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Can’t the Government Pay For This?

April 23, 2018 by Honey Leveen Leave a Comment

MoneyThere is a growing trend in the United States. More and more Americans now want the government pay for programs that meet our daily needs. Does this surprise you? It sure isn’t what I expected to find.

For years, the rallying cry has been for smaller government. In fact, this recent shift marks the first time in 8 years that a majority of Americans now favor an increase in government participation. A report from the Pew Research Center found that most Americans think the government is doing too little to help young people, the elderly, the middle class and the poor.

This new trend was also reported by William A. Galston’s article (WSJ, “Americans Want Big Government“):

“In the NBC/Wall Street Journal poll last month, 58% of Americans—the highest share ever recorded—agreed that ‘government should do more to solve problems and help meet the needs of people,’ compared to only 38% who thought that ‘government is doing too many things better left to businesses and individuals.”

Galston also cited a Kaiser survey that reports an interest in increased spending on defense and education.

As early as 2017, a separate Pew survey found broad support across both Republicans and Democrats for increased spending on veterans’ benefits, infrastructure, scientific research, environmental protection and assistance to the needy.

Can the Government Pay for Programs?

Not this government. Not today. “The federal deficit is big and getting bigger… Its balance sheet reveals that the public debt will reach $15.7 trillion by October.” And these numbers don’t include “unfunded liabilities, reported by the Social Security and Medicare Trustees, that are four times the current public debt.” (John F. Cogan, WSJ, “Why America is Going Broke.“)

So, if you’re counting on Medicaid…

I’ve written a number of articles urging you to become more self-reliant when planning for your future. Our nation’s financial uncertainty does not have to limit your access to quality care. You just need to do a little planning today.

The first step is to click here to receive your personal quote for Long Term Care Insurance.

 

 

Filed Under: Information About LTC, Long-Term Care Awareness Month, Medicaid Planning Tagged With: Medicaid Planning, Wall Street Journal

Long-Term Care: How Big a Risk?

January 15, 2015 by Honey Leveen Leave a Comment

Stephen D FormanHuge thanks to my friend and colleague, Stephen D. Forman of Long-Term Care Associates, for permitting me to re-publish his blog, below.

In a nutshell: a Boston College study was released in November, 2014. Its findings are that the need for long-term care insurance is and has been exaggerated. It finds that if you are in the minority who do need long-term care for an extended length of time, no worries, Medicare and Medicaid will be there as your safety net.

If people stop long enough to think about some of the claims the study makes, they are counterintuitive, and fly in the face of too many actual life experiences. Steve explains why this is so in his post, below.

Please flip through my past blog posts to find links to an abundance of credible sources that refute the new study’s findings.

Why do media seem to enjoy hashing and re-hashing stories derogatory to long-term care insurance (LTCi) while often neglecting the abundance of coverage favorable to LTCi purchase?

Major media reported on this study without making much effort to present balanced opinions on it.

Coverage of the faulty study continues (Steve explains why it is faulty). More than a month after its publication, The Wall Street Journal reported on the study. No apparent effort was made to practice fair journalism and present balanced views. I see the date of the WSJ article was December 23, 2014. Perhaps most WSJ reporters were away for the holidays? Maybe the WSJ was really grasping to find any sort of copy. It looks to me like this article can be used as a classroom example of embarrassing, shoddy, unprofessional reporting.

I actually invested valuable time trying to blog about why this new study is so wrong but chose not publish it because I was unwilling to make the effort to go into the detail necessary to create a blog I’d be proud of. Fortunately, Stephen Forman succeeded where I failed.

Steve’s piece, below, will take about three minutes to read and is well worth it. Thanks for allowing me to share this, Steve!

***************************************************************************

Model
Not this kind of model.

No single model received more attention in 2014 than one produced by the Center for Retirement Research (CRR) at Boston College titled “Long-Term Care: How Big a Risk?” (November 2014, Number 14 – 18, Leora Friedberg, et. al.) At the same time, no other model has been more widely misinterpreted, wrongly extrapolated, or gleefully co-opted by LTCI detractors. Since the New Year is considered a time for looking forward, let’s begin by clearing this foggy hangover from 2014, then speak no more of it.

