July 13, 2001

            If you ask most Americans what crisis they expect to face during the next few decades, chances are that few will mention the cost of nursing home care, home health care, assisted living care or other long-term care expenses.  However, as baby boomers approach retirement age, millions more Americans will be confronted by the need for long-term care, and by the need to pay for it.

            Just think, the average cost for a year’s stay in a nursing home is about $50,000.  For too many American families, that expense is out of reach.  For others, a stay in a nursing home can wipe out money for which they have worked and saved over a lifetime.

The cost of long-term care is the greatest unfunded liability facing most Americans.  Unfortunately, many people do not think about their potential need for long-term care, or about how they will pay for it.  Some believe that Medicare or Medicaid will pay these expenses; but Medicare does not pay for most long-term care costs, and Medicaid pays only after people go broke trying to pay the costs.  Others end up depending on friends or family members to provide these services; but often, these caregivers must forego wages or benefits – or even their livelihoods. 

            Meanwhile, the number of Americans who may need long-term care is growing rapidly.  According to the U.S. Bureau of the Census, people age 85 and older are more likely to need nursing home care than any other age group.  According to the Census Bureau, the number of individuals 85 and older – currently at 3.5 million – will double by the tear 2020, and double again to 14 million by 2040. 

            Clearly, more and more Americans will require long-term care – especially as baby boomers reach retirement – and the costs of long-term care services can easily rob families of their life’s savings.  How can we avoid this crisis? 

            Congress is taking steps to help families meet this financial burden.  On September 19, 2000, President Clinton signed the “The Long-Term Care Security Act,” which will make long-term care coverage available to millions of federal employees, their dependents, and federal retirees of the armed services.  Currently, Congress is considering bi-partisan legislation, which I have co-sponsored, that would allow tax deductions for baby boomers paying long-term care insurance premiums in anticipation of a future need.  The legislation will also provide up to $3,000 in tax credits for families with current long-term care needs.

Private long-term care insurance is similar to health care policies.  It can help pay for nursing home care, home health care, assisted living, and other long-term care costs.  In addition to helping pay for care, long-term care insurance gives people the freedom to choose where to get the care they need.  Providing tax relief to people purchasing this private insurance would pay for itself over time by reducing federal and state Medicaid spending.

            The “Long Term Care and Retirement Security Act of 2001” is an important step toward helping baby boomers meet their current and future long-term care expenses.  There is a large amount of bipartisan support in Washington for helping Americans avoid financial ruin at a time that is difficult for any family.  It is my hope that soon we can turn this proposal into a reality.

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