Getting older is costly, and the effects can be devastating.
“Hey kiddo, it’s your dad. You should make it a point to come home next weekend; it’ll be your last chance to spend some time in Grandma Thompson’s house.”
I met Isaiah, a 19-year-old student from the University of Minnesota during tutoring hours, when he received a call, on a morning where a calculus midterm was his biggest concern. His dad informed him that his grandparents’ home, the house his family spent every Thanksgiving, Christmas and Easter, had been sold. The outlook of Isaiah’s day, weekend and foreseeable future took a turn many Minnesotans can relate to. With no concrete solution to long-term care insurance from the state legislator the new President- Elect, Donald J Trump, people like Grandma Thompson are forced to make life-altering decisions to afford their care. As the insurance headache rages on, so do the nation’s retirement rates, the costs of Medicaid and the ballooning expenses of life during the golden years.
Minnesota’s demographics are changing, and it’s happening fast. Currently, 13.8 percent of Minnesota’s population is over the age of 65. In particular, Cook County has the second highest average age in the state at 51.4 years. By 2030 more than 1 in 5 Minnesota residents, including all baby boomers, will be an older adult (65+), and in 2020, the state’s K-12 population is set to be surpassed by the state’s 65+ population for the first time in history. This fluid demographic is not just a Minnesota phenomenon; it’s a sweeping shift in which all states have to take into account.
People are living longer, both in good health and with disabling conditions. With these promising advancements, fewer families are seeing their money go the distance, as the cost for long-term care increases. The public eye is honed in on the election results, and the national debate on healthcare is largely what should or should not be done about the Affordable Care Act. However, another health policy overhaul is in motion across many states: the continued growth of Medicaid spending.
In Minnesota, older adults account for only 7 percent of eligible Medicaid (Medical Assistance) enrollees, yet they account for over 20 percent of the cost, and that number is rising, creating a need for long-term care coverage options. As retirement rates increase, the number of young people entering the workforce is actually in decline. Slower workforce growth means slower economic growth, which in turn reduces government revenue. Inconvenient timing when the demands for expensive long-term care services like in-home health care, are escalating. Notably, Medical Assistance spending for the elderly, which includes long-term care services, is projected to increase by over 9 percent every year through the 2020s.
The scope of this issue stretches outside Minnesota’s economy. According to a report on long term care, of the private insurers that offer long term care insurance, 90 percent are no longer able to do so due to the number of adults needing coverage. A scary prospect, as more and more older adults look to the government to help fund their inevitable care expenses.
The term “spend-down” has become increasingly prevalent as middle-class Minnesotans struggle to prepare for the cost of long-term care services. Spending down occurs when adults who need these services exhaust savings and assets, often shifting them to family members just so they become eligible for Medicaid. And as the private market opts out of the long-term care business, the rates for policies purchased long ago, continue to rise.
In today’s America, 1.4 million older adults (26,616 Minnesotans), reside in nursing homes. Like Grandma Thompson, a widow and former stay-at-home mother with prevailing dementia, 70 percent of these residents will rely on Medicaid to “foot the bill.”
Long-term care insurance is a relatively new health policy issue. Options for the middle-class market have dissolved as long-term care insurance becomes limited to an upper-class commodity. It is apparent that current practices are flawed and systematic change is needed. A possible solution may be to increase incentives for older adults, to finance long-term care services themselves. Options like improving tax credits and state relationships with Minnesota employers to educate the state’s workforce on the importance of planning for long-term care as part of their retirement plans. Employers are generally seen as a viable source of information regarding various insurance services. Additionally, this may be a good way to reach younger employees and instill a sense of importance about planning for effective long-term care financing.
As Minnesota’s health care evolves under the Affordable Care Act, the state must evaluate both the short-term and long-term impacts the aging population will have on its health system. With increases of 9 percent each year in Medicaid spending, and a projected two-fold increase in the older adult population, cost adjustments and extensive policy measures will be necessary to ensure benefits for future seniors, limiting the financial burden on non-retiring Minnesota residents.
Editor’s note: Benjamin Butler is a Public Health Master’s student at the University of Minnesota. As a requirement for a health policy course he had to submit an op-ed regarding a specific policy issue. Ben picked long-term care costs for older adults and those with access to Medicaid. We thought our readers would be interested in his editorial, and we are happy to help Ben in his quest to achieve his degree.
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