[LTPC-disc] Fw: LTC Bullet: Long-Term Care Lemmings

[Doug Burg]

----- Original Message ----- 
From: "Center for Long-Term Care Financing" <ltcbullets@centerltc.org>
To: <Recipient list suppressed>
Sent: Thursday, June 05, 2003 4:45 PM
Subject: LTC Bullet: Long-Term Care Lemmings


> LTC Bullet:  Long-Term Care Lemmings
>
> Thursday, June 5, 2003
>
> Seattle--
>
> LTC Comment:  How and why do long-term care interest groups behave like
> lemmings?  Find out after the ***news.***
>
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>
> LTC BULLET:  LONG-TERM CARE LEMMINGS
>
> LTC Comment:  Following is an article titled "Long-Term Care Lemmings."
In
> it, every major long-term care stakeholder group comes in for some
friendly
> criticism.  The article tries to tweak everyone to look beyond narrow,
> short-term, apparent self-interest and consider how all interest groups
> might work together toward their mutual interests and the interests of
> their common clientele--aging Americans.  Our thanks to Broker World and
> "Insurance Publications" for permission to reprint.  For a formatted .pdf
> version of this article, go to
> http://www.centerltc.org/pubs/Articles/LTC_Lemmings.pdf .
>
> Reprinted from BROKER WORLD May 2003 Subscriptions $6/yr. 1-800-762-3387
> Used with permission from Insurance Publications
>
> F O C U S
>
> STEPHEN A. MOSES is president of the Center for Long-Term Care Financing
in
> Seattle, WA.  The Center for Long-Term Care Financing is a charitable,
> nonprofit think tank and public policy organization with the mission of
> ensuring quality long term care for all Americans. The Center offers a
free
> [first three months] online newsletter, "LTC Bullets," and a full-day LTC
> graduate seminar.  Email requests for the newsletter to
> mailto:info@centerltc.org .  Moses can be reached by telephone at
> 206-283-7036.  Email:  mailto:smoses@centerltc.org
> .  Website:  http://www.centerltc.org/ .
>
> "Long Term Care Lemmings"
>
> Most of us define the lemming as a short-tailed Arctic rodent.  However,
> the New Shorter Oxford English Dictionary offers this secondary
> definition:  "A person bent on a headlong rush, especially toward
disaster;
> a person unthinkingly joining a mass migration; an unthinking person."
>
> Who are the long term care lemmings?
>
> LTC Lemming 1:  The Government.
>
> By paying for 80 percent of all patient days in America 's nursing
> homes--at a rate often less than the cost of providing the care--state and
> federal Medicaid programs have nearly destroyed the nursing home industry,
> impeded the development of a market for home and community-based services,
> chilled the demand for private long term care insurance, and anesthetized
> the public to the risk and cost of long term care. Yet, our government
> marches on toward disaster instead of targeting Medicaid benefits to the
> poor and providing real long term care insurance tax deductions to
everyone
> else.
>
> LTC Lemming 2:  The Public.
>
> Few people take the risk of long term care seriously until it's too late
to
> save, invest or insure.  Then, to avoid paying privately for long term
> care, they take the path of least resistance, qualify easily for Medicaid
> nursing home care without spending down if they are middle class, or
> impoverish themselves artificially with the aid of a lawyer if they're
> affluent.  Most frail elderly don't know what has hit them until their
> options are gone. Yet, Medicaid planners continue to do a land office
> business; boomer heirs collect Medicaid financed inheritances; and the
> nursing home based, welfare financed LTC system drifts ever closer to
> complete collapse.
>
> LTC Lemming 3:  Senior Advocates.
>
> The General Accounting Office and the Congressional Budget Office (not to
> mention nearly every credible economist) have been warning for years that
> America's social safety net is a huge, unfunded liability likely to
> collapse when the baby boom falls into it.  Yet senior advocacy groups
like
> AARP and Families USA blithely advocate expanding Medicare and Medicaid
> financing of long term care and prescription drugs.  That's like adding
> deck chairs to the Titanic after the little incident with the iceberg.
>
> LTC Lemming 4:  Long Term Care Providers.
>
> Nursing homes relied so heavily for so long on stingy, but easy Medicaid
> and Medicare financing that they are now incapable of attracting enough
> private payers to remain solvent.  Assisted living facilities, stricken by
> slow fills and meager profitability, are tempted by the same "siren's
call"
> of government financing that lured nursing homes down a primrose path of
> constricting reimbursements and growing regulation.  Yet, the long term
> care providers continue to spend most of their lobbying dollars begging
for
> higher government reimbursements or relief from regulations instead of
> insisting on Medicaid eligibility controls and private financing
