It’s not something that we talk about very often — the possibility of ever needing assistance with activities of daily living such as bathing, eating, dressing or even getting out of bed, but the risk is real. Approximately seven in 10 Americans who reach age 65 in the next five years can expect to need some level of long-term services and supports. Nineteen percent of Americans aged more than 65 years are expected to need LTSS for a year or less, and about 14% are expected to have needs that last more than five years.
Right now, people pay for LTSS in one of two ways: from personal savings accounts and retirement funds or Medicaid. Both are strained now, and their future viability is at stake. A paltry few have long-term care insurance.
Last week, LeadingAge released a new report about the state of LTSS in this country. “Perspectives on Financing Long-Term Services and Supports” analyzes recent modeling work that examined alternative approaches to financing reform. Although no single solution emerged from the three approaches studied, the research clearly demonstrates that the nation’s current way of funding LTSS is unsustainable, irrational and unfair.
On average, people aged more than 65 years will spend at least $138,000 on LTSS. This includes home care, home modifications, assisted living nursing care — all potential services and supports, depending on need.
Juxtapose that with a person aged 65 to 74 years who has median financial assets of $76,000 and median home equity of $80,000 and you get the picture. More will become impoverished, and Medicaid will continue to buckle under the strain.
For more than 10 years, LeadingAge has been on the forefront of LTSS funding concerns. We have studied the issues, created economic models, analyzed actuarial projections and narrowed our focus from seven possible paths forward to just a few. It is widely agreed among our policy colleagues in Washington, DC, that the ultimate solution is a universal approach that covers catastrophic expenses associated with LTSS — expenses incurred over three or more years of need — and is targeted particularly to middle-income individuals and families who have limited resources to pay for LTSS and who aren’t eligible for Medicaid.
We know that individuals and families need relief from the expenses they are paying out of pocket for. As such, we are also looking to the private long-term care insurance market to refine insurance products and benefits and to invent possible new vehicles to help people save for their later years. There are savings mechanisms for college — why are there none for LTSS?
It is understood that, as with any major new initiative that includes federal involvement, it will take a number of years to see the fruits of our labor. Rest assured, labor we will. We will work collaboratively to seek champions in Congress, allies in state capitols, and a grassroots movement from consumers. We will continue to examine the options for a workable approach to cover catastrophic expenses.
LeadingAge recognizes that there is no easy solution to this increasingly serious issue, but we will look at a variety of integrated approaches and incremental solutions that will help ease the financial and emotional burdens for individuals and families needing LTSS.
Ultimately, we are seeking a different future for all — younger people with disabilities, families, paid and unpaid caregivers, employers, the middle class, providers and federal and state budgets. The status quo is neither fair, rational or sustainable. We are driven by the urgency of putting solutions in place before today’s problems become worse.
Katie Smith Sloan is president and CEO of LeadingAge.