> ATTN: Horace B. Deets:
>
> As a member of AARP for the last 14 years I did not communicate
> with the headquarters staff until about two months ago. At that time
> I inquired about pro-active programs for the preservation of senior
> rights, particularly for those persons in long term care facilities.
> After not hearing from your staff, I sent a second e-mail to which I
> finally got a perfunctory response that really was "boilerplate" and
> failed to respond to my initial inquiry. I followed this up with a
> third e-mail, once again asking specifically what AARP is doing of a
> pro-active nature for those in LTC facilities. This time your staff
> solved the problem by just not responding.
>
> Like many others I have been very concerned about the vulnerability of
> our growing population of seniors. In fact, after being contacted by
> AARP about volunteer service, my wife and I spent three years as
> ombudsmen in Knoxville nursing homes where we saw first-hand the
> conditions that many of our helpless elderly have to endure. The end
> result, I believe, is that residents are stripped of their dignity,
> abused, neglected and in other ways misused.
>
> Of course, the problem isn't limited to nursing homes. In its June 17
> issue, JAMA reported on a study that, after assessing 18,000 cancer
> patients aged 65 an older, found that 26 percent received no treatment
> for daily pain. JAMA also said the study revealed a "disturbing
> tendency" for pain in older patients to receive less adequate
> treatment than that given to younger patients, although there was no
> medical justification for this.
>
> It was with this as a background that I initiated my request for
> information to AARP. Surely the organization must be doing more than
> giving lip service to the problem and sending form letters to
> inquiring members.
>
> Once again, I renew my request to AARP for information on any
> pro-active programs AARP has to protect the rights and dignity of
> seniors in long term care facilities. Incidentally, my wife and I
> have accepted the invitation to be the first two volunteers for a
> pilot guardianship program for the elderly sponsored by the East
> Tennessee Area Agency on Aging. We are continuing our pro-active
> efforts. What about AARP?
>
> Harvey I. Cobert
>
> cy: Walter Cheney, webmaster, Seniors-Site
>
For Immedate Release. -- Thursday August 7, 1997
"Bad Advice on LTC Insurance
Abounds"
Contact: Stephen Moses, Research Director,
206-515-7145, steve_moses@compuserve.com;
David Rosenfeld, Counsel for Public Policy,
206-515-7156, DMRatLTC@aol.com
Seattle--
Financial planning experts often give bad advice on
private long-term care insurance. Vulnerable seniors
who heed their recommendations run the risk of unnecessary welfare dependency and inferior long-term care.
Editors, journalists and other knowledgeable authorities
should sound a warning. Here's the story:
Over 30 million people read AARP's bimonthly magazine
Modern Maturity. In its July/August 1997 issue, Priscilla
Itscoitz of the United Seniors Health Cooperative, a
Washington, D.C.consumer group, gives this advice:
"Don't consider a LTC insurance policy unless you
have an annual gross income of at least $30,000, can
pay the premiums out of that income, and also have at
least $75,000 in assets, excluding your car and home.
If your gross income is below $15,000 and your nonhome, noncar assets are less than $76,000, Medicaid
will probably foot the bill."
A July 13, 1997
Washington Post article echoed Itscoitz's advice saying "individuals should buy a long-term care policy
only if their annual retirement incomes are over
$30,000 and if they have assets of $100,000 to $500,000
--not including their home." Deena Katz, a nationally recognized financial planner, bumped the ante
even higher in the Investor's Business Daily (January
24, 1996): "Below $250,000," she said, "you're probably a candidate for Medicaid."
What these experts are recommending, without saying
so explicitly, is Medicaid planning. According to Hal
and Debora C. Fliegelman, writing in the Summer 1997
issue of the Wake Forest Law Review, Medicaid planning
is "the process of lawfully re-arranging an individual's
assets so that the individual qualifies for Medicaid
under the law while the assets are sheltered for use by
a spouse, children or others....
These techniques...
include: divesting assets generally, transferring assets
between spouses, transferring assets to trusts, converting assets, and divorcing a spouse." Although Congress
and President Clinton imposed a criminal penalty on
certain asset transfers in the Health Insurance
Portability and Accountability Act of 1996 and targeted
the penalty toward attorneys in the recent budget bill,
the Fliegelmans report: "Medicaid planning is still
practiced by competent people of all socio-economic
classes in all fifty states."
