Health Care: Long-Term Care

Issue

How do we encourage greater personal and family responsibility in planning and saving for an individual’s long-term care that will ensure access to affordable, quality services independent of government-subsidized programs?

Policy

The business community is concerned about the projected demographic wave of seniors who will ultimately have long-term care needs; the small percentage of Minnesotans saving for their long-term care (LTC) needs and the projected impact of these costs on the state budget. Furthermore, there are also concerns about caregiver roles that affect employee workplace productivity, taxable earnings and employee retention. The Minnesota Chamber supports initiatives that make it rewarding and possible for people to support their loved ones at home while still maintaining a productive employment; and to financially contribute toward their own LTC needs and which make it possible for them to purchase the desired services in the most appropriate settings. The policies to create this system should minimize public subsidies for quality care and avoid shifting the financial burden onto the next generation. By planning for long-term care costs now, we will increase choice and access to a menu of affordable LTC options for older Minnesotans.

Principles for Reform.  The Minnesota Chamber of Commerce supports a comprehensive LTC solution that meets the following criteria:

• Create incentives for individuals to be personally responsible for planning and saving for their long-term care needs and target limited public dollars to those who can least afford their own care.
  
  
• Encourage greater participation and information sharing in the business community between employers and employees.
  
  
• Support innovation and flexibility in the delivery of LTC to promote consumer choice, deliver better outcomes and reduce cost.
  
  
• Support employees who are serving in care-giving roles.

To meet these criteria, the Minnesota Chamber of Commerce supports the following policies:

Promote and expand personal long-term care financing options:

• Remove disincentives for personal savings. For example, repeal the state nursing home rate equalization policy that mandates equal charges for private pay and Medicaid recipients. This policy undermines state efforts and discourages individuals to save and plan for their own LTC needs.
  
  
• Promote state policies and regulations that create incentives for personal responsibility for planning and saving for LTC needs.
  
  
• Support and encourage participation in Minnesota’s public-private partnership program that creates incentives for individuals to finance their long-term care needs.
  
