Long-term care financing reform presents area of opportunity for presidential candidates

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Long-term care financing reform presents area of opportunity for presidential candidates
Long-term care financing reform presents area of opportunity for presidential candidates
Among issues facing the next president is an incredible opportunity to improve how we live, receive care and pay for the quality of life we desire when we experience disability as an older or younger adult.  

The opportunity is long-term care financing reform.  

If our future president and members of Congress do not seize it, the federal debt will unnecessarily balloon by billions, thousands of Americans who haven't planned for care costs will experience financial difficulty, and the independence and dignity we desire as human beings will be compromised.  

A better way exists.

Candidates mostly mum on long-term care

America is in an unprecedented, multidecade age wave. Almost all of us know someone who has had their life disheveled working to balance the duties of caregiving with the rest of life. This stressful juggling costs U.S. businesses more than $33 billion annually according to a MetLife study, and that number is rising rapidly.

The population of Americans age 65 and older will double to 71.5 million by 2026. Sixty nine percent of people turning 65 today will require long-term care either in the community, their homes or in care centers.  In just 12 years, more than 12 million older Americans, and likely more, will need long-term care. Amid the backdrop of record federal debt, most states are dealing with long-term care as one of the biggest, fastest-growing areas of their budgets. The status quo is unsustainable.


Despite this, Sen. Barack Obama (D-IL) and Sen. John McCain (R-AZ) are relatively silent on the issue of long-term care. You'll also be hard-pressed to find congressional candidates who are talking long-term care.  

Republican John McCain offers a 106-word description on his Web site of a "cash and counseling" approach to long-term care. The senator touts the "Program of All-Inclusive Care for the Elderly (PACE)," now operating in 22 states, which offers individuals who qualify for nursing homes to receive care in their homes. A change to current federal programs allowing seniors a monthly stipend to spend as they wish on health care assistance and products is also suggested by McCain's camp.

Though a gifted writer, Democrat Barack Obama offers even fewer  words (62 words) of policy focused on long-term care.  Echoing McCain, his program will "give seniors choices about their care, consistent with their needs, and not biased towards institutional care." The candidate advocates long-term care financing reform and wants to improve the quality of eldercare through training more nurses and health care workers.

Why the absence of ideas and candidate voices? Several reasons.

* First, people equate the phrase "long-term care" with outdated nursing homes rather than the diverse array of services that actually comprise long-term care today, from technology to home care to assisted living and beyond to help people live as independently and fully as possible when they need care or physical assistance.

* Second, America is in a time warp.  Let's face it: We're operating a 1965 aircraft—The Great Society—without having done the major engine work to keep it flying strong in the 21st Century. Consequently, while other countries have moved to robust, coordinated home and community-based services for old and young disabled, our mishmash of a system is dominated by institutions, which are much, much more expensive than less restrictive services and settings that Americans overwhelmingly desire. A new AARP study highlights that re-balancing from an institutional bias is slow nationally. Complacency simply isn't an ingredient of change.

* Third, somewhere along the line, we separated health care and long-term care in public policy discussion and formation. It's a mistake we have to rectify because they're intertwined in the preventive, coordinated cradle to grave health care system that America yearns for, but which we haven't been able to so far deliver.

* Fourth, the aging and caregiving lobbies (which should include every American, because aging is something we're all doing) have not cohesively raised the voices of its customers, employees, families it serves and many others that are part of communities that provide long-term care. That will have to change. And it will because the stakes in terms of quality of life and economics are too high and too interconnected to the rest of America's success.

However, these whys can be replaced by solutions. Long-term care could be the great bipartisan comeback for America policy making. Think of the ingredients candidates, their speechwriters and ad people have to work with and could tap.  

- An undeniable fact to which we all can relate: We're all aging.  

- An issue that people automatically "get," especially if they've devoted any time as a caregiver. This issue hits home for so many people because it's personal, it's real.  

- An unquenchable desire by Americans to avoid living in an outdated nursing home.

- An equally intense desire for choices and options that allow a person to live fully to the very end of life.

- The math. You don't have to be a comptroller to realize the financial realities and costs America is facing.

The Obama-McCain long-term care themes, such as "choice," are great. But how do we make them a reality for all and how do we pay for them?

Thinking extensively about this are nonprofit senior housing and service providers. Under the umbrella of our national trade association—the American Association of Homes and Services for the Aging (AAHSA)—has come a national framework called The Long-Term Care Solution.
 
Vetted by the highly respected economics research firm The Moran Group, this is a national long-term care insurance trust that would provide a daily cash benefit for people needing assistance with two or more activities of daily living (ADLs) and be fully funded for at least 75 years.
 
The Cost:  A Cup of Coffee Per Day

The Moran Company explored multiple scenarios and estimated premium prices using two different assumptions regarding disability rates, which are key drivers of costs. The chart below shows premium prices for a program that includes everyone age 21 and up, has a five-year vesting period, and pays $75 a day to people with qualifying disabilities (two or more ADLs). This could be a mandated program or an opt-out program, which we're increasingly seeing work in 401-K programs to increase savings early in one's career. The cost for a benefit of $27,000 per year is less than a large cup of coffee per day.



The national insurance trust is based on "consumer choice, financial responsibility and equity." It also offers cost savings - large cost savings. In fact, if this initiative had been put in place five years ago, government costs (Medicaid) would be about 50% less than they are today for long-term care.

Private long-term care insurance not the answer


Private long-term care insurance will work for some people, but not all. Insurance companies do not have the financial resources to cover all Americans who require insurance.  

Long-term care insurers cover less than 5% of the population today and that figure will likely grow to no more than 20%, leaving the majority of the country uninsured for their care needs. As many as 30%-45% of applicants for long-term care insurance are denied coverage because of pre-existing conditions, another chilling reminder of why a national solution is a must.

A national insurance trust would actually help increase sales of private long-term care insurance policies while preserving a Medicaid safety net for those in need. A greater appetite would be made for supplemental long-term care insurance policies to "wrap around" and extend the benefit they'd receive from the national insurance trust. To give buyers more confidence in purchasing long-term care insurance policies, the Centers for Medicare and Medicaid Services could apply "The Good Housekeeping" seal to them.

As the chief executive officer of one of the country's largest nonprofit senior housing and services companies, and as a baby boomer, I see the future. And I do not want to leave it with people who cannot live fully as they age because we don't have a solution for long-term care. Our country can ride the age wave rather than drown. A tremendous opportunity sits before every candidate vying to transform America. That opportunity is long-term care financing reform.

Kathryn Roberts, Ph.D., is president and CEO of Ecumen. Based in Minneapolis-St. Paul, it is one of the country's largest nonprofit senior housing and service companies. She also is a member of the AAHSA board of directors.

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Guest columns are written by long-term care industry experts, ranging from academics and thought leaders to administrators and CEOs.

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