by Karen Minto
Q: How did you discover Ayn Rand?
Moses: During this time of working in the government, fighting the bureaucracy and the incompetence, feeling like I was bouncing around in a rubber room, I was perfectly miserableófrustrated and depressed. My wife told me I ought to read Atlas Shrugged. I did, and the rest is history.
Q: How did she discover it?
Moses: Just from general reading. She could see from the kind of things I was complaining about that there was a connection and that Atlas could help me.
Q: So how great a change did reading Rand make in your life?
Moses: It saved my life. I donít know how much longer I would have survived otherwise. I was declining both mentally and physically, and it changed everything. Here was a philosopher who was like the one Iíd asked my freshman philosophy professor to tell me about. I had inquired "isnít there somebody who just accepts reality but explains all these puzzling philosophical paradoxes?" He said "no, unless maybe Hume." If he had told me then, twenty years before, about Ayn Rand it would have saved me all this grief. Philosophy was my first love, and here finally was a philosopher who made all the puzzles go away and had a fully rational system from metaphysics through epistemology, ethics, politics and esthetics. I read all the fiction and then all the non-fiction and then the newsletters and the books about Randís life. It consumed me intellectually for a number of years. That got me reading more widely in economics and the literature of freedom. Learning about public choice theory helped me to understand what I was facing in the government that hadnít made sense. Thereís a market in self-esteem just like there is a market in money and thatís what was so corrupt in the government.
Q: You began working for LTC, Inc. in 1989 as director of research. That company was trying to sell long-term care insurance. How do you sell something that the government is giving away?
Moses: That was exactly the question that I raised with the long-term care insurance industry. Although people over the age of 65 face a 9% probability of spending 5 years or more in a nursing home at $50,000 per year, only 7% of the elderly and virtually none of the baby boomers were buying private insurance against this risk. What I had found working for the government was that you could ignore the risk of long-term care, avoid the premiums for private insurance, wait until you got sick and then you could get the government to pay (despite the conventional wisdom that Medicaid is welfare and you have to be poor to get it). Approximately 70% of all patient days in nursing homes are paid for by Medicaid. I researched the phenomenon of Medicaid estate planning, whereby private attorneys shelter and divest assets on behalf of upper middle class people to get them on Medicaid. I made the connection that as long as people could get the government to pay after the insurable event occurred, why would they worry about long-term care, plan ahead, and pay up to 40 years of expensive premiums for private insurance? I presented this analysis to the principals at LTC, Inc. It made sense to them. They hired me and that was my ticket out of the government.
Q: But can poor people afford long-term care insurance?
Moses: No. The idea is not that we get poor people to buy long-term care insurance. The idea is that we stop taking care of the middle class and upper-middle class on a welfare program. Give them incentives to plan, save, insure and pay for their own long-term care. Give Medicaid back to the poor who have no other option. Now youíre going to ask me whether we really need government to do this, and my answer is going to be "no." But we do need a gradual transition to a fully privatized system. Otherwise progress is not politically feasible.
Q: If a typical welfare mentality has trouble getting the initiative to find a job, how do you convince them to care about their old age if their only efforts are to procure drugs, booze, sex, and lottery tickets?
Moses: The problem is not that poor people donít buy long-term care insurance. The problem is that the middle and upper middle class people who could be buying are not. Because if they donít, they end up taking advantage of the program that is supposed to be targeted only to the needy, but isnít.
Q: But say we had abolished welfare. How would the poor people be able to afford long-term health care insurance and what would happen to them when they got old and infirm?
Moses: In a rational, laissez-faire, free market for long-term care, people who failed to insure for the risk would have to spend down their life savings to get the care. The word would get around very quickly, and before long, almost everyone would buy insurance against the risk to avoid that outcome.
