A Minnesota public-interest group is recommending reforms to force individuals in the state to take on more fiscal responsibility for possible extended-care needs late in life.
The Citizens League, St. Paul, recently issued a report with recommendations for financing long term care (LTC) for the elderly in Minnesota with a combination of Federal and individual financing.
Although developed as a list of proposals for the state legislature and governor to consider, its plans could apply to all 50 states, the group says.
Minnesota faces an "unsustainable burden" on taxpayers for nursing homes and other long term care as its population ages, the report said. But it could lower those costs significantly by making it easier and more attractive for people to invest in their own care, the Citizens League said in a report issued by its committee, the LTC Collaborative.
Without changes, public financing of LTC for the elderly in Minnesota would grow from $1 billion in 2010 to $5 billion by 2035, according to the report, "Moving Beyond Medicaid: Long Term Care for the Elderly as a Life Quality and Fiscal Imperative."
Members of the collaborative include representatives of state government and groups acting on behalf of senior services, health care, business, social services and philanthropy.
Neither individuals nor states are prepared for the increasing costs of old age that come with longer life expectancies, the report warns.
But few Minnesotans prepare for the cost of extended care, leaving government to be the main payer. Medicaid now pays for 40% of elderly LTC spending in the state, the report points out.
The group's recommendations include government programs to increase awareness of LTC planning across different income groups. To that end, it wants to see 85% of Minnesotans aged 45 to 65 develop financial plans for LTC by 2020.
For that goal to be reached, the report argues, Medicaid must be reformed to provide strong reasons for individuals to become financially prepared for LTC. In addition, it urges development of a mix of financial products that provide families a way to prepare financially for LTC, depending on their family situations and financial resources.
The report notes that under health care reform, starting in 2014, the state could ask for federal permission to redesign Medicaid so that it can be combined with new products aimed at middle-income baby boomers.
It recommends the state legislature set up a commission to refine and adopt its recommendations over the next two years so that it is ready to act when health care reform legislation kicks in.
For the state to change its Medicaid requirements would require state legislation, says Stacy Becker, leader of the Citizens League Long Term Care Collaborative.
"That's down the road," she says. "First Medicaid has to be designed in a way that works."
The group's specific recommendations included a redesign of Medicaid to provide coinsurance options, with eligibility based on privately purchased LTC insurance or savings for LTC as well as on income.
Although financial products already exist to help save for retirement needs–including retirement accounts, LTC insurance and health savings accounts–such products are "poorly targeted to middle income households," the report argues.
Among additional products proposed by the council is a new loan product based on the idea of the reverse mortgages to help seniors tap their home equity.
