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It’s finally happened. Medicaid has run out of money to pay nursing homes in two states (Colorado and California – see below). Payment will be made but when? Small nursing homes are like small businesses – stop the cash flow and the business can close. What happens to the patients in this situation? How do the patients and their families feel who chose Medicaid planning over long-term care insurance because their tax dollars entitled them to “free care”?

In my training workbook for insurance agents, I pointed out a couple of years ago that while 2/3 of nursing home patients are on Medicaid, this is not true in four states that have a higher than average market penetration for long-term care insurance. In Iowa, Kansas, Nebraska and North Dakota, the Medicaid ratio of patients is 50%, 53%, 53% and 55% respectively (“Nursing Home Statistical Yearbook”, 2001). In all four states, over 15% of 65+ residents own LTC insurance per HIAA’s most recent report “LTC Insurance in 2000-2001,” Feb. ‘03. Coincidence? No. Why can’t we make this connection nationwide?

My company just completed the employee education effort for the State of Tennessee. As is true in most states, K-12 education is the #1 item in the TN state budget, Medicaid is #2 and higher education is #3. Some higher education teachers didn’t get raises this year and there are cutbacks in colleges and universities all over the state. In the employee education meetings, I did my best to draw a line between supporting LTC insurance and shifting money from Medicaid to private insurance so money that would normally go to Medicaid could be freed up to go to education in our state. You could see the blank looks on the faces of the teachers that this was brand new information.

I tried to make that evident to the benefits department of the State. They took it as criticism of the Medicaid program, instead of an intense effort to save the Medicaid program.

I made the same point in a meeting with the top health policy analyst in Sen. Frist’s office in March of this year.

How many states will run out of money and how many Medicaid patients will be affected before this message sinks in? How many schools won’t open on time if at all because Medicaid is sucking the state budget dry?

The sample letter for congressional representatives in the top story on my website to lobby for LTCI tax incentives points out that we need those Medicaid dollars for education and a lot of other things. I spoke to the Florida LTC Task Force a month ago, and their thrust is to find more Medicaid dollars for community-based services like assisted living and home care. They knew very little about long-term care insurance and once again, I asked why they weren’t working hard to make LTCI work in Florida so Medicaid dollars could be freed up to pay for the home-based care they want so badly.

Please use the letter (“LTCI Tax Incentives Need Your Immediate Attention!”, www.ltcconsultants.com) to help us get the above-the-line deduction we so desperately need to encourage Americans to plan ahead with long-term care insurance. HIAA reports show that better tax incentives is the #1 thing that will make more people buy in both the individual and corporate market.

Do seminars in your community to raise awareness. WRITE ARTICLES. Network with other professionals. Do radio and television talk shows. In all communication, make the point over and over that we cannot afford as a nation to pay for the baby boomers’ long-term care with public assistance. WE EITHER MAKE LTC INSURANCE WORK IN THIS COUNTRY, OR WE ALL PAY WITH UNPRECEDENTED TAXATION.

Patients with long-term care insurance policies in Colorado and California still have money coming in from the insurance companies. Medicaid patients don’t. Which side of the fence would you personally like to be on? If you’re reading this and you don’t have your personal LTCI policy, I hope this makes you sign an application in the next 24 hours. It’s only going to get worse until our regulators are able to connect the dots between paying for the babyboomers on Medicaid or paying with dollars from private enterprise with LTC insurance.

Thanks to the Center for Long-Term Care Financing (www.centerlec.org) for bringing these news briefs to my attention.

Phyllis Shelton

"LTC Daily Analysis Briefs. California Halts Medi-Cal Payments to Nursing
Homes SACRAMENTO, CA -- 06/27/2003 -- (Eli Digital) Cash-strapped
California has stopped payments to nursing homes, hospitals and clinics for
services they have already provided to the state's 6.4 million Medi-Cal
beneficiaries. The cutoff resulted from a $1 billion deficit that was
caused in part by the legislature's failure to adopt a spending plan on
time or to make cuts when expenses spiraled, the Los Angeles Times reports.
While state officials say they eventually will make the payments, they do
not say when. Medicaid costs have risen nationwide, but California's
problems were worsened by miscalculations, according to the
paper. Lawmakers, for example, overestimated by $100 million the amount
the state expected to collect from anti-fraud efforts, despite warnings
from top state officials and financial analysts that the figure was

Source: LTC Daily Analysis Briefs, June 27, 2003, prepared by
http://www.eliresearch.com/ for http://www.snalfnews.com/,

LTC Daily Analysis Briefs. Colorado Medicaid Fund Runs Dry. FORT COLLINS,
CO -- 06/23/2003 -- (Eli Digital) Colorado's nursing homes should brace
themselves for a delay in receiving their upcoming Medicaid reimbursement
checks. The state is suspending Medicaid payments to nursing homes and
other providers for the last week of June because the state's Medicaid
funds have run out, the Associated Press reports. Officials with the state
Health Care Policy and Financing Department said payments could be delayed
until July 8 in some cases. While the delay probably won't drastically
affect many facilities, some smaller homes might have to take out loans to
make ends meet."

Source: LTC Daily Analysis Briefs, June 23, 2003, prepared by
http://www.eliresearch.com/ for http://www.snalfnews.com/,

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