Bob Kramer

Scott

I'd like to welcome to this episode of our Versed podcast, Bob Kramer, who is the founder and fellow at Nexus Insights and co-founder, former CEO, and now a strategic advisor at the National Investment Center for Senior Housing and Care. Bob hay, thanks for coming on our podcast.

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Bob

Thanks for the opportunity, Scott. Look forward to our discussion as always.

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Scott

Yeah, and, and by the way, there are a lot of things we could talk about, I think from kind of, your work on the middle market to AI transforming long-term care, to transparency, to value-based care. I mean there are a whole host of issues we could talk about, and I'd love to have you on again, the future to do a deeper dive on some of those. But I'm going to have you on kinda as a special topic today. I've been doing this podcast for about two and a half years now, and this is the first one I've done where it's been a very pinpoint topic. Because I think you posted something on LinkedIn a few weeks ago that really touched me. And I think for our listeners, it'll be a really interesting conversation because what I love about you, Bob, is that you're always thinking about what's next.

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Scott

And I think you always do a great job of pushing the rest of us to understand and think about what's next. And I love as a leading advocate in the industry for all of the decades you've been part of it. And here you are thinking about what's next. Again, most of us can't get outta the 2024 cycle. Your post on LinkedIn a few weeks ago was talking about how finally in the 2028 election cycle, I'm going to quote you here, finally, long-term care will become a mainstream campaign issue for the very first time. And I gotta tell you, Bob, as someone who's been in politics for a long time, I really had to think about that because you're absolutely right. National candidates for the White House in particular have largely ducked this discussion despite the fact that it has an incredible impact on a majority of the constituents in our country. And I'd love to dig a little deeper as to your thoughts as to what's going to happen in 2028 that's going to make that conversation finally unavoidable or hopefully also some candidates that will take on a voluntary basis. But let's talk a little bit about why it's not a campaign issue for a lot of national candidates today and in past elections. So maybe say a little bit about why is it not an issue in this election cycle?

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Bob

Well, I think there are several things. First and foremost, we have to say because more so than ever before, this campaign is not about, this presidential campaign is not about issues. It's about personalities. And that's always been true to a certain extent. People vote with their gut, they vote emotionally so forth. So it's not like this is suddenly new. But to have a Republican party that for multiple cycles doesn't have a platform that tells you volumes. Basically this election is really about Trump and those that love him and those that are scared to death of him. And so the Republican party doesn't have a platform. And in fact, every time it's current leading presidential candidate, and presumably the nominee former President Trump opens his mouth on issues, usually the party leaders try and walk back. And his campaign tries to parse what he said to say, he really didn't mean that you would have to look no further than Social security, where he ventured the idea of raising the retirement age.

And Republican senators quickly walked away from it. And I think that it was true in 16, but it was even more true in 20, and it will be absolutely the case in 2024. This is about personalities. It's not about issues. And those that are trying to make it about issues are just drowned out. And you see that even the candidates that tried to make it about issues, they just got no traction. They got nowhere. So I think that's one key reason today. The other reason is, quite frankly, because we're not at a crisis boiling point on issues of long-term care, it's becoming more and more urgent, but we're not at that sort of boiling point. And if anything, our national politics and political parties have seen, have demonstrated an uncanny ability to kick issues down the road. They kick 'em down the road for weeks and months. They don't even think years. Just look at the recent budget cycle. We finally now have funding through September, as if that's a huge accomplishment. Well, to try and think about where we're going to be in two years or four years, that's a kind of thinking that is foreign to Capitol Hill.

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Scott

And you go on your post to say politicians over time, conveniently said, up until now, I'll never turn my back on seniors and I will they, they continually kick the can down the road. We won't abandon seniors on Medicare. And maybe the question there has been all along, and I know you've written, you and Dr. Grabowski and and Tomlinson have talked about this before, we really haven't had a comprehensive long-term care policy in this country, really ever. And in fact, I went back and found an article in Forbes magazine from 2016 that kind of talked about on the eve of the January presidential elections back then, just the void of an obvious topic that touches most of the constituency in this country. And why aren't we talking about it?