Medicaid 1, LTCI 0

This is the way the CRR model’s conclusions are most often presented: by using monthly instead of yearly data, it was found that average nursing home stays are 30% shorter than previously believed. (On average a man stays less than 12 months, a woman 17.) In fact, 45% of patient stays do not exceed 3 months. Even worse, LTC insurance is duplicative since Medicare will cover these short stays– the study assumes the first three months of “all episodes of care are covered by Medicare.” [emphasis in the original]

Finally, CRR corrects a previous model which understated the probability of ever needing care by 32 – 63%. The conclusion? Since long term care is a relatively high-probability event– but less catastrophic than previously understood— it makes less economic sense to insure against.

The media jumped all over it:

  • “Maybe You Don’t Need Long-Term Care Insurance After All” (Bloomberg)
  • “Here’s a New Reason to Think Twice Before Buying Long-Term Care Insurance” (Time/Money)
  • “‘Spending Down’ for Medicaid is the Most Practical LTC Financing Plan for Most Americans, Researchers Assert” (McKnight’s)
  • “Is Long-Term Care Insurance for You?” (Wall Street Journal)
  • “Boston College Finds Rip-Off in Long Term Care Insurance Costs When Compared to Other Options, Opines UltraTrust.com” (Estate Street Partners)

Readers who dove into these articles seeking sound advice were met with takeaways such as this: “Forgoing long-term care insurance and relying on Medicaid is the smartest financial planning decision for the majority of unmarried Americans.” Lacking were any qualifications concerning Medicaid’s notoriously low reimbursement rates, institutional bias, record of poor quality, or inability to access care.

This was our first sign of trouble: CRR assumes all “rational, far-sighted, well-informed” individuals make decisions entirely on the basis of money. We do not. As economists, they’d have been better served with a model in which rational individuals make decisions which maximize our utility. Had they done so, their buyers would’ve valued higher quality care and the ability to remain at home with family, tilting the scales in favor of LTCI.

Meanwhile, the Bloomberg piece acknowledges that the biggest threat to a retiree’s nest egg “isn’t a stock market crash. It’s a long illness requiring round-the-clock care.” Unfortunately, thanks to the new CRR model, not only should most people “just skip [LTC insurance],” but the majority of Americans (all but the richest 20 – 30% of singles) should “[spend] down their assets and then [let] Medicaid pick up the tab.”

Lest we dismiss this study for its preoccupation with singles, we are warned that “forthcoming research will show long-term care insurance makes even less sense for married couples.”

Deer
Not this kind of deer.

And why did the researchers focus on singles anyway, when 82% of all LTCI policies are purchased by members of couples? They argue that since 75%+ of nursing home residents are over age 65 and single, their limitation to singles is “not significant”. Once again our economists have set out on the wrong foot: they are not modeling nursing home residents, they are modeling buyers. Oh, dear.

The Average Family Has 2.5 Children

I’ve been careful in my choice of words: what the Center for Retirement Research produced was an economic model. Framing it otherwise (a study or research report) suggests a methodology or outcome which we shouldn’t reinforce. Models exist in the abstract, not reality. This one invented hypothetical buyers in a controlled environment.

One particularly unfortunate problem with CRR– overlooked in all the hubbub– is that it sought to answer a question of its own making, and not one that anybody had been asking. Namely, why do only a certain percentage of single individuals (an assumption of their own creation which disagrees with other contemporary sources*) buy LTC insurance, differing from the percentage predicted by the Brown & Finkelstein Model (ie, the famous “Medicaid Crowd Out Effect”)? This model was an attempt to reconcile the two numbers.

Now, models can serve a purpose, but they are inherently limited. In the case of CRR, even its “new” data remain archaic (10-years old) and don’t square with reality: after all, insurance is built primarily around the remote but catastrophic risk – not the occasional shopping cart dinging your car door. This is why buyers and sellers have played a tug-of-war between unlimited benefit periods and short-term care. One is hard to offer profitably, while the other is hard to make desirable.

Worst of all, the model presumes that buyers care only about nursing facilities, when the exact opposite is true. Most of our clients are motivated to purchase LTCI for its ability to do the one thing Medicaid is worst-equipped to do— keep them out of the nursing home.

Then, in a final Hail Mary, they assume Medicare pays for most short stays– which one nursing home worker laughs off, “[I] can count on 2 hands out of the thousands of patients I’ve served, how many have actually received 100 days of Medicare coverage.”

