On March 9, the Senate Special Aging Committee heard testimony on financing options for long-term care. In his opening remarks, Chair Gordon Smith (R-OR) said that “the biggest concern regarding long-term care is that it is very expensive. The Centers for Medicare and Medicaid Services estimate that national spending for long-term care was approximately $160 billion in 2002, representing about 12 percent of all personal health care expenditures. To make matters worse, demand for long-term care is expected to increase significantly in coming decades.” He announced his introduction of the Long-Term Care Trust Account Act (S. 2397), which would “create a savings vehicle for the purpose of preparing for the costs associated with long-term care services and purchasing long-term care insurance. Individuals who contribute to this account will receive a tax credit on their contributions. This will help individuals save for insurance and the many people in our country that want to help their parents or a loved one prepare for their health care needs.”
Dr. Robert Friedland, director of the Center on an Aging Society and an associate professor in the Department of Health Systems Administration at Georgetown University, said that long-term care is frequently provided by families, adding, “Most families have more than one caregiver, but the primary caregiver, which is typically the spouse or adult child, usually provides the most care and spends considerable effort coordinating the care provided by other family members as well as that provided by paid caregivers. The typical primary caregiver is a 46-year old woman who provides more than 20 hours of care each week to her mother (or mother-in-law).” Addressing the high costs associated with long-term care, he explained that one option is to buy into a “continuing care community” where “everyone is charged the same initial and ongoing fees, and it is hoped that these fees will be sufficient to cover the costs of those who end up needing long-term care.” Dr. Friedland also highlighted the benefits associated with long-term care insurance, but noted that the policies cannot be purchased for younger people and there are high premiums. He encouraged Congress to consider tax incentives for long-term care insurance, pointing out that at least 26 states have amended their tax codes to provide a tax credit or deduction for the insurance premiums.
Testifying on behalf of the Alzheimer’s Association, Joanne Vidinsky shared how her husband’s parents’ experience with Alzheimer’s influenced her decision to prepare for her own mother’s long-term care needs: “My mother lives modestly on her Social Security benefits and a small amount of savings that came from a life insurance policy that my father had when he died of cancer 18 years ago. My mother is typical of most elderly women who live alone; should she become disabled she does not have a spouse to help her remain at home and her financial resources would be drained after only a few months in a nursing home. Despite working her whole life and raising her two children, she would face impoverishment, if it were not for the help she receives from my brother and me.” Ms. Vidinsky explained that she and her brother bought long-term care insurance for her mother and noted that the policy costs approximately $10,000 each year. “Unfortunately, most older people in this country cannot afford the average annual cost of $76,219 for nursing home care out of their own savings, nor do they have children who can afford to buy long-term care insurance for them. The majority of older people must rely on the government Medicaid benefits to help them meet their long-term care needs, when informal caregiving is no longer enough.” She praised the FY2006 spending reconciliation bill (P.L. 109-171) for expanding the Long-Term Care Partnership program and encouraged the committee to “initiate a national dialogue…to reach consensus on a viable solution to the long-term care financing problem.”