Well, is it because it's just so voluminous and it's so big and it's, it's complex. And I'll just add one more thought too. I think about the times where, and let's talk about the Republican party, where they've tried to touch entitlement spending and it's gone bad for them. Right? I mean I worked on Capitol Hill in the mid nineties when Gingrich tried to touch it, and the Democrats very effectively turned it into Mediscare, and then everybody kinda walked away. Paul Ryan had Medicaid reform proposal as a part of Obamacare repeal. And then because that dramatic vote by John McCain and others you know the bill didn't pass. And so others have tried it. I think about the great op-ed that Lamar Alexander wrote back in 2012 the great swap where he talked about, you know, as a governor, then let's swap out Medicare, excuse me, Medicaid and education, and let's have the gov federal government deal with Medicaid and the states finally deal with education. Apparently he pitched that to Reagan was the White House several decades before. And Reagan actually talked about the State of the Union address. So I think about between Reagan and Biden, Biden did, of course, talk about long-term care, and we'll talk about it in a minute and it's addressed last year. But is it just because there's just, it's so big and voluminous, it's just hard to get your hands around and it's easier to just not deal with it.

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Bob

That's one way to talk about it. What I would say, it's so broken. It's not that it's so big, it's so broken. And first and foremost, we don't have a system. That's what Ann Tomlinson, David Grabowski and I wrote about in the Hill. We basically, when people encounter long-term care in America, what they find is a maze with mostly dead ends. And it's not, it's a system just that needs more money, or it's not that it's a system that just needs a tweak here or a change there. We don't have a system. And secondly, we're in fundamental denial as to the investment we have to make. And because we're in fundamental denial, we demagogue the issue back and forth without constructively moving to any solutions. So to me that's part of it. We need both incredible private sector investment and financing, but we also need public sector support.

Both from a policy point of view and a funding point of view. Both are needed. It's not either or. But we spend our most of our time firing back and forth on, gee, the private sector will solve it. Well, no, they won't. Not without meaningful public policy changes and not without meaningful public sector and financing and engagement. Or on the other hand, we'll just fund it through the public sector dollars. Well, that's somebody's dreaming or smoking something in a state where it's legal 'cause that ain't happening. I mean, one of the reasons I started NIC in 1991 as a former state legislator, it became clear to me in the 1980s that there was no way that there were going to ever be enough public sector dollars to totally address the long-term care, post-acute care challenge in America. And you are going to have to have meaningful private sector engagement. Now we demonize the private sector engagement on the one hand, but denounce anybody that talks about raising taxes to address the issue. On the other hand, well, that leaves you at a zero sum game of nothing.

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Scott

And we saw a little bit of that focus certainly last year in president Biden’s State of the Union address, where we called it the longest 19 seconds in long term care. We didn't know what the president was going to say, but he knew was going to say some of that long-term care. And of course, then he launched his initiative to create a national minimum staffing ratio regulation for skilled nursing facilities. And then this approach and focus on private equity. What is it about that, do you think, Bob, that there's such this negative view by certain politicians, the White House Senator Elizabeth Warren, maybe a few others about the private investment side in our industry,

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Bob

It gets good headlines and for one, two, let me say, I think when it comes, and this is just my opinion, I could be totally wrong, but my sense is his State of the Union address was a great case of politics, got ahead of policy. Got ahead of date. In other words, CMS was doing a, whether you liked it or not, they were doing a careful study of the issue, trying to figure out where to come out on it. And all of a sudden the White House rushed out politically and said, we're going to have a staffing mandate. CMS was caught unprepared. They were also caught embarrassed because all of their studies had not backed, and in fact had said staffing mandates could not improve the problem and could have unintended consequences. But politically for whatever reason, and I'm sure somebody could write a book about it, they rushed out with that.

And then coupled that with an attack on private equity, as you know, Scott, private equity is depending on which sector you're looking at, but just looking at it in terms of skilled nursing, is probably somewhere around 5%, maybe 7%. And then if you wanna add REITs on there, you have another 10% to 12%. So even combined, if you combine both of those, you have a tiny portion of the overall financing that comes from private sector dollars and ownership. But it's the easiest one to attack. It just sells newspapers, it gains headlines. It's like I laugh about with Medicare Advantage. Medicare Advantage is the gift that keeps on giving to politicians. Why? Because on the one hand, they can capitate their own budget, exposure risk which is critical. They  aren't going to get the surprise each year of much higher budget dollars than they planned for and have to come up with the money.