What is wrong with this advice? Medicaid is a means-
tested public assistance program. It is welfare. The
program has a well-substantiated reputation for deficiencies of access, quality, reimbursement, discrimination,
and institutional bias. Furthermore, these problems are
getting worse! Medicaid is no longer required to provide
"reasonable and adequate" reimbursement rates since the
repeal this month of the Boren Amendment that required
them. For documentation, consult the quotations listed
below. Reach your own conclusions about the wisdom of
intentionally relying on Medicaid for long-term care
expenses.
So, what is the correct advice to give seniors and
their heirs regarding the purchase of private long-term
care insurance?
When someone cannot otherwise afford
private coverage, consider these options:
- invite
the adult children who will inherit the parents' wealth
to contribute toward the premiums (why should Grandpa
have to insure Junior's inheritance anyway?);
- use
home equity conversion to generate extra income (80%
of seniors own their homes and 80% of these own them
free and clear), or
- reduce excessive Medicare
supplemental insurance or life insurance premiums to
free up dollars for long-term care protection.
In a nutshell, financial planning experts should urge
families to pull together and work as a team to empower
their seniors to pay privately for red-carpet access
to top-quality private long-term care and to avoid
the risks and stigma of Medicaid dependency. The most
compelling reason to purchase long-term care insurance
is to guarantee access to quality care at the appropriate
level and locale, not merely to protect assets.
DOCUMENTATION OF MEDICAID'S DEFICIENCIES
"Because Medicaid pays nursing homes less than the cost
to provide the service, many nursing homes are reluctant
to accept Medicaid patients." (United Seniors Health
Cooperative, Long-Term Care: A Dollar and Sense Guide,
Washington, D.C., 1988, p. 32)
"There is strong evidence that Medicaid eligibles face
substantially lower access to nursing home services than
private payers." (James D. Reschovsky, "Demand for and
Access to Institutional Long Term Care: The Role of
Medicaid in Nursing Home Markets," Inquiry, Vol. 33,
Spring 1996, p. 16)
"Medicaid recipients have more problems getting into
nursing homes than higher paying private payers....
An ample bed supply may go unfilled if Medicaid payment
rates are too low to make it profitable to admit most
Medicaid recipients." (General Accounting Office,
"Nursing Homes: Admission Problems for Medicaid
Recipients and Attempts to Solve Them," GAO/HRD 90 135,
September 1990, pps. 2, 15)
"In the real world, you have to buy your way into a
nursing home. Average cost of the ticket: six to
nine months private pay.... Keep in mind that the
nursing home would rather take a private-pay patient.
A commitment for a certain number of months of private
pay will usually secure a bed." (Harley Gordon, How to
Protect Your Life Savings from Catastrophic Illness and
Nursing Homes, Financial Strategies Press, Boston, 1994,
pps. 200-201)
"Medicaid recipients are excluded entirely from nursing
homes that choose not to be Medicaid certified." (David
Landes, "What Legislators Need to Know About Long-Term
Care Insurance," pamphlet of the National Conference
of State Legislatures, May 1987, p. 5)
"Private-pay patients can usually find a nursing home
bed quickly. Waiting lists for Medicaid patients
(especially heavy-care patients), can stretch for several months, even a year or more. The only opening for a
Medicaid patient may be in a facility that is not convenient to visitors, or that does not provide quality care."
(Dana Shilling, Financial Planning for the Older Client,
National Underwriter, Cincinnati, Ohio, 1992, p. 73)
"More than a third of doctors surveyed by Medical
Economics exclude Medicaid patients from their practice....
