Stephen Moses, president of the Center for Long-Term Care Reform, prepared a Policy Report for the John Locke Foundation highlighting the potential budget problems linked to North Carolina’s system of financing long-term care services. Moses discussed the report with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)
Kokai: It sounds like a very tall issue for North Carolina to deal with, if this long-term care is going to create insurmountable budget problems [as the report you prepared for the Locke Foundation indicates]. Is this really a big deal?
Moses: Well, it is, and it’s not just North Carolina. Of course I’m working at the national level. We have a very serious problem with the aging of the baby boom generation. This is an age wave that’s about to crest, and soon will crash on the whole country, including North Carolina. We have some special problems in this state, which I reviewed for a week last June. We now have a report on the question of long-term care financing in North Carolina. Basically, the issue is, that with so many more people getting to the older ages and the cost of taking care of them in nursing homes and assisted living and home care so high, it becomes a burden that — with the programs that we have at the public level now already stressed — they can’t carry it and hence, the problem is insurmountable going forward over the next 10, 20, 30 years.
Kokai: You mentioned that part of the problem is the existing programs and the way in which people are using them. What are some of the problems there?
Moses: Well, the primary financing source for long-term care, especially nursing home care in North Carolina and the rest of the country, is Medicaid. Now Medicaid is a means-tested public assistance program. It is welfare, and it was never intended to be the primary financing source for everyone. It was to be a safety net for the truly needy. But over time, Medicaid has expanded to cover most people for long-term care, and that has created problems like bias towards nursing home care instead of home community-based care, which people would prefer, and a reluctance of people to take the issue of planning for long-term care seriously, resulting in their failure to use private financing vehicles like insurance or reverse mortgages. Now, this is the problem here in North Carolina. The state has been very generous with public resources. That has had the unintended but perverse effect of desensitizing the public to the risk of long-term care. I think very soon we’re going to have to change those incentives in the system to make it a positive incentive that people plan for long-term care and either purchase insurance or be prepared to pay privately. Otherwise, the public programs that we have won’t be able to take care of the poor adequately, much less the middle class and affluent, as they stretch to do now.
Kokai: Now I assume, Steve, that almost everyone will say, well, we don’t want the poor, old people to suffer in their old age and not get the healthcare they need, but what you’re talking about is not people who are old and indigent and would have no other resources, but people who have plenty of resources to deal with their long-term care who are still getting public funding for it.
Moses: Well, the important thing is that we get to people when they’re young enough, healthy enough, and affluent enough to plan for long-term care. Long-term care has a long tail — 20 or 30 years. You need to purchase insurance, for example, and begin setting aside reserves. That’s what insurance companies do so that they can pay claims later on when you don’t have the resources to pay privately for very expensive nursing home care — six or seven thousand dollars a month. The problem with the public programs is they don’t set aside any reserves, and when the time comes there won’t be any money there to pay for people’s needs. Social Security has a $16 trillion unfunded liability. Medicare’s unfunded liability is $75 trillion. Medicaid doesn’t even have a phony trust fund like those programs, full of IOUs to draw on, so long-term care is kind of the 800-pound gorilla of social problems waiting just around the next bend in public policy. And even if we solve Social Security and Medicare, we are going to be staring that problem in the face, and it is insurmountable unless individuals and families take personal responsibility for themselves. There’s an old saying — the best way to help the poor is not to become one of them, and so we are encouraging people not to become one of the poor in order to put excess strain on Medicaid. Yet that is exactly what is happening in the current system. There are actually attorneys specializing in impoverishing people artificially to qualify them for Medicaid, thus overloading Medicaid even further. So what I’m all about is preserving Medicaid as a safety net for the poor. My roots are in the federal service. I was a career U.S. government employee for 18 years, mostly with the Health Care Financing Administration, and I’m out here doing my best to influence public policy in the direction of preserving Medicaid as a safety net and encouraging everyone else to plan for the future to be able to pay privately for their long-term care and not become a strain on the system.
Kokai: You’ve outlined the problem. What is the first thing for us to do to help find a solution?
Moses: Well, in North Carolina there are a number of things that need to be done. You could implement the provisions on Medicaid eligibility in the Deficit Reduction Act, such as placing a cap on the exemptibility of home equity at half a million dollars; extending the look-back period on transfer of assets from three years to five years; eliminating the so-called half-a-loaf strategy — give away half and qualify in half the time for Medicaid. When I did this study, North Carolina had still not implemented those requirements in the Deficit Reduction Act. North Carolina could do a better job of collecting from estate recoveries. We estimate there could be another $60 million a year to draw on to relieve the burden on taxpayers and put more money into the system to provide better care. North Carolina could reconsider its focus on funding home and community-based care in the absence of a strict eligibility system. It just makes Medicaid much more attractive and further anesthetizes the public to the risk of long-term care. So those are a few things that would be a very good start for this state. [Editor’s Note: Proposed budgets for the next fiscal year include provisions for a 3.23 percent increase in rates most often paid to assisted living facilities, and more funds for community block grants.]
Kokai: If folks want to learn more about the center, what’s your Web site?
Moses: It’s www.centerltc.com, and you will find a wealth of content there, and I encourage people to go there and to feel free to contact me. My contact information is on the Web site.