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September 8, 2004
Medicaid Long Term Care: Deadly For State Budgets
Report Addresses Problems and Provides New Solutions to Cure State Financial Woes

ALEXANDRIA, VA – The Council for Affordable Health Insurance (CAHI), in partnership with the American Legislative Exchange Council (ALEC), today released a new report, “The Long-Term Care Dilemma, What States Are Doing Right and Wrong,” by Steve Moses of the Center for Long Term Care Financing.

The Medicaid long-term care system is already on the verge of collapse, a decade before the baby boomers begin retiring. The report looks at the long-term care financing system, highlights its dysfunctions, and provides key solutions. Included in the paper are profiles of 10 states—five of which could be considered “pro-Medicaid” and five “pro-private pay” states—by looking at six variables and ranking them accordingly.

“Medicaid is being exploited by wealthier people, diverting resources away from the truly needy. This new report is exactly what the doctor ordered for states wrestling with massive and ever-growing Medicaid long-term care costs,” said CAHI Director Dr. Merrill Matthews. “It explains the problem in an upfront manner and offers real solutions, not denials or platitudes.”

Solutions included in the report:

  • Target scarce public resources to the genuinely needy.
  • Close the most egregious Medicaid eligibility loopholes, such as those related to annuities, trusts, asset transfers, and life care contracts.
  • Implement a strong estate recovery program to generate alternative nontax revenue and make Medicaid a loan, not a grant, for the middle class as intended by federal law.
  • Educate the public that Medicaid is no longer an entitlement and that long-term care requires savings, investment, and planning.
“The costs associated with providing institutional long-term care under Medicaid are absolutely unsustainable as the baby boomers approach retirement,” said Jim Frogue, Director of ALEC’s Health and Human Services Task Force. “Reverse mortgages are the key missing part of the long-term care financing puzzle. Up until now, state leaders have not explored this path assertively. States must address this problem now, or Medicaid will consume their entire state budgets within a generation, endangering resources for such spending priorities as education, highways, and law enforcement.”

To schedule an interview with CAHI Director Dr. Merrill Matthews, or to obtain a copy of “The Long-Term Care Dilemma, What States Are Doing Right and Wrong,” contact Tom Gardner, director of Communications at (703) 836-6200 x386 or tgardner@cahi.org.

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