Prominent Cape Cod Elder Attorney Arthur Crooks Warns of Nursing Home Finance Disaster in New Law

The Baker Administration in Massachusetts has proposed changes to MassHealth/Medicaid that would expand greatly its ability to seize assets from the estates, spouses, and children of seniors whose nursing home care is paid by the state.  MassHealth is basically broke and is dragging the Commonwealth down with it, so this legislation is something of an act of desperation.

Please click on the excerpt below to download the entire article.

Middle aged white women are killing themselves.

Middle aged white women are killing themselves.

And they are not alone.

There was a fascinating article, “A great divide in American death,” about the decline in life expectancy of rural white women in today’s Washington Post. It can be found at this site:

http://www.washingtonpost.com/sf/national/2016/04/10/a-new-divide-in-american-death/

Here is one of many fascinating graphs (click on it to see it better):

There is more and more drinking, smoking, drug-taking and depression in rural America, and it’s not working out very well.

Drugs are expensive, but they are a small part of the medical cost problem

An article in today's Wall Street Journal surprised me.  ("How Do We Deal With Rising Drug Costs?", p. R4) We are all aware of the astonishing costs of some drugs -- for example, biologics. We hear about people whose drug costs are $50,000/year or more.  (Whether paid by the insurance company or not.)

If fact, however, drug costs are only about 10% of health spending, and while drug costs are rising rapidly, so is over-all health spending.  It's a much bigger problem than just drug costs.

Retirement savings: We've got bad news, and worse news

Moody's reports ("Moody's: U.S. pension liabilities moderate in relation to Social Security, Medicare") that government pensions are underfunded by $7 trillion dollars.  (That's "trillion.")  Half of that is for federal pensions and half for state and local pensions.

That amounts to 40% of 2015 GDP.  This is a very big number.

The good (?) news is that this $7 trillion deficit is small when compared to the deficits in social security and medicare.  Social security's deficit is $13.5 trillion, or 75% of GDP, whilst Medicare's deficit is $3.2 trillion, or 18% of GDP.

Added together, the government is underfunded by 133% of GDP.  This compares with with the UK's 66% of GDP and Canada's 12% of GDP.

It is a deep hole; an abyss, in fact.

To access the article, please click on the penguins.

What percentage of their portfolios should retirees allocate to equities?

There is the old "Rule of 100" that financial planners have long used to advise their clients on equity allocation.  The rule goes as follows: Subtract your age from 100; that is the portion in percent of your portfolio that you should allocate to equities.  For example, I am 66, so I should have 34% of my portfolio in equities, which is about what I have.

There is an interesting article on this subject in yesterday Wall Street Journal (R1).  The article discusses possible allocations from 0% to 100% and finds advisors who advocate each mix for retirees.  One advisor, Tim Shanahan in Braintree, MA, says he has 70% of his personal accounts in cash and is advising his clients to do the same.  He believes equities and bonds are both very overvalued.

The article is worth reading.  Here is a link to download it.  (Click on the photo of pigs in the Bahamas.)

The 4% Rule: Making your money last through retirement

In 1994 a financial advisor proposed "The 4% Rule."  According to this rule, a retiree with a portfolio composed of 60% stocks and 40% bonds can withdraw annually 4% of his initial amount, which is adjusted for inflation each year, and still have a 90% probability that his portfolio will last for 30 years.

For example, if your portfolio is $500,000, you can take out 4% or $20,000 in year one.  If inflation is 5%, then in year two you can withdraw $21,000.  And so on.   This is a reasonably good approach,

But we don't know the future, so it is a good idea to start with the 4% but be prepared to change your strategy if conditions change dramatically.

Here is a recent article from The Motley Fool on the subject.  (Please click on the image.)

Hospice owner accused of telling nurses to overdose, kill patients.

Here is the sad case of bad behavior in elder care.

Hospice owner accused of telling nurses to overdose, kill patients.

The owner of a Texas hospice company has come under fire for allegedly encouraging employees to overdose patients and hasten their death in order to avoid the federal reimbursement cap for hospice stays.

Brad Harris, 34, owner of Novus Health Care Services Inc., allegedly told a nurse to overdose three patients on drugs such as morphine, and instructed another employee to give a patient four times the maximum dose allowed, according to an FBI affidavit obtained by a Dallas television station. In another instance, Harris texted an employee of the Frisco, TX-­based company “you need to make this patient go bye­bye.”

The FBI affidavit was written in February, but not publicly released until this week. No charges have been filed against Harris or Novus as of press time, and Harris remains free. The FBI declined to comment on the investigation, the Dallas Morning News reported.

The affidavit also accuses Harris of telling other healthcare executives that he sought out “patients who would die within 24 hours,” and of making comments like “if this f— would just die.” While at least one employee refused to comply with Harris' instructions, it's unclear if any patients were harmed.

The FBI's affidavit says Harris was motivated to find patients whose hospice stays were forecasted to be short, or even speed up patients' deaths, in order to skirt the payment caps placed on hospice care by Medicare and Medicaid.

Another employee said Harris would frequently decide which patients would be moved to and from home care, despite not being medically certified; Harris is an accountant by trade. Harris would have employees sign transfer papers with the names of doctors employed by the company, according to the affidavit.

"If a patient was on hospice care for too long, Harris would direct the patient be moved back to home health, irrespective of whether the patient needed continued hospice care,” the affidavit reads