Ultimately, the economists got the results they hoped for (had they not, would this study have seen the light of day?), and were able to achieve agreement between the Brown & Finklestein model and their own:

Singles aged 65+ who “make optimal saving and insurance decisions” (how many real people do you know like that?) are substantially less willing to buy an option to purchase LTC insurance at market premiums, based on a more-accurate transition matrix updated to 2004 based on monthly probabilities instead of annual transition events.

Now go back and read that sentence again.

Not much of a headline-grabber, huh? We should be asking ourselves what all the hoopla was about– particularly since a landmark study was released almost simultaneously as CRR which contained some of the most newsworthy, compelling and positive research about LTC insurance in over a decade. Do you remember the financial media covering this report with the same enthusiasm as the Boston College model? Do you recall seeing any of the above publications covering it at all?

Don’t worry, we’ll be reviewing it in our next LTCA Sales Idea. Until then, Good Selling!

* CRR uses a penetration rate that is between 23 – 54% less than other estimates. Had they used the higher rates, the results of their study would not have been as dramatic.

Filed Under: Correcting Ignorant Public Figures, Helpful Information About LTC, I'll Just Self-Insure, Information About LTC, Misinformation About LTC Tagged With: Boston College Center for Retirement, Honey Leveen, Long Term Care insurance, LTCi, Medicaid, Medicare, Stephen D. Forman, Wall Street Journal, www.honeyleveen.com

Healthcare.Gov (ACA) and Long-Term Care

October 23, 2013 by Honey Leveen Leave a Comment

Dollar Being StretchedThanks to my colleague, Romeo Raabe, for permission to re-publish his blog, “Heathcare.gov (ACA) and Long-Term Care”.

No, long term care is not directly affected by the Affordable Care Act (ACA, AKA Obamacare) but there are some scary correlations between the two. I refer to this morning’s Wall Street Journal article about what is coming – in both healthcare and long term care.

Doctors are retiring in droves. Those near are taking early retirement to avoid the losses of treating people for less than they are reimbursed. Medicare payments are being cut way back just as 10,000 Americans a day are coming on board (and will each day for the next 18-19 years). The ACA takes large sums from Medicare to fund the ACA. Doctors are reimbursed less and less, as more people are starting to use Medicare, hoping to get doctor appointments scheduled. Doctors often discourage their children from entering the profession. Others won’t accept new patients over the age of 50 (who will get Medicare in 15 years).

Medicaid, the primary payer of long term care in America, is being stretched to millions of uninsured Americans for medical care now. This leaves less for the already under-reimbursed long term care facilities. Nursing facilities tell me they lose between $2000 and $3400 per month on every resident on Medicaid. They cannot make you leave if you run out of funds and turn to Medicaid, but they can – and do – say no to your entrance. If you lose money on every customer, you cannot make it up on volume! They do it gently, asking about what care you will need, and then apologizing that they do not have the staff, currently, to deal with those needs. If the “desirable” LTC facilities turn you away, what choice does this leave you? The less desirable facilities, or one far away that will accept you? I wonder if the people who “wisely” divested their homes and fortunes years ago realized the box they have put themselves in.

More doctors are going into “concierge” medicine, accepting only those patients willing to pay an annual retainer of $500-$3000 a year for ready access and longer consultations. Some LTC facilities also are turning away all Medicaid entrants. The ambience will be nicer, with more staff and better activities and food, and all will pay their fair share with no cost shifting. That is where I want to go when needed, and I have the income from my LTC insurance policy to pay for it. Wouldn’t you like to be in a position to choose such care as well?

With the ACA starting enrollments just as the Medicare Advantage season starts, there is confusion with some going to the wrong site for information and to sign up. Many Americans already believe that LTC is free from the government, and do not realize that Medicaid is not given because you are old, or disabled, it is given because you are impoverished – a fancy word for broke. Why would someone plan to end up that way and dependent on a government that you may have heard rumors of being short on funds itself? LTC insurance is often less expensive than people imagine, and most do not need as much as they initially suspect. Wouldn’t it be prudent to at least investigate?

