The Long Term Care Financing Collaborative

The Collaborative[1] is made up of policy experts, consumer advocates and representatives from service providers and the insurance industry.  In addition, the group consists of senior executive branch officials in both the Democratic and Republican administrations, former congressional aides, and former top state health officials.

 THE COSTS INVOLVED

 The statistics surrounding long-term care or long-term supports and services (“LTSS”) are eye opening.  According to the Collaborative, there are between 10 and 12 million adults today who require LTSS and that number is expected to double by the year 2030.  More than two-thirds of older adults will need some assistance before they die and nearly half will have a high enough need that they will be eligible for private long-term care insurance or Medicaid to pay the bill.  More than 6 million older adults need that level of care today and nearly 16 million will need it in 50 years.

The Collaborative defines Long-term supports and services (“LTSS”) as non-medical assistance.  This would include help with such things as food preparation, personal hygiene, assistive devices and transportation, bathing, eating and the like.

[1] For a list of members of the collaborative:  http://www.convergencepolicy.org/ltcfc-participants/

Cost to the Elderly or Disabled:

 The elderly or disabled persons who find themselves in need of LTSS try to pay for it out of their savings or income from their retirement along with help from family members.  Often, this is insufficient to cover the costs and many people have to turn to Medicaid for help.  The overall spending on LTSS is expected to double by 2050, which will cause even more people to depend on Medicaid to pay for it.

Few people have saved sufficiently for LTSS.  In fact, the Collaborative reports that a typical American between the ages of 65 and 74 has financial assets of $95,000 and about $81,000 in home equity.  This does not include retirement savings, which vary widely across the country.  To pay for one’s lifetime medical expenses with a 90% certainty requires savings of about $130,000 and an additional $69,500 for LTSS costs.  With this in mind, it is easy to see how people are running out of money.

Over all, individuals pay for about 55% of LTSS expenditures; Medicaid pays about 37%; and Private LTSS insurance pays for less than 5%.

The  next post will address the cost to the family and loved ones.