento Bee."
LTC Comment: Guaranteed issue and spousal discounts are the main issues?
6/26/2013, "AHIP touts strong enrollment in plans with health savings accounts," by Elise Viebeck, The Hill
Quote: "Enrollment in health savings account (HSA)-eligible insurance plans has reached nearly 15.5 million, growing by almost 15 percent since last year. . . . Authorized by Congress about 10 years ago, HSAs allow consumers to put away money for medical expenses without paying income tax on those savings."
LTC Comment: HSAs could solve the acute health insurance problem and ameliorate the LTC insurance problem by putting consumers back into the health care market and letting them accumulate savings for LTC premiums.
6/26/2013, "Retirement savings $14 trillion below threshold," by Steve Vernon, CBS MoneyWatch
Quote: "The study found that Americans of all ages are falling well short of the savings amount they need to secure their retirement. Still worse, 45 percent of working-age Americans have no retirement savings at all! The estimated gap in needed savings totals $14 trillion if you count only savings set aside specifically for retirement; the gap declines to $6.8 trillion if you consider total net worth, the largest item being home equity."
LTC Comment: Warning; brick wall of fiscal reality directly ahead!
6/25/2013, "Medicaid for prisoners: States missing out on millions," by Christine Vestal, USA Today
Quote: "Only a dozen states have taken advantage of a long-standing option to stick the federal government with at least half the cost of hospitalizations and nursing home stays of state prison inmates. The other states have left tens of millions of federal dollars on the table, either because they didn't know about a federal rule dating to 1997 or they were unable to write the laws and administrative processes to take advantage of it."
LTC Comment: Heaven forbid that anyone misses a chance to stick it to Uncle Sucker.
6/24/2013, "Elder Fraud Epidemic: How Banks Are Failing Seniors," by Robert McGarvey, TheStreet
Quote: "'It's bank employees, caregivers, in many cases it is family members who are stealing from the elderly,' said Tod Burke, a professor of criminal justice at Radford University in Virginia."
LTC Comment: Add Medicaid planners to that list. They impoverish frail and infirm elders, enrich their clients the heirs, and take big fees in the process, leaving the elders dependent on public welfare.
6/23/2013, "Living Long but Not Prospering," by Joshua Gotbaum and Dallas Salisbury, Wall Street Journal
Quote: "The long-term-care private-insurance market is essentially collapsing. All of the major carriers that built long-term-care practices over the past 20 years are exiting the marketplace."
LTC Comment: A Center member bcc'd me on his letter bringing up short the president of EBRI for such a ridiculous quote:
"Mr. Salisbury: In today's WSJ (R5 - Living Long But Not Prospering) you said 'The long-term-care private-insurance market is essentially collapsing. All of the major carriers that built long-term-care practices over the past 20 years are exiting the marketplace.' The truth is John Hancock, MassMutual, Northwestern, Transamerica, Mutual of Omaha and Genworth all still actively sell LTCi. How can the President and CEO of the Employee Benefit Research Institute be so misinformed?"
Washington, DC—
LTC Comment: The first public meeting of the LTC Commission involved less wishful thinking and more hopeful signs than I expected. Details and highlights after the ***news.***
*** STUDIES. The Center for LTC Reform has completed our field work in Virginia. We're headed next to begin a study in New Jersey and finally to Georgia in August. Our interim report on Medicaid and long-term care financing in Virginia will be ready soon. Final reports on all three projects will be released sometime this Fall before the November elections. All three studies will provide evidence and reasoning to support our recommendations to the new LTC Commission, whose first meeting is the topic of today's LTC Bullet. Commission members are welcome to ride shotgun with me as we interview front line experts in each state about how Medicaid eligibility really works. For examples of our reports on similar studies in many other states, including California, New York, Pennsylvania and Maine, go to http://www.centerltc.com/reports.htm. ***
*** MEDICAID PLANNING. Center member Ross Schriftman forwarded an elder law article to us titled "Not Knowing How Medicaid Annuities Work Will Get Advisors into Hot Water!," by Mike Anthony, JD. I couldn't find the piece online but its message is that Medicaid-compliant annuities succeed: "There are plenty of good ways to use annuities and other insurance products to proactively help a potential Medicaid patient." Schriftman had this to say about the Medicaid planning example in the article:
Dear Steve,
These guys really gall me. The "ethical" thing to do is having the son keep $250,000 AND stick you and me with the cost of the mom's long term care? [Hardly.]
Here is the more ethical thing to do. Son buys his Indiana mom a long term care insurance policy when she is 70 and still generally in good health. He pays $584 per month out of his own money to protect his inheritance. Mom's care is paid for by her policy. Son picks where, who and how she gets care; not the government. Son inherits $250,000 minus his cost for the premiums. Assuming he pays $584 per month for 10 years he nets $180,000.
(70 year old select rate for Mutual Care Plus $170 per day, 4 year benefit, 90 day EP,3% compound inflation)
Sincerely, Ross Schriftman Tel. 215-682-7075
Thanks, Ross. That example struck home. Knowing every Medicaid planning trick in the book, I chose instead to buy and pay for private LTC insurance for my parents in 1987. Today, my mother is 100 years old and receives benefit payments from her first-AMEX, then-GE, now-Genworth policy. ***
LTC Comment: This is how the meeting announcement read:
Federal Commission on Long-Term Care Announces
First Public Hearing for June 27th
Fifteen member commission created by fiscal cliff law tasked with advising Congress on long-term care reform
Washington, DC – The newly created federal Commission on Long-Term Care will have its first public hearing on Thursday, June 27th at 2:00 pm EDT in the Rayburn House Office Building, Room 2322. The title of the hearing is "The Current System for Providing Long-Term Services and Supports."
The Commission will hear testimony from the following expert witnesses:
• Anne Tumlinson, Senior Vice President, Avalere Health
• Kirsten Colello, Specialist in Health and Aging Policy, Congressional Research Service
• G. William Hoagland, Senior Vice President, Bipartisan Policy Center
• Marc Cohen, Chief Research and Development Officer, LifePlans, Inc.
The Commission was created by the American Taxpayer Relief Act – the so-called "fiscal-cliff" law – to advise Congress on how long-term care can be better provided and financed for the nation's older adults and people with disabilities, now and in the future.
The bi-partisan commission consists of 15 appointees – nine members appointed by Democratic Congressional leadership and the White House and six members appointed by Republican leadership. The Commission is charged by statute to report with a "plan for the establishment, implementation, and financing of a comprehensive, coordinated, and high-quality system that ensures the availability of long-term services and supports for individuals in need."
LTC Comment: When I saw that announcement, I said to myself "I have to be there. Center members will want to know what happens." So I did a couple interviews for our Virginia long-term care financing study by phone instead of in person and hustled myself to the nation's capital arriving at the hearing room in the nick of time.
The first public meeting of the LTC Commission lasted a full three hours. Four panelists gave yeomanlike presentations on aging demographics, the ABCs of LTC, the government's budget crisis and the current state of the long-term care insurance industry.
Two presenters and their presentations stood out. One was Marc Cohen's explanation of LTC insurance. He presented the usual information familiar to people who know the LTCI industry: who buys, who doesn't, why, why not, and how has that changed over the years. Committee members addressed most of their questions to Marc and at least one praised him for his clarity and synthesis.
The presentation that blew me away, however, was by G. William Hoagland, Senior Vice President, of the Bipartisan Policy Center, which is "a non-profit organization that drives principled solutions through rigorous analysis, reasoned negotiation and respectful dialogue" that was founded by former Senate Majority Leaders Howard Baker, Tom Daschle, Bob Dole and George Mitchell. Hoagland's message was couched in polite, almost apologetic terms, but I would translate it thus:
"If you think you're going to find more government money to improve long-term care, you are out of your minds. Social Security, Medicare and Medicaid are already in deep financial trouble; they're sinking fast; and you will have to find some way to divert most people to private LTC financing in the future."
Hoagland emphasized that LTC spending went from mostly out-of-pocket personal expenditures in 1970 to mostly Medicaid and Medicare spending now. He left the Commission with two major "take aways."
1. Medicare and Medicaid have become the major LTC funding sources but cannot continue so payment reforms are necessary and alternatives must be found for financing LTC. 2. By making access to LTC available after the insurable event has occurred, Medicaid and Medicare have ended up paying for the most expensive care and cannot afford to do so going forward.
Hoagland concluded that well-intentioned, commendable intent has left America with a current system that discourages long-term care planning, overwhelms state/federal budgets, and limits care available to people who need it. His arguments were in perfect synch with ones we've made year after year in our annual "LTC Bullet: So What if the Government Pays for Most Long-Term Care? [link]"
What I didn't hear a lot of at yesterday's LTC Commission meeting were the usual bleating calls for more public spending on long-term care. Even the strongest advocates for a government takeover of long-term care restrained their fire. They were brought up short by the hard budget realities.
What I did hear a lot more about than I expected were puzzled queries about Medicaid "spend down." If Medicaid requires impoverishment, how come Medicaid pays for most expensive LTC? Why do studies show Medicaid crowds out most of the LTC insurance market? What accounts for recent studies that prove the affluent get as much or more from Medicaid than the poor?
Simplistic dodges of these questions gained no traction. The obvious observation that people don't know who pays for LTC and so they can't be deciding not to buy private insurance because they're planning to go on Medicaid answers nothing. That's not how it works. Rather, Medicaid has paid for most expensive LTC for nearly 50 years which has desensitized the public to LTC risk and cost. It's not that they are planning to go on Medicaid. It's that their denial of LTC risk has been enabled by the reality that Medicaid has paid and continues to pay for most expensive care.
If the LTC Commission stays on its current course of acknowledging the fiscal crisis, demanding an explanation about how and whether Medicaid spend down really works, and refusing to gaze thoughtlessly at the chimera of Medicare Part X or mandatory government LTC insurance, there is maybe some hope their deliberations will bear meaningful fruit.
In the meantime, if they'd just read the six succinct briefing papers in "How to Fix Long-Term Care," they'd be off to an even better start.
Richmond, Virginia—
LTC Comment: Do your friends or clients ever doubt the ravages of long-term care? Martin Bayne was a successful LTCI broker when he was ravaged by early-onset Parkinson's. He styled himself Mr. Long-Term Care. Today's lead article from The Philadelphia Inquirer's philly.com tells his story.
6/23/2013, "From the front lines, a fight for aging boomers," by Michael Vitez, Philadelphia Inquirer
Quote: "He had foresight to buy a long-term-care policy at age 40, for a $1,000 annual premium, which would pay up to $231 a day for life. His policy, he said, has paid about 80 percent of his $750,000 in long-term-care costs."
LTC Comment: Martin Bayne had care options because he had long-term care insurance. Read this article with that in mind.
6/21/2013, "Ask Farnoosh: What Do You Do After Maxing Out Your 401(k) and IRA? [link]," by Farnoosh Torabi, Yahoo Finance
Quote: "Finally, long-term care is proving helpful for seniors who need to fill the gaps not covered by Medicare or health insurance."
LTC Comment: LTC insurance shouldn't be a last resort, but better then than never.
6/21/2013, "Hybrid Long Term Care Insurance Solutions Explored by Trade Group," by Jesse Slome, AALTCI
Quote: "Two audios exploring hybrid long term care insurance options were made available to insurance professionals by the American Association for Long-Term Care Insurance."
LTC Comment: AALTCI's extensive educational resources continue to grow.
6/21/2013, "2013 Critical Illness Insurance Forum," LIMRA/LOMA
Quote: "Join us this September 16-18, 2013, in Fort Lauderdale, Florida, where we will discuss how critical illness products are evolving into one of the most important products in the supplemental health insurance portfolio. Plan to attend and learn strategies to help shape your company's success in the years ahead."
LTC Comment: Click the link to reach the conference announcement and details.
6/20/2013, "How much should you save for long-term care?," by Chris Farrell, Marketplace Morning Report
Quote: "Long-term care. It's an economic consequence of an aging America that doesn't get nearly as much attention as Social Security. Nursing homes can run around $100,000 a year, and many aging boomers will not have the money. Marketplace Economics Correspondent joins Morning Report's Mark Garrison to discuss."
LTC Comment: The bottom line of this podcast is "learn about LTC insurance.
6/20/2013, "Gen X most at risk to burn through retirement savings early," by Gillian Roberts, Employee Benefit Adviser
Quote: "Generation X is currently most at risk for financial hardship in retirement. PricewaterhouseCoopers released results of an employee financial wellness study this week and found of employees in the generation born in the early '60s through early '80s say they're likely to tap into their retirement savings. This number was higher than both surrounding generations, the Baby Boomers and Millennials. In fact, 30% of them admit to already having withdrawn from a retirement account."
LTC Comment: Oh what public policy has wrought by tipping all the benefits toward older generations for so long. When will the entitlement bubble burst?
