“Medicaid [long-term care] should be restored as a safety net for indigent elderly people,” but “lawmakers should eliminate the ability to access publicly funded LTC while preserving wealth,” Stephen Moses, president of the Center for Long-Term Care Reform, writes in a new paper, “Long-Term Care: The Solution.”

The center promotes universal access to quality long-term care by encouraging private financing as an alternative to Medicaid for most Americans.

The new paper is a follow-up to Moses’ “Long-Term Care: The Problem,” which was published a year ago by the Paragon Institute. In the previous paper, Moses asserted that the Medicaid program is largely responsible for problems in long-term care. The solution, he believes, is for Congress to eliminate all Medicaid loopholes that allow individuals to qualify for long-term care benefits while holding onto their financial reserves.

“Keeping Medicaid LTC easy to get while preserving exempt wealth but with later estate recovery as an incentive to plan did not work,” Moses told the McKnight’s Business Daily on Tuesday.

He contends that Americans have sufficient money to fund their long-term care needs privately via home equity, retirement savings and life insurance. 

“Personal, not public, responsibility for LTC is deeply rooted in American values, statutes and policy,” Moses wrote.

With many baby boomers — those born between 1946 and 1964 and currently aged 58 to 77 years — in or nearing retirement and an increasing percentage of the overall population living past 85, creating a sustainable long-term policy is crucial, according to Moses.

Moses detailed seven options that he says would “empower younger and middle-age Americans to meet a new, publicized individual LTC planning responsibility.” Those options:

  1. Private insurance. Moses encourages Americans to purchase long-term care insurance policies that offer minimal coverage standards based on age, sex and health status.
  2. Investment accounts. According to Moses, younger Americans should establish new tax-deferred investment accounts similar to the 401(k) or individual retirement accounts already available, to cover future predictable long-term care expenses.
  3. Retirement savings. Moses believes that Americans should be able to set aside a portion of their retirement savings to meet the long-term care planning responsibility. 
  4. Home equity. Before applying for Medicaid, according to Moses, an older adult should put a lien against his or her home or draw on a reverse mortgage.
  5. Life insurance. “Many life insurance policy holders can carve out enough of their cash values or death benefits to meet their personal LTC responsibility,” Moses wrote.
  6. A deferred reverse estate annuity mortgage, or DREAM. Admittedly, Moses said, this option doesn’t currently exist, “but it is similar to the existing Medicaid estate recovery obligation except that it moves the responsibility forward in time and ensures eventual LTC funding availability.”
  7. Capture the other end of the age spectrum from estates. This plan could reward people who begin saving, insuring or setting aside resources for long-term care before they reach age 40 with reduced long-term care costs down the line.

According to the author, each of those seven suggestions could be managed by employers, insurers, banks or brokers, thereby taking the government out of the planning.

“Other tools and methods of satisfying the LTC planning objective will evolve naturally in a market not distorted by Medicaid rules that reward failure to plan,” Moses wrote.