As Minnesota's population ages, caring for the elderly could become a huge drain on state finances. The state's human services chief plans to launch a new effort to encourage people to finance their own care.
What would persuade Minnesotans to start saving for their care in old age -- and prevent the swelling "silver tsunami" of baby boomers from bankrupting the government?
How about insurance that covers long-term care but doubles as investment savings? Or tax inducements to squirrel away money in specialized savings accounts? Or a program that offers prizes to those who save, or a state-sponsored insurance plan?
"If we don't figure this out pretty soon, in 20 years Minnesota won't have money for schools, highways, even for other social services," Human Services Commissioner Lucinda Jesson warned Thursday as she outlined a campaign that soon will start seeking answers.
Even starting to trim rising health costs won't be enough to counteract the rising pressure on the state Medicaid budget as the number of Minnesotans 85 and older, currently 110,000, doubles by 2035 and triples by 2050, she said.
Addressing a University of Minnesota forum on financing long-term care, Jesson outlined a two-year campaign called Own Your Own Future.
It will start with two pilot education projects that could go statewide later this year, perhaps with help from employers. The effort is likely to lead to specific tools and incentives the Legislature may be asked to approve to encourage saving. It may include seeking federal permission to redesign Medicaid -- which pays for two-thirds of nursing home residents after they exhaust savings -- perhaps offering middle-income Minnesotans sliding-scale coverage.
Some legislative support
Encouraging individual responsibility to pay for care is key to a major effort now under way by Jesson's department and the Republican-controlled Legislature to control costs by better targeting care to those who need it most.
A panel of two Republican and two DFL legislators generally supported the proposal.
"I agree, we need to get people to take more responsibility," said Rep. Jim Abeler, R-Anoka, chairman of the House Health and Human Services Finance Committee. "But how do we get their attention? A lot of people think they'll never need that kind of care, or that the government will pay for it. Will a letter from the governor get their attention?"
Jesson said the plan is still unfolding, but said it's been a high priority for her since she took office early last year. "We have to act now," she said. "Our current system is unsustainable."
Among reasons she cited:
•Baby boomers may be earning more than any previous generation, but they are saving less. That comes at a time when more employers are dropping retiree health plans and stopping pensions in favor of cheaper 401(k) retirement savings plans.
•Changing families -- more divorces, more blended families and fewer children -- means there will be fewer family members caring for aged parents in the future. Now, about 91 percent of long-term care comes from families and friends, down from 97 percent 20 years ago. In another 20 years, it will drop significantly.
•Long-term care costs to state government are projected to quadruple in the next 25 years, from $1.1 billion to $5 billion. Over the next four years, the total state Medicaid budget is projected to soar 80 percent, from $3.2 billion to $5.6 billion.
•After age 85, most people will need some sort of long-term care -- nursing homes for a few, but home health care for many more. Others can use savings to buy other services or remodel their homes, where most people want to live out their days.
Panelists Abeler and Sen. Tony Lourey, DFL-Kerrick, said they have long-term care insurance. But they noted that many people can't afford the insurance, and there are other ways to save for care in old age.
Jesson, 53, has chosen one such option. Her preparation includes salting away extra money in a health savings account that will add up over the years, creating a nest egg to finance her long-term care.
Warren Wolfe • 612-673-7253