Americans Remain Baffled By Long-Term Care Financing, But Would Like A Medicare Benefit.

Americans age 40 and older continued to be flummoxed by the challenges of long-term care financing, but increasingly believe that Medicare ought to provide such supports and services. According to a new poll by the Associated Press-University of Chicago NORC Center for Public Affairs Research (AP-NORC), support for a Medicare long-term care benefit has grown significantly over the past five years. And for the first time since the survey began, a majority of Republicans favor Medicare long-term care.

The Staggering Cost of Long-Term Care and Medical Care in Old Age

A typical 65-year-old couple will need to save nearly $400,000 to pay for out-of-pocket medical care and long-term care in old age, according to new estimates by the Fidelity Benefits Consulting. That is $60,000 more than a typical couple’s entire savings at retirement, including equity in their home.

Fidelity estimated an older couple will need to put away an average of $260,000 (in today’s dollars) for their out-of-pocket medical costs, even if they have Medicare. And they’d need to save an additional $130,000 to insure themselves against the need for long-term supports and services, in nursing homes or at home. It is important to think about the two costs together since we often think about only one or the other.

Who Owns Long-Term Care Insurance?

About 7.2 million Americans currently own traditional long-term care insurance policies, a number that’s held steady for the last seven years. But who are they? And what does it say about the future of long-term care insurance?

Overall, the share of older adults who own long-term care insurance (LTCi) has barely changed since 2002, according to new research by my Urban Institute colleague Rich Johnson. In 2002, about 10 percent of those 65 and older had coverage. By 2008 that share had ticked up to 12 percent, but in 2014, it dropped back to 11 percent. Among those aged 55-60, the share of policyholders slipped from 7 percent in 2002 and 2008 to just 5 percent in 2014.

What If Government Pays for All Long-Term Care?

How much would it cost if government pays for all long-term care?  About $4 trillion over the next decade.

We know because Democratic presidential hopeful Bernie Sanders has proposed to do just that, as part of his ambitious Medicare-for-all health insurance program. And, in an effort to calculate the overall cost of Sanders’s domestic policy agenda, a group of my Urban Institute colleagues have run the numbers.  The overall net increase in federal government spending for all health and long-term care: $32 trillion over 10 years. As part of that project, Urban long-term care expert Melissa Favreault estimated the net increase in federal spending for long-term supports and services only: about $3 trillion (after accounting for the roughly $1 trillion Medicaid already pays).

A New Look At The Big Differences In Financial Well-Bring Among Older Adults

For years, experts have been arguing over whether Americans are financially prepared for old age, especially after including the costs of health care and long-term care. But those debates often focus on averages (or medians), a perspective that misses a key point: While some seniors are sitting pretty, many others face a huge challenge. In other words, it isn’t just about the total housing and financial assets that older adults hold, or how much they make each year. It is about how much of that wealth and income is in the hands of a relatively few seniors.

A New Kind of Annuity for Those Who Already Need Long-Term Care

Imagine you are 75 and suffer a stroke. You have some financial assets but, suddenly facing a lifetime of unexpected personal care needs, you are worried about outliving your money. You never bought long-term care insurance and could never pass underwriting that would allow you to buy now.

What do you do? You could tap your home equity with a reverse mortgage or by selling your house. You could spend down what assets you have and turn to Medicaid once you are impoverished. Or you could consider a creative new product being offered by Genworth. It isn’t for everyone, and consumers need to be careful before buying, but it is intriguing.

Yes, We Can Create A Universal Long-Term Care Insurance Program

For three years, I’ve been working with a diverse group of policy experts to create a consensus framework for financing long-term supports and services (LTSS). This morning, the Long-Term Care Financing Collaborative, released its recommendations. And they are built around two major reforms: a new universal catastrophic long-term care insurance program and major improvements to Medicaid’s LTSS benefit.

Our insurance proposal would create an alternative to Medicaid for many middle-income people who now impoverish themselves paying for both long-term care and related medical expenses.

A Bipartisan Plan To Pay For Long-Term Care

Four former top government officials—two Democrats and two Republicans—have proposed a new plan aimed at improving the nation’s system for financing long-term care. Their package of ideas is detailed but relatively modest. However, by agreeing to a consensus plan, the officials have taken a major step in raising the profile of the critical issue of long-term care financing.

The group recommends changes in two key areas: making private long-term care insurance more attractive to middle-income buyers and improving Medicaid benefits for long-term supports and services for lower-income individuals. The former officials also say they’ll consider more ambitious ideas in a second stage of their initiative.

Hawaii Is About To Debate A Public Long-Term Care Insurance Program

 

The state of Hawaii is about to have a fascinating debate over whether to create a first-in-the-nation universal long-term care insurance program. The benefit would be modest—about $70-per-day for a year– but it would be available to all long-term residents of the state and be funded through a broad-based tax.

The measure will be introduced by Senate Commerce, Consumer Protection and Health committee chair Roz Baker, according to a report in the American Prospect magazine. Hawaii has been working on this issue since the 1990s—not surprisingly since the state has a rapidly growing population of those 75 and older and has a cultural traditional of caring for older adults.

Women Will Face High Long-Term Care Risks As They Age

It is no secret that long-term care is among the greatest financial risks we will face as we age. But if you are a woman, your chances of needing significant levels of personal care after age 65 are especially high. So are the dangers of not planning for costs that will average more than $180,000 for a woman turning 65 today.

On average, according to my Urban Institute colleague Melissa Favreault and Judith Dey of the Department of Health & Human Services, about half of all Americans will need a high level of long-term supports and services at some time before they die. In other words, the chances that you’ll need extensive paid assistance in old age are about 50/50. But if you are a woman, they are nearly 6 in 10. Take a look at this chart: