Dear Gail Sheehy,

As a public figure with considerable influence, you have a responsibility to educate yourself before you advise the public on any topic.  Your comments on a recent Diane Rehm Show were not only incorrect, but also harmful because your listeners may use your words as an excuse to do nothing about long-term care planning, eventually suffering severe emotional and financial consequences as a result.

I understand that you were a substitute speaker at our Intercompany Long-Term Care Insurance Conference in March 2010, and I am grateful for your filling in at the last moment.  The audience enjoyed your compelling story about the hardship you endured as a caregiver.

It’s interesting that such a difficult journey evidently taught you so little about everyone’s need to take responsibility to financially plan for long-term care. Even more disturbing is that as an influential public figure, you did not admit that you are out of your area of expertise and instead have no problem giving false information out to the public.

I listened to the part of your interview with Diane Rehm where you gave false information about long-term care insurance. Based on this, I wager that you don’t own long-term care insurance. If I am wrong about this, I will buy you a steak dinner. If you owned long-term care insurance, you would have learned during your buying process that most LTC insurance is NOT capped at $115,000. Your additional misconception that long-term care insurance can be too expensive for many also proves you probably don’t own long-term care insurance.

It’s a real betrayal that such an ill-informed long-term care insurance basher wound up being the keynote speaker at our conference!

This is from Steve Moses’ May, 18, 2010 blog on this subject: “*** GAIL SHEEHY keynoted this year’s Intercompany Long-Term Care Insurance Conference in New Orleans last March. But evidently she’s no friend of long-term care insurance. We got this tip from a corporate supporter of the Center for Long-Term Care Reform: Sheehy was interviewed on the Diane Rehm National Public Radio (NPR) show last week about eldercare/caregiving issues. When asked about her opinion of long term care insurance, she was less than flattering – not at all endorsing such protection. Rather she touted PACE programs through Medicaid as a wonderful service. (PACE is as good as Medicaid gets, but it suffers from inadequate funding like everything in Medicaid.) Listen to the show here. The part in question is around minute 48:25. Diane Rehm comments that most LTC insurance is capped at $115,000 and Ms. Sheehy agrees. The ignorance of influential people in the media who should know better, who have a responsibility to listeners to know better and advise correctly, is mind-boggling. ***”

On being able to sustain our current methods of funding long-term care:

“Medicaid is the principal funding source for long-term care (LTC) throughout the United States. Although LTC users are only seven percent of the Medicaid population, they account for more than half of the program’s costs nationally.” Stephen Moses, The Center for Long-Term Care Reform 

“Within 12 years, without an increase in interest rates, the single-largest line item in the federal budget would be interest on the federal debt. That means more than defense, more than social security, more than Medicare.” David Walker, Peter G. Peterson Foundation 

Long-term care is expensive. One year of care in a nursing home, based on the 2008 Texas average, costs over $43,000 for a semi-private room. www.ownyourfuturetexas.org

On the urgent need for responsible long-term care planning:

The lifetime probability of becoming disabled in at least two activities of daily living or of being cognitively impaired is 68% for people age 65 and older. - The American Association for Long-Term Care Insurance (AALTCI) 

“The greatest risk is not the longevity of this bear market, or even another bear market. It’s the devastating cost of long-term care.” – Terry Savage, nationally syndicated Chicago Sun-Times personal finance columnist. 

 Sooner or later, the Age Wave will crest, Medicaid will fail, and the bottom will fall out of our welfare-financed, nursing-home-based LTC system. 

 Rhode Island took a gutsy leap into radical Medicaid reform last year. The Centers for Medicare and Medicaid Services (CMS) granted it a “global Medicaid waiver.” Rhode Island agreed to a cap on Medicaid matching funds for five years in exchange for more flexibility, less bureaucracy, and the opportunity to explore ways to save money while improving care.

“Doing LTC Right” is a newly issued, joint report from the Ocean State Policy Research Institute and the Center for Long-Term Care Reform.  This report clearly identifies problems, concerns, and remedies. It outlines measures that should be taken so that Rhode Island can take care of its needy, stay in the black, and avert financial catastrophe.

As far as I’m concerned, “Doing LTC Right” is a ray of hope for the future of long-term care in the US.  

A recent LIMRA report titled Individual Long-Term Care Sales Survey says sales of individual long-term care insurance (LTCi) policies fell the last quarter of 2008 and the first quarter this year.

This correlates well with my October 2, 2009 blog which documents how ill-informed the public is regarding the realities of needing long-term care and how it is paid for. The MetLife Long-Term Care IQ Survey, reveals that most are not taking appropriate steps to protect themselves from these potentially catastrophic expenses.

