Many of us will spend away our life savings on essential services for our Alzheimer's and other chronic illnesses
The Affordable Care Act will cover millions of Americans who cannot afford private health insurance. Still, many of us will spend away our life savings on essential services for our Alzheimer's and other chronic illnesses. It is time for Minnesota's baby boomers -- the generation now holding most leadership positions and most likely to consume the most care -- to change this untenable approach and move beyond Medicaid.
Until the 1970s, the word "Alzheimer's" was largely isolated to medical journals. Large families, one-worker households and nearby relatives made family caregiving realistic. And people died younger, often shortly after retirement.
With today's "new old age," a sandwich generation is wedged between caring for parents, raising kids and working day jobs. National Gallup research shows that family caregivers miss work 126 million days annually, at a productivity loss of just more than $25 billion. That doesn't include part-time employees or caregiver health costs. Alzheimer's, of course, is no longer isolated to medical texts; nearly 100,000 Minnesotans have it. And with seniors' record longevity, Alzheimer's and other chronic illnesses have become top causes of death.
Who pays for this care? Not Medicare, which picks up only a small portion of costs, based on acute health episodes. In Minnesota, 40 percent of seniors' long term care costs are paid by taxpayers through Medicaid, at a cost of $1.1 billion in 2010.
Many don't know the difference between Medicare and Medicaid, which often becomes tragically clear at the worst possible time -- when someone needs help with Alzheimer's care or with bathing, eating or other basics. Only then do they learn that Medicare doesn't pay and that they must impoverish themselves to become eligible for Medicaid.
Do we really want to continue with public policy that drives people to poverty to get needed care?
The state of Minnesota intends to launch a public education campaign this year called "Own Your Future." Used in other states, the campaign's purpose is to raise people's awareness of the need to plan how they'll pay for their own long-term care.
Awareness is good. But without sensible, affordable incentives and viable ways to pay, people will continue going destitute and using Medicaid as their insurance. Minnesota must move beyond Medicaid.
New approaches identified by the Citizens League provide a road map to preserve aid for the poorest Minnesotans, remove disincentives for personal responsibility, and keep more of us from poverty and Medicaid.
One path is remaking Medicaid into a coinsurance program for long-term care that supplements self-financing efforts and creates a new paradigm in which personal responsibility will be publicly supported and rewarded. In this approach, if you self-finance above a threshold amount, Medicaid would supplement your effort based on new eligibility criteria that don't require impoverishment. A qualifying private plan might consist of private insurance, a health savings account, home equity, a prize account that rewards savings, or the CLASS Act, which is part of the ACA but hasn't been enacted.
Another route is creating a safe state-backed hybrid home equity product. Even with recent declines, a home is most people's largest asset. It would be cost-effective for the state to develop or support a product letting seniors tap their home equity for limited purposes (e.g., long-term care) and allowing them to remain in their homes under far more favorable terms than do existing reverse mortgages.
A third approach would create an easy-to-use, state-regulated online marketplace providing diverse private insurance plans, not just the most comprehensive and expensive. A great resource for anytime use and during company benefit enrollment, it could include "catastrophic care" policies for the largest care costs, high-deductible policies for later years of care and supportive services, or term life insurance that converts to limited coverage.
Research shows that people believe individuals should bear some responsibility for their long-term care. These and other new ideas would provide meaningful options and incentives that empower individuals and our statewide community to combine awareness with payback.
We're all aging. It's a national leadership opportunity for Minnesota baby boomers to innovate and demonstrate greatness in our generation, too.
Kathryn Roberts is president and CEO of Ecumen, which provides senior housing and services in Minnesota.