personal finance

Working to Provide Economic Security for All Americans

As the last year has shown no one is certain how our society will be transformed in the coming decades by political, technological, medical, economic or social developments. We do know, however, that the current government services which provide for society's most fragile, the aged and those with disabilities, will not be able to meet their obligations; in fact by 2030, unless reform is enacted, most if not all services will be bankrupt. As our country's population ages, America has yet to adequately prepare for the new demographic realities that 77 million baby boomers will have upon social and economic policies. Americans have begun to address several of these problems in the form of Social Security and Medicare reform, yet long term care financing -a potentially devastating cost for tens of millions of Americans, and a critical component of financial security has not received the attention and scrutiny necessary to begin solving this problem. People are entering the 21st century with government sponsored financial security programs invented in 1935 and 1965 that are now made obsolete by expense and demographics. We need to find a better way!

The purpose of CLTC is to raise the need for comprehensive long term care financing reform within the public debate at all levels of government and business so that nonpartisan reform becomes a priority among public and private leaders with leadership and support from the President of the United States.

The need for long term care can be sudden and unexpected as the result of an accident or medical event. It can also be the result of a chronic illness or years of age related illness. Whatever the cause, studies show that 40% of all Americans will need some sort of long term care in their lives. Despite this sobering fact Americans and their elected leaders ignore long term care financing issues. An overwhelming number of Americans mistakenly believe long term care is covered by Medicare. It isn't.

The cost of long term care, which averages $56,000 per year nationally for a nursing home has the potential to bankrupt most families very quickly. Nationally, two thirds of all recipients of long term care utilize Medicaid, the state-federal welfare program to pay for their care. The current Medicaid based financing of long term care is an ineffective system that does not meet its current needs nor can it be expected to remain operable, as the baby boomers require long term care. Using Medicaid as the primary payer for long term care is a demeaning outdated approach to As the baby boomers begin to utilize Medicaid, we will see a dramatic increase in government expenditures to pay for long term care.

Unless the financing system loi Pinel is reformed federal and state Medicaid budgets will threaten resources needed for education, defense, criminal justice, infrastructure and other services. Federal government planners already foresee the day in the next 30 years when the costs of entitlements will meet or exceed revenues. In 2002 we are beginning to see the effects of long term care costs on state budgets as 40 states reported budget shortfalls, in part, because of long term care costs and slowing economic growth. How then will we finance the exploding government borne cost of long term care when an additional 77 million Baby Boomers reach the age when the are most susceptible to needing long term care?

The process to get there

In March of 1999 former Senator David Durenberger called together a representative group of key individuals who were interested in the development of long-term care issues. After several meetings, a steering committee was appointed that met in order to decide how to proceed. The individuals attending the meeting felt there was a unique opportunity based on the front-loaded presidential primary system to inject the issue into several key early state primaries. The effect of concentrating on the early states where retail politics are more important provides the ability to shape the issues prior to large media driven states where a campaign without significant resources would fail.

The members of this collaborative effort represent all segments of the long term care spectrum each of whom would like to see a different solution to long term care financing. They agreed that this effort would be solely committed to raising the issue, not proposing solutions.

The decision to use the election of the President in the year 2000 as a springboard for the issue of long term care financing reform was a recognition that this issue had been buried in Washington, governor's and state legislative policy debate circles. It had been put on the back burner behind Social Security and Medicare reform, both of which appear poised to dominate the federal policy debate.

The election strategy required that we treat long term care financing reform as a candidate for purposes of the early primaries. The strategy developed a campaign style effort, replete with a series of campaign style tactics: theme development, spokesperson recruitment, media endorsements, delegate targeting and recruitment. By establishing a presence in Iowa and New Hampshire we were a constant force, which forced candidates to respond to this issue. Long term care financing is a personal issue and it is in these retail states where politicians are swayed and respond by individual voters that we sought to gain attention for the issue.