Here’s why:

“The government pays today for the vast majority of all expensive long-term care. Medicaid pays for almost half; Medicare, a quarter; several percent come from the VA, and over 10% is nothing more than Social Security “spend-through” of people already on Medicaid.

Therefore, 85 to 90 percent of all expensive long-term care in the USA is paid for by direct or indirect government funding or spend-through of Social Security income by current Medicaid recipients.

In fact, only about 10 to 15 percent of all expensive long-term care is paid for out-of-pocket from personal income or assets.”

The words above came an address given by Steve Moses, President of the Center for Long-Term Care Reform, at The 8th AALTCI Long-Term Care Insurance Producers Summit Kansas City, Saturday, November 14, 2009.

If the government pays for 85 to 90 percent of all expensive care in this country, why bother with long-term care planning? The fact that government-paid care is typically inferior, offers few options, has a bleak future ahead, reduces peoples dignity and often adds undue stress to people and their families is obviously irrelevant to many, as long as the government continues to provide them with a mostly free ride.

If you can understand the quote above you are well on your way to understanding why sales of long-term care insurance continue to languish.

Here’s a follow up to my Tuesday, October 27, 2009 blog about the CLASS Act. The following paragraph is so well-written and easy to understand that I have taken it entirely from The Center for Long-Term Care Reform’s posting yesterday.

CLASS stands for Community Living Assistance Services and Support. Its passage would result in government paid long-term care insurance.

“The Washington Post (10/28, Montgomery, 684K) reports on “a quiet revolt…brewing against…a plan to create government insurance for long-term care” known as the CLASS Act. The late Sen. Edward Kennedy “pushed to have the measure included in the health-care overhaul package that passed the Senate health committee in July.” According to the Post, the proposal that would “create long-term care insurance that would be available to anyone, including those who are already disabled,” has “gained momentum in recent days.” However, “An array of groups — including the Congressional Budget Office and the American Academy of Actuaries — have questioned the design of the program, warning that it could easily require vast infusions of cash to cover benefits after 2019.” Sen. Kent Conrad “called the CLASS Act ‘a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of,‘ and he vowed to block its inclusion in the Senate bill.” Source: Michael Cannon, Director of Health Policy Studies, Cato Institute”

C.L.A.S.S. stands for Community Living Assistance Services and Support.  The CLASS Act has generally been overlooked in the debate over health care reform. It is a bill introduced by the late Senator Edward M. Kennedy, that would establish a national long-term care insurance program.

Stephen Moses, President of the Center for Long-Term Care Reform, attended a Kaiser Family Foundation briefing titled “The Sleeper in Health Reform: Long-Term Care and the CLASS Act” on October 21, 2009 in Washington, DC.

His reporting on the hearing was picked up by “McKnights Long-Term Care News & Assisted Living”. Click herefor the article, which I beleive is absolutely brilliant.

Although the article deals with complex issues, I think it is clear and easy to follow, even by “lay” readers.  If you take the time to read it, you will gain great insight into why long-term care insurance sales lag, as well.

In my opinion, Mr. Moses bursts a lot of bubbles using nothing but facts and common sense.  The presenters appear to be highly accomplished policy people and academics. As far as their understanding of how enactment of the CLASS Act would actually function,  they dwell in a fantasyland  far removed from reality. The CLASS Act essentially proposes government run long-term care insurance. The brilliant presenters clearly lack the necessary business background to understand what it would take to make CLASS viable.

Here’s a quote from an article by David Abel in the October 15, 2009  Boston Globe.

“A $332 million state program that oversees home health care services for about 18,000 elderly and disabled residents is vulnerable to fraud and has employed personal care attendants who have committed felonies, including manslaughter, assault, and threatening to commit murder, according to a report released yesterday by the Office of the State Auditor.”

This article refers to the Massachusetts Medicaid program, which is one of four in the nation that has no requirements for training, education, and criminal background checks for personal care attendants.

Here’s the article: http://www.boston.com/news/local/massachusetts/articles/2009/10/15/home_care_system_leaves_elderly_at_risk_auditor_says/

Why is Medicaid paid care often inferior to what we call “privately-paid” care?

Because Medicaid usually pays less than what it costs to care for patients well. Often, corners must be cut, causing Medicaid-funded facilities to hire fewer qualified people, and pay them less.

If you need care for a lengthy amount of time and you haven’t planned well by purchasing LTC insurance, you could wind up qualifying for Medicaid.

I helped underwrite a recently published report titled The Age Wave, the Ocean State, and Long-Term Care, written by Steve Moses, President of the Center for Long-Term Care Reform. The Ocean State Policy Research Institute (OSPRI) invited Steve to conduct the study, which was supported by corporate and individual donors like me.

