1. 1 Financing Long-Term Care for Minnesotans Presentation at VAN Forum March 24, 2010 LaRhae Knatterud Minnesota Department of Human Services

2. 2 Minnesota’s population 85+ will more than triple between 2000 and 2050

3. 3 Percent change in Minnesota’s population 85+ between 1970 and 2050

4. 4 Changing Demographics l Longer life expectancy l Fewer children to be informal caregivers l Child-rearing expenses later in life

5. 5 Changing Resources l Changing retirement system l Shift: defined benefits to defined contributions l Increase in Social Security retirement age l Reduced housing values

6. 6 Minnesota’s Projected Retirement Resource Insufficiency l The number of Minnesota retirees who will be at risk of retirement insecurity will increase dramatically 90,000 in 2005 to over 225,000 by 2021 l The number at risk each year will more than double in just 9 years 188,461 by 2014

7. 7 When family caregiving decreases, public costs increase For every 1% decline in family caregiving, it costs the public sector $30 million ?

8. 8 Number of elderly served in MA: if we had to serve all with insufficient income versus same percent as now MA expenditures for the elderly would grow exponentially in the future This could cost $20 billion 

9. 9 Long-term care financing study 2003 Legislature required a study l Study of private financing options to determine which of several options would be most attractive to individuals and achieve the state’s goal of generating Medicaid savings l Propose a new mix of public and private approaches to financing long-term care

10. 10 Financing options reviewed l Five insurance options Long-term care insurance Partnership for long-term care Nursing home benefit mandated in Medicare supplemental products Health insurance options that include long- term care coverage Life insurance that includes long-term care coverage

11. 11 Financing options reviewed (cont) l Two options that borrow money Reverse mortgages Family loan or line of credit l Two options that use savings Public savings – Hawaii CarePlus Private savings – long-term care annuity

12. 12 Recommendations l Medicaid has perverse incentives for elderly and families Incentives to transfer assets and voluntarily impoverish yourself Very existence of Medicaid in its present form may “crowd out” private options l Consensus that we must eliminate mixed messages about personal responsibility for long-term care

13. 13 A new mix of approaches l Tighten MA program eligibility l Provide incentives for private payment of long- term care Education for all individuals on risk and options Financial incentives that target those at risk of using Medicaid l For longer-term, rethink and restructure private and public responsibility for long-term care

14. 14 A new mix of approaches l Intensify efforts to support family caregivers l Prevent disability that causes long-term care need, improve chronic care management l Increase number of “communities for a lifetime” in Minnesota

15. 15 We spend more time planning vacations than we do our retirement and old age