Forward on Reverse: A conversation with Stephen A. Moses of the Center for Long-Term Care Reform Inc.: Part IIIAtare E. Agbamu, CRMSreverse mortgage, medicaid, long term care insurance, Long Term Care Reform
Atare E. Agbamu: What do you think is going to happen if
people don't get the message about the relationship between
Medicaid and reverse mortgage sales?
Stephen A. Moses: If people don't get the message, we'll
just continue on the course we've been on. Medicaid will collapse.
A lot of poor people will be hurt. And the baby-boom generation
will have no way to pay for long-term care except [for] their home
equity. They won't buy insurance; when the time comes, Medicaid
won't be there for them and they will have to use their home
equity. Regardless of whether we solve the problem through
responsible public policy or just leave it alone and let Medicaid
collapse, both the reverse mortgage industry and the long-term care
insurance industry are going to explode in popularity, because that
will be the only way to pay for decent long-term care. The tragedy
is that a lot of poor people will get hurt. And a lot of young
people won't get inheritances from their baby-boomer parents
similar to what baby-boomer parents are getting from their World
War II generation parents.
AA: What do you say to people who say premiums for
long-term care insurance are just way, way [expensive] for most
people in their 70s? They will not be able to get the right policy
at the right price because they may have pre-existing conditions
and other factors that could disqualify them from getting a better
policy.
SM: Well, you can't buy fire insurance when your house is
in flames, and you obviously can't buy long-term care insurance
when you already have Alzheimer's disease. Most people who make
those kinds of arguments are totally unrealistic about economics,
and the idea that you can now transfer this risk to government
programs that are already bankrupt just covering what they have
already covered is just so economically and philosophically
irresponsible that it's frankly kind of sickening. The reality is a
vast majority of people can afford long-term care insurance if they
purchase it at the most appropriate time of their lives. It's
cheaper when they are younger. But if they are raising a family
well, then maybe later on if incentives are in effect. The children
that they raised, if they are in responsible positions, can
supplement the parents to afford long-term care insurance.
The main thing is that there should be an incentive to buy it
and an incentive to use home equity if they don't have the other
resources to afford it. Those incentives have not been there in the
past; as a consequence, both the long-term care insurance and the
reverse mortgage industries have been under-developed. Those
incentives are developing, per small step of the Deficit Reduction
Act of 2005. There will be more restrictions in the future. So you
will see people re-evaluating the risk such that they're willing to
pay more toward the purchase of long-term care insurance. As they
see the need for it and as the need becomes real, they'll be more
and more likely to tap their home equity to help them afford
it.
In your 70s, long-term care insurance gets expensive. I
purchased it for my parents in their mid-70s in 1989. I've paid the
premiums ever since, because I don't think they should have to pay
the premiums on insurance that protects my inheritance. And I've a
policy for myself and my wife that I've [been paying] for 10 years.
I am part of the solution. I pay my taxes in order to preserve
Medicaid as a safety net for the poor. What I resent is paying
taxes that support people who hire attorneys to get rid of their
assets in order to take advantage of a program that's supposed to
be for the poor. They've basically ruined Medicaid as a safety net
for the poor. And my mission and the mission of my organization,
the Center for Long-Term Care Reform, is to give Medicaid back to
the poor and encourage everyone else to plan responsibly for
long-term care, which they can and should afford to do if they put
the proper priority on that risk.
AA: Do you have any closing remarks for reverse mortgage
lenders?
SM: I think they should wake up, smell the coffee, take it
upon themselves to learn more about the relationship between public
and private long-term care financing, and then get involved in
publicizing this and educating their salespeople so that we can get
the word out to the public that long-term care is a risk for which
they need to take responsibility in the future.
AA: Steve, thank you very much for this
opportunity.
For more information about Stephen A. Moses and his mission
at the Center for Long-Term Care Reform, visit www.centerltc.com. Atare E.
Agbamu, CRMS is president of ThinkReverse LLC, a reverse mortgage
training and consulting firm based in the Twin Cities and is a
consultant with Credo Mortgage. Atare is regarded as an emerging
authority on reverse mortgages and is frequently consulted by
financial professionals and families across America. His reverse
mortgage interviews have been Web cast on MortgageMag Live! He can
be reached by phone at (651) 389-1105 or e-mail
[email protected].