Reasons given: 'Too much trouble for too little pay,'
'It doesn't cover my overhead,' 'Low pay for high risk,'
and frustration 'dealing with bureaucrats'." (Medicine
and Health, 10/11/93, p. 1)
"...the proportion of Medicaid recipients is indeed
associated with lower levels of RN staffing and a
higher proportion of residents not toileted...higher
proportions of Medicaid were found to be associated
with lower nursing home quality, suggesting that the
Medicaid program in fact exercises its power to bargain
for price rather than quality.... A higher proportion
of residents whose care is reimbursed by Medicaid is
associated with lower quality as measured by these
indicators.... Residents in homes with few private-pay
patients (implying more public-pay patients) were found
to be 30 percent more likely to experience functional
decline.... Simply raising Medicaid rates or mandating
parity across payers may not provide sufficient incentives for increasing quality. Under conditions of excess
Medicaid demand, there may be little incentive to provide
quality at any price...." (Jacqueline S. Zinn, "Market
Competition and the Quality of Nursing Home Care," Journal
of Health Politics, Policy and Law, Vol. 19, No. 3, Fall
1994, pps. 570, 573, 574-575)
"About 88% of U.S. nursing homes certified for Medicare
and Medicaid are 'drastically short' of nurse aides and
licensed nurses, according to a study...by the National
Committee to Preserve Social Security and Medicare.
Estimates of how much it could cost to correct the
problem vary between $200 million and $2.6 billion...."
(Older Americans Report, 9/21/90, p. 366)
"States' efforts to limit the number of beds to control
Medicaid costs provide a protective environment for most
nursing homes. Operators can have little or no fear
that their occupancy will fall or that a new home will
try to enter their market even if the quality of care provided is somewhat deficient." (William J. Scanlon, "A
Perspective on Long-Term Care for the Elderly," Health
Care Financing Review: 1988 Annual Supplement on Post-
Acute and Long-Term Care, Health Care Financing Administration, Baltimore, Maryland, December, 1988, p. 12)
"Facilities can attract as many Medicaid patients as
needed without addressing quality, because Medicaid
patients are most concerned with simply finding a bed.
Accordingly, higher-quality homes attract private pay
patients, and these facilities act on their preferences
for such patients by admitting them first and filling
the few remaining beds with Medicaid patients."
(Mark A Davis, "On Nursing Home Quality: A Review and
Analysis," Medical Care Review, Vol. 48, No. 2, Summer
1991, p. 149)
"Planning only for Medicaid eligibility severely restricts options,and would not be in the best interest
of many clients. For example, considerations should be
given to the following possible consequences of transferring resources in an effort to meet resource eligibility requirements:
- Possible loss of autonomy,
pride, and dignity; increase in dependence on others;
- Inability to purchase services not available under
Medicare or Medicaid;
- Reluctance of nursing homes
to admit Medicaid as opposed to 'private pay' patients;
- Donees of transferred assets may be or become unwilling to provide financial assistance to the donor when
needed; and
- Resource depletion eliminates the option
of obtaining entry to facilities that do not accept
Medicaid patients.
(William Overman, "Medicaid Program,"
Chapter 29 in Advising the Elderly Client, Clark,
Boardman, Callaghan, New York, June 1995, pps. 54-55
"Medicaid coverage for poor Americans seeking health
care resembles the last lifeboat for passengers on the
Titanic: it is not nearly large enough to accommodate
even half of those in need." (Gordon Bonnyman, "Deciding
Who Swims with the Sharks: Boren Amendment Litigation,"
Clearinghouse Review, Vol. 26, No.3, July 1992, p. 302)
"The evolution of Medicaid, especially in the past
five years, has made the program so complex that it
is incomprehensible to recipients and providers and
unmanageable for governors and states." (National
Governors' Association, quoted in New York Times,
8/4/92)
"Some facilities have Medicaid wings and require residents to move to them when they convert from private-
pay to Medicaid status.... If the Medicaid wing is
full, the facility may try to evict the resident....
Services for Medicaid recipients may not be as good
as those for private-pay residents." (Patricia Nemore,
"Drawbacks of Medicaid for Nursing Home Residents,"
Bifocal, Vol. 11, No. 1, Spring 1990, p. 1)
"'It's incumbent on us to realize that the states can't
continue to pay for Medicaid, which is a complicated,
second-class healthcare system for less than half of
the poor people in the country,' said Representative
Henry A. Waxman, a California Democrat who is chairman
of the House Subcommittee on Health and the Environment
and the author of a number of Medicaid mandates."(New York
Times, 3/24/92, p. A10)
The National Association of Insurance Commissioners
advises: "Medicaid will generally pay for long-term
care if you have very little income and few assets,"
but warns "Your choice of long-term care services
may be limited if you are receiving Medicaid." (NAIC
suitability standards, updated through 12/31/96,
Appendix C: "Things You Should Know Before You Buy
Long-Term Care Insurance)
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