incentives.
>
> LTC Lemming 5:  Long Term Care Insurers.
>
> Lured by promising demographics, dozens of carriers, hundreds of brokers,
> and thousands of agents have tried to sell long term care insurance, only
> to give up and exit the market.  Most of those who continue to sell the
> product are less than thrilled by the return on their investment. Yet, the
> insurance industry continues to ignore the primary reason for the market's
> disappointing results--the government has been giving away their product
> since 1965.  Even with full above-the-line tax deductibility, the public
> policy basket into which insurers have put all their eggs, most people
> won't buy long term care insurance if they can ignore the risk, avoid the
> premiums, and get the government to pay.
>
> Forgive the mixed metaphor, but what America needs is a pied piper to lure
> the lemmings of long term care away from their well-worn course of
> self-destruction.  It doesn't take a genius to understand the problem once
> you put the pieces together.  Here's an analysis and a solution in a
> nutshell.
>
> In 1965, recognizing a problem with long term care, Medicaid and Medicare
> began paying for nursing home care with every good intention.  The public
> concluded that long term care is free but that it means going to a nursing
> home, which they put off as long as possible at great financial and
> emotional cost.  Providers jumped on the government-financed gravy train,
> paved the country in nursing homes, and had no incentive to offer home
care
> or assisted living.  Likewise, long term care insurance could get no
> traction in the marketplace because nursing home care was free and home
> care or assisted living was unavailable.
>
> That gets us up to 1990, at which time welfare financed nursing home care
> began to have such a bad reputation that people actually started spending
> their own money to get home care, assisted living, adult day care, and
> geriatric care management.  Once the public began paying out of pocket for
> some long term care, private insurance started to sell somewhat more
readily.
>
> That brings us to the current time.  Today, we have a rapidly
> disintegrating balance between public denial of a long term care risk
> enabled by continued government financing and a growing realization
> (especially on the front edge of the baby boom generation who are
suffering
> through long term care crises with their own parents) that access to
> quality care at the most appropriate level requires an ability to pay
> privately.  The more the status quo disintegrates, the more private
> financing options such as long term care insurance and home equity
> conversion will prosper.  The challenge is to achieve the latter goal
> without paying the former price.  That will require creative public policy
> changes that turn the perverse incentives in the current system upside
down
> and replace them with positive incentives for people to plan early and
> save, invest or insure for long term care.  The needed change is to target
> government-financed long term care to the genuinely needy and provide
> incentives for everyone else to take personal responsibility.
>
> One way to do it is to realize that people with substantial incomes and
> large Medicaid-exempt assets are not poor.  They just have a cash flow
> problem.  Instead of luring them into Medicaid nursing homes with generous
> exemptions and tempting loopholes, give them lines of credit on their
> estates--repayable after death--that will enable them to purchase quality
> care in the private market with dignity and stay off public assistance.
Why?
>
> When people find their assets genuinely at risk for long term care, more
> will take the long term care risk seriously, prepare early, and pay
> privately for long term care.  More will buy long term care insurance, and
> that market will boom.  More will tap the equity in their homes to pay for
> long term care, and home equity conversion will boom.  Taxpayers will find
> relief because fewer people will depend on Medicaid.
>
> In time, Medicaid will have more money to provide a wider range of better
> services to a smaller number of genuinely needy recipients.  Home care,
> assisted living, and nursing home providers will have more private payers
> and be less dependent on public financing.  Seniors will retain more
> choices and independence.  Boomer heirs will see the light and seek
private
> LTC insurance protection.  Everyone wins, except perhaps the Medicaid
> planners, and who would object to their assuming the role of the LTC
lemmings?
>
> Reprinted from BROKER WORLD May 2003 Subscriptions $6/yr. 1-800-762-3387
> Used with permission from Insurance Publications
>
> A formatted version of today's LTC Bullet is available at
> http://www.centerltc.org/bullets/current/444.htm .
>
>
>
>
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