Editorial: Plan now to avoid elder cost explosion

  • Updated: December 15, 2010 - 7:27 PM

Redesign Medicaid to reward savings, Citizens League says.

Star Tribune Editorial

The challenge involved in setting sound long-term care policy is evident in the topic's very name.

Anything "long-term" tends to get short shrift from people and politicians who feel more than burdened by the crises of today.

But with the first wave of the giant baby boom generation turning 65 next year, it should be possible for even myopic thinkers to see that society's spending on long-term care, which already strains federal, state and family budgets, is headed for the stratosphere in a decade or two.

If care for the frail elderly and disabled is to be put on a more affordable trajectory without unacceptable consequences, policymakers need to start now.

That's the message of a report issued this week by the Citizens League and sponsored by a host of long-term-care stakeholders, including the Minnesota Chamber of Commerce.

It makes a stark projection: Unless Minnesota changes the way it provides and pays for long-term care, that service's cost to state and federal budgets will increase fivefold in the next 25 years, from $1 billion in 2009 to more than $5 billion (in constant dollars) in 2035.

The Citizens League's report, "Moving Beyond Medicaid," argues that middle-income Minnesotans need to be ready to shoulder more of their own long-term-care costs, should they be among the three out of five people who, after age 65, will need to buy some kind of elder-care service in the future.

Those who require such services after age 65 pay $48,000 on average, the report noted.

Many Minnesotans incorrectly assume that Medicare, the federal health program for seniors, will cover those costs. With limited, short-term exceptions, it does not.

Medicaid, the health care program for the poor, is government's long-term-care workhorse. But it's poorly designed for the task, the report says. Medicaid's tacit message to seniors: Don't save money for long-term care, and don't bother with long-term-care insurance.

Instead, deplete your assets early to make yourself poor when you need care. Then let government -- that is, everybody else -- foot the bill.

The report makes a case for a system that rewards people for preparing while they are younger to pay for their own care needs later in life.

An ideal financing structure would blend government help with personal resources, acquired either through savings or with insurance. It also calls on the insurance industry to offer less-costly, limited-coverage policies that would work in sync with a redesigned Medicaid program.

One version of that idea already exists in a program called the Minnesota Long-Term Care Partnership. It gives purchasers of long-term-care insurance the capacity to keep a defined portion of their assets and still qualify for Medicaid support.

That's helpful for middle-income people who want to preserve an inheritance for heirs. A possible next step would be to make provision of Medicaid support for middle-income people contingent on the purchase of such a policy.

Policymakers should welcome the Citizens League's suggestions for helping Minnesotans do what, according to one poll, 86 percent of them believe they should: take responsibility for their own need for assistance as they age.

The crafters of the report readily acknowledge that redesigning Medicaid is not the whole answer to rapidly rising long-term-care costs.

Policymakers also ought to pay attention to improving prevention and management of chronic diseases; delivering home-based services via low-cost technology, and supporting informal caregivers with training, time off from work and respite services.

This is a good time to reexamine Medicaid in Minnesota. A new administration and Legislature in St. Paul are bound to look afresh at how Medicaid is and isn't meeting long-term-care needs, with an eye toward shrinking the massive budget deficit.

The Citizens League recommendations are timely indeed.

  • FOR MORE INFO

    Questions about long-term-care planning and access, Medicare, Medicaid, home-based care and a host of related topics can be answered by the Senior LinkAge Line, a free service of the Minnesota Board on Aging. Call 1-800-333-2433, or visit www.mnaging.org

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