6/20/2013, "Living Longer + Lack of Lifetime Income = Risky Business: Actuaries express the mission of financial services today: Income [link]," Life & Health Advisor
Quote: "A new discussion paper, 'Risky Business: Living Longer Without Income for Life,' developed by the American Academy of Actuaries' Lifetime Income Risk Joint Task Force, explores the difficulties awaiting people in retirement who lack a plan for lifetime income, offers steps individuals can take to prevent shortfalls in retirement income, and discusses public policy options and education initiatives aimed at addressing the problem of inadequate lifetime income."
LTC Comment: And whom do we have to thank for this problem? Yes, government again. The Federal Reserve has forced interest rates down to almost nothing ruining sources of lifetime income not to mention handicapping the LTCI market.
6/19/2013, "More in U.S. caring for someone with health issues, study finds," by Emily Alpert, Los Angeles Times
Quote: "A rising share of Americans is caring for someone with health issues, often juggling the task with a job and family, the Pew Research Center found in a newly released survey. Researchers found that 39% of U.S. adults surveyed said they were caring for an adult or child with significant health challenges in 2012, compared with 30% who said the same in 2010."
LTC Comment: The Age Wave crests and its ripples grow bigger.
6/19/2013, "Perceived Risk of Critical Illness Diagnosis High Among Middle-Income Americans [link]," Life & Health Advisor
Quote: "A recent study finds middle-income Americans on average give themselves about a 1-in-5 chance of being diagnosed with a critical illness in the next three years and a 1-in-2 chance of being diagnosed with a critical illness within the next 20 years."
LTC Comment: Such perceptions are bound to enhance the market for Critical Care Insurance.
6/19/2013, "New approach to Alzheimer's treatment might be key to a cure," by Ashley Carman, McKnight's LTC News
Quote: "Alzheimer's treatment often begins after symptoms are already apparent, such as memory loss. However, medications targeting the dementia-inducing disease's signature plaques and tangles have had little success in reversing symptoms. So doctors and investigators are developing an alternative approach: treatment before the disease takes over."
LTC Comment: Well, OK, but how do you know whom to treat? Everyone? Who will pay?
6/18/2013, "Boomers Greatly Underestimate Cost of Long-Term Care, Retirement Style [link]," Life & Health Advisor
Quote: "A new Nationwide Financial consumer survey found that boomers' beliefs on the cost of long-term care (LTC) and the time they will spend in retirement do not match reality. In fact, Americans aged 50 and older underestimate the annual costs of LTC by more than three times the actual cost."
LTC Comment: Well, now, why do you suppose that is? Could it be the same reason most people have no idea what their medical care costs? That is to say: government pays for most medical care and even more so for LTC, thus desensitizing the public to the actual costs and risks.
6/18/2013, "Tight timeline forces LTC commission to narrow its ambitions, member says [link]," by Tim Mullaney, McKnight's LTC News
Quote: "With its report due by the end of September, the Congressional Long-Term Care Commission is setting its sights on what can be accomplished in an 'extraordinarily short time-frame,' according to member Judith Stein, executive director of the Center for Medicare Advocacy."
LTC Comment: Friday's LTC Bullet provided our recommendations to the LTC Commission on how to prioritize their work. See "LTC Bullet: What Should the LTC Commission Do?," Friday, June 21, 2013.
6/17/2013, "How We Became International Senior Gypsies In Retirement," by Lynne Martin, Huffington Post
Quote: "At 72 and 67, we have been home free for two-and-a-half years, lived in nine countries, and we have never been healthier or happier! Buenos Aires, Argentina, San Miguel de Allende, Mexico, Paris, Florence, Istanbul, London, Dublin, Marrakech, Morocco, and California's Central Coast have been our temporary homes for anywhere from two weeks to three months at a time."
LTC Comment: We've known for a long time that boomers would not retire the old-fashioned way. Well, now it's happening. Put on your thinking caps, marketers. There must be some brand-new, creative ways to reach people like these with the LTC insurance solution.
6/16/2013, "States Ease Use of Life Policies for Elder Care," by Kelly Greene, Wall Street Journal
Quote: "State lawmakers are encouraging elderly residents to use life insurance as a way to pay for long-term care-and lower the Medicaid tab in the process. The strategy marks a tacit endorsement of so-called life settlements, a practice in which policyholders sell their policies at a discount in the secondary market and the buyer takes over premiums and consequently collects the death benefit."
LTC Comment: Does the possibility of a life settlement to fund LTC impair the market for traditional LTCI products by giving consumers a false sense of security? We've heard from Center members on both sides of that question.
6/14/2013, "Only 5 percent of new doctors head to rural areas, researchers find [link]," HealthDay
Quote: "Fewer than 25 percent of new doctors in the United States go into primary care, and only about 5 percent open offices in rural areas, according to a new study."
LTC Comment: Another unintended and very dangerous consequence of government interference in the medical marketplace.
6/13/2013, "Why the Government Needs to Budget Over the Infinite Horizon [link]," by Laurence Kotlikoff, Yahoo! Finance
Quote: "For the U.S. government as a whole, the infinite horizon fiscal gap is a whopping $222 trillion. Its elimination requires not a 32 percent immediate and permanent tax hike in Social Security FICA taxes or a 22 percent immediate and permanent cut in Social Security benefits, but either a 64 percent immediate and permanent tax hike in all federal taxes or a 40 percent immediate and permanent cut in all expenditures apart from servicing official debt."
LTC Comment: The 2013 Social Security and Medicare Trustees Reports show infinite-horizon unfunded liabilities of the two programs rising to $23.1 trillion and $43 trillion respectively. When will America's debt bubble burst?
LTC Comment: How should the LTC Commission prioritize its work and recommendations? Some thoughts after the ***news.***
*** SUMMER SOLSTICE. Happy first day of Summer! The days are long, today the longest, and that's good because the new LTC Commission needs all the waking hours it can get. ***
*** SINKING FEELING. The 2013 Social Security and Medicare Trustees Reports show infinite-horizon unfunded liabilities of the two programs rising to $23.1 trillion (up from $20.5 trillion last year) and $43 trillion (up from $38.6 trillion), respectively. Why is it important to examine the entitlement programs' unfunded liabilities through all of the future instead of only the 75-year window usually analyzed? See economist Laurence Kotlikoff's "Why the Government Needs to Budget over the Infinite Horizon." ***
When the American Taxpayer Relief Act of 2012 (ATRA '12) repealed CLASS it offered a consolation prize, a special commission to study long-term care services and financing. The new commission was directed to form quickly, deliberate rapidly, and present its recommendations for long-term care reform within six months. Months have gone by with no action, but the LTC Commission has finally appointed a Chair (SCAN's Bruce Chernof) and Vice-Chair (Towers Watson's Mark Warshawsky) and scheduled its first meeting for this coming Thursday, June 27.
With only three months of its original six remaining, where should the commission start? What should its priorities be? Where can it get the biggest reform bang for its deliberative buck?
The problem with long-term care is that people don't worry about it or plan until they need it. That condition exists because Medicaid made nursing home care virtually free in 1965, created an institutionally biased LTC system, impeded a private market for home and community-based care, and crowded out home equity conversion and private LTC insurance from helping to finance long-term care. The result is that a safety net program intended to help only the poor has become the dominant payer of long-term care for everyone.
Throwing more government money at long-term care or forcing Americans into another unfunded entitlement program like Medicare would only make the situation worse. You don't put out a fire by dowsing it with gasoline. The right way to approach reform is to return Medicaid LTC to the needy and redirect the affluent and middle class toward early LTC planning and private LTC financing. That's how a safety net for the poor can be preserved while attracting private-sector funding to relieve the hopelessly heavy and about-to-explode fiscal burden on government.
To achieve that goal, these should be the LTC commission's priorities:
1. Eliminate or vastly reduce Medicaid's home equity exemption from a minimum of $536K and a maximum of $802K now to something more reasonable, like $50K or less. This would redirect people to reverse mortgages to fund home care, discourage a common planning gimmick of investing otherwise countable assets in exempt homes, and encourage families to help elders prepare for private LTC financing as a way to protect their own inheritances. Simultaneously the look-back period for transfers of real property should be extended from 5 years to 10 years or even 20 years to discourage divestment of the home. Longer lookbacks for real property are no administrative burden because all real estate transfers are recorded and easy to track, often online these days.
2. The next biggest potential savings to Medicaid is reducing or eliminating the currently unlimited exemption for prepaid funeral expenses. Eligibility workers in a couple dozen states where I've conducted my studies have told me 80% to 90% of all Medicaid LTC recipients have prepaid burial plans averaging $8,000 to $12,000. I'm told very few non-Medicaid-LTC recipients purchase such plans. Medicaid planners say "Prepaying a burial may not be a timely investment in many cases since it returns no interest or dividends, but purchasing an irrevocable burial plan is an important part of the Medicaid spend down." (ElderLaw Answers). Annually, this exemption amounts to scores of billions of dollars diverted from private financing of LTC to Medicaid asset shelters nationally. Wonderful windfall for the funeral industry and heirs but a huge cost to Medicaid and taxpayers.
3. Medicaid-friendly annuities are a gigantic problem that would be simple to fix if CMS would just take the travesty seriously. They're used in two ways. First, a Medicaid LTC recipient transfers all his assets to a community spouse which interspousal transfer is allowed anytime without limit. Now the spouse has the whole estate in her name, buys an immediate annuity which meets requirements of the Deficit Reduction Act of 2005 (DRA '05), such as paying out within the actuarial life expectancy of the Medicaid spouse, and collects all the money back in her own name but outside Medicaid consideration in as little as a year. Maine gave me the example of a $450,000 annuity that paid out $17,000 per month to the community spouse until she had the whole amount, less the agent's commission, in her exclusive ownership. Maine provided a letter New Jersey sent to CMS requesting closure of this loophole to which they said CMS never formally responded. The second way annuities are used is as a means to return half of a penalized asset transfer in a "reverse-half-a-loaf" method that could also be done using a promissory note for the purpose of qualifying an unmarried applicant for Medicaid LTC in half the time. (That technique is too complicated to explain briefly here, but for a full explanation and documentation of the annuity problem, see "The Maine Thing About Long-Term Care is That Federal Rules Preclude a High-Quality, Cost-Effective Safety Net [link].")
4. Any assets that are only exempted and not divested should be available for estate recovery. Otherwise, Medicaid operates as free inheritance insurance for heirs. The Omnibus Budget Reconciliation Act of 1993 (OBRA '93) tightened eligibility, encouraged liens, and made estate recovery mandatory with the intent to encourage people to save, invest or insure privately for long-term care, but to make sure, if they don't plan responsibly, that they must pay back the cost of their care out of their estates. Unfortunately, states didn't implement estate recovery well; the feds don't enforce it aggressively; the media doesn't publicize it; and the public is unaware of it. The last time the federal government even bothered to measure and publish estate recoveries was in 2005 based on 2004 data. Estate recovery is very easy to avoid with legal advice, and that's a routine part of the advice all Medicaid planners give their clients. For details and a current status report on Medicaid estate recoveries, see our recent report "Maximizing NonTax Revenue from MaineCare Estate Recoveries."
The Center for Long-Term Care Reform's two recent reports cited above explain in full what must be done to wean the middle class and affluent off Medicaid, return the program to the poor as a quality long-term care safety net, and prepare the LTC financing system to meet the growing Age Wave challenge that will overwhelm long-term care otherwise. For a quick read that explains how America evolved into a welfare-financed, nursing-home-based LTC system and what to do to fix it so that people can get the care they need in the settings they prefer, see our six briefing papers titled "How to Fix Long-Term Care."
Unfortunately, no changes to Medicaid LTC eligibility rules are easy politically. Every imaginable interest group has a stake in the status quo. Needed eligibility changes are even more difficult for the time being because of the "Maintenance of Effort" rule in the Affordable Care Act of 2010 (ACA '10) which prevents states even from reducing their easy eligibility rules (e.g., $802,000 home equity exemption) to the tighter rule otherwise allowed (e.g., $536,000). So fixing this system isn't easy. But it is not impossible either, as our victories (documented here) at the federal and state level over the years demonstrate.
I think the best argument for the right kind of reform is this: we have a moral and fiduciary responsibility to ensure that Medicaid's scarce resources go first to the truly needy and that taxpayers' money is not used to subsidize the boomers' failure to plan responsibly for long-term care. If the LTC Commission applies that principle, it may make a positive contribution.
LTC Comment: Why is it that so much government does to "help people" ends up hurting them?
Case in point: Medicaid made nursing home care virtually free in 1965 (good intentions), but the result was little demand for private home care or LTC insurance and today (unintended consequence), a bankrupt, welfare-financed, nursing-home-based LTC system that serves no one well.
Here's a quote from a paper that develops the concept of "pathological altruism" to explain such outcomes:
"Presented here are the mechanistic bases and potential ramifications of pathological altruism, that is, altruism in which attempts to promote the welfare of others instead result in unanticipated harm."
"Concepts and implications of altruism bias and pathological altruism," Barbara A. Oakley, Proceedings of the National Academy of Sciences
I found this research fascinating. I hope you do too.