The report is intended to identify the key issues surrounding Rhode Island’s unique “global Medicaid waiver”, which was granted by the Centers for Medicare and Medicaid Services (CMS). This waiver gives Rhode Island the latitude to experiment with policies not otherwise allowed under federal law in exchange for accepting a cap on federal Medicaid matching funds.

While the “global Medicaid waiver” obviously provides Rhode Island with a great opportunity for experimentation, it could also cause huge cost over-runs for the state’s already greatly indebted budget.

The report identifies the changes people want from the government, such as covering more home health care and less nursing home care. It then shows measures that can be taken to finance the desired changes without causing further debt. In fact, these measures could actually cause increases in revenue.

Please contact me if you are interested in seeing this report.

The following is a summary of John Goodman’s recent Forbes article about the status of Medicare and Social Security. It is important because currently, these two programs plus Medicaid pay the majority of long-term care costs in this country.

I take no credit for the summary. It was written by friend and Center for Long-Term Care Reform President Steve Moses.

For the article itself, click here.

What all of this boils down to is that our current, primarily government-funded methods of paying long-term care costs are not only broken, but unsustainable.

I prefer to use firsthand, front-line stories to illustrate how not owning long-term care insurance can destroy dignity, rob people of options, and wreck havoc with families. If you don’t like my approach perhaps Steve’s more numerical, factual approach will resonate more.

Either way, if you don’t own long-term care insurance, you need to be talking about it and taking it seriously RIGHT NOW!

——————

AN UNFUNDED LIABILITY EXPLOSION, summarized by Steve Moses.

Recently, the Social Security and Medicare Trustees released this year’s annual report on the economic health of both programs. Unfortunately, the Trustees and the financial press ignored the massive unfunded liability that is being created for future generations, says John C. Goodman, president and CEO of the National Center for Policy Analysis.

According to the Medicare Trustees:

o Medicare’s expected future obligations exceeded premiums and dedicated taxes by $89 trillion.

o In other words, Medicare’s liability is about 5 1/2 times the size of Social Security’s ($18 trillion) and about six times the size of the entire U.S. economy.

o Throw in Medicaid, and health care spending alone will crowd out every other thing the federal government is doing by mid-century, says Goodman.

Clearly we are on an unsustainable path.

Source: John C. Goodman, “A Medicare Explosion,” Forbes, May 19, 2009.

For text:

http://www.forbes.com/2009/05/19/medicare-ticking-bomb-opinions-contributors-goodman.html

This morning, I got a mass email from The Ohlson Group, wanting me to view a free, 10-minute video featuring Raymond J. Ohlson, CLU – President & CEO of The Ohlson Group, Inc., and Maureen Rulison – President of Medicaid & Financial Planning Services of Florida.

Here’s a quote directly from the email, “Now there’s a tool that gives caregivers the right to be compensated by the sick parent and not have it looked upon as a gift by Medicaid. There’s NO 5-year look-back if done with a personal service contract. This additional form of Medicaid planning has opened a new market for advisors dealing with clients who are caregivers. This is an opportunity to positively change lives and be rewarded handsomely in return.”

Here’s the deal: the agent makes a commission by selling an annuity. The family caregiver gets to keep much of their inheritance and not have it hemorrhage away, paying for their parent’s care.  Sounds great, doesn’t it?

In the video, Ms. Rulison even advises families to contact her well in advance of an event requiring care, as if everyone and anyone ought to take this approach.

But my questions are, whose best interest is at heart with this approach?

Why isn’t there as much energy spent educating advisors and public alike, on a much better solution – to purchase long-term care insurance while premiums are reasonable and coverage is possible?

Does the approach above sound Madoff-ian and too good to be true to you? It does to me.

The government is bankrupt (or nearly so). Because of this, trends to cut payments of Medicaid funded long-term care continue. A visit the Center for Long-Term Care Reform (CLTR) will provide you with insight into the magnitude of our indebtedness, how we got into this predicament, and why Medicaid-funded care is inferior. I find the CLTR absolutely invaluable, as source of unbiased knowledge and insight into this looming, extremely imminent crisis.

The party on the shortest end of the stick is the loved one who needs care. In my job, I have visited and toured through dozens of care facilities of all types, and compared notes with dozens of colleagues on the opposite side of the fence who are intake and assessment nurses, home health care agency owners and marketers, directors of nursing, etc. Endless surveys prove that reduced Medicaid payments are correlated to poor care quality. Reimbursements for Medicaid patients simply do not cover costs. There are fewer and fewer Medicaid beds available. This, we all concur, is fact.

I am saddened that our system of government-funded care is falling apart, largely due to exploited Medicaid loopholes like the one described above. These loopholes seek to enable people who have the money to pay for care, to “game the system”, by re-positioning wealth, and having Medicaid pick up the tab.