Perhaps more than any other item, the thing that many Americans neglect when it comes to retirement planning is long-term care. And yet, for an estimated 12 million Americans and rising, that is the thing they most need as they journey through their retirement years.
With that in mind, the U.S. Senate Special Committee on Aging recently held a special hearing on “The Future of Long-Term Care Policy: Continuing the Conversation.” Participating were Committee Chairman Senator Bill Nelson (D-FL) and Senators Sheldon Whitehouse (D-RI), Joe Manchin (D-WV), Tammy Baldwin (D-WI), Elizabeth Warren (D-MA), Susan Collins (R-ME), Kelly Ayotte (R-NH), and Tim Scott (R-SC).
Senator Nelson opened the hearing by stating that “long-term care is an issue that comes up repeatedly. It is an issue that many of us not only have a legislative interest in, but a personal stake, as well. Many of us have spoken in prior hearings about caring for our parents as well as planning for our own futures to alleviate some of the decisions for our children.”
Nelson said that most traditional health insurance plans and Medicare do not cover long-term care expenses. Private insurance is available, but it is expensive, and most Americans don’t carry such insurance because they don’t anticipate needing it.
As a result, more than half of long-term care provided in this country is by family caregivers, Nelson said. The Congressional Budget Office (CBO) estimates the value of that care to be approximately $234 billion annually.
“Despite these enormous costs, most Americans have done little or nothing to prepare for their future long-term care needs, according to a recent study from the SCAN Foundation,” Nelson said. The situation will only get worse as more Americans become older Americans, Nelson stressed, and as older Americans continue to live longer each year.
“So, our current system of providing long-term care is unsustainable for both the government and for families,” Nelson warned. “CBO predicts that expenditures for long-term care are likely to increase from 1.3 percent of gross domestic product (GDP) to as much as 3.3 percent by 2050.”
Echoing both the social and financial warning of long-term care impacts was Senator Susan Collins, who serves as Senate co-chair on the Congressional Task Force on Alzheimer’s Disease.
“Long-term care is the major catastrophic health expense faced by older Americans today, and these costs will only increase as our nation ages,” Senator Collins said. “Americans 85 and older, our so-called oldest old, are the fastest growing segment of our population, and this is the very population that is most at risk of the multiple and interacting health problems that can lead to disability and a need for long-term care.”
Collins said that there are currently estimated to be seven available family care givers per person over 80 in this country. But due to declining birth rates, by the year 2030 that number will drop to four caregivers per person over 80.
One obvious immediate need is to recruit and retain “a robust and competent long-term care workforce,” Senator Collins noted.
But more importantly, Americans today need to be encouraged to think about and prepare for their own long-term care needs, Senator Collins advised.
“Americans should consider their future long-term care needs just as they plan for their retirement or purchase life insurance to protect their families,” Senator Collins said.
The committee also heard from Bruce Chernoff, president and CEO at The SCAN Foundation, and Mark J. Waeshawsky, visiting adjunct scholar at the American Enterprise Institute. The two discussed the results of a special report on long-term care prepared for the event by the Long-Term Care Commission. Chernoff said the report was the result of four public hearings, involving 34 witnesses, over 100 submissions of public testimony, and nine working sessions.
The report includes 28 recommendations on the long-term care dilemma, but Chernoff conceded that there wasn’t time to discuss them all at length at the hearing. He did highlight the general options that were presented within those recommendations.
Chernoff also urged the committee to name a follow-on body, “to pass along the baton for critical economic modeling work that is still needed but not complete. We also called for a 2015 White House Conference on Aging in partnership with the National Council on Disability to focus on long-term services and support issues.”
Another non-Congressional speaker at the hearing was Anne Tumlinson, senior vice president at Avalere Health. Tumlinson said she has 20 years of experience on the topic.
Commenting on the state of long-term care overall, Tumlinson said that “we spend well over $200 billion, but we pay for very little care. We depend on over 60 million Americans to provide most of the care, and they provide it unpaid. And they do this because Americans are not insured against the financial risks of long-term care and they really want to avoid a Medicaid nursing home bed.”
Solutions to long-term care costs will not quickly come from the Medicaid budget, Tumlinson stressed. Indeed, she said long-term care is a shrinking percentage of the Medicaid budget. That under-funding is one of the greatest problems facing long-term care.
“We know from industry data that over a million people are paying privately right now for assisted living or some other type of senior housing, and it costs $42,000 per year, on average,” Tumlinson said. “This is not just for rich people. These services are being financed through the sale of homes, through contributions from adult children. And providers tell me that their residents exhaust their resources while in assisted living and have to move into a nursing home to continue their care under Medicaid, because Medicaid does not cover assisted living.”
Concluding her remarks, Tumlinson said “my final point, and this is probably the least popular point that you will hear here today, is that even when people are educated about the risks of long-term care, and even when they are presented with the long-term care insurance policies, and even if we manage to do that for many Americans, we will not truly address under-financing without requiring everyone to participate in the risk pool.”
In essence, Tumlinson said Congress needs to begin debate on a mandatory participation long-term care program, much like Americans not contribute to Social Security.
“We have this vigorous debate over private versus public insurance options, but it does not really mean anything because neither works very well in actually covering enough people when the participation is optional,” Tumlinson concluded.