6/15/2013, "Ruinous promises: States cannot pretend to be in good financial health unless they tackle pensions [link]," The Economist
Quote: "Few fiscal problems are as grave, or as little understood, as underfunded state and municipal pensions. The funding gap for all state schemes is estimated at $4 trillion-25% of GDP."
LTC Comment: The feds can just print more money (up to a point), but the states have no easy out from the closing fiscal vise of unfunded pensions.
6/13/2013, "SCAN: 66 percent of Californians want a public LTC program," by Allison Bell, LifeHealthPRO
Quote: "When survey workers asked whether participants in California would favor 'a government administered long-term care insurance program, similar to Medicare' to 'help Americans prepare for the costs of ongoing living assistance,' 66 percent said they favor the idea of setting up a Medicare-like government-administered LTC program . . .."
LTC Comment: Well, if Californians want it, it must be a good idea. Never mind Medicare's $38.6 trillion unfunded liability. Let's spend more funny money and bill it to the future.
6/13/2013, "Elderly Americans Living With Children Are More Unhappy," by Khadeeja Safdar, Wall Street Journal
Quote: "Young children are supposed to bring joy into their grandparent's lives. But according to two researchers, elderly Americans who live with children under the age of 18 experience inferior living situations and worse emotional health than those who don't."
LTC Comment: All the more reason to plan early to remain independent late in life.
6/12/2013, "Latest Research Reinforces The Need For LTC Planning," InsuranceNews.net
Quote: "According to recent data from Genworth men are taking an increasingly active role in caregiving. The data also shows the impact of long term care on caregivers and care recipients; money, time spent and emotional issues could be minimized if those involved take a more proactive role towards planning."
LTC Comment: Damon and I are living that reality with his 100-year-old Grandmother, my mother, in claim on her Genworth policy I purchased in 1987 and moving from assisted living (seven years) to a skilled nursing facility. Difficult transitions.
6/12/2013, "What Do You Mean I'm Getting Old? Denial About Aging and Our Impending Long-Term Care Crisis [link]," by Bruce Chernof, Health Affairs
Quote: "However, there is promise for innovative approaches to solving these issues: Americans across the political spectrum show majority support for public policy solutions to transform the nation's system of long-term care. Seventy-seven percent support tax breaks to encourage saving for long-term care expenses; about half (51 percent) of Americans support a government-administered long-term care insurance program."
LTC Comment: Bruce Chernof, the newly appointed Chairman of the LTC Commission, which will meet for the first time June 27, advocates something like mandatory CLASS. Luckily, the Commission's Vice Chair is Mark Warshawsky who has a much better understanding of why LTC financing is the way it is and what's necessary to fix it.
6/10/2013, "Low blood sugar in some diabetics boosts dementia risk," by Melissa Healy, Los Angeles Times
Quote: "For older patients with Type 2 diabetes, an aggressive focus on keeping high blood sugar down increases the risk of driving blood sugar too low--and with that, boosting the likelihood of developing dementia, says a new study. As if that weren't bad enough, the new research finds that dementia, in turn, increases the risk of hypoglycemic episodes."
LTC Comment: Double jeopardy.
6/10/2013, "Medicare Advantage 2013 Spotlight: Enrollment Market Update," Kaiser Family Foundation
Quote: "While about 28 percent of Medicare beneficiaries nationally are now enrolled in Medicare Advantage plans, the share varies greatly by state -- ranging from 49 percent in Minnesota to less than 4 percent in Iowa and Alaska. National Medicare Advantage enrollment tends to be concentrated among a small number of organizations, with five firms (and affiliates) accounting for two-thirds of enrollment."
LTC Comment: Medicare Advantage continues to grow despite disadvantages imposed on it with the intent to shore up demand for traditional Medicare.
6/8/2013, "For Retirees, a Million-Dollar Illusion," by Jeff Sommer, New York Times
Quote: "In 1953, when 'How to Marry a Millionaire' was in movie theaters, $1 million bought the equivalent of $8.7 million today. Now $1 million won't even buy an average Manhattan apartment or come remotely close to paying the average salary of an N.B.A. basketball player. Still, $1 million is more money than 9 in 10 American families possess."
LTC Comment: Anyone smart enough to have that million bucks should also have the brains to protect it with LTCI.
6/7/2013, "Doctors Should Steer Conversation to Older Drivers: Study," HealthDay News
Quote: "With 10,000 baby boomers turning 65 every day, the number of elderly drivers on U.S. roads is accelerating rapidly, researchers say. But doctors and other health care providers often wait too long before they talk to seniors about giving up driving, even though many elderly patients are ready to discuss the issue much sooner, according to a new study."
LTC Comment: A perennial problem that will accelerate dangerously as boomers age.
6/7/2013, "IG says flaws in Medicare databases invite fraud and abuse," Washington Examiner
Quote: "On the eve of an historic expansion in the federal role in healthcare, a government review finds Medicare overwhelmed by new-medical provider information and unable to police its existing databases against the fraudulent use of taxpayer money. Government investigators found that the data systems used to catalog the records of Medicare providers were riddled with inaccurate or incomplete information. When compared, 97 percent of files studied were inconsistent."
LTC Comment: Building on a foundation of straw.
Richmond, VA—
LTC Comment: What goes into planning, implementing and completing one of the Center for Long-Term Care Reform's state-level Medicaid/LTC financing studies, after the ***news.***
*** LTC COMMISSION will meet June 27, with Bruce Chernof of the SCAN Foundation as Chair and Mark Warshawsky of Towers Watson as Vice Chair. Created January 1, 2013 by the fiscal cliff avoidance legislation (American Taxpayer Relief Act), the new commission is a consolation prize for the elimination, in the same statute, of the CLASS Act. According to the law, members of the commission were to be appointed "not later than 30 days" after enactment. Oops, missed that deadline by a couple months, with the White House making its three appointments, completing the membership, in mid-March. "Not later than 6 months" after their appointment, the members of the commission are supposed to vote on a comprehensive "long-term care plan." With only three months remaining of the original six allotted to complete its work, the Commission begins handicapped by time pressures. Expectations are low, but whatever the LTC Commission achieves or doesn't will at least point public attention now and again toward the looming catastrophe of long-term care financing. ***
LTC Comment: Over the past three years, the Center for Long-Term Care Reform has completed Medicaid and LTC financing studies in California, New York, Pennsylvania, Rhode Island and Maine. We've reported to you faithfully on the results of those studies and our reports are readily available on the Center's website here and on the sponsors' websites as well.
So far, however, we have not described what goes into conducting one of our state-level studies. Let's correct that oversight today. Following below the "fold" is a document, titled "Implementing a Medicaid and Long-Term Care Financing Study," which we provide to each project sponsor at the beginning of the process.
Over the years, study sponsors have included state governments, state Medicaid programs, LTC provider trade associations, and State Policy Network-affiliated think tanks. Whoever the sponsor and whichever the state, we always proceed in the same, methodical way. We gather information systematically from face-to-face interviews with key officials and experts. We analyze germane current and archival documents, gleaning from them the history, status, and likely future course of Medicaid and LTC financing in the state.
We seek to understand the way Medicaid LTC eligibility actually works, irrespective of the conventional wisdom that it requires catastrophic spend down and total impoverishment. We try to discern the challenges key stakeholder groups face and we gather their ideas and suggestions. We analyze the politically realistic options for change. And we recommend policies that improve the LTC financing system for all while reducing dependency on publicly financed care.
We are not always able to schedule all of the desired appointments. Nor can we locate all desirable documentation in every state. We're usually limited to one intensive week onsite to do all of the face-to-face interviews. This Summer, however, for the three studies we're conducting in Virginia, New Jersey, and Georgia, I'm onsite for at least three weeks in each place. That's because we've taken the Silver Bullet of Long-Term Care on the road again and I'm living all Summer on the East coast.
As these three studies develop, we'll keep you posted on our progress and results. In the meantime, here's how we begin each project and what we do in the process.
Implementing a Medicaid and LTC Financing Study for [State Name]
I'm counting on the [project sponsor name] to help me find key information and documents not easily accessible online and to help locate interviewees and schedule appointments for the site visit. I anticipate scheduling the site visit for [dates].
I will provide guidance including a full briefing on the issue, suggestions on where and how to find documents and information, names of organizations and/or individuals to contact, draft letters describing our inquiry, documents and web links establishing my and the Center for Long-Term Care Reform's bona fides, etc.
After you look this document over, let's talk by phone about how to begin the process. There are several things we can do in the ensuing weeks which will save us time once we can begin in earnest.
Following is a list of organizations and individuals to interview during my site visit and a list of documents and information we need to begin collecting soon.
Interviews/Briefings to schedule for site visit
Governor: if possible, a short briefing and interview on the issue, the proposed study and likely recommendations, 15 or 20 minutes
Governor's health policy specialist: longer briefing and interview, up to one hour
Key state legislators and staff, especially chairs of germane committees and sub-committees: short briefings for the principals, longer sessions with staff. OK to set up one briefing for all legislators and staff, but also schedule personal briefings for key legislators who want them.
State Insurance Commissioner: if possible, a short briefing on the issue, the study and likely recommendations, 15 or 20 minutes
Insurance commission LTC insurance specialist: longer briefing and interview, at least one hour
Medicaid single-state agency head and State Medicaid Director: together or separately, a short briefing on the issue, the study and likely recommendations, 15 or 20 minutes
State Medicaid LTC financial eligibility policy specialist: intensive briefing and interview, two hours
State Medicaid lien and estate recovery program manager: intensive briefing and interview, two hours
State Medicaid local offices (one urban, one suburban, and one rural): in each of the three offices, two-hour briefings and interviews with a Medicaid financial eligibility supervisor and at least one, but preferably more, eligibility workers who actually take and process applications Medicaid LTC benefits.
Proprietary (AHCA affiliate) and non-proprietary (Leading Age [formerly AAHSA] affiliate) nursing home/assisted living trade association representatives, including executive directors of the state affiliates, their government affairs directors, and a sampling of members (nursing home and assisted living owners or managers).
Home health agencies representatives from trade associations and members.
Long-term care insurance representatives including individual producers and people representing carriers and major brokers.
NAIFA, NAHU affiliates.
Reverse mortgage specialists including representatives of lenders and individual producers
Elder law attorneys including Medicaid planners.
Senior advocates (AARP, NCOA, Area Agencies on Aging, LTC Ombudsman)
Business (Chamber of Commerce, etc) and/or taxpayer representatives who have an interest in long-term care financing issues. (Employee absenteeism and presenteeism re family LTC responsibilities have become as big a problem as child care.)
Documents or Information:
Any data or reports on the current budgetary crisis especially as relates to funding Medicaid and long-term care.
Details on measures (1) taken already and (2) anticipated, to cut Medicaid costs, especially cuts that affect LTC.
Break out of state spending on Medicaid vs other state programs, i.e. education, corrections, etc.
[State] Medicaid expenditures for long-term care for the elderly broken out by nursing home and HCBS (home and community-based care) for the past five years, more years if possible.
Any available reports on Medicaid financing of long-term care in [State], including studies bearing on advisability and potential savings from nursing home diversion to HCBS.
[State] Medicaid (TEFRA) lien and/or estate recoveries for the past five years, excluding recoveries for fraud.
Medicaid financial eligibility rules for nursing home and HCBS, e.g. asset limits, countable vs. non countable assets, income limits, spousal impoverishment protections, etc.
Any demographic studies related to aging of the [State] population and the likely impact of the Age Wave.
Medicaid reimbursement rates for nursing homes and home care providers and private pay rates in the state for comparison.
Any reports or data bearing on quality of care in [State] nursing homes and by home care providers.
Information on nursing home liability insurance issues, premiums, claims experience, etc.
Percent of nursing home residents in [State] covered by Medicaid, Medicare, private pay and other systems.
Summary of [State]'s Medicaid waivers that provide care for the elderly.
Any studies that document "Medicaid estate planning," the practice of artificially impoverishing people to qualify them for Medicaid LTC benefits.
Any studies documenting the use of private long-term care insurance or home equity conversion to fund long-term care in [State].
Insurance commission regulations bearing on long-term care insurance.
Data on home ownership and home equity of [State's] residents especially for the age 62+ cohort that could qualify for reverse mortgages.
Status of "LTC Partnership" take-up and implementation in [State].
LTC Comment: Private long-term care insurance gets more than its share of negative media coverage. So when a good, positive story comes out, it's worth highlighting. Such is our lead for today's LTC E-Alert . . .
6/5/2013, "LTC: Perfect gift for him, her & you," by Mike Causey, FederalNewsRadio.com
Quote: "Personal example: My mother was a long-time federal worker (HUD, HHS, Social Security and the U.S. Information Agency). She retired before the government offered LTC coverage. But as soon as they did, I urged her to sign up. She very reluctantly agreed, although like a lot of us, she didn't like to think about things like that. Anyhow, I thought I was doing her a favor. Turns out it was one of the biggest late-in-life gifts she could give to me. After being healthy as a horse and a big walker (she didn't learn to drive until her early 30s), as well as following a careful diet, she got dementia. We didn't know it at first, but it got worse. For the last couple of years, she had to be in a nursing home. She required watching and 'round-the-clock care. As her only child, I (with a very big assist from my kids and their spouses) was it! Thanks to her federal annuity, Social Security (she worked a long time in the private sector, too) and LTC, she had relatively few bills. Same for me. It was sad, it was trouble, it was awful (especially for her). But it could have been so much worse. She was able to stay in a great place (considering the situation) that was 20 minutes from me and her grandchildren. Thanks to LTC, the icing on the cake, she had a very good quality of life (considering the circumstances), and we weren't always sweating the money and quality of care."
