Editorial: Don't ignore costs of long-term care

The symposium sponsored by a right-of-center Minneapolis think tank was an unlikely place to propose a new federal tax and an even unlikelier place to find agreement that it's time to consider one.

Yet that was the situation at a thoughtful gathering on entitlement programs -- Medicare, Medicaid and Social Security -- conducted recently by the Center of the American Experiment. The conservative Minnesota participants -- Chuck Chalberg, Laurence Cooper, Tom Kelly, Peter Nelson and moderator Mitch Pearlstein -- called passionately for cost containment as baby boomers age. Toward the end of the program, when the subject of long-term care came up, things took a surprising turn. Kelly, a Dorsey and Whitney attorney who's chairman of the Minnesota Free Market Institute, shared perspectives from his parents' and grandmother's long-term care experiences. "We should ... simply say that if you have the good fortune to live into the twilight years when you require this care, it will be provided for you." Pressed by Pearlstein on how to pay for this, Kelly replied: "We would have to have a tax ... the same as we do for Social Security."

It was a striking exchange, one calling attention not only to long-term care costs, but also the opportunity afforded by our shared experiences to explore meaningful solutions to the challenges of caring for the nation's elderly and disabled in years to come. Most families have seen up close how costly and frustrating the process can be. More than just about any issue, there's common ground on which to build real reform: policies that reduce reliance on expensive institutional care and encourage more personal savings.

Whether that involves a new taxpayer-supported social insurance program remains to be seen, and it's too early to support any type of tax. But make no mistake, it's time to act. The nation's long-term care system is in crisis. The reason is that far too few Americans save for long-term care expenses, yet the majority of them will need it -- nearly 70 percent of people over age 65 will require this kind of care at some point. Private long-term care policies pick up just 7 percent of the nation's long-term care costs. Those without insurance go through their savings and then turn for help to Medicaid, the $360 billion-a-year medical care program for the poor that is administered jointly by the state and federal government.

Medicaid's costs are unsustainable. In 1971, Medicaid consumed 0.7 percent of the U.S. Gross Domestic Product. That total had climbed to 2.1 percent by the early part of this decade. Long-term care services comprise about one-third of the program's total spending and are expected to consume dramatically more dollars as baby boomers age. Despite the money spent, and despite recent policy fixes, families remain frustrated by the program's institutional bias. It's designed to put people in nursing homes, not keep them in their own homes.

Minnesota is fortunate that its politicians understand the issue's urgency. In the state Legislature, Reps. Laura Brod, R-New Prague, and Paul Thissen, DFL-Minneapolis, teamed up admirably this spring on a bill that would have allowed Minnesotans to open up tax-advantaged savings accounts for long-term care expenses. The bill wasn't passed during the 2009 session, but it deserves a second chance in 2010. While a small step, it's a start in getting more people to save for their own care .

Newly installed U.S. Sen. Al Franken, who sits on the Senate's Special Committee on Aging, also understands the issue's urgency. Just days after taking office, Franken told the Star Tribune that long-term care must be part of the health care reform debate going forward, and his ideas bear watching as he offers specifics.

The new senator's focus is welcome. Even during this summer's historic health care reform discussions, long-term care has unfortunately remained an after-thought. The U.S. House bill, introduced last week, essentially ignores it. On the Senate side, Sen. Edward Kennedy has introduced a program that calls for Americans to voluntarily pay long-term care premiums into a new government-run long-term care insurance program. That program, called the CLASS Act, deserves a higher-profile debate than it has gotten.

Kelly and his colleagues at the Center of the American Experiment symposium spoke honestly and courageously about long-term care. Their conclusions are correct: Drastic action is needed and all options must be on the table. More blunt talk is needed if the nation is to continue providing the quality affordable care its most vulnerable citizens deserve.