The Medicaid program would not be necessary as a financing source for long-term care, because those few people who failed to insure and remained dependent could be handled through private charities. But weíre not going to get to that point in one great leap. Itís going to be a gradual process. Just as Fabian socialism was incrementally installed in England, weíre going to have to back this monster out gradually. If I advocated stopping all public financing of long-term care, I wouldnít get the ears of any politicians or reporters. What weíve suggested instead, is a program called "LTC Choice." My new companyóThe Center for Long-Term Care Financing, founded in April 1998 when GE bought LTC, Inc.óhas published a white paper on that proposal.
The idea is that instead of Medicaid picking up the pieces after a person has a stroke at 85 as happens now, people would have to confront the risk of long-term care at age 50 to 60, when there is still time for them to plan and insure against the risk. If they buy insurance, then no problem. If not, they would have to agree in writing that they understand no government assistance will be forthcoming until they spend down all of their own income and assets first. Years later, when uninsured people need long-term care, their estates become their collateral for a government-backed, but privately administered line of credit to assist them in purchasing high quality long-term care in the private marketplace. This loan is recovered from their estates when they die. Only people who exhaust all of their savings receive welfare grants. With seniorsí estates and their heirsí inheritances at risk in this way, both will take the risk of long-term care more seriously. They will be far more likely to plan early and insure fully against the risk, thereby relieving the burden on the public programs and taxpayers.
Q: Is this insurance expensive?
Moses: Yes it is. But if every tenth house burned down, fire insurance would be more expensive also. The problem with long-term care insurance is that people usually do not buy it until their late 60s. By then it is quite expensive, because policyholders usually start needing long-term care by their late 70s or early 80s. The secret is to get coverage when you are younger. For example, I bought a long-term care insurance policy at age 50. I pay a level premium of $400 a year for a policy that will pay $200 a day toward nursing care and $120 toward assisted living for the rest of my life when the need arises. That same policy, obtained at the average age of purchase (which is 69) would probably cost $2,500 per year or more.
Q: Yes, but wonít the cost of nursing home care go up as inflation goes up and your policy would not be able to cover your expenses when you do finally get old?
Moses: You can buy a policy with inflation protection if youíre concerned about that.
Q: I see.
Moses: The latest long-term care insurance policies offer inflation protection that increases the benefit annually by 5% simple, or 5% compounded. You pay extra for this protection. Or you can do what I did. Today, nursing home care averages $135 a day. I bought $200 a day worth of coverage because Iím in the fieldóI watch the products, I wanted a base that I could afford at age 50 while Iím still putting my son through college. But assuming Iím still qualified medically and financially, in another 5 or 10 years Iíll add more coverage and kind of stack it on what I already have. Had I been buying a policy once and for all, I would have spent about twice as much ($800) and purchased one with compound inflation protection and a few other optional features.
This field is changing very rapidly. In 20 years, there is a high probability that most people will not get their long-term care in nursing homes. Custodial care of elderly people in an institution like a nursing home was entirely an artifact of public financing. Medicaidóthe welfare programópaid for nursing home care, but not for the kinds of care that people would rather receiveóhome care and assisted living. I want to be able to buy insurance in the future that will pay for the kind of care that is most desirable and available when I will need it. Most people donít want to die in nursing homes on welfare, but thatís where most of them end up, because that is the Medicaid provides.
Q: Yeah, and they put old people in there to stare at peeling wallpaper and thatís all they do.
Q: And the relatives hardly visit them because itís a smelly place and itís nasty and depressing.
Moses: The way the incentives in the system work now, when your parent gets old and needs help, if you want to keep your inheritance, you go see an attorney. It costs you about $2,000. They artificially impoverish your parents. They give you your inheritance early. Then, because youíve already got momís and dadís money, you no longer have a strong incentive to go visit them. That is why so many of our WWI and WWII veterans have ended their lives subsisting in welfare-financed hellholes.
Q: Is that like a living trust, where they hand over the money?
Moses: There are all kinds of techniques that the Medicaid estate planning attorneys use to impoverish the elderly artificially.