LTC Comment: Congratulations to CEO Paul Forte and everyone associated with the federal LTC insurance program for this terrific publicity and for making one more LTC story have the happiest possible ending.
6/7/2013, "Fine Print and Red Tape in Long-Term Care Policies," by Tara Siegel Bernard, New York Times
Quote: "One of the big reasons people buy long-term care insurance is to avoid burdening a spouse or grown children when they can no longer care for themselves. But some family members are shouldering another type of burden: one that involves piles of paperwork and repeated phone calls, as they are forced to navigate a labyrinth of requirements to collect benefits that the insured spent many years paying."
LTC Comment: Thank goodness the alternative—applying for Medicaid benefits—is so efficient and unburdensome. Not!
6/6/2013, "Genworth To Eliminate 400 Jobs," InsuranceNewsNet.com
Quote: "Genworth Financial, Inc. (NYSE: GNW) today announced an expense reduction plan as it continues to work on improving the operating performance of its businesses. This plan will eliminate approximately 400 positions, including 150 open positions that will not be filled, and will reduce related information technology and program spend. When fully implemented, the company expects to realize approximately $80 to $90 million in annual pre-tax expense savings primarily related to these actions."
LTC Comment: The private LTCI industry struggles to adapt with premium increases and expense reductions while the public LTC programs continue to ignore financial reality and the Fed supports bad fiscal policy with near-zero interest rates. When will this bubble pop?
6/7/2013, "CMS crackdown doubles Medicare removals," by Tim Mullaney, McKnight's LTC News
Quote: "The Centers for Medicare & Medicaid Services has removed 14,663 healthcare providers and suppliers from the Medicare program in the last two years, the agency announced Thursday. The figure more than doubles the number of removals from the prior two-year period."
LTC Comment: Government is much more proficient at giving money away than it is at preventing fraud or recovering mis-appropriated funds. Profit motive and competition compel private companies to monitor spending more carefully in the first place and to correct abuses by employees or customers quickly and efficiently.
6/6/2013, "Feds settle first genetic discrimination lawsuit," by Keith R. McMurdy, Employee Benefit Adviser
Quote: "Plans may not request or require individuals or their family members to undergo genetic testing or to provide genetic information. As defined in the law, genetic information includes family medical history and information regarding individuals' and family members' genetic tests."
LTC Comment: Forbidding private insurance to use genetic information in underwriting invites abuse of the same information by insureds, increases adverse selection, and undercuts actuarial analysis.
6/4/2013, "Timely Long Term Care Insurance Option Reduces Coverage Costs," by Jesse Slome, WSJ press release: "The Wall Street Journal news department was not involved in the creation of this content."
Quote: "'The Guaranteed Purchase Option (GPO) allows more people to buy coverage they can afford,' explains Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI). 'You lock in meeting the required good health qualifications along with the advantage of lower rates, plus you still have the ability to increase coverage in future years -- an extremely attractive combination.'"
LTC Comment: Premium Elite Center member Sally Leimbach observed "Jesse is correct but consumers have to be careful that their state will allow that [Guaranteed Purchase Option] as Partnership Qualified. Most of those options go away if not exercised and when a person goes on claim. Still better then nothing, but consumers MUST receive the full pros and cons from their broker to make a fully informed decision."
6/3/2013, "Baby boomers are killing themselves at an alarming rate, raising question: Why? [link]," by Tara Bahrampour, The Washington Post
Quote: "It has long held true that elderly people have higher suicide rates than the overall population. But numbers released in May by the Centers for Disease Control and Prevention show a dramatic spike in suicides among middle-aged people, with the highest increases among men in their 50s, whose rate went up by nearly 50 percent to 30 per 100,000; and women in their early 60s, whose rate rose by nearly 60 percent (though it is still relatively low compared with men, at 7 in 100,000)."
LTC Comment: "(I hope I die before I get old (Talkin' 'bout my generation))."
5/31/2013, "Congressional Long-Term Care Panel Will Finally Meet, But Odds For Success Are Worsening [link]," by Howard Gleckman, Forbes
Quote: "The other controversy focused on whether wealthy people artificially dispose of or hide assets in order to become eligible for Medicaid. Stephen Moses frequently makes this claim and he did again on Friday based on what he says are interviews with state Medicaid officials. Unfortunately, Mark echoed this claim. However, many studies, including a new one by Josh Wiener, tell a different story. The vast majority of those who enroll in Medicaid long-term care never had much in the way of assets, and thus had very little to give away. While it is true that some people abuse the system, the evidence is pretty clear: The problem is much smaller than Stephen and Mark assert."
LTC Comment: Apparently Mr. Gleckman drifted off when I explained how basic Medicaid eligibility and Medicaid planning in general, not simply asset transfers, explain why the affluent get as many benefits from the welfare program as the poor, as established by a Chicago Fed study. Thankfully, C-SPAN covered the event live and the video is archived on AEI's website so please do watch and reach your own conclusions: http://www.aei.org/events/2013/05/31/long-term-care-markets-or-mandates/.
5/31/2013, "Dementia Risk Raised 35% by General Anesthesia in Study," by Kristen Hallam, Bloomberg
Quote: "Older people who undergo general anesthesia for major surgery have a 35 percent higher risk of developing dementia later in life, according to a French study."
LTC Comment: One more factor to underwrite?
5/31/2013, "Medicare Trust Fund's Life Extended, But What Does It Really Mean?," by Mary Agnes Carey and Kaiser Health News, PBS News Hour
Quote: "Slower growth in spending is helping extend the life of Medicare's hospital trust fund to 2026, two years beyond last year's estimate, officials said Friday. They also reported, however, that Social Security's disability trust fund, which pays monthly benefits to disabled workers and their families, is expected to be exhausted by 2016. Social Security will begin to run out of money in 2033, nearly the same time frame as predicted last year."
LTC Comment: You could call the Medicare news "good" except that all the money in the "trust fund" has already been borrowed and spent by the government. Hardly encouraging, yet the media coverage of this development was mostly cheerful!
5/31/2013, "Using your Health Savings Account for Long-Term Care," by Ann G. Schnorrenberg, US News & World Report
Quote: "Health savings accounts are one of the most tax favored savings vehicles available to Americans. Since they are completely tax free — funded with pre-tax dollars and not subject to taxes at withdrawal —they are a great way to save money for future medical costs. In particular, the HSA could be a good way to help cover long-term care costs."
LTC Comment: "[A]n HSA (health savings account) is an account established to pay for qualified medical expenses, including qualified long term care costs and long term care insurance premiums. Contributions and withdrawals are tax-free for qualified expenses." Source: The Federal LTC Insurance Program.
5/31/2013, "SNF margins cut in half, Alliance report says," by Tim Mullaney, McKnight's LTC News
Quote: "With income margins decimated by Medicare and Medicaid cuts and access to capital strangled, skilled nursing facilities will be unable to care for the nation's booming senior population unless changes are made, according to a new report from the Alliance for Quality Nursing Home Care."
LTC Comment: The fiscal walls are finally closing in on government-financed long-term care.
5/30/2013, "Coping With Alzheimer's: A Mother and Daughter Portrait Of Long-Term Care [link]," PBS
Quote: "After being diagnosed with Alzheimer's, professional artist Mary Wyant slowly lost her ability to paint and the ability to take care of herself. Ray Suarez examines the story of Mary and her daughter Rebecca, who is now her mother's legal guardian and primary caretaker, about the daily struggles of long-term care."
LTC Comment: The following note from Center member B.J. Randolph inspired us to find and share this item: "Did you see the evening PBS news? A great video of a 48 year old daughter caring for her mother with Alzheimer's Disease, for years, to illustrate a message, '70% of 65 year olds will need care ..... but the majority has not made plans for it .....' It was a lengthy part of the news ... well done. I was both touched and hopeful that LTC was reaching a national audience on this respected program and that the subject is emerging more and more into the light of day."
5/30/2013, "Variation In Medicare Costs Is Mainly Due To Post-Acute Care," by Peter Ubel, Forbes
Quote: "If we want to control Medicare spending, this analysis suggests we need to focus our efforts on post-acute care. Our obsession with hospital costs and physician bills may be misplaced. It could be time to look much more closely at things like the nursing home industry, the home healthcare industry, and places that specialize in long-term care. Not quite as sexy as those other topics. But worrying about sexy doesn't help us control healthcare spending!"
LTC Comment: More proof rational LTC financing policy is critical and could produce major savings.
5/30/2013, "Debt of the Elderly: Housing: Debt payments as a percentage of income steadily rising [link]," by Craig Copeland, Ph.D., Life & Health Advisor
Quote: "As described in more detail below, debt levels of the current elderly and near-elderly are at much higher levels than they have been for past generations. Among families with heads age 75 or older, both housing and consumer debt levels increased in 2010. Moreover, for this cohort, a larger percentage had debt levels above the threshold considered problematic. While a high debt level is not necessarily a sign of financial danger for all elderly or near elderly families (especially if they are also high-income), housing debt (typically the most financially significant asset elderly families have) is of particular concern, because leveraging it at this point in their lives may leave them without a major resource to finance an adequate retirement."
LTC Comment: This finding is worrisome especially because tapping home equity to fund LTC privately and to encourage the purchase of LTC insurance is just about the only hope government has to save Medicaid as a long-term care safety net.
5/29/2013, "SSA Representative Payee Program: Addressing Long-Term Challenges Requires a More Strategic Approach [link]," Government Accountability Office
Quote: "Although changing demographics and resource constraints will challenge the future administration of the Representative Payee Program, SSA has done little to position itself for the long term. The projected growth in the aged population, as well as the incidence of individuals with dementia, will have implications for the program, as SSA will have to spend more resources finding and monitoring payees. These challenges are exacerbated by staff and resource constraints, which could make SSA less able to identify and address payee benefit misuse."
LTC Comment: Abuse of Social Security by representative payees is a major problem for LTC providers. Frail or infirm elderly on Medicaid must contribute most of their income toward their cost of care, including their Social Security benefits. But payee reps, often the same people who take early inheritances to put their parents on Medicaid, sometimes keep the Social Security checks for themselves. Federal and state Medicaid programs usually do nothing to help recoup such funds. They leave the responsibility to collect in the hands of LTC providers who are already receiving less than the cost of care from Medicaid. Losing the Social Security income too adds insult to injury and is one more reason why LTC providers are struggling and publicly financed LTC has a quality problem.
5/29/2013, "Genworth Down to Underperform," Nasdaq
Quote: "Life insurance sales slipped 68% year over year, while long-term care insurance sales decreased 17% year over year. In addition, loss ratios of long-term care insurance business have been increasing over the past several years and ranged from 65% to 71% over the last five years."
LTC Comment: Lower lapse rates and higher loss ratios make a double whammy.
5/29/2013, "Health Differences May Explain Medicare Spending Variation," by Jordan Rau, National Public Radio
Quote: "The idea that uneven Medicare health care spending around the country is caused by wasteful practices and overtreatment — a concept that has influenced portions of the federal health law — took another hit in a study published Tuesday. The analysis concludes that differing levels of health of people around the country explain between 75 percent and 85 percent of cost variations in Medicare. 'People really are sicker in some parts of the country,' said Dr. Patrick Romano, one of the authors.'"
LTC Comment: Just as the alleged $70 billion savings from CLASS disappeared in the light of good analysis, so too is another dubious health-reform money saver proving baseless. There simply are not billions of dollars to be saved by standardizing Medicare's service delivery.
5/28/2013, "Boomers: Older, Wiser and... Worried," by Gail Buckner, FoxBusiness
Quote: "Now, a recent study by Merrill Lynch and the demographic experts at Age Wave indicates that as boomers are moving into the next stage of their lives, their priorities are coming into sharper focus. And their attention is not about having a fat 401(k). There is fear of the unknown, such as how healthy they or their spouse will be. A shockingly-high number of boomers- 90%- say they are not confident they will be able to afford they health care they might need. They've mixed feelings about living longer. They're worried about running out of assets and concerned that Social Security and pension benefits they are expecting might not be there."
LTC Comment: Consumers are worried, yes, but most fail to act. Could it be that eight decades of social insurance programs--which spread but don't price risk--created a sense of entitlement that undercuts personal responsibility?
5/28/2013, "Senior health care crisis looms; report ranks states," by Michelle Healy, USA Today
Quote: "An aging nation that's living longer but with growing rates of obesity, diabetes and other chronic diseases points to an emerging health care crisis, says a report out Tuesday that analyzes seniors' health status state-by-state. . . . LONG-TERM CARE: Investigate your options early."