But on the other hand, they're capitating the risk by having in private or public for that matter. But having insurance companies, private payers, take that risk. Well, who scores even higher on the negative scale than a politician? An insurer. So if I'm a, if I'm an elected official, I have the best of both worlds. I'm capitating my risk from a budget point of view, and I have somebody the public universally loves to hate, to blame if anything goes wrong. So I can have a press conference decrying what the insurers are doing. Sometimes they deserve it, let me say. But I get great ink while at the same time accomplishing what I want, which is a capitated budget exposure in terms of long-term care slash healthcare expenses. So, again, it's an easy target, which basically takes away attention from how will we really meaningfully address this issue and fund it.

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Scott

And you just, you just raised two other great topics, Bob, I want to have you on again sometime is certainly the role of Medicare Advantage and of course the labor markets in our sector once we go forward. I think you and I both could point to a number of cases, which private equity has really improved the industry and saved operators from bankruptcy and provided really great access to care opportunities for rural seniors.

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Bob

Well, and perhaps even more significantly, everyone would say, we need innovation. And the key to innovation is technology. And if we're going to move to value-based care, if we're going to move to better outcomes at less cost or at least better outcomes at the same cost or the same outcomes, but at lower cost, if we're going to move in that direction, we're going to have to have integrated real-time accessible data. And that takes investment. And the last I saw, I didn't see those investment dollars coming out of the federal government. And they don't have a history of sponsoring innovation and sponsoring integrated data platforms with real-time. Now, once they're pioneered, can CMMI then pick up on them and do pilots involving them? Absolutely. But the innovation comes from the private sector.

And again, what I would say is we desperately need innovation. We need more efficiency of staff. We need healthcare that is predictive, participatory, and preventative, not just reactive, curative, and passive. You can't go there without innovation and without data. Now I'm all in favor of transparency. And I think so many of the moves for transparency, though, they will add cost. But having more transparency of where dollars go, absolutely. We should be for that. And do I think AI-driven algorithm denials is something that needs to be investigated? Absolutely. So pre-authorizations, denials, basically human nature being what it is, there'll always be people who want to game the system. And given that we have to have protections, that is the role of government in regulation to try and address that. And when I look at somebody like such, and Jane, he's certainly an advocate for MA plans, but he's also a critic of them. And I think he has a lot of good insights. Let's not forget folks, nobody is saying that fee for service, Medicare is the solution. Least of all the federal government in terms of financing, my point is not either or. We need both.

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Scott

Need both. Need all of it. Yeah.

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Bob

We've got to have both. The issue is so large, the needs are so huge that we've got to have both, and it's got to be coordinated. It can't be something where the right hand never knows what the left hand is doing.

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Scott

And I think, Bob, you again raised quite a few topics. I think we're going to have a whole annual series with you here with the number of topics we can talk about. Let's jump to 2028, because that was what it peaked my interest a few weeks ago. Because I think, again, true to form, you're already looking ahead. Tell us why 2028 will be very different than today. Backing out any personalities and who could be running, but what, what's going to be different in the marketplace? What's going to be different with respect to smart or public financing sources? How 2028 can be different than now?

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Bob

Well, depending on what happens and who you believe and so forth. But the Medicare trust funds projected to show a deficit as of now starting at about 2026. The oldest of boomers will turn 80 that year. And that's significant in terms of increased needs and demands for long-term care. And social security will be only a few years away, early 2030s from running a deficit. And then I've coupled that with what I call the arrival with Gen X, but especially millennials of the first of what I call the triple mortgage generation, where their first mortgage is student loans, their second mortgage is the traditional mortgage of getting in a home. And then the third mortgage is how are they going to cover the long-term care costs of their parents? And in some instances, their grandparents. And so I call them the first triple mortgage generation.

Because this is huge. It's a huge impact on them. So again, they have a vested interest in this issue, not just for themselves when they're 85, but they have a vested interest when they see, for instance, we've had a lot of focus, Scott in housing policy in the last five years about workforce housing. The fact of nurses, teachers, policemen, firemen, public service workers not being able to afford to live in the areas where they're serving. And that includes long-term care workers. Well, the reality is we're going to have that same issue when it comes to long-term care for those same folks. Meaning that their lifetime savings, their social security is not going to be adequate to address their long-term care needs. So again, I think all of those things combine to make 2028 for the first time. I think another issue quite frankly is whatever happens in 2024, the candidates will not be Joe Biden and Donald Trump. And so that means there's a possibility, not a guarantee, but a possibility we'll go back to at least some discussion around issues. And it may be because of a revulsion from not having addressed issues. I don't know. I think we're more likely to have party platforms that are meaningful, at least as a point of departure and debate for different candidates. And two personalities that people have really strong feelings about are going to be gone from the scene in terms of being the leading candidates of their party.