Our goal was to raise the issue of long term care financing within the public debate to the point that the next President takes ownership of the issue and names reform beginning in the year 2001 as one of the his priorities. We found the candidates to be knowledgeable about the issue and all recognized its importance; however they would not address the issue unless asked directly about it by Citizens For Long Term Care, a reporter, or other interested party.

Post-Primary Efforts

After concluding our activities in the early primary states Citizens For Long Term Care began focusing its efforts on assembling a core groups of "champions" who would be the leaders of reform at different levels of government and industry. We found leaders among local legislators, Governors, Members of Congress and various segments of industry who shared our belief in the need for long term care financing reform. Through individual and small group meetings; a series of closed briefings for Members of Congress and their staffs; presentations to trade associations; and constant contact with the Presidential campaigns we increased awareness of the need for reform.

Legislative vehicles such as a family caregiver tax credit; tax incentives for the purchase of long term care insurance; higher reimbursement rates; and issues around staffing ratios helped heighten the awareness of long term care issues and continued to maintain interest in long term care issues throughout the election cycle. As President-elect George W. Bush began announcing his Cabinet officials and senior advisors Citizens For Long Term Care felt long term care issues had been successfully noticed with the nomination of Governor Tommy Thompson as Secretary of Health and Human Services.

"Welfare reform, health care reform, long-term care for seniors, greater opportunities for the disabled, helping the poor find work, and helping the working-poor find rewards in their efforts, biotechnology and scientific research: I am absolutely passionate about these issues."

-Health and Human Services Secretary Tommy Thompson

Upon being nominated by President George W. Bush, Health and Human Services Secretary Tommy Thompson's comments indicated success in getting President George W. Bush to recognize the importance of long term care issues. As the leader of the Department of Health and Human Services Secretary Thomspon has had the opportunity to continue his leadership on long term care issues that he began as Governor of Wisconsin.

Defining the Future Through "Common Ground"

In April 2001 Citizens released a "white paper" entitled, Defining Common Ground: Long Term Care Financing Reform in 2001 that serves as a framework within which all debate on long term care financing reform can take place. Among the conclusions of the paper was the agreement that an insurance system, not the current welfare system, is the most appropriate way to finance long term care. To achieve such a system participants agreed to a limited social insurance cash benefit based on levels of disability to help people pay for their long term care needs. Such a benefit would be coupled with generous incentives to help stimulate the early acquisition of private long term care insurance. The paper also called for reform of the Medicare program to better treat chronic illnesses so as to delay, roll back, and even prevent the onset illnesses that often need long term care.

With the paper and support from our wide range of members Citizens began working with the Senate Special Committee on Aging to develop a series of hearings on long term care. This ongoing series has resulted in 10 different hearings on LTC. Through meetings with individual Representatives and Senators we have been exploring their interest in long term care and working to gather the necessary leaders to support a presidential initiative on long term care.

In June 2002 Citizens released a second "common ground" paper. Supported by a grant from the Kaiser Family Foundation of Menlo Park, California the paper, Long Term Care Financing Reform: An Integral Part of the Social Security and Medicare Reform Debates, this paper makes illustrates why the health and financial security issues involved in long term care financing are similar to the health and income security debates in Social Security and Medicare reform. Moreover, the paper concludes that by including long term care financing in these entitlement reforms there will be significant benefits to the long term care system including: the opportunity to better coordinate existing programs; improve treatment for chronic illness; increase family caregivers; reduce the cost of care per beneficiary and make services available to more people; and increase personal resources and the utilization of private long term care insurance.

This paper represents a launching point for a second Defining Common Ground paper that seeks to take the conclusions of the first paper and develop a more detailed policy proposal. The "common ground" process that Citizens has used in both Defining Common Ground: Long Term Care Financing Reform in 2001 and Long Term Care Financing Reform: An Integral Part of the Social Security and Medicare Reform Debates has proven to be very successful in advancing the long term care financing debate. Citizens is currently developing a third paper using this process that explores how the current financing system contributes to the workforce crisis in long term care. This paper will be released in 2002.