LTC Comment: The evidence mounts as dependably as consumers and policy makers ignore it.
5/24/2013, "Sequestration 2.0 likely to take another bite out of provider payments," by John O'Connor, McKnight's LTC News
Quote: "For many long-term care providers, dealing with funding cuts that began in March has amounted to making the best of a bad situation. Automatic sequestration cuts are trimming Medicare payments by 2%, while many complementary programs are being held back or halted. That's the bad news. The really bad news is that things are likely to get worse. Thanks to pending sequestration cuts that are beginning to look all but inevitable, more cuts may be coming."
LTC Comment: Historically, when government cuts LTC provider rates, providers compensate by raising private-pay rates, which increases the incentive for people to qualify for public financing. It's a vicious downward cycle ruining quality care while discouraging responsible LTC planning.
LTC Comment: When Medicaid pays for expensive LTC without recovering from estates, it subsidizes irresponsibility and hurts the poor. Details after the ***news.***
*** SILVER BULLET IN VIRGINIA. I write this in the Silver Bullet of Long-Term Care with rain pattering on the aluminum roof. I'm in Richmond, Virginia to begin a study of Medicaid and long-term care financing for the Thomas Jefferson Institute for Public Policy, the Commonwealth's leading non-partisan think tank. From here, I'll head to New Jersey and later to Georgia to conduct the same studies. In the meantime, we're keeping a close eye on LTC public policy developments in Washington, DC including the new LTC Commission's slow start. ***
*** LTC COMMISSION. The new study group has a huge task, a short time frame, a late start and little or no budget. Nevertheless, there is a propitious beginning to report. Mark Warshawsky, Ph.D. wrote an excellent paper titled "Questions for the New Federal Commission on Long-Term Care." Tap the link and read it in the LTC Discussion Group's archives. You won't be disappointed. And don't miss the American Enterprise Institute's panel discussion of Warshawsky's paper ("Long-term care: Markets or mandates?") which was covered live by C-SPAN and is available on AEI's website for viewing here. Hear my 15-minutes of commentary at the 1:32:44 (one hour, 32 minute, and 44 second) point in the program. Controversy erupted after the program when two panelists privately challenged my assertion that IRAs are exempt for purposes of determining asset eligibility for Medicaid LTC. My position proved correct when the question was put to an expert on the subject of SSI eligibility. ***
*** "TRUST FUND MADNESS" is the Washington Post's hook to Bob Samuelson's column titled "Trust funds are least of Social Security, Medicare problems." If you read any of the many good-news columns about alleged improvements in the Social Security and Medicare "trust funds," you should read Samuelson's rebuttal which puts the lie to such Panglossian nonsense. ***
LTC Comment: The Center for Long-Term Care Reform has published a new report titled "Maximizing NonTax Revenues from MaineCare Estate Recoveries." It explains the need for estate recoveries, recounts best practices from leading estate recovery states, recommends 20 actions MaineCare (Maine's name for Medicaid) should take to increase recoveries, and includes an annotated bibliography of publications both for and against estate recovery. We thank the Maine Heritage Policy Center and the Maine Health Care Association for their support of this work. Check out the report here: http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf. "Read the Executive Summary" below. But first some background:
The DHHS Inspector General's 1988 report titled "Medicaid Estate Recoveries," which I wrote by the way, made three major recommendations:
Federal law (OBRA '93) implemented all three of those recommendations creating what has been called a "government-sponsored home equity conversion program." The plan was that Medicaid would retain its huge asset exemptions so that people stricken by the chronic illness of old age would not be forced into poverty, but neither would they be rewarded for failing to save, invest or insure for long-term care.
On the way from federal legislation to nationwide implementation, however, the plan went awry. State Medicaid programs didn't implement strongly, the federal government didn't enforce aggressively, the media didn't report, and the public remained unaware and hence uninfluenced by the positive incentives in the law to plan for LTC.
Two decades later, Medicaid coverage for LTC expenses remains easy to obtain without spending down, most states do not utilize liens to secure exempt property, and estate recoveries—though mandatory—remain spotty. Consequently, Medicaid continues to discourage responsible LTC planning, rewards failure to plan for LTC, and therefore crowds out both privately financed home and community-based care and private LTC insurance to pay for care.
Bottom line, Medicaid LTC financing remains a quagmire of perverse incentives and unintended consequences that will get much worse as the baby-boom generation retires and finally needs LTC in big numbers. So, what does our new report have to say about the situation as it is manifested in Maine and the eight other leading states we reviewed?
Executive Summary from "Maximizing NonTax Revenue from MaineCare Estate Recoveries":
MaineCare is Medicaid in Maine, a means-tested public assistance program, partially funded by the state and federal governments. It is the dominant payer for institutional and home and community-based long-term care in the state.
MaineCare, especially its long-term care component, is a huge expense to the state budget, at risk of crowding out expenditures for other critical state programs, facts explained and documented in our earlier report titled "The Maine Thing About Long-Term Care Is that Federal Rules Preclude a High-Quality, Cost-Effective Safety Net."[1]
Federal law exempts substantial assets from Medicaid's resource limits, such as for example, home equity up to a minimum of $536,000. But federal law also mandates that state Medicaid programs recover the cost of care provided from the estates of deceased recipients or from the estates of their surviving exempt relatives.
Thus, although Medicaid is intended as a health and long-term care safety net for the poor, it has also become the predominant funder of most expensive long-term care for the middle class and often for the affluent as well. Without strong estate recovery, state Medicaid programs become free inheritance insurance for baby-boomer heirs.
MaineCare operates an inexpensive and quite effective estate recovery program that returns an average of $6.7 million per year in state and federal funds to the state which can be re-invested in the program to benefit citizens who need help with the catastrophic cost of long-term care in the future.
By interviewing experts in eight of the leading Medicaid estate recovery states, we identified numerous ways in which MaineCare might increase its estate recoveries by as much as double or triple the amount of current recoveries to a total of $13.4 million or $20.1 million, respectively.
To achieve such dramatic results, MaineCare would need to seek new state statutory authorities such as an expanded definition of "estate," the ability to place liens on real property during a recipient's lifetime, and elimination of the current "family allowance" which prevents recovery from estates with less than $10,000 in most cases.
Operationally, MaineCare would need to invest more in its estate recovery unit to reduce its cost-effectiveness ratio from $25 in recoveries for each dollar of cost to something more closely approaching a ratio that maximizes total recoveries, perhaps $10 to $15 in recoveries per dollar of cost. With additional staff resources, the MaineCare estate recovery unit could pursue all of the best practices listed in the "Recommendations" section below.
MaineCare's long-term care program performs a valuable service for Mainers, enabling them to obtain expensive long-term care when they need it without financial devastation. The program's federally mandated quid pro quo is that beneficiaries of the state's and federal government's largesse repay the program from their estates.
That is the moral high ground MaineCare's estate recovery program occupies. Citizens, policy makers and law makers who support and encourage the program help to ensure that MaineCare will continue to provide a long-term care safety net for Mainers without busting the state's budget.
[1] Stephen A. Moses, "The Maine Thing About Long-Term Care Is that Federal Rules Preclude a High-Quality, Cost-Effective Safety Net," Center for Long-Term Care Reform, Seattle, Washington, November 2012; http://www.centerltc.com/pubs/Maine.pdf.
LTC Comment: Good public policy comes down to asking the right questions. Finally, someone has and we'll provide the right answers after the ***news.***
*** A VERY THOUGHTFUL PAPER written by an appointee to the new LTC Commission inspired today's LTC Bullet. Tomorrow (Friday) morning, you can watch online as its author presents the paper and five experts discuss it. We highlight this opportunity because it promises to be a very enlightening program and well worth anyone's time who cares about LTC financing policy. The details follow. ***
*** AMERICAN ENTERPRISE INSTITUTE (www.AEI.org) presents "Long-Term Care: Markets or Mandates?" on Friday, May 31, 2013 from 9:15 a.m. - 11:15 AM Eastern Time at AEI headquarters in Washington, DC. LTC Commission appointee Mark Warshawsky will "explain the implications of another publicly funded long-term care insurance program. A panel will then debate whether another government program is the best way to ensure that families can afford to provide the necessary services for their aging loved ones." Serving on the panel with Steve Moses (representing the market-based position) are Howard Gleckman (who writes op-eds for Forbes), Joshua Wiener (a widely-published LTC analyst who favors public financing) and Matt Salo (Director of the National Medicaid Directors Association). AEI's highly regarded analyst Joe Antos will moderate the program. If you can't be there in person, check out the live stream here or catch it later in AEI's archives where the full video will be posted within 24 hours. For more information, please contact Catherine Griffin at firstname.lastname@example.com, 202-862-5920. ***
LTC Comment: When it was announced, no one—I among them—held out much hope for the new "LTC Commission," created by the oxymoronically named American Taxpayer Relief Act of 2012. But the first output to come from one of the new commission's members has me thinking more positively.
Mark J. Warshawsky, Ph.D., who served as Assistant Treasury Secretary for Economic Policy in the G.W. Bush administration, has written a paper titled "Questions for the New Federal Commission on Long-term Care to Address Prior to Legislative Recommendations." He's definitely asking the right questions, as few scholars have, so do click the link and read his paper. Your time will be amply rewarded.
But right now let's play a little "LTC Jeopardy." As on the TV quiz show, we'll supply the answers and then see which of Dr. Warshawsky's questions they resolve. Because our answers contradict much of the conventional academic wisdom about LTC financing, I think you'll see why we're so excited someone's finally asking the critical questions that only our analysis can explain.
We'll close with a final "LTC Comment" that resolves once and for all the puzzling conundrums raised by Warshawsky's paper. Ready contestants? Here goes.
Answer #1: Well-intentioned but counterproductive public policy, which pays for most expensive long-term care without requiring strict financial eligibility limits, has anesthetized the public to LTC risk and cost resulting in their failure to plan, save, invest or insure and guaranteeing a ever-worsening financial crisis as the Age Wave crests.
MJW's Questions: "What has caused this rapid growth in LTC spending? . . . What role is played by the creation of government funded social insurance and welfare programs? Other factors? Will the rapid growth continue into the near future? The next twenty to thirty years? Over the horizon used by the Trustees of the Social Security and Medicare programs?" (p. 3)
Answer #2: Despite decades of wishful thinking by academics and policy makers, providing home care financed by public programs without limiting eligibility to people in financial need does not save money compared to institutional care because home care loses the economy of scale, is very expensive to control for quality, crowds out free family care, invites fraud, encourages Medicaid gaming/dependency, and discourages private LTC planning and personal responsibility.
MJW's Questions: "In light of a reported trend in up-coding as well as recent discoveries of outright fraud on Medicare arising from the home health care industry, is growth in this component of spending a source of concern? Can home health care be an efficient replacement of nursing home services, saving the government money, or does it replace free care provided by families and friends and volunteers?" (p. 3)
Answer #3: Decades of easy access to publicly funded long-term care through Medicaid, Medicare and the VA has left those programs shackled with trillions of dollars of unfunded liabilities and hopelessly unable to meet the claims of future beneficiaries.
MJW's Questions: "In light of the well-established tendency (commonly called moral hazard) for insurance provision to encourage over-spending, is this shift in the sources of funding for LTC [from mostly private to mostly public] efficient, both in terms of government spending and outcomes? . . . How significant is growing LTC spending in Medicare's long-standing and deepening deficits and its poor future prospects? . . . How significant are the absence of look-back periods and other constraints on program eligibility for the growth in spending by the VA on LTC? . . . Combining all sources of federal government spending on LTC, and taking a Trustees long horizon approach to evaluating the sustainability of spending and financing, what is the long-term projected status of current law federal government support of LTC?" (p. 4)
Answer #4: Asset shifting, or more generally Medicaid planning, is a problem, but the far bigger problem, rarely recognized by analysts including Warshawsky, is that Medicaid LTC eligibility is easy for most middle class people to obtain because income is rarely an obstacle and virtually unlimited assets are exempt.
MJW's Questions: "What is the empirical evidence on asset shifting to gain Medicaid eligibility for LTC services? How strong is state-level enforcement of these rules, including collection efforts? What are the administrative systems in place to police compliance with these rules?" (p. 5)
Answer #5: Because of Medicaid's generous income and asset eligibility rules, people can ignore the risk of LTC, wait to see if they ever need expensive long-term care, and if they do, qualify easily for the program's most expensive benefit. That's been true since Medicaid began in 1965, so it's no surprise that most aging Americans don't make LTC planning or insurance a priority.
MJW's Questions: What is the evidence, empirical or logical, that the Medicaid crowd-out explanation for the (growing but still) relatively moderate size of the private LTC insurance market is the (largely) correct one? (p. 5)
Answer #6: The fact that affluent people get as much or more Medicaid LTC benefits as poor people is only hard to understand if you assume incorrectly—as most scholars do, including those whose Chicago Fed paper Warshawsky cites—that Medicaid forces people to spend down into impoverishment unless they "shift assets." It doesn't.
