America lacks the planning gene. As individuals, we dont think about the future; the personal savings rate as a percentage of disposable income has steadily declined from less than 8% in the early 1990s to minus 1% last year. In societal terms, we arent coming to grips with the biggest issues we face, including Medicare and Social Security, because their effects are too far in the future.
Those shortcomings are on full display in long-term care. We have no earthly idea what we are going to do when the baby boomers morph into senior citizens.
On the individual level, only about 8 million people have long-term-care insurance. Most Americans will unwittingly end up relying on Medicaid for nursing home care, straining the program beyond its limits. There is a good reason for this: Most long-term-care policiesif you are healthy enough to get oneare relatively expensive. The annual premium runs roughly $1,700 if you buy in at age 50, $2,200 at 60 and $4,225 at 70. Furthermore, there is ample evidence that the policies wont cover anything like the full cost of care at a private facility, which now runs a staggering $70,000 to $90,000 per year. Some companies are already reneging on paying on policies, as investigations by Congress and the Government Accountability Office are finding.
On a national level, it means we lack a comprehensive policy for how to deal with an influx of baby boomers into an already overburdened, inefficient and often grossly negligent system of elder care.
Nobody really knows whether the baby boomers will be healthier or sicker than previous generations; there are conflicting studies. But certainly the sheer numbers will be what matters. Today there are about 36 million people 65 or olderroughly 13% of the population. By 2020 that percentage will rise to 17% and by 2050 one in five people will qualify for Medicare. The old-old, those over 85, will continue to grow faster as a percentage of the population than any other cohort. The risk of Alzheimers is an incredible 50% after 85.
Meanwhile, the percentage of people ages 35 to 54who not only are the children of the aged and allegedly responsible for some of their in-home assistance, but also the largest group of working people expected to staff senior housing facilitieswill decline from about 38% in 2000 to 30% by 2050. And yet, according to one U.S. Labor Department report, we will need two and a half times more long-term-care workers by 2050.
There are a few signs of an active response to the coming crisis. One is the National Commission for Quality Long-Term Care, led by the odd pair of former Democratic Sen. Bob Kerrey and former Republican House Speaker Newt Gingrich. It has issued a preliminary report defining the problems and identifying six areas of needed system change, such as the workforce challenge, technology and finance. It is continuing its work, hoping to issue a comprehensive report soon.
There is an emerging consensus in the elder-care community that changes are needed in the healthcare system in general, turning the focus from responding to health crises to prevention and management of chronic diseases. Baby boomers have to engage in their own care, ensuring they enter old age in better health. Research is needed on new ways to keep people out of nursing homes and in residential settings.
Last and not least, long-term care must have a much higher profile in the national healthcare reform debate. Whenever the topic is raised, you can just see peoples eyes roll. Planning like this isnt sexy and it isnt about partisan politics. Its about being responsible and looking forward, which in this country means there is really hard work ahead.