O•P•I•N•I•O•N
Medicaid and Long-Term Care: The Numbers Just Don’t Add Up
For those of you who didn’t keep up with the Stimulus
Package debate, I congratulate you. You are by far wiser than
those of us who constantly caught updates on the Net, CNN,
Fox and other news outlets. Further, I expect you are enjoying a
sense of peace the rest of us are having difficulty finding.
I watched the debate with interest, particularly the proposals that relate to Medicaid. Now that the bill has passed, I
want to share some observations that should create a sense of
urgency and motivate your clients to discuss long-term care
planning issues.
States in Trouble
First, one thing is clear: The proposed federal Medicaid intervention will hog-tie the states; and prevent them from taking prudent cost-saving measures. Many states, because of
budgetary problems, have been cutting benefits and tightening qualification requirements in order to reduce overall
Medicaid costs. The new Stimulus/Spending Bill mandates
that states keep the same eligibility requirements and application processes that were in effect as of July 1, 2008. This
would rescind many of the cost-saving measures states have
already implemented.
States, for the most part, are already reeling because of
tough economic times; they can barely keep up with Medicaid
demands. For example, Kentucky Medicaid rolls increase by
3,000 people a month and Maryland had 50,000 new enrollees
last year. Florida signed up 200,000 more people than last
year. (We all knew that Florida was a retirement haven. Well,
now you see one of the repercussions of all that warm weather.) At first glance, federal help would appear to be just what
many states need. However, when you examine the facts, it is
actually quite disturbing.
Additional Burdens
To begin with, the additional aid being offered by the feds
will only last through 2011 but, by requiring the rescission of
previous state cutback measures while expanding Medicaid rolls,
this so-called assistance is the height of fiscal irresponsibility.
For instance, the feds want to extend Medicaid coverage
to include individuals and dependents who receive unemployment or who have exhausted unemployment benefits.
On January 30, the Labor Department reported that the
number of Americans continuing to claim unemployment
insurance for the week ending January 17 was a seasonally
adjusted 4. 78 million.
by Phillip W. Sullivan
President SellingLTC.com LLC
Rabun Gap, GA
psullivan@sellingltc.com
In addition, the president signed the State Children’s
Health Insurance Program, which provides coverage to 4
million more children of low-income families who make too
much to qualify for Medicaid. This alone will cost the states
an additional $33 billion each year. With states already
struggling, where does the government expect the money to
come from for these new benefits?
Let’s sum this up: The feds want to dramatically increase
Medicaid rolls, rescind cost cutting measures instituted by
the states, and provide only two years of relief. The feds are
basically demanding the states engage in irresponsible fiscal
management, which will only exacerbate the states’
Medicaid budget problems. The fed plan only treats the
symptoms, not the problem. It appears that our representatives want to continue to measure the merits of expanding
and managing Medicaid based on social ideology rather
than economic reality.
Add the growing burden of Medicaid (in addition to the
fiscally irresponsible actions the feds are requiring states to
engage in) to the unfunded liabilities of Social Security and
Medicare for future benefits, which is estimated to be $102
trillion dollars, and the big three entitlements are in a disturbing state.
Final Thoughts
What does this mean to us and our clients? It means the
chances of future consumers finding any relief from the government for long-term care needs is slim. We will be lucky if
they will be able to help the actual people for whom the program is intended, much less the unintended (those who only
get Medicaid through aggressive Medicaid planning).
As financial services professionals, we must get the message out that everyone needs to create and implement a
plan of action to ensure all of their future needs will be met.
Ignoring the true financial state of the big three entitlements while considering any plan is perilous indeed.
The boomer wave is here; we can hope for the best, but
we better plan for the worst. Our clients need to know that
their future is ensured regardless of the state of Social
Security, Medicare and Medicaid. We need to plan for the
future as if these programs don’t exist because, at the rate
we are moving now, it’s likely they won’t. Our responsibility
to offer our clients wise and prudent advice does not cease
simply because difficult economic circumstances exist. They
need us now more than ever. HIU