MJW's Questions: "In particular, does the empirical finding that the well-to-do and long-lived qualify for Medicaid to a surprisingly high degree imply that significant asset transference activity is taking place, or, alternatively, that these households are inadequately protected financially for longevity?" (p. 5)
Answer #7: Public information programs about the need to plan for LTC have little effect because they invariably claim that catastrophic asset spend down awaits victims of long-term illness which is not true because public financing is factually easy to obtain and the public simply doesn't take such scary "education" seriously.
MJW's Questions: "How economically significant are the survey results of public confusion about government program coverage for LTC. That is, does lack of knowledge account for why there is not more saving and insurance provision among those for whom advance planning may be possible and sensible (middle class population and above)? If this explanation is important, what are its implications? In particular, can public information campaigns or private marketing help alleviate the knowledge gap?" (pps. 5-6)
Answer #8: The LTC Partnership Program only increases LTC insurance sales marginally because forgiveness of the alleged Medicaid spend down requirement, which hardly exists in the first place and likely wouldn't occur until decades after purchase of a partnership policy, is little incentive to plan or buy. By targeting Medicaid LTC benefits to people most in need, public policy could unleash an enormous source of new private financing for LTC from home equity conversion and private LTC insurance, which would finally be in demand.
MJW's Questions: "Do partnership policies save or cost the government (state and federal) money? Do they expand the LTCI market beyond what it would be otherwise in a leveraged way, for example, through marketing of partnership policies, thereby increasing public knowledge of the limits and deficiencies of public insurance? In the current low inflation environment, is the 5% automatic increase feature for partnership policies still a reasonable requirement? Are there other non-insurance private sources of individual funds of LTC spending whose accumulation can be encouraged? Can Medicaid and Medicare be better structured to incent the wider use of private insurance and/or personal savings accumulated over a working lifetime for LTC?" (p. 6)
LTC Comment: Okay, enough with Jeopardy. Let's put the Qs & As back into the normal order. In a nutshell, Mark Warshawsky's paper asks the following questions either explicitly or by implication:
If people can't get government-financed long-term care without spending down their life's savings into total impoverishment, then . . .
The answers to all these questions and many more turn on correcting the fallacious premise that most analysts assume, i.e. that "people can't get government-financed long-term care without spending down their life's savings into total impoverishment."
Here are the facts:
But here's the good news: if we just stop doing what we've always done (giving away free LTC after people need it), we'll stop getting the same result (exploding public costs, complacent consumers, and minimal private LTC financing). That's the formula for sane public policy.
And even better news: it won't be hard to do. Drop the federal home equity exemption from its current stratospheric level to something closer to England's $36,000 exemption (for all assets including home equity); eliminate the "Maintenance of Effort" requirement in ObamaCare so that state Medicaid programs can tighten LTC eligibility rules within existing federal limits; and encourage state experimentation with tighter financial limits and stronger estate recovery programs designed to encourage early and responsible LTC planning.
Do those things and the puzzling conundrums raised by Mark Warshawsky's excellent paper will disappear like morning mist in the hot summer sunshine.
Columbus, OH—
LTC E-Alert #13-017: Hybrids vs. Traditional LTCI and LTC News and Comment
LTC Comment: Thanks to Bronze Corporate Member Rick Leonard, President of Long Term Care Resources, for this thought-provoking query:
"Most of the LIMRA and other studies we see on individual LTC sales never account for hybrids like TLC and Moneyguard. There are now numerous other Life policies that have LTC riders and these sales are not tracked.
"As I look at this, I consider every one of these hybrid or Life w/ LTC rider sales to be an LTC sale. It may not provide the coverage of traditional LTC but the in the customer's mind – the LTC issue has been solved. The Life agent is selling it that way in a lot of cases and even if the limitations are explained to the consumer, they have checked off the box for having LTC coverage. They are not replying to any direct mail letter we send them or any other solicitation from an LTC Advisor.
"So, under this view point, the year over year sales on LTC may look drastically different and the market penetration as well. Have you seen any data that includes any hybrid or Life w/rider sales data?
"Thanks for your help.
Rick Leonard President Long Term Care Resources
"PS With a $50,000 average premium, this would convert to $70 million or more in LTC premium. The actual people planning for LTC could look very different than traditional LTC sales. Life distribution far outpaces traditional LTC sellers."
We replied:
"According to Broker World's "2012 Long-Term Care Insurance Survey" authored by Claude Thau & Dawn Helwig & Allen Schmitz and published in the July 2012 issue:
"'Life/LTCI and annuity/LTCI products (referred to as hybrid, combination, linked or asset-based products) continue to become a larger factor in long term care planning, accounting for more than $1.5 billion in single premium sales in 2011. These products are attractive because benefits are certain to be received; pricing has been more stable than for past stand-alone LTCI policies; and certificates of deposit have low yields. These products may supplement stand-alone LTCI. If interest rates rise sharply in the future, there may be an avalanche of 1035 tax-free exchanges to hybrid annuities.'"
Query: Do hybrid policy sales crowd out traditional LTCI?
5/24/2013, "AALTCI: Average age of life-LTC insureds drops," by Allison Bell, LifeHealthPRO
Quote: "The percentage of male buyers who are under age 65 increased to 56 percent in 2012, from 53.5 percent in 2011. The percentage of female buyers who are under age 65 increased to 53.5 percent, from 50 percent. . . . [T]he approval rate for consumers who applied through agents affiliated with the firm fell to about 65 percent in 2012 and 2013, from about 81 percent from 1999 through 2011."
LTC Comment: Makes sense: younger people are buying LTCI as coverage rejections increase.
5/24/2013, "Senior panel to consider LTCI model update," by Allison Bell, LifeHealthPRO
Quote: "The Senior Issues Task Force, an arm of the National Association of Insurance Commissioners (NAIC), has put proposed changes to the NAIC's LTCI model regulation and a proposed model LTCI rate increase bulletin on the agenda for a two-day LTCI meeting."
LTC Comment: Beware! The regulators are at it again.
5/24/2013, "How Growth of Elderly Population in U.S. Compares With Other Countries [link]," by Francesca Colombo, PBS News Hour
Quote: "By 2050, more than 32 million Americans will be over the age of 80, and the share of the 80-plus generation will have doubled to 7.4 percent. Across the 34 OECD countries, the share of people over the age of 80 is projected to grow even faster, from 4 percent today to almost 10 percent in the same time period. While more and more elderly people will still enjoy active, healthy lives and contribute to society, many are likely to have at least one chronic condition. Today, three out of four Americans aged 65 years and older have to cope with health concerns such as cardiovascular disease, diabetes, cancer or chronic respiratory diseases."
LTC Comment: The OECD countries face even greater challenges from the age wave than we do. But our problem is bad enough. Complacency is very dangerous both for individuals and for public policy makers.
5/23/2013, "New York Long Term Care Insurance Partnership Costs Too Much for Many [link]," by Jesse Slome, Kansas City InfoZine
Quote: "The high cost for New York Long Term Care Insurance Partnership policies make far more affordable options well worth considering today according to the head of the American Association for Long-Term Care Insurance."
LTC Comment: What LTC Partnerships give in Medicaid spend down forgiveness, they too often take away with mandated benefits that make the coverage unaffordable.
5/23/2013, "Healthy, Retiring Rapidly and Collecting Social Security: The MetLife Report on the Oldest Boomers [link]," MetLife Mature Market Institute
Quote: "Now turning 67 years old, the first set of Baby Boomers, those born in 1946, continue to be myth-busters, according to a new study, Healthy, Retiring Rapidly and Collecting Social Security: The MetLife Report on the Oldest Boomers. The data, from the company's MetLife Mature Market Institute, says the earliest Boomers aren't necessarily "working 'till they drop," as was predicted." Source: http://www.lifehealth.com/oldest-boomers-are-retiring-at-a-quick-rate/
LTC Comment: Find the MMMI study here. Highlights: "Long-term care rose to the top of the list of retirement concerns; 31% reporting concern about providing for themselves or their spouses."
"Despite the fact that they are worried about long-term care, just under a quarter owns private long-term care insurance."
5/22/2013, "Stroke Costs to Double by 2030, Groups Say," by Crystal Phend, MedPage Today
Quote: "The rising prevalence of stroke in an aging population is likely to more than double the cost of stroke care over the next two decades, the American Heart Association and American Stroke Association warned."
LTC Comment: A datum that should open aging eyes to the need for LTCI.
5/22/2013, "How can we fix long-term care insurance?," by Alicia H. Munnell, WSJ MarketWatch
Quote: "My colleagues and I really like the idea of a catastrophic policy with the premiums paid up front. That is, the product would pay benefits only after the individual had paid for, say, 18 months of nursing home care - about $120,000. This arrangement would change an unbounded black hole of an expense into a known quantity. Moreover, the premium for this benefit would be relatively modest and could be paid in a single lump sum at retirement so that people would not worry about premium costs climbing as they age. The hope would be that once people felt like they understood the dimensions of their exposure to long-term care costs, they would feel more comfortable about spending their 401(k) balances and tapping their home equity."
LTC Comment: A smart government would grant above-the-line tax deductibility to such a policy in a heartbeat, because it would translate into massive, easily documented Medicaid savings many times the cost of the deduction. That's because the biggest expense to Medicaid is long-term institutional care. The average period of time from onset to death in Alzheimer's Disease is eight years.
5/22/2013, "Why Baby Boomers Need To Get Real About Health and Long-Term Care Costs In Retirement [link]," by Howard Gleckman, Forbes
Quote: "That collapse in assets, driven by both medical and long-term care costs, may partially explain why so many nursing home residents end up on Medicaid. As Josh Wiener found in his recent study, the vast majority of those who became eligible for Medicaid long-term care benefits never had much to start with."
LTC Comment: If that alleged "collapse in assets" were really happening, LTCI would be flying off the shelves. But Medicaid co-opts most LTC spend down by paying for the vast majority of all high LTC costs, especially for middle-class and affluent people. Both the author of this article and the researcher he cites will be on a panel with me at the American Enterprise Institute on May 31. Check "events" at www.aei.org for details, http://www.aei.org/events/2013/05/31/long-term-care-markets-or-mandates/ They'll stream the event and archive it too. It should be a fascinating discussion.
5/22/2013, "Medicare Nixes Coverage For New Cancer Tests," by Scott Gottlieb, M.D., Forbes
Quote: "Medicare has sharply changed the way it pays for diagnostic tests, cutting payment rates and curtailing coverage for some new tests altogether. The makeover in the way that Medicare reimburses molecular diagnostics has been foreshadowed for years, but was abruptly put into effect this summer."
LTC Comment: Significance for CI insurance?
5/22/2013, "Recession not entirely at fault for retirement crisis," by Teck Lim, Employee Benefit Adviser
Quote: "The economic recession may have sparked a retirement crisis in America, but other significant factors played a role in the derail. On average, retired and pre-retired Americans reported to have lost $117,000 in retirement savings due to unanticipated events, according to a survey conducted by Ameriprise Financial in February."
LTC Comment: Long-term care is a major retirement "derailer," but it goes unmentioned in this article.
5/21/2013, "Pensions Are Top Income Source for Wealthier U.S. Retirees; Social Security top source for less wealthy retirees [link]," by Jeffrey M. Jones, Gallup Economy
Quote: "Specifically, 62% of retirees younger than age 70 say Social Security is a major source of retirement funds for them, compared with 61% of retirees aged 70 or older. Thirty-six percent of both age groups say pension plans are a major source of retirement income. In fact, the only noticeable difference between younger and older retirees comes in the extent to which they rely on 401(k) plans or IRAs, with older retirees more likely to cite these as a major source of retirement funds."
LTC Comment: Any port in a storm, but Social Security is a weak vessel in the coming demographic tsunami.
5/21/2013, "Wealthy Unprepared for Long-Term-Care Costs," by Teck Lim, Financial Planning
Quote: "Of the 711 high-net-worth adults with over $3 million in investable assets surveyed, 47% have created a financial plan to address long-term care needs that they and their spouse or partner might need, but only 18% have a financial plan that accounts for their parents' long-term care costs."
LTC Comment: Maybe that's because public policy incentivizes adult children to ignore LTC risk and cost for their parents, take an early inheritance if LTC needs arise, and put the parents in a nursing home on Medicaid.
5/21/2013, "SNFs could see 50% payment reduction for Pre-Existing Condition Insurance Plan claims [link]," by Tim Mullaney, McKnight's LTC News
Quote: "The PCIP program was created as part of the Affordable Care Act in 2010. It was designed as a stop-gap program for people with pre-existing conditions, so that they could get healthcare coverage before the ACA takes full effect in 2014. At that time, most insurers will no longer be able to deny coverage or charge high premiums due to pre-existing conditions."
LTC Comment: Another federal bait and switch. Promise consumers free services, then refuse to pay providers to supply it.
