A new national survey conducted for AARP, the senior citizen advocacy group, finds few seniors grasp the real costs of long-term care, and they don’t understand what their options are for paying that bill.
This lack of familiarity with the costs makes post-retirement planning difficult, say advocates for seniors. They want the government to devise a better system for educating residents on these issues, including how to obtain long-term care insurance.
The survey, whose results were released in January, polled more than 1,800 people age 45 and over from across the country, as well as an additional 400 people in each of five target states: California, Florida, New Mexico, Washington, and Wisconsin. AARP leaders released the report in Florida because, they noted, the state is already experiencing senior-boom issues.
While the national average monthly cost of a nursing home stay exceeds $4,600, only 15 percent of surveyed Florida residents came close to naming the right cost figure. Most significantly underestimated the cost. Florida residents had almost as much trouble identifying the $2,500-a-month cost of assisted-living care, according to the survey.
Advocates for seniors said the poll results surprised them. “If you do not know the reality, you cannot prepare for it,” said Esther “Tess” Canja of Port Charlotte, Florida, national president of AARP. “For far too many people, the costs of long-term care will prove to be a crushing burden.”
Stephen Moses, president of the Center for Long-term Care Financing, was less surprised by the survey results. “The problem with this survey,” he told Health Care News, “and with the unending series of studies like it designed to blame long-term care problems on market failure—the ignorance and stupidity of consumers—is that it completely ignores the government role in long-term care.
“Consumers don’t know who pays for LTC, nor do they care. But consumers are right, and the surveyors and experts are wrong, when they (consumers) give answers that suggest someone or something pays for LTC.”
Most people surveyed mistakenly believe that “Medigap,” a supplemental insurance policy filling gaps in Medicare coverage, will pay for a stay in an assisted-living facility.
Linda Barrett, a senior researcher for AARP, reported 31 percent of respondents said they purchased insurance covering long-term care. But she noted the Health Insurance Association of America says only about 6 percent of Americans have the coverage. AARP officials suspect those people are probably confused about their policies, perhaps believing government health care or a private-sector health insurance policy provides extended long-term care benefits.
National demographic trends indicate these issues will become increasingly difficult to ignore. The number of residents over age 85 will increase 50 percent by 2010. By 2025, more than one of every four Floridians will be 65 or older. Nationally, 7 million Americans may need long-term care this year. By 2020, that figure will grow to 20 million.
Lack of Coordination
Despite the graying of its population, Florida has a disjointed system for handling important aging issues. At least six state agencies handle some aspect of long-term care concerns and funding, according to E. Bentley Lippscomb, AARP’s Florida director.
Lippscomb, who ran the Department of Elder Affairs during Gov. Lawton Chiles’ administration, has warned, “We’re spending billions of dollars each year on long-term care, yet nobody is responsible.”
AARP is backing a bill drafted by the State Senate Health, Aging and Long-Term Care Committee that creates a new oversight agency, dubbed the Office of Long-Term Care Policy.
Long-term care insurance has been around since the 1960s but has never really caught on, experts say, because consumers don’t see the need for it. The policies tended to be almost exclusively focused on nursing home care, an unattractive option to many seniors and their families.
Interest in long-term care insurance is picking up, however. Today, many insurance companies give customers more choices, such as coverage for home health care or adult daycare. Some offer riders covering spouses or even parents who provide care for relatives.
As Moses explained, “The government-financed, welfare-based system created by perverse public policy incentives is in the latter stages of collapse. The public is starting to realize that to get access to quality care at the appropriate level, they must be able to pay privately.
“That’s why you are finally beginning to see in the past 10 years some growth in the LTC insurance market and in private-pay alternatives to welfare nursing homes such as home care and assisted living.”
Moses thinks AARP is right in concluding that today’s LTC insurance policies are much better, but wrong about why people don’t buy. “More education will help,” said Moses, “but will not expand the market more than marginally. The key to getting people to buy private LTC insurance is to target scarce government LTC resources to the genuinely needy, and provide incentives for everyone else to plan early and save, invest or insure for the cost of long-term care.”
The AARP survey was conducted by the Knowledge Management division of AARP’s Membership Group under the direction of project manager Linda L. Barrett.
Survey respondents were selected randomly from a nationally representative random digit dialing (RDD) list. Respondents in the five target states were drawn from RDD lists for each state.
The national survey was conducted by telephone from July 20 through August 14, 2001; the state interviews were conducted by phone between July 27 and August 21. AARP reports the survey took an average of 16 minutes to administer.
For more information …
on the AARP survey, see the Executive Summary on the group’s Web site at http://research.aarp.org/health/ltc_costs_1.html.