Q: Why are a growing number of financial advisors adding LTC planning to their repertoire of services and what inspired that move?
Moses: We have a real crisis in aging demographics in this country. The baby boomers are moving through American history like a pig through a python. When they start needing the kind of long-term care that has become such a burden to the public programs already, the burden is going to become completely insupportable. So financial planners, accountants and attorneys are getting lots of questionsóespecially from their baby boomer clients. The boomers see what is happening to their parents and they start worrying about what will happen to them. Because of the way the system works now, the only way get to long-term care for free is to become impoverished and enter a nursing home on welfare at the governmentís expense. Thereís a lot of demand for that because itís a cheap way to handle the problem. On the other hand, thereís also a good bit of demand for private insurance for people who want to take responsibility for themselvesówho donít want to end up dependent on the public programs. So itís a lucrative field for financial advisors of all kinds, whichever approach they take.
Q: Isnít it unfair to the taxpayers for the children to impoverish their parents and have them live on the taxpayer? Isnít that in a way like stealing?
Moses: Of course, thatís why Iíve been fighting it all this time. But Iíll tell you something interesting. The argument I get from Objectivists sometimes is: "Well, after all, we paid these taxes. This money was expropriated from us. Itís perfectly acceptable under Objectivist principles to recover, by any means what has been stolen from you." The problem with that argument, with which I would otherwise agree, is what happens to the seniors who lose their assets! Say, for example, that you have $250,000. With that money, you can purchase top-quality care in the private marketplace. Youíll never have a waiting list for the best long-term care facilities if you are paying the bill. You can get home care, adult day care, assisted living, and maybe even stay out of a nursing home altogether. But once youíve been artificially impoverished, in order to qualify for Medicaid, you are stuck with nursing home care, because that is usually all Medicaid provides.
Q: What do you do for hobbies or other activities outside of your mission for elderly care?
Moses: I love to read. When Iím not reading with a physical book in front of me, I have earphones on listening to unabridged recorded books. Iím currently working through ten volumes of Will Durantís Story of Civilization. I also love to travel. Iíve spent a lot of time overseas, usually with my family, traveling in Europe, South America, Australia, New Zealand. Judy and I explored Machu Picchu and Iguazu Falls on a month-long "vuelta" in 1969. We embarked for France with an 8-month-old baby on a Russian luxury liner in 1977 (that floating oxymoron has since sunk). I motored through Macedonia, Kosovo, Montenegro, and Serbia in 1989 just before Yugoslavia blew up. My son Damon and I toured the Outback in a camper van and dove the Barrier Reef in í95. The three of us took a train trip through China in í97 for a monthóBeijing to Hong Kong. It tickled me to listen to my audiotape copy of Atlas Shrugged while rolling through thousands of miles of central China. I enjoy the theater. We have season tickets for the Seattle opera. Online investing is becoming a passion.
Q: What is the greatest lesson you have learned from life?
Moses: I think
it would have to be that persistence prevails. If you just stick at something
long enough, you can have a major impact. The key thing is not to give
up. I like the idea in Objectivism that we need to produce before we consume.
Thatís a wonderful rhythm. I love going back and forth between really
heavy-duty focused, fully intensive work, and then relaxing a little bit
and enjoying achievement and savoring the sense of pride it brings. Iíve
learned that Objectivism is right. There isnít much in Objectivism that
doesnít work for me, intellectually and practically in life. Iím very
optimistic about the future. I think we could truly be on the brink of
Atlantis, because of what is going on in the information revolutionóhigh-tech,
communication, globalization. The significance of this revolution exceeds
the Industrial Revolution and it relies on and further empowers all of
the values and virtues that we celebrate in Objectivism. So itís just
a wonderful time to be alive. I think applying the principle that persistence
prevails in the context of the Objectivist values has the potential to
transform this world very quickly into what those of us in this community
of thoughtful people would like it to be.
(c) 1992-2000 Full Context