5/20/2013, "Too young for long-term care insurance?," by Bill Losey, WSJ MarketWatch
Quote: "The fact of the matter is that long-term care insurance is something that nearly all of us are going to need. Whether we spend our later years in a nursing home, an assisted-living facility or live them out in our own home, we are probably going to need some sort of care."
LTC Comment: No truer words were ever spoken.
5/19/2013, "HSAs cover critical illness insurance," by Joanne Wojcik, Business Insurance
Quote: "Critical illness insurance is one of a handful of supplemental health insurance policies that workers covered by high-deductible health plans linked with health savings accounts can purchase under Internal Revenue Service rules. . . . Besides critical illness, other types of insurance permitted with high-deductible health plans linked to HSAs are accident, disability, dental, vision and long-term care, as well as insurance that pays a fixed amount per day of hospitalization."
LTC Comment: This is one of those rare areas in which CI and LTCI get positive encouragement from public policy.
*** AMERICAN ENTERPRISE INSTITUTE (www.AEI.org) presents "Long-Term Care: Markets or Mandates?" on Friday, May 31, 2013 from 9:15 a.m. - 11:15 a.m. at AEI headquarters in Washington, DC. LTC Commission appointee Mark Warshawsky will "explain the implications of another publicly funded long-term care insurance program. A panel will then debate whether another government program is the best way to ensure that families can afford to provide the necessary services for their aging loved ones." Serving on the panel with Steve Moses (representing the market-based position) are Howard Gleckman (who writes op-eds for Forbes), Joshua Wiener (a highly regarded LTC analyst who favors public financing) and Matt Salo (Director of the National Medicaid Directors Association). If you can't be there in person, check out the program's live stream here. For more information, please contact Catherine Griffin at firstname.lastname@example.com, 202-862-5920. ***
*** PREMATURE LANDING. Last week's LTC Bullet, titled "How Will the LTC Plane Land?," included some of the top level results of a Delphi survey. The detailed report, including individual comments by survey participants, was explicitly embargoed, but LTC Bullets requested and believed we received permission to publish the top-level, summary findings. Evidently we misunderstood, as the directors of that study have indicated it was not their intent to permit any distribution of the results beyond the survey participants. We regret the error. Please disregard the report until it is released publicly. ***
LTC Comment: Once a week, usually on Fridays, we publish our LTC Bullet. The Bullets are often policy pieces, sort of like op-eds. You can always find the five latest Bullets here and archives of all 995 Bullets (so far), by date here and by topic here. These 1,000 articles are a valuable historical resource. Please make use of them. Search for key terms using Control-F on your keyboard.
This year, in celebration of this thousandth LTC Bullet and the Center's 15th anniversary (April 1), we are releasing a retrospective of the most interesting and dramatic LTC Bullets that we've published since the Center's founding in 1998. We'll highlight one Bullet per year in each of seven major topics: "The LTC Problem and Solutions"; "Reality Check: The Facts on LTCI"; "Medicaid Planning"; "LTC Services"; "Politics and Legislation"; "Demographics and Other Data"; and "CLTCR News."
Today's Bullet is our "Thousand Bullets Retrospective" Number 3 covering "Medicaid Planning." These "Medicaid Planning" Bullets address the impact Medicaid planning has on public programs and benefit recipients, the latest court and administration rulings and the effect on the marketability of private long-term care solutions. Read our summary and check out the original at the link provided. Enjoy this walk down memory lane.
October 23, 1998: LTC Bullet: Attorneys Promote Medicaid as Alternative to LTC Insurance [link]. "Elder law attorneys who specialize in Medicaid planning (i.e., transferring or sheltering assets in order to qualify clients for Medicaid's long-term care benefits) routinely defend their practice by arguing that LTC insurance is not an alternative for their clients. They publicly claim to be helping only those who cannot afford or otherwise qualify for insurance. But what are they telling each other? In the Fall, 1998 issue of the NAELA Quarterly (the journal of the National Academy of Elder Law Attorneys), Baird Brown, a fellow and member of NAELA, clearly portrays Medicaid as the preferred alternative to LTC insurance."
February 3, 1999: LTC Bullet: Perils of Medicaid. "A reporter from a prestigious financial planning publication contacted the Center for Long-Term Care Financing yesterday. She asked us to provide evidence that Medicaid nursing home care can be risky for consumers. Some Medicaid planning attorneys had told her that clients they artificially impoverish to qualify for the welfare program do not experience access and quality problems. We thought our readers would appreciate seeing the same evidence of potential Medicaid-related deficiencies gleaned from the gerontological literature that we provided to the reporter. That information follows."
August 15, 2000: Bill Gates on Medicaid? "Should Microsoft Chairman Bill Gates have Medicaid pay the bill if he ever needs long-term care? It makes sense 'if you follow the arguments of elder law attorneys to their logical conclusions,' says an Arkansas state official and critic of Medicaid planning. Here's the story:
The August 2000 issue of the trade journal Contemporary Long-Term Care contains an article entitled 'The Booming Business of Elder Law' by New Hampshire nursing home administrator David Irwin.
Perhaps you've heard us say: 'You can't sell apples (LTC insurance) on one side of the street when they're giving them away (Medicaid benefits) on the other.' Irwin's article shows that Medicaid planners are still dispensing plenty of the free fruit that gums up the long-term care insurance market.
Easy money for Medicaid planners means tough sales for responsible financial planners and insurance agents. Want to see what you are up against? Here are some excerpts [in this LTC Bullet]."
April 25, 2001: They're Baaaack . . . Medicaid Planners Rise Again. "Ever since Congress and then-President Bill Clinton nailed them with mandatory estate recovery (OBRA '93), "Throw Granny in Jail" (HIPAA '96) and "Throw Granny's Lawyer in Jail" (BBA '97), the Medicaid estate planning attorneys have laid low. Their conference agendas and publications carefully avoided the phrase "Medicaid estate planning." Even their highly publicized firebrands toned down the rhetoric considerably. Their trade association, the National Academy of Elder Law Attorneys (NAELA), plateaued at just under 4,000 members after skyrocketing for years. Of course, we know from following their actions—not just their words—that the actual practice of artificially impoverishing clients to qualify them for Medicaid hardly skipped a beat. Whether from shame or fear of prosecution, however, the Medicaid planning bar hunkered down in defensive mode for several years and didn't promote their services as loudly as before. That's all over now." [See also: They're Baaack, Part II: Frank Comments, They're Baaack, Part III: "Buy Cattle, Get Medicaid, They're Baaack, Part IV: "Abandon Your Spouse . . . Get Medicaid", They're Baaack, Part V: "A Person With $1 Million Is Not Wealthy" and They're Baaack, Part VI: "Medicaid for the Upper Crust".]
September 5, 2002: Medicaid Planning Full Disclosure. "LTC Bullets readers frequently send us examples of flyers and web sites promoting easy access to Medicaid nursing home benefits. Complaints about Medicaid planning are just as likely to come from state and federal welfare administrators as they are to come from insurance agents and financial planners. Over the years, eight Congresses and three Presidents have struggled to discourage the widespread practice of artificial impoverishment to qualify for Medicaid. The government even went so far as to make it a crime: "Throw Granny in Jail" (repealed) and "Throw Granny's Lawyer in Jail" (unenforceable). Nothing seems to work. Now come Ross Schriftman, Associate Chair for Long-Term Care, and the National Association of Health Underwriters (NAHU) Long-Term Care Committee with a fascinating idea they have under consideration. Why not require Medicaid Planners to disclose the nature, consequences, and suitability of the self-impoverishment products they offer just as insurance agents and carriers must do for the legitimate financial products they market? You'll find the proposal that the NAHU folks are considering [in this LTC Bullet]."
March 4, 2003: In the Lion's Den of Medicaid Planning. "Medicaid planners wave a magic legal wand and shift the cost of long-term care from affluent elders to taxpayers and LTC providers while delivering a financial windfall to client heirs. See how one senior advocate and health care columnist spoke truth to power in a lion's den of Medicaid planners [in this LTC Bullet]."
March 4, 2004: No Wonder They Don't Buy LTCi. "Do Medicaid estate planners really advise adult children to grab their parents' money, yank them from private-pay assisted living facilities, stick them in a nursing home on welfare, and transfer the cost to taxpayers and providers? Read an actual Medicaid planning 'engagement letter' that does exactly that."
August 8, 2005: The Great Debate on Medicaid and LTC. "On September 7, 2005 at the Cato Institute in Washington, DC, Steve Moses, president of the Center for Long-Term Care Reform, will debate Vincent Russo, a leading elder law attorney in New York and a former president of the National Academy of Elder Law Attorneys." Watch or listen to a recording of the debate here: http://www.cato.org/events/medicaid-long-term-care-crisis-who-should-pay [link].
August 3, 2006: Dueling Letters. "When I saw two articles justifying and promoting Medicaid planning in Life Insurance Selling magazine, I sent the following letter to the editor, Gordon Bess. He published it with the Medicaid planner's reply in the magazine's July 2006 issue. Both letters follow, republished with permission from Life Insurance Selling (www.lifeinsuranceselling.com)."
May 30, 2007: Medicaid Pushers. "Another NAELA member offers easy Medicaid LTC and seduces insurance producers with a promise of huge incomes." Read about it in this LTC Bullet.
June 3, 2008: Medicaid Planning Update. "We have not published an LTC Bullet to expose the damaging practice of Medicaid estate planning for a long while. Following is kind of a grab bag, but it'll give you a feel . . . more like nausea . . . for the lucrative business of poverty-making."
February 4, 2009: Why Stimulate Medicaid Planning? "The stimulus bill could help the poor elderly, the states, LTC providers, and encourage responsible LTC planning by closing Medicaid loopholes, but it doesn't." Click the link above to find out why.
August 31, 2010: Medicaid Planning Up, LTCI Down. "It's no secret that long-term care insurance sales have languished over the past few years, despite a recent blip up. But government-financed LTC is on a rampage of expansion. It isn't just the new CLASS program, which is actuarially unsound and bound to wither and die. It's Medicaid, the historically dominant funder of long-term care for most Americans--rich, poor and in between."
February 24, 2012: Medicaid Planning for Long-Term Care. "This week, in LTC Bullet: Medicaid Planning for Long-Term Care, we tackle the controversial topic of how affluent people artificially self-impoverish to qualify for Medicaid LTC benefits and what the government has attempted unsuccessfully to discourage the practice."
LTC E-Alert #13-016: LTC News and Comment
05/17/2013, Kiplinger 2013 Retirement Guide Showcases Steps To Starting a Long-Term Care Home Plan, Spotlighting True Freedom II Plans By American Senior Services Incorporated (link), WSJ.com
Quote: "Kiplinger's Personal Finance recently published its annual 2013 retirement guide, which will stay on shelves for months and provides numerous articles on programs and services that should be considered in long-term care planning. The issue also features three steps to living safely and independently as you age in your home by American Senior Services Incorporated (ASSI) via its True Freedom plans (http://www.truefreedomhomecare.com)."
LTC Comment: Check out http://www.truefreedomhomecare.com for more information on ASSI's innovative approach to home care.
05/17/2013, The Journey: Make your finances solid before helping adult kids, by Janet Kidd Stewart, chicagotribune.com
Quote: "More than half of people 45 or older who are parents said they expect they will have to provide financial support to adult children, according to the 2013 Merrill Lynch Retirement Study. The survey polled 6,300 people. More than a third expect to provide support to grandchildren, 16 percent expect they will help parents and 10 percent said they expect to help siblings, the survey found.
"Particularly for less wealthy retirees, it's also important to cover the practical bases if you're going to be on the hook for family members, whether it's nursing care for parents or graduate school for Junior. That means investigating long-term care insurance well in advance of the need and being realistic about how much you can help children with education expenses, said former IRS attorney Sandy Botkin, author of 'Achieve Financial Freedom — Big Time!'"
LTC Comment: Financial planning for retirement, including having a viable long-term care plan in place, is just about the best way parents can help their adult children.
05/16/2013, Maine Democrats, Republicans duel over Medicaid, hospital payback, by Steve Mistler, The Morning Sentinel
Quote: "The two sides held dueling press conferences at the State House a day after Democratic leaders moved to meld one of their highest priorities, Medicaid expansion to cover about 60,000 Mainers, with the Republican-backed plan to pay the state's $181 million share of back payments to the Maine's 39 hospitals. The conflict in Augusta mirrors debates that have unfolded in other state legislatures over expanding Medicaid through the Affordable Care Act. It's an issue that has brought forth entrenched ideologies and political positions on the federal health care law and one of its pillars, Medicaid, the publicly funded health insurance program for low income residents."
LTC Comment: The debate on Medicaid expansion continues.
05/16/2013, Senate confirms Tavenner as CMS administrator, by Tim Mullaney, McKnight's Long Term Care News
Quote: "Marilyn Tavenner has become the first confirmed head of the Centers for Medicare & Medicaid Services in seven years. The Senate confirmed her as CMS administrator on Wednesday, in a 91-7 vote." ############################# 05/16/2013, Invitation: Long-term care: Markets or mandates? (May 31)
Quote: "To protect Americans from the costs of long-term health care for the elderly and disabled, President Obama's health law established the Community Living Assistance Services and Supports Act (CLASS). Less than two years later, the Obama administration announced that CLASS could not operate without large and growing deficits, and the program was terminated. In its wake, the Commission on Long-Term Care -- created by the fiscal cliff legislation -- is charged with developing a new way to finance long-term care services and supports. The commission's report is due in September 2013."
