How the Supreme Court Decision Affects Long-Term Care Insurance

My main concern in this situation was addressed…at least temporarily. I’ve been saying since the Patient Protection and Affordable Care act was passed in March, 2010 that the most dangerous part of this law is the Medicaid expansion, not the individual health insurance mandate. The Medicaid expansion part says that the federal government will pay the initial cost of using Medicaid to provide free health insurance to anyone with an income up to effectively 138 percent of the federal poverty level, beginning in 2014. Before the Supreme Court decision on June 28, 2012, the federal government could threaten to withdraw ALL federal Medicaid funding from the states if they didn’t play ball with this new plan. Chief Justice Roberts said that kind of coercion IS unconstitutional. He said the federal government could expand Medicaid as long as it didn’t threaten states with the withdrawal of federal funding for existing Medicaid programs.

As for the individual mandate, it is not constitutional under the commerce provision of the law, but it IS constitutional under the tax provisions of the law. NO criminal penalties will be levied if individuals choose not to buy health insurance. There CAN be tax penalties, however. This means that insurance companies will continue down the road of accepting all applicants, regardless of pre-existing conditions, beginning in 2014.

Back to my main issue. I said it was addressed temporarily. Part of PPACA includes cutting funds to providers for indigent patients, primarily the uninsured. Those cuts will continue to happen which means the pressure on the states to accept the three years of 100% funding from the Federal government for the Medicaid expansion is mounting exponentially as you read this message. That funding sounds great until you consider all the additional administrative expenses the states will have to undertake to accept such a large number of Medicaid enrollees. Just preparing the eligibility and claims systems alone can be a monumental task for many states!

My bottom line: all of this makes it even more critical for people to own long-term care insurance as it is highly questionable as to how many Medicaid dollars will be there for LTC in the future. In 20-30 years, people who need long-term care will be sharply divided between haves and have-nots. Many people who elected to self-insure will be squarely in the middle of the have-not bucket as the cost of care soars to $1000 a day in 30 years. Money buys choices. Without long-term care insurance, most families simply won’t have the money to buy care and their worst nightmare will happen as the burden for their care falls on their children and grandchildren.


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