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Boomer time bomb

A federal insurance plan could help offset the cost of long-term healthcare for an aging population.

August 15, 2011

With legions of baby boomers starting to retire, a growing number of Americans will soon need some kind of long-term healthcare, whether from a nursing home or from an in-home health aide. A new survey by the SCAN Foundation and the UCLA Center for Health Policy Research, however, finds that Californians are woefully underprepared for the cost of such services. The survey is a wake-up call to the public, as well as a warning sign to lawmakers who want to pull the plug preemptively on a new federal insurance program for long-term care.

The survey, which measured the views of nearly 1,500 registered voters in California over age 40, found that more than 60% worried about their ability to pay for healthcare in general and long-term care in particular. But 66% of those surveyed said that with nursing home fees averaging $6,500 a month, they couldn't afford more than three months of care. More than 40% said they couldn't afford a single month.

That's a financial time bomb, considering that conventional health insurance doesn't cover long-term care, and Medicare covers only 100 days of skilled nursing care for people recuperating after hospital stays. And roughly 70% of those over age 70 will need some kind of long-term care at some point, with an average duration of three years. The percentage is likely to increase as life spans lengthen; to cite just one factor, the population of Alzheimer's sufferers is expected to double over the next 20 years.

The SCAN/UCLA results, which are expected to be released Tuesday, confirm the troubling findings of other surveys around the country. Americans remain in denial about the challenges they'll face in retirement; in addition to saving too little, the vast majority eschews long-term care insurance (often in the mistaken belief that Medicare covers it).

To encourage Americans to prepare better — and to lower the costs borne by Medicaid, which covers the long-term care costs of the poorest citizens — Congress created the Community Living Assistance, Services and Supports plan as part of the healthcare reform law. Due to launch next year, CLASS is designed to provide low-cost insurance policies that pay up to $75 a day to offset the cost of long-term care.

Crucial details of the policies have yet to be worked out, however.And although the law bars tax dollars from being spent on the policies' benefits, some critics fear the plan will evolve into a costly new entitlement. Nevertheless, it's too early to give up on CLASS, as some lawmakers have proposed. The more Americans who carry long-term care insurance, the better. And if it's implemented the right way, CLASS can help.

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