LTCI Watch: 1in4 Save Scarce Medicaid Dollars

My own philosophy is pretty concrete: Try both approaches and see which works best.

My suspicion is that one common ground principle agree upon is this: Whatever acute health care or LTC services the government says it will provide, the government should provide those services.

If the government promises it will pay poor people's nursing homes, it should either make good on the promises or publicly cancel the nursing home support program, not try to hide a decision not to pay by paying extremely slowly, processing claims in an erratic way or providing such horrible care the poor people would be better off if they'd been dumped on the sidewalk.

Klein puts the well-known perils facing Medicaid in one neat, depressing package. Klein doesn't see private LTCI as a practical financing option for most people who will need LTC services.

Today, he notes, about 60% of nursing home residents rely on Medicaid.

But the story Klein tells makes the idea of voluntarily relying on Medicaid to pay future LTC bills seem foolish. House Republicans already are proposing to convert federal Medicaid aid into a fixed block grant, in a way that would, in effect, reduce total federal Medicaid funding by about one-third over 10 years, Klein says.

States are trying to stretch Medicaid money further by making more use of Medicaid managed care, especially for people who need LTC services, but there are no guarantees that managed care plans can safely and effectively serve the people who need LTC services, Klein says.

President Obama's budget proposal for fiscal year 2013, which starts Oct. 1, does not address the lack of a comprehensive and coordinated LTC program, and it proposes cutting federal health care spending by "blending Medicaid and Children's Health Insurance Program funding in a way that would reduce spending by $18 billion over 10 years, Klein says.

Obama also is proposing to phase out states' use of health care provider taxes to generate Medicaid matching funds, and his administration is proposing decrease aid for hospitals that tend to serve a high percentage of low-income, uninsured patients, Klein says.

"Where will the states find the money to replace what the federal government saves with these changes in policy?" Klein asks. "States are already struggling to find ways to reduce Medicaid costs. At some point, services and eligibility will be cut and beneficiaries will be expected to pay more of their modest incomes for health care."

One answer seems clear: The idea of a family with money protecting assets with Medicaid planning rather than LTCI seems unwise.

The family would be putting its future in the hands of a shaky government program, and siphoning off Medicaid assets that otherwise would be used to pay for care for people who really have no practical ability to buy any kind of insurance.