Adjust Font Size: 
10 Reasons Long-Term Care Financing Needs to be Reformed in America
Here are 10 reasons why we have to change the way our country pays for long-term care. Please add others:
1. The Age Wave is Unprecendented: About 10 million Americans need long-term care today. (Note: Long-term care is an array of services, from home care to assisted living, not simply nursing home care.) By 2020, 12 million older Americans will need long-term care.
2. Americans Want More Choice: People want more choices than ever in how they live and receive care. The nursing home isn’t a place they want to choose. Guess what? Many states rely on institutional nursing homes for long-term care. To pay for choices that today’s consumer desires, we have to have new ways to pay for care.
3. The Costs are Unsustainable: According to the independent, non-partisan Government Accounting Office (GAO), Medicare, Medicaid (which pays nearly half of all long-term care expenditures)and Social Security will nearly double as a share of the economy by 2035. Today long-term care alone costs federal and state governments $116.8 billion every year. We’ve been able to sustain these entitlements because of a low-depression era birth rates and a large postwar workforce. No more. Absent substantive change, Medicaid, Medicare and Social Security will overwhelm the rest of the Federal budget.
4. America’s Savings Rate is Deplorable: Americans are horrible savers. In fact, 2005 and 2006 marked the first time since the Great Depression that American’s charted a negative savings rate in back-to-back years. By 2030, many retirees will not have enough income and assets to cover basic expenditures or any expenses related to aging services.
5. Business Production is Taking a Hit: According to the Metlife Mature Market Institute and National Alliance for Caregiving, American businesses lose as much as $33.6 billion in annual revenue because of employees’ need to care for their loved ones. That is approximately $2,110 per full-time employee who is also a caregiver.
6. Busting State Budgets: On average, state governments spend 18% of their budgets on Medicaid, which pays for all most half of all long-term care costs. These costs are only rising and if left unchecked will crowd out all other spending.
7. Americans are Clueless as to What Care Costs: In 2006, according to AARP study, only 8 percent of Americans over 45 could estimate the average monthly cost of what care costs within 20 percent of its actual cost. In an Ecumen study of baby boomers, nearly a third of boomers think that they will use Medicare to pay for their long-term care costs. Sorry . . . . Medicare won’t pay for costs such as memory care and assisted living.
8. Long-Term Care Insurance isn’t the Whole Answer. Only one in five Americans can afford the long-term care insurance policy needed to meet their long-term needs. And even if everyone purchased the best private coverage he or she could afford, Medicaid costs still would triple by 2045.
9. A Worker Shortage: According to the U.S. Department of Health and Human Services, the next four decades will see a need for more than 4 million care professionals in the U.S. Who will pay their salaries? We need to change the financing system to attract great professionals to this profession for the long-term.
10. Voters Want Change: The vast majority of Americans say that our health care system is broken and they desire a well-coordinated, integrated, cradle-to-grave system. To have such a system, long-term care/aging services must be part of the solution. According to a 2007 national poll by Genworth and the Mellman Group, voters want long-term care/aging services to be part of national health care reform. Nearly 8 in 10 voters (78%) stated that the presidential candidates should make this part of their health care proposals.
Email This Post
This entry was posted on Monday, June 30th, 2008 at 10:56 am and is filed under Age Wave, long term care financing. You can follow any responses to this entry through the RSS 2.0 feed.
July 1st, 2008 at 11:16 am
[...] politics Ecumen | by Sarah Mashburn He may not be David Letterman, but Eric Schubert with Ecumen’s Changing Aging Blog can sure put together a top 10 list…and today’s topic is an important one: why our [...]
July 1st, 2008 at 11:21 am
What a great list. I just posted it on AAHSA’s blog. Here’s another reason to consider:
11. It is unaffordable to care:
Most Americans have been or will be caregivers, providing support for an elderly or disabled relative or friend. These individuals assume enormous emotional and logistical burdens to care. A recent National Alliance for Caregiving survey found that caregivers spend more than $5,531 per year to pay for loved ones’ food, transportation and medicine. That’s more than most spend on their own health care. Long-term care insurance is a partial solution for one in five Americans who qualify. But what about the rest of us? We have to spend down life savings to go on welfare through Medicaid or live with unmet needs. These personal problems are compounded by the crazy and inadequate ways long-term care is financed. Simply put, it’s time to make it affordable to care.
July 1st, 2008 at 5:13 pm
8. Long-Term Care Insurance isn’t the Whole Answer. Only one in five Americans can afford the long-term care insurance policy needed to meet their long-term needs. And even if everyone purchased the best private coverage he or she could afford, Medicaid costs still would triple by 2045.
Yet another slight of LTC insurance and its’ potential to help solve the LTC dilemma.
America’s messed up long-term care service delivery and financing system is self-inflicted by perversely counterproductive public policy. The good news is we can fix it over night. Just stop doing what we’ve always done and we’ll get a different result. Albert Einstein called that the definition of sanity.
To wit: stop giving away most home care and nursing home care through inadequate public programs. Make middle class and affluent people pay their own way, either up front or later through estate recovery. Stop using Medicaid as free inheritance insurance for the baby boom generation. Use the savings to pay for tax incentives for LTC insurance, LTC education programs and to promote the use of home equity to fund LTC.
You can do that through responsible public policy. Or you can stay on the same course we’re on, let the long-term care system collapse altogether, hurt poor people most, and end up with the middle class and affluent having to use their home equity to get decent care in the long run anyway. Long-term the outcome will be the same.
But mindless attacks on nursing homes for symptoms (bad outcomes) while ignoring the real causes (poor public policy) should stop. Hang the culprits (policymakers responsible for this mess), not the victims (heroic providers struggling to make a bad system work).
By making smart financial choices today, you can open the door to a variety of options later in life. Every person using their own money, home equity, or LTC insurance is one less person on Medicaid.
July 2nd, 2008 at 6:03 pm
Good list. It is sad that the nation’s leaders have not had the political will to tackle this issue. There is certainly more interest in solving the overall health care for the uninsured issue. Of course, most Americans are also uninsured for long-term care. It seems to me that it should be part of the upcoming debate and deliberations on health reform. But, there has to be the political will to make a change and unless boomers raise their collective voices, it won’t happen.
July 3rd, 2008 at 9:24 am
Scott, you’re absolutely right. I think you’re going to see this issue elevate. I have worked on a lot of issues and this one has all of the ingredients to move up the priority ladder.