Filed Under: Affordable Care Act Obamacare, Helpful Information About LTC, Information About LTC, Uncategorized Tagged With: ACA, Affordable Care Act, Medicaid, Medicare, Obamacare, Romeo Raabe, Wall Street Journal

WSJ Advice Demonstrates Lack of Insight

November 11, 2012 by Honey Leave a Comment

Family GatheringIn the December 4, 2012 issue of the WSJ entitled “Time for Elder Care?”, Kristen Gerencher offered advice for children of elders needing long-term care (LTC), but included only one questionable strategy about how to prevent LTC from bankrupting  Mom and Dad (and possibly reduce the kids’ inheritance to $0.00!).

Obviously timed for those family get-togethers during the holidays, the story advises adult sons & daughters to take a good look to see if Mom & Dad are slipping, either mentally or physically, and may need some LTC assistance.  If so, Gerencher lists professionals who can help find the right level of assistance.

Grencher suggests that the adult children look into options, ranging from voluntary services such as nutritional programs to more expensive (but unmentioned) alternatives such as moving to an assisted living facility or nursing home.

The reporter notes – correctly – that “Medicare doesn’t cover most LTC costs” and adds that “Medicaid covers them under certain conditions.”  But she fails to add that the “conditions” are typically after Mom and Dad have spent their worldly assets (the kids’ inheritance) paying for long-term care and are  impoverished.  She does add, however, that the kids can consult an elder law attorney to make sure that their parents’ assets are properly sheltered, but then helpfully notes that any clever actions like cash gifts or transfers of assets to junior MUST be made at least five years before the parents apply for Medicaid.  Ah, hah, the first reference to planning to avoid financial ruin!!

Sadly for her readers, Gerencher does not even mention long-term care insurance LTCi), which requires frank discussion and careful planning between parents and adult children!  With reasonably priced LTCi, Mom & Dad will have the funds to retain their dignity and options to defray the cost of a wide range of LTC, based on their needs.  Furthermore, the whole family will be able to gather during the holidays and at other times with peace of mind and a definite plan of action if the kids notice a need for care, which research has shown will happen to about 70% of elders.

Sounds like a plan to me!

Filed Under: Correcting Ignorant Public Figures, Helpful Information About LTC, I'll Just Self-Insure, Information About LTC Tagged With: Information About LTC, Kristen Gerencher, Long Term Care insurance, LTC Insurance, Medicaid, Medicare, Wall Street Journal, WSJ

At End of Life, Medicare Beneficiaries Spend Thousands Out of Pocket

September 14, 2012 by Honey Leave a Comment

MedicareAt end of life, Medicare beneficiaries spend thousands out of pocket is the title of an article by Sarah Kliff, published on September 10, 2012, in the Washington Post.

This article reports on a recent study performed by Amy Kelly, a professor at Mt. Sinai School of Medicine.

“As more Baby Boomers retire,” Kelley writes, “A new generation of widows or widowers could face a sharply diminished financial future as they confront their recently-depleted nest egg following the illness and death of a spouse.”

This is because Medicare is among the fastest growing line items in the federal budget, already paying out $500 billion a year in benefits.  But Medicare does not pay for all health care expenses.

Dr. Kelly reports that a quarter of Medicare beneficiaries spend all of their wealth paying for medical and long-term care expenses during the last five years of their lives, with the average beneficiary spending $38,688.

My guess is that most of the $38,688 spending average comes from long-term care expenses, not from medical care or treatments.  In her report, Dr. Kelly mentions that dementia patients have the highest out-of-pocket expenses.  The American Association for Long-Term Care Insurance (AALTCI) concurs and has plenty of statistics proving that the longest lasting, most expensive long-term care insurance claims are from dementia patients. Medicare does a decent (but imperfect) job of paying for acute medical problems and treatments, but Medicare’s biggest shortcoming is in the area of payment for long-term care.

It is tragic to have a long decline after a long, healthy, active life. It is doubly tragic to decline and then see your money fly out the window paying for long-term care expenses. This is rarely what anybody plans to do. However, if you don’t converse about long-term car ahead of time, you are failing to plan. If you fail to plan, you plan to fail.

Filed Under: I'll Just Self-Insure, Information About LTC Tagged With: AALTCI, AALTCI.org, Amy Kelly, Baby Boomers, Honey Leveen, long-term care, LTC Insurance, MD, Medicare, Mt Sinai School of Medicine, Sarah Kliff, Wall Street Journal, Washington Post, www.honeyleveen.com

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Phone: 713-988-4671
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Email: honey@honeyleveen.com

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