Our Principles

Services should promote individual dignity, maximize independence and self-sufficiency, and be provided in the least restrictive setting possible, and reflect the overwhelming preference of individuals to remain at home.

People should be able to choose from a full range of home, community-based, facility-based health and social services so they can get the types of services that will meet their individual needs and preferences.

Role of Families
The central role families play in planning for and providing long term care should be recognized and supported.

People of all ages and income levels should have access to long term care services and supports.

Eligibility for services should be based on functional criteria and social needs that take into account cognitive, physical, and behavioral limitations and the need for support, supervision, or training.

Costs should be spread broadly and progressively, so that out of pocket costs are affordable. This goal may involve tax policy, Social Security, Medicare, Medicaid, private health insurance and pensions, social services and housing policies. Both public and private financing mechanisms should be strengthened toward this goal.

Systems for assuring the quality of care should be built into all long-term care programs. These systems should assure quality and value based on outcomes and consumer protections enforced through appropriate government regulations.

The highest standards of professionalism and quality are essential for caregivers and systems. This must be supported by thorough training, appropriate supervision and fair compensation.

Systems should coordinate services for people with multiple needs that change over time, providing a seamless continuum of care.

Incentives and controls in public and private programs must maximize quality and control costs.


The long term care financing issue can, and should be the next major policy question facing our lawmakers as we enter the 21st century.

A rare opportunity faces our elected officials as they consider public policy in the 21st century. That opportunity is the chance to devise a system of quality health care for the millions of Americans that will face the need for long term care in the next century.

Politically, the chance to alter programs that once seemed sacrosanct appears to be at hand. The policy debates on Social Security reform and Medicare reform are now top priorities on both parties' agendas. Politicians are apparently eager to discuss new ways to structure these previously untouchable public entitlement programs. Oddly, however, the third large component, Medicaid and its role as the as the primary financing vehicle of long term care remains in the shadow of this new debate.

Reform of Social Security and Medicare cannot realistically take place without a reform of long term care financing. The financial link among these issues and their impact on the elderly and people with disabilities means they all must be discussed in some joint way. The current fragmentation and inadequacies of long term care financing and confusion over which programs finance care have promoted a system that does not meet the needs of the those who rely on it most.

If this opportunity is missed, our current system of providing long term care for the elderly and people with disabilities will only get worse, leaving many without health care, many more with inferior care, and the looming threat of personal impoverishment.

The issue of long term care financing reform encompasses a vulnerable population that is currently utilizing an inappropriate mechanism to finance their most life-critical purchases of care. These costs are competing more aggressively every year with other priorities in state and federal budgets. Most importantly, on the immediate horizon there is a demographic explosion from the baby boomers that are reaching retirement years, which will further strain the ailing long term care delivery systems.

A new national policy based on principles of independence, access, choice, family, responsibility, affordability and efficiency must combine public and private resources to provide for long term care. Such a policy must be devised and put into place soon to be able to finance the delivery of long term care services when they are needed - peaking between 2010 and 2030. The status quo alternative of continued haphazard financing, which leads to reduced quality, an under-paid workforce and increased costs, is simply unacceptable.

Significant injuries or medical events that necessitate long term care; the birth of a child with mental and physical impairments; chronic diseases requiring long term care all have the ability to significantly affect an individual's or family's economic security. During retirement, when many of these events occur, the need for long term care can impede the best of plans and threaten financial and retirement security. Unless we act now the rising cost of medical care, combined with our aging population and increasing number of disabilities will perpetuate a system that is heading for collapse at an increasingly rapid pace.

To develop a new national policy we will need leadership from our country's most visible and respected leaders supported by the individuals and families that have had to suffer with our current financing system. Until recently the common experiences that people are having dealing with loved ones struggling to find and pay for care and support has gone relatively unnoticed. However, as more people experience this dilemma, including legislators and policy makers, we expected to be able to give voice to this urgent need.