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Scott

Yeah. And you know, Bob, you're right in that same post, you know, one of the problems is that up until now, no one has asked candidates to get more specific. Well, they will now. And so here we are. I think you're set, you're setting the stage appropriately than 2028 candidates will not be able to avoid these questions. And hopefully we'll have some true leadership where they will bring it on voluntarily to, to wrestle to the ground and and offer real policy solutions that'll serve everybody well. Including operators, including investors and most specifically families and residents and staff. So Bob, maybe help us along here, what are those questions we should be asking? Because I think what you're also setting the stage for is that in 2028, because of the conflicts of all of these challenges, it will be a grassroots issue. It will bubble up. There will be questions on the campaign trail. It'll be unavoidable. What should we be asking our national leaders?

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Bob

Well, two things. First of all, let me say that depending on what happens between now and then, it could either be an acute crisis in 28, or it could be a kick the can down the road again to 2032. And I gotta to be realistic, I have to say that that said, I think the questions really have to do with, for instance, how are you going to avoid my mother who worked hard all her life having to spend down to qualify for Medicaid in order to get long-term care is an entitlement. And oh yes, she lives in a state where either there is no Medicaid funded HCBS or the wait list is so long that practically speaking, that's not an option for her. Mr. Or Ms. Elected official, what's your solution? Are you telling my mom her only option when she needs long-term care, and our only option as a family is to make sure my mom spends herself into poverty and then maybe we win the lottery and she gets an HCBS Medicaid slot, otherwise she ends up in a nursing home.

Oh yes. Nursing homes, you've been starving for funding for years and in many instances actually cheering when you close them down. But now you're going to have escalating need and no solutions. But I think the questions have to be, not systemic, but personal. They have to be about my mom and my dad, or about what is going to happen to me. And so I think for boomers, for a long time it was about their parents. Now it's going to be increasingly about themselves. And for Gen X and for millennials, we love our parents, but we can't believe that there's no solution for them. We can't believe that the attorneys tell us, well, the only option's to spend down the Medicaid and or hide your assets and we'll help you how to do that. So I think that this will become an issue when it's not seen as a low income issue, but rather it's seen as a middle class issue where we are saying to that middle class, sorry, you're outta luck. And that will not be an acceptable answer either for them and they vote or for their adult children.

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Scott

Yeah. You know, Bob, you're, again, you're setting such a great stage for us in 28 as we're all putting ourselves in those positions of discussions with legislators as our parents get older, as we get older. It reminds me, I may have mentioned this before, I had the great opportunity to work for former Indiana Governor Mitch Daniels, and when I was in the office, a big issue was childcare. And making sure that there were adequate survey systems in place at the state agencies to make sure that childcare was effective and safe. That there were vouchers, there were Medicaid waiver opportunities and Medicaid funding for childcare. And I'll tell you, single family parents who are needing childcare to go to work, we're very effective advocates in front of the state general assembly. Very, very effective. And so I think you're setting the stage again, for those of us that are going to be in that stage of caring for our parents. Some of us are moving into that age too, that's going to be very personal, very personal.

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Bob

And on top of that, we're going to have a phenomenon that we've never had before. And that is unprecedented numbers of solo ages. Either because of death or divorce, or they never got married, or they got married but they never had kids. Or because of divorce or whatever they're really not at all close. They're not involved in the lives of their kids. And this is going to be not thousands, but millions of older Americans. I do think that this issue is going to become a very real issue. And will it be possible to kick the can down the road again? Of course there'll always be efforts, but as I see it, we need to build now. This won't be an issue in 24. Absolutely will not be. But I hope that advocates will be building it for 28. But again, if it's framed as we need to do this for the poor and the low income, it won't get political traction.

That is absolutely key. It's got to be a middle class issue. And how we are abandoning these folks, the country is basically abandoning them. The other thing I would say is it can't be pitted as young people against old people. It's got to instead be that young people have the most at stake at this, because if we don't figure this out, by the time they get older, they're going to be consigned to basically social economic and really cultural irrelevance for the last third of their lives, as well as bankrupted in the short term by either guilt or the financial burden of trying to care for their parents.

