Long-term care a serious national issue

Lea Smith Johnson
The Bradenton Herald

I recently attended the National Long-Term Care Symposium in Washington, D.C., moderated by Susan Dentzer of PBS News Hour with Jim Lehrer.

Long-term care was presented as a serious issue facing America. Some of the topics covered included: Who needs it and what does it cost? Current statistics and demographics. How to educate people about the gravity of the situation and misconception that Medicare, Medicare supplements or Medicaid will pay for their care. How to pay for it? Incentives implemented that are helping to reduce costs. Forward-thinking ideas to transform long-term care and the health care system in general to reduce costs of medical care.

With 78 million baby boomers near retirement, long-term care is a top-public policy priority in this country. In the coming years, Americans will be forced individually and collectively to cope with the enormous challenges of long-term care. The number of Americans that will need long-term care this year will be between 10 million and 15 million, and the number will continue to grow every year in proportion with the seniors in our population. By 2050, the population of those older than 85 is expected to quintuple the level in 1995. Those younger than 65 needing long-term care for such illnesses as Parkinson's disease or diabetes-related illnesses are not measured or included.

The socioeconomic changes of today mean fewer family members with less free time that can be devoted to caring for the seniors. The demographics of the workforce are drastically changing. The future funding of Social Security and Medicare with fewer people entering the workforce provides a smaller pool of money available through payroll taxes while more people will be needing care. One survey shows 72 percent of seniors are impoverished after one year of paying for long-term care with discretionary income.

More working families may be required to support an elderly family member and will lose work time because of it. More than 31 percent of caregiving families stated that a large part of their savings, or in some cases all of it, has been depleted due to the costs of funding long-term care.

Part of the problem is that many people still believe that Medicare or their supplement policy will pick up the charges. The Medicare rules are strict and being made tougher to qualify. Qualifying for Medicaid was made even harder this year because the look-back period for gifting was increased and net worth requirements for eligibility were reduced. There are many reasons you will not be best served by being on Medicaid. Even after death, Medicaid has the right to collect money from an estate before probate for the dollars Medicaid paid for care. There is no security of care when a nursing home declares bankruptcy due to a large Medicare/Medicaid population.

Purchasing insurance at a younger age saves dollars. Purchasing sooner rather than later keeps premiums down. Timing the purchase of long-term care insurance with the time you first start working helps. Older persons who are unable to pay premiums could use home equity to pay for insurance. There are already tax deductions for individuals, allowing annual tax deductions for those who purchase long-term care policies.

The new Pension Reform Act enables some annuity income payouts to be exempt from tax when used for long-term care. Recently approved in several states and being considered state by state is protection of your estate from medical costs up to the amount of long-term care insurance purchased. For example, if $500,000 of insurance coverage was purchased but more long-term care needed, your estate would be protected from Medicaid up to $500,000.

At the heart of the present problem, however, is that medical costs keep rising. Technologies common today are not being used to improve care and increase efficiencies. Although digital capability is available, the system now is catastrophically incapable of dealing with a pandemic such as the avian flu or an engineered biological attack. Our paper-based bureaucratic health care system can kill tens of thousands of Americans each year if you consider for a moment people's medical histories washed away during Katrina.

A digital health record for every American can be created. Development of systems to manage health care digital records can improve efficiencies reducing costs. Examination of the deregulation of the airlines in 1978 shows there is no question that deregulation reduced air travel costs per mile since that time.

A system for pharmaceuticals that creates a buyer's market needs to be created. The digital systems can be knit together into a virtual public health network for health protection against natural outbreak and bioshield against deliberate biological attack. Similar digital technology could control borders and improve national security, but that is another article.

Speakers and panel discussion participants were Newt Gingrich, former speaker of the U.S. House of Representatives and chairman of the National Long Term Care Committee; Debbie Stabenow, Democrat senator from Michigan; Douglas Holtz-Eakin, director of the Congressional Budget Office 2003-2005; Glen Bolger with Public Opinion Strategies, a polling and research firm; Mary Beth Franklin, senior editor of Kiplinger's Personal Finance; Mike Magee, director of Pfizer Medical Humanities Initiative; and Meryl Corner, caregiver and a former television journalist.

Statistics presented by the panel and articles referenced included: Karen S. Peterson: More Time Spend Caring For Elders-3/18/97; SA Kaplan-Case for Self-funding Corp.: Sponsored Employee-Paid LTC Compensation & Benefits Review 2/96; Chessman, J.D.: 1993 Population Projections of the U.S., 1993-2050; Hearing Before the Subcommittee on Aviation, Committee on Transportation and Infrastructure, Sept. 28, 2005.

Lea Smith Johnson is a financial and investment adviser. She can be reached at 755-0975 or 321-3250.