American Consumer News December 14, 2010
Minnesota's non-partisan Citizens League today introduced recommendations for financing long-term care for the elderly in Minnesota at the Long-Term Care Solutions Forum held at the University of Minnesota Hubert H. Humphrey Institute of Public Affairs.
Long-Term Care Financing Recommendations By Minnesota's Non-Partisan Citizens League Provide Insights for State Governments
New Report is Entitled "Moving Beyond Medicaid: Long-Term Care for the Elderly as a Life Quality and Fiscal Imperative"
Minneapolis (PRWEB) December 14, 2010
Minnesota's non-partisan Citizens League today introduced recommendations for financing long-term care for the elderly in Minnesota at the Long-Term Care Solutions Forum held at the University of Minnesota Hubert H. Humphrey Institute of Public Affairs. While Minnesota-focused, the recommendations provide insights for all 50 states in how to create new ways to pay for long-term care while preserving a safety net for those who cannot escape poverty.
Under current arrangements, public support for long-term care for the elderly in Minnesota is projected to grow from $1 billion in 2010 to $5 billion by 2035. The recommendations within the report entitled, Moving Beyond Medicaid: Long-Term Care for the Elderly as a Life Quality and Fiscal Imperative, establish a new philosophy: "personal responsibility will be publicly supported and rewarded."
"At its heart, long-term care is a highly personalized issue, dealing with the most intimate concerns of life and death, relationships with our family members, and the financial dreams we set for our children and ourselves," said Stacy Becker, leader of the Citizens League Long-Term Care Collaborative (LTC). "We recommend a package of public incentives and private-sector financial products that enables people to create for themselves the most appropriate way to care for themselves in their older years."
The recommendations are a result of more than a year of work by citizens and participants from multiple sectors and diverse ideologies, including senior services, health care, non-profit, business, government, social services and philanthropy. The full report can be found online at http://www.citizensleague.org.
"In only a few generations, 'old age' has gone from limited survival after retirement to 'middle age' with almost twenty years of life ahead at retirement," said Becker. "But we've not prepared as individuals or as a state on how we'll pay for the huge costs that accompany old age. With the first baby boomers retiring in 2010, the time has come."
Long-term care--the assistance needed to manage one's daily life, whether at home or in a care center --is both expensive and likely. Yet few Minnesotans prepare for the cost, leaving government (via Medicaid) as the default funding source. Medicaid, created to provide publicly funded health care for those in poverty, now pays for 40% of elderly long-term care expenditures in Minnesota. Without other forms of financing, Medicaid funding for long-term care for the elderly could grow nearly fivefold in Minnesota, from $1.1 billion in 2010 to $5 billion in 2035.
Two Goals for Minnesota
The Citizens League LTC Collaborative set two goals for the state with an accompanying framework and a set of recommendations that open the door to incentives to increase personal responsibility across incomes.
Goal 1: By 2015, 50% of Minnesotans aged 45-65 will have some financial planning in place for their long-term care.
Goal 2: By 2020, 85% of Minnesotans aged 45-65 will have some financial planning in place for their long-term care.
The framework contains three essentials that must exist to encourage and support personal responsibility. None of the three can be ignored to meet the goals above.
1. A strong reason to become financially prepared for long-term care (i.e., Medicaid reform); and
2. A mix of financial products that provide families the opportunities to financially prepare, appropriate for varying family situations and financial capacities; and
3. The knowledge and information to make sound choices.
Recommendation 1: Redesign Medicaid to Provide Co-Insurance Options - Medicaid's current structure contains disincentives for personal responsibility. Consequently, its function as a safety-net for long-term care for the elderly poor has been distorted and is in jeopardy. Medicaid has been dubbed "a public insurance with an extremely high deductible" (i.e., virtually all of one's assets). The Long-term Care Collaborative recommends that it become a type of co-insurance, with eligibility for co-insurance contingent on: 1) privately purchased long-term care insurance and/or savings for long-term care; and 2) income.
Recommendation 2: Make Available and Promote a Mix of Financial Products, Especially Those Aimed at Middle-Income Families - A variety of savings and insurance products already exist to help families save for their retirement and long-term care: IRAs, 401k's, long-term care insurance, and Health Savings Accounts (HSAs), and very recently, public insurance through the federal CLASS Act, which will take effect in the coming years. While current products have had some success, they are insufficient because of the challenges and impediments of Medicaid and because they are poorly targeted to middle income households. The LTC Collaborative recommends three very specific products to quickly increase the personal resources available for long-term care: prize-rewarded savings; new, more affordable long-term care insurance products; and a new loan product to help seniors tap their home equity.
Recommendation 3: Make unbiased information about long-term care planning and financial options readily available to the general public so that long-term care planning becomes an essential and ubiquitous part of retirement planning. - Key to this is working with employers to educate their employees about the CLASS Act and other financial options. Employers have an enormous stake in long-term care financing. Because caregiving for a loved one while employed can be extremely difficult to juggle, United States businesses lose an estimated $33.6 billion a year in productivity from full-time employees who serve as caregivers. (Met Life, 2006) A well-publicized statewide collaborative web site with non-biased information is recommended to serve as a resource hub for all Minnesotans.
Long-term care is everybody's business. All Minnesotans have key responsibility areas and actions to achieve our goals in Minnesota. The report outlines next steps. The LTC Collaborative will begin working to shape legislation in 2011.
The Citizens League wishes to thank the following project donors: AgeWell, Aging Services of Minnesota, Allianz Foundation, Alzheimer's Association, Benedictine Health System, Care Providers of Minnesota, Courage Center, Ebenezer Society, Ecumen, Eventide, Good Samaritan Society, Medica, Metropolitan Area Agency on Aging, Minnesota Chamber of Commerce, Minnesota Home Care Association, Minnesota Insurance and Financial Services Council, Presbyterian Homes, St. Therese Homes, Thrivent Foundation, UCare, Voigt, Klegon & Rode, Volunteers of America, and the Whalen Family Foundation.