When I think of my friend Stephen Moses I imagine him as the proverbial town crier, speaking loudly with the courage of his convictions, who begins with what should be obvious that the earth is indeed not flat but concludes with the airtight conclusion that the Emperor has no clothes. Stephen was my first guest speaker in 1999 and the ingredients of his recipe to end the current long term care funding madness were already in the pot to boil. He was already clearly explaining that perhaps some of our basic assumptions concerning the source of our industry’s lack of sales success was our lack of understanding the true nature of the problem itself. That the threat of impoverishment was an illusion. That Medicaid was welfare which should be its only purpose. That perhaps a re-examination of our myopic vision of the risk itself must be at the beginning of potential reform. With assistance from the good folks at Paragon Health Institute he has recently released what can only be described as a very compelling manifesto based on a life of service to the same “Cause” I have attempted to chronicle in these columns for the last 20 years. Long Term Care: The Solution, October, 2023, should be mandatory reading for all stakeholders in the continuing struggle to blunt the still largely unprotected risk facing far too many Americans. In his previous work Long Term Care: The Problem 2022 and his preface to suggested reforms in the current work he carefully chronicles how we got here.
- There has never really been a visible risk for consumers. How in the hell did we expect sales success in that environment?
- The only real fuel burning anyone’s motivational fire is the robust and growing fire of state Medicaid costs. What’s worse is we sent out firefighters without sufficient water to change the course of events on the ground. The whole concept of possible mandatory impoverishment was pure fraud.
- What’s even more crazy is the government kept trying to return the cost and risk to the middle class. As an example, extending the look back period to five years. Those who could and should pay, however, continue to slip the noose. We still have massive fraud in Medicaid usage to pay for inevitable custodial care.
- Low interest rates only temporarily masked the financial pain which is returning to the political forefront. Experiments in yet another payroll financed social insurance cannot succeed as proposed. What the fire sale in Washington State has demonstrated is that, when the risk is clearly standing before you, private insurance will be the overwhelming first choice.
- As long as Medicaid pays for the middle class to shelter assets, the solution to the long term care conundrum shall remain caught in a financing trap of our own making.
Stephen has laid out a blueprint that attacks the problem at its core. He has once again boldly confronted what might be best described as the Naked Truth. Lawmakers must take practical actions to stop the State funding mechanisms. Severe and definitive actions need to be taken to finally alter the current failed trajectory.
Step One: Eliminate the Moral Hazard. Shut down all planning tools used to avoid personal responsibility—to include purchase of exempt assets, eliminate home equity exemptions, prohibit asset protection trusts and Medicaid compliant annuities. And perhaps most importantly extend the look back period to 20 years and then “monitor and enforce compliance.”
Step Two: Publicize the now exposed true risk.
Step Three: Reconceptualize the actual size of the risk.
Step Four: Proselytize affordable planning at younger ages.
Although the obvious solution is to tighten and reinforce the fences around our unique risk encampment, these proposals must appear somewhat draconian. As an old cattleman I know you must maintain effective fencing perimeters and nothing works better than new barbed wire. If those within the wire are to prosper they must accept that the only exit is single file with only one gate in the corner.
If by some miracle there were to arise the political will to actually fix a broken funding system, Stephen has provided a clear and precise blueprint to make a real difference.
Other than that I have no opinion on the subject.
