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Long Term Care - Avoiding the Crisis

The crisis in long term care is a disaster 61extended period. If that percentage holds in
years in the making. It began in 1946, whenthe coming years, then 49.6 million of the
the first post-war babies were born-in recordboomers will require long term at some point.
numbers. It continued for 18 more years, as
the "baby boom" continued. Things took a turnThe cost of that care will be staggering.
for the worse in 1964, when birthrates beganRight now, the average cost of a private room
to fall. The impact of the baby boom has beenin a nursing home is $74,600 a year and the
enormous. It has affected everything fromaverage stay is 2.4 years. At those rates,
school enrollment in the '50s and '60s to thethe total cost of long term care for the baby
economy of the '80s, '90s, and '00s. At theboom generation would be $8.88 trillion. That
peak of their earning power, the baby boomersaverages out to $467 billion a year for each
have generated record tax receipts andof  the  baby  boom  generation's  19  years.
created a surplus in Social Security. That is
about  to  change.Who is going to pick up the tab? Nearly 60
percent of baby boomers are under the
With the baby boomers in the workforce, thereimpression that Medicare pays for long term
are now 3.3 workers for each Social Securitycare. They are mistaken. Medicare pays for
beneficiary. As the boomers move intoshort rehabilitation periods, but not for
retirement, however, that figure will fall.long term care. Today 51 percent of long term
By 2031, there will be only 2.1 workers forcare is paid for by individuals and long term
each Social Security beneficiary. The Socialcare insurance; 49 percent is paid by
Security trust funds are projected to haveMedicaid, the federal program covering
surpluses each year until 2016. Trust fundlow-income  people.
reserves will grow to about $4,459 billion.
In 2017, however, with about half the boomersWithout reforms, the baby boom will put a
at retirement age, tax revenues flowing intotremendous strain on Medicaid. As a result,
the trust funds will be less than totalCongress is tightening Medicaid eligibility
expenditures. Interest on the reserves andrequirements. It is also giving tax breaks to
the assets will make up the shortfall-atindividuals who buy long term care insurance.
least for a while. In 2041, when the firstLong term care insurance is a special policy
boomers are 95 and the last are 77, thefunded by monthly premiums that pays for long
reserves will be depleted. Incoming fundsterm care, if it is ever needed. The AAHSA
will cover only 75 percent of the scheduledestimates that the average long term care
benefits  and  administrative  costs.insurance policy purchased by a 65-year-old
and held until death pays out 82 cents for
The boomers will have a similar impact onevery  dollar  spent  in  premiums.
long term care. At least 72 million baby
boomers will live to be 65 and older,As with all insurance, long term care costs
according to the U.S. Census Bureau.less for younger, healthier people. The
According to the American Association ofaverage annual long term care premium for
Homes and Services for the Aging (AAHSA), aindividuals under 65 is $1,337. The average
nonprofit organization that specializes inpremium for individuals over 65 is $2,862.
elder care, 69 percent Americans who live toThe sooner the boomers sign up for long term
be 65 or older require long term care-thecare insurance, the better off they are
supportive services needed by people who lacklikely to be.
the ability to take care of themselves for an



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