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Scott

And you know, former Indiana Health Commissioner Jerome Adams, who was Trump's surgeon general, famously talked about his worry about the nation's future debt and indicating that one of the number one causes for debt right now, healthcare bills. So once it's more than just your own nuclear family's healthcare bills, it's multi-generational that's going to be significant. So, Hey Bob, I can't thank you enough for again, pushing us ahead. You're always so good about pushing us all ahead and thinking it's what's next. And most of us are just mired in 24 right now in the campaign, but I think we need to be thinking ahead to make sure we are prepared to ask these tough questions of elected officials in all directions. And you help them empower and equip us with that today. So thanks for that.

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Bob

Well, I think we also see, for instance, Scott, that President Biden in his budget has actually addressed this. Is that probably going to go anywhere? Probably not. But again, he's taken an approach of raising taxes on high earners, both the tax, the Medicare tax, and extending the social security tax for those earning 400,000. But obviously that'll be attacked as raising taxes. But in one sense, you could say the counter to that was former President Trump musing about raising the retirement age. Do you raise taxes or do you basically restrict the benefits to older folks or less benefits or whatever. This is going to be a battle. Make no mistake about it. But it is interesting that actually President Biden did address this issue of solvency of both Social Security and the Medicare Trust Fund in his proposed budget. I wouldn't be terribly optimistic that that will actually ever get implemented, but it is interesting that he did address it, whether one agrees with his approach or not

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Scott

Or allows to go through. Yeah. Well thanks for bringing that up today. I know our listeners will be watching how that budget proposal goes going forward, and certainly whatever the house Republicans are doing right now, just to see what the rest of the year looks like for leadership at all levels. So, Hey Bob, before I let you go, I always ask our listeners kind of one final question because I believe your nightstand is just loaded with amazing books. What are you reading right now, or what do you recommend to people? What do you hand to people and really indicate that they should be reading this as well?

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Bob

I spend a lot of time reading outside of our field, both because of interest and also because I always look for what I'd call anomalies or trends. One person that I really like to follow is Ann Applebaum. Why? Because she's a real expert on Russia, the former Soviet Union and the situation in Ukraine. And I think she's incredibly knowledgeable and insightful, and she's an expert. And my wife and I are really concerned about the situation in Ukraine and what's happening there. And she's one. Another, Tim Alberta has written a book, The Kingdom, The Power, And The Glory, and he's kind of looking at what I'd call the rise of political evangelicalism. And it's a searing, but really well researched portrait. How can evangelicals, supposedly people of the Bible, embrace a leader such as Trump? And then also Michael Weir has written a book. He worked in the Obama administration called The Spirit of Our Politics.

A Thin Little Tone compared to Tim Albertas meticulously researched very long volume. But both of those I find as someone who comes from a perspective of faith, when I look at public life and issues and so forth. Fascinating reading. So those are a few I could go on. As I said, my wife, I'm fortunate, my wife is a voluminous reader, so our bedstand is filled, but she usually reads the books first. And then says, you really must read this. So it's worked for over 50 years, so hopefully we'll continue that.

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Scott

Well, three great recommendations there. I'd like to also just offer our guests a recommendation when I can. Our last podcast, I was in the middle of a new book by Albert Brooks, the Harvard Business School professor that teaches happiness in his new book with Oprah Winfrey called Build the Life You Want. I think that is required reading for anyone at any age. I actually slow read it on purpose because I didn't want it to end, and his podcasts, as you know, are tremendous as well.

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Bob

Arthur Brooks stuff is terrific. I'm actually going up to participate in a two day seminar up at Harvard around many of his ideas and so forth, particularly as they relate to work and the workforce. It's a terrific recommendation. And not only is he brilliant, but he's really brilliant at bringing different fields together and different perspectives together. And I find that just fascinating.

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Scott

I'd love to just audit his class, and I'm sure that's why the waiting list is so long there, so that's

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Bob

Why it's so popular. Exactly.

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Scott

That's right. Well, Bob, we've been friends for a long time through all of our prior roles in the industry, and I just, I can't thank you enough for coming on and spending time with us today. I think for our listeners, they can understand why I want to have you on at this juncture. I'd love to have you on again, maybe after the next presidential election, kind of talk about how we can best equip ourselves to make sure we are getting what we need out of our national leaders going forward with respect this dialogue.

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Bob

Look forward to it, Scott. Yeah, thanks for the opportunity today. Appreciate it, as always.

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Scott

Great. Thanks so much Bob. And for our listeners, thanks for tuning in. This is Versed.

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