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On Aging with Dr. Roger Branch Sr.: Long-term care, mounting dilemmas
Branch WEB
Dr. Roger Branch Sr.

It cannot be said that issues and problems faced by senior citizens are ignored. The November 27 issue of Time Magazine devotes 12 pages to immediate and growing problems with long-term care. The lead article in the November AARP Bulletin is on patient safety in nursing homes. There are so many issues that I will divide them into two columns for coverage.

Typically, the first issue is money-how to pay for long-term care. We have been hit by an actuarial crisis. Plans and programs that began with the creation of Social Security were based on an average life expectancy of 61 years, a base that was not changed greatly with the addition of Medicare. Today, average life expectancy is almost 80 years.

Fewer people are dying before retirement, leaving their contributions to Social Security and Medicare to fund the claims of those who live longer. Many people are living 10, 20 years and longer after retirement. While they might not be disabled, they often struggle with some health issues for extended periods. Old plans and programs do not fit present problems.

Still on the subject of money, how is long-term care funded? The answer is not Medicare, with the exception of hospice care. The cost for assisted living facilities rests exclusively on private sources, the income or savings of the resident or family. Nursing homes (euphemistically, rehabilitation centers) also are patient-funded (Social Security and personal savings or income) unless they cannot pay. Then payment comes from Medicaid, a broad system of indigent care funded by federal and state tax monies. According to AARP, Medicaid is the primary provider of nursing home services, roughly 62 percent of all patients in 2015.

Few seniors have private fortunes capable of paying for extended care. The costs are staggering — about $80,000 a year for nursing home care, $267 a day for a private room, $235 a day for a non-private room and pray for a compatible roommate, etc.

What happens when patients have some savings but not enough? When they have "paid down" — meaning exhausted their financial resources — they become eligible for Medicaid. After going through the process of demonstrating destitution, they can have their stay supported by state and federal tax allocations. If they have property, like a home, it will be sold at death to recover all or part of the money expended by Medicaid, unless there is a surviving spouse. A surviving spouse retains use of the home until death, but must pay all expenses (taxes, repairs, etc.). Then it is sold.

Most seniors are less financially secure at retirement than was the case 20 years ago. In the first place, we never have been good at saving money. Our economy is based on consumption. Its driving force is advertising. Billions of dollars are spent every year to convince people to buy things they do not need with money they do not have, often spending unreasonably more for things for their product-line names. "Oh, Lord, won't you buy me a Mercedes Benz?"

P.T. Barnum supposedly said, "There's a sucker born every minute." He must have meant lots of suckers.

Another problem with the financial security of older Americans is the breakdown of retirement plans supported by employers. For decades, labor unions negotiated agreements with employers that included generous retirement plans for workers. In a few cases, when companies went bankrupt, it turned out that they had not set aside any money to ensure retirement agreements and workers had nothing. The bigger issue is that labor unions lost their clout when employers exported jobs overseas or substituted industrial robots for human hands.

Local, state and federal employees remain the largest contingent of significant retirement programs supported by both employers and employees. These range from kindergarten teachers to Navy Seals, from members of congress to garbage collectors. In some cases, generous retirement plans were offered in order to attract people to jobs that were not otherwise so richly rewarded.

Over time, with retirees living longer and drawing down available funds, problems have emerged. How to pay retirees as promised. How to structure retirement programs for the future. Currently the South Carolina legislature is considering an IRA approach to replace its state retirement system. A century of nearly continuous military involvement has claimed a large and growing part of the federal budget to cover both retirement and health care for veterans.

So, here's the point. Few seniors have enough savings or other income to pay for a decade-long stay in any sort of long-term care facility. Social Security income is not enough to cover such expenses. Employer-supported retirement programs are under duress. Declining into poverty makes nursing home patients eligible for Medicaid support, but politicians are champing at the bit to get rid of Medicaid.

One more thing, the baby boomers are coming. By 2040, one in five people in this country will be retired or eligible for retirement. The cost of health care is rising! For some the only choice is to keep on working.

 

Roger G. Branch Sr. is professor emeritus of sociology at Georgia Southern University and is a retired pastor.


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