LTC Comment: At this event presented by the American Enterprise Institute in Washington, D.C. on May 31, I will debate two of the leading advocates of government-financed long-term care. If you are not able to attend in person, note that the event will be streamed live, no registration necessary. Steve
05/15/2013, Retirement savers lose $117,000 to unexpected events, by Melanie Hicken, CNN Money
LTC Comment: Speaking of "retirement derailers." That's an understatement when considering the risk and cost of long-term care.
05/14/2013, "Covering the Rising Cost of Long-Term Care" by Caitlin Kelly, NYTimes.com
Quote: "FEW sticker shocks are as bracing as the price of hiring someone to help with the simplest activities — bathing, toilet use, dressing, eating and moving. Whether recovering from surgery or a stroke or suffering a chronic illness like arthritis, those needing skilled help need deep pockets indeed. And those requiring full-time nursing or assisted-living care face even steeper costs. A 2013 report by Genworth Financial, an insurance provider based in Richmond, Va., estimates the national median daily cost of a private room in a nursing home at $230 a day, an increase of 3.6 percent over 2012 — some $6,900 per month. Sharing that room is only $27 less a day, according to the report."
05/15/2013, "BREAKING NEWS: L&HA e-newsLink," LIFE&Health Advisor
Quote: "Advanced Resources Marketing (ARM), one of the country's largest distributors of Long Term Care Insurance (LTCi), announced today that Henrik Larsen, MBA, CLTC, has been promoted from Vice President of Marketing to Chief Executive Officer."
LTC Comment: Congratulations to Henrik Larsen.
05/10/2013, "Buy Long-Term-Care Insurance With Tax-Free Money-Kiplinger," by Kimberly Lankford, Kiplinger
Quote: "Can I use money from my health savings account to pay for long-term-care insurance?
"Yes. If you have a tax-qualified long-term-care policy (which includes most policies that pay benefits if you need help with at least two activities of daily living or have cognitive impairment), then you may be able to make a tax-free withdrawal from your health savings account to pay for a portion of your premiums. The annual limits depend on your age. In 2013, you can withdraw up to $360 from your HSA tax-free to pay premiums if you're age 40 or younger; $680 if you're 41 to 50; $1,360 if you're 51 to 60; $3,640 if you're 61 to 70; and $4,550 if you're 71 or older."
05/15/2013, 3 concerns for women planning retirement, by Stephen Williams, MarketWatch
Quote: "According to recent U.S. census data, almost 50% of women age 65 or older are single, either because they have been widowed, divorced or never married. Women face unique challenges in retirement, as on average women live longer, are more likely to need long-term care and have a lower risk tolerance than men. All of these factors combine to increase their risk of running out of money in their later years. However, there are specific steps women can take to be more prepared for retirement, whether they are single or married."
05/11/2013, 10 Reasons Critical Illnesses Pose Retirement Risk, by Philip Moeller, The Best Life (usnews.com)
Quote: "Health care clearly has emerged as the greatest financial risk faced by retirees. The incidence of expensive chronic diseases is higher for today's retiring baby boomers than it was for their parents. Longevity gains have added years to average life spans, but these extra years may seem more curse than blessing if they are spent dealing with serious illness and unaffordable medical bills. Doesn't insurance cover these things? Not exactly. Basic Medicare leaves retirees on the hook for a 20 percent co-pay with no cap. Supplemental Medicare policies can close much of this gap. But they don't cover most long-term care expenses, and neither does Medicare. The Employee Benefit Research Institute says a 65-year-old couple with median drug expenses would need $283,000 to have a 90 percent chance of covering their out-of-pocket drug expenses during the remainder of their lives. And this total does not include long-term care."
LTC Comment: See also news from one of our recent LTC Bullets: "LIMRA, LOMA, SOA, and NACII are teaming up again to sponsor the Critical Illness Insurance Forum, "the premier critical illness insurance gathering in North America and a great opportunity for industry professionals to network and communicate with their peers." Details: 2013 Critical Illness Insurance Forum September 16–18, 2013 Harbor Beach Marriott Resort & Spa, Fort Lauderdale, FL Event Details | Save the Date | Register Now"
05/11/2013, The truth about nursing home Medicaid eligibility, by Matthew Wallace, The Times Herald
Quote: "There are many misconceptions about nursing home Medicaid eligibility. We have discussed some of these issues before. However, I continue to get these questions, so I thought I would cover them again. Medicaid laws are complex and confusing. I do not recommend that you try to plan for Medicaid by yourself."
LTC Comment: Ever wonder how affluent people qualify for Medicaid without spending down? Here's a Medicaid planning attorney telling readers how it's done. Like most Medicaid planners, this author gives lip service to LTC insurance, but only after he's told you why you don't need it. This is precisely what the Center for LTC Reform is fighting to change.
05/10/2013, Alzheimer's keeps frustrating Big Pharma, by Bruce Kennedy, MSN Money
Quote: "When some of the world's leading researchers on Alzheimer's meet in Boston in July to discuss therapies and treatments for the so-far incurable neurological disease, will they have any breakthroughs to mention? Chances are, probably not. Years of research and tests by the pharmaceutical industry, which looks to benefit from patents for an effective Alzheimer's treatment, have so far yielded little to no positive results. And that's leading to questions about whether Big Pharma might still consider Alzheimer's research cost-effective."
LTC Comment: Curing, treating, or at least mitigating as much as possible the effects of Alzheimer's is key to restraining the ever increasing cost of long-term care.
04/19/2013, LTC service contracts, by Allison Bell, LifeHealthPro
Quote: "Jonas Roeser -- one of the people who helped promote the 3in4 Need More long-term care insurance (LTCI) outreach campaign with a tireless ability to generate publicity -- is now trying to get attention for a different kind of long-term care (LTC) planning. He has been working with people like Mark Golberg, Tom Skiff and Peter Gelbwaks, long-time LTCI marketers, on an effort to develop and sell non-medical long-term support services (LTSS) service contracts.
"Roeser and colleagues at American Senior Services Inc. (ASSI) are taking a different route: Having an association sell a package that provides access to LTC planning services and a set amount of discounted non-medical long-term support services, such as companion care services and homemaker services."
LTC Comment: Click www.truefreedomhomecare.com for more information on American Senior Services Inc.
05/09/2013, Six Global Destinations for an Affordable Retirement, by Michael Foster, Fox Business
Quote: "Over the 20th century, many retirees moved from New England, California and the Midwest to the sunny and sparsely populated Sun Belt, where low taxes and warm weather beckoned. Today, many Americans are moving much farther afield to enjoy a new life at a low cost. Thousands are migrating to Asia, South America, Europe and beyond to stretch their retirement dollars. And foreign countries, eager for the boost to their economies, have taken notice. With so many nations interested in attracting retirees from abroad, Americans are spoiled for choice. Bankrate uncovers six up-and-coming destinations where retirees can easily live on an income of $2,000 a month. In some cases, retirees are already living there for far less. Read on to discover the affordability of housing, food and medical care at these retirement destinations."
05/09/2013, More Tips on Long-Term Care Insurance, by Mark Miller, Morningstar
Quote: "Morningstar columnist Mark Miller presents a closer look at hybrid life insurance/LTCI policies, timing an LTCI purchase, self-insuring, and finding the right broker."
LTC Comment: In terms of not waiting too long (or until it's too late), timing is key in the purchase of LTCi.
05/08/2013, "New Retirement Realities: Part 3 Of 3 'The Family Factor,'" by Ken Dychtwald Ph.D., The Huffington Post
Quote: "This is the third part in a three-part series exploring findings from 'Americans' Perspectives on New Retirement Realities and the Longevity Bonus [link],' a landmark national study just completed by my [Ken Dychtwald] firm, Age Wave, in partnership with Merrill Lynch. The study was conducted by research firm Harris Interactive among representative samples of more than 6,000 respondents age 45 and older.
"The term 'sandwich generation' was coined in the 1980s to describe baby boomers who needed to simultaneously care for both children and aging parents. Today, the sandwich generation is morphing into a kind of Rubik's Cube puzzle of connections and arrangements. It's not uncommon for people to find themselves extending one type of support or another to parents, in-laws, siblings, children, step-children, and grandchildren--sometimes at the same time!"
LTC Comment: We forwarded the series announcement with link to Part 1 recently. See also Part 2 for another good read.
05/08/2013, How To Hire (And When To Fire) A Caregiver, Forbes
Quote: "From time to time, when I worked as a social worker in a skilled nursing facility, visiting family members complained to me about certain staff members. Residents too often were worried that if they themselves griped to senior managers, there might be some form of retaliation. That's understandable — and it's why we must advocate for our loved ones in long-term care residences. If there's a staff member who isn't doing his or her job properly, an administrator needs to know. And if the issue is a bad attitude, and not just a need for more specific training, perhaps it's time for that aide to find another job. Addressing problems with an in-home caregiver can be more complicated. The person your family hired may turn out to be unqualified or have a negative attitude. But the patient may still like him or her, in spite of apparent flaws."
05/08/2013, "New Retirement Realities: A 3-part series on a pivotal new study," Age Wave
Quote: "Today, with longer lives, pre-retirees and retirees are pioneering new territory that is far more complex and unpredictable. To better understand how people are now thinking about retirement, we are excited to share with you a fascinating national investigation,
'Americans' Perspectives on New Retirement Realities and the Longevity Bonus [link],' an Age Wave/Merrill Lynch collaboration conducted by Harris Interactive."
LTC Comment: An interesting series from a former board member of the Center for Long-Term Care Financing, Ken Dychtwald.
05/07/2013, "How Would A Critical Illness Affect You?," Life & Health Advisor
Quote: "An overwhelming majority (90%) of our nation's middle-income Americans say they are not financially prepared for a critical illness diagnosis, according to a new study released by Washington National Institute for Wellness Solutions (IWS)."
LTC Comment: Click www.criticalillnesseducation.org/ for more information on this important protection.
05/07/2013, "Woman With Alzheimer's Receives First Ever Brain Pacemaker," by Tim Watt, Sunrise Senior Living
Quote: "Pacemakers have helped individuals with heart problems for years, and now, a similar technology is being used to treat Alzheimer's disease. Kathy Sanford recently became the first person with the cognitive illness to receive what is being referred to as a 'brain pacemaker.'
"While it's too early to tell whether the brain pacemaker will be a successful treatment for Alzheimer's disease, doctors say early research looks positive."
05/06/2013, "10 Unexpectedly Great States for Retirement," by Chris Kahn, Fox Business
Quote: "What are the best states for retirees? The popular answer seems to be anywhere along the Sun Belt, where retiring Americans have flocked for generations in search of sunshine, swimming pools and year-round golf. Yet, if you consider other factors that are important for seniors, you'd find that some of the best spots are actually located farther north. Bankrate pored through a slew of key factors, including access to medical care, cost of living, local crime rates, state and local taxes -- as well as climate. Here, in ascending order, is Bankrate's list of the 10 unexpectedly best states for retirement."
05/06/2013, "WINEGARDEN: Treating Alzheimer's with regulations," by Wayne Winegarden, Washington Times
Quote: "The U.S. health care system is rife with rising costs and stagnating quality. All too often, the cure for these ailments calls for ever greater government intervention. Such cures misdiagnose the problem. The health care system's problems are caused by too little patient control, not too little government intervention.
"Reduced patient control takes critical health care decisions away from the patient and gives it to government bureaucrats. Along with other adverse consequences, such as skyrocketing health care inflation, reduced patient control leads to a less responsive, more rigid medical system. The current issue surrounding early detection tests for Alzheimer's exemplifies this problem."
October 23, 1998: LTC Bullet: Attorneys Promote Medicaid as Alternative to LTC Insurance (link). "Elder law attorneys who specialize in Medicaid planning (i.e., transferring or sheltering assets in order to qualify clients for Medicaid's long-term care benefits) routinely defend their practice by arguing that LTC insurance is not an alternative for their clients. They publicly claim to be helping only those who cannot afford or otherwise qualify for insurance. But what are they telling each other? In the Fall, 1998 issue of the NAELA Quarterly (the journal of the National Academy of Elder Law Attorneys), Baird Brown, a fellow and member of NAELA, clearly portrays Medicaid as the preferred alternative to LTC insurance."
August 8, 2005: The Great Debate on Medicaid and LTC. "On September 7, 2005 at the Cato Institute in Washington, DC, Steve Moses, president of the Center for Long-Term Care Reform, will debate Vincent Russo, a leading elder law attorney in New York and a former president of the National Academy of Elder Law Attorneys." Watch or listen to a recording of the debate here.
Branson, MO—
LTC Comment: Net results from 50 LTC experts opining about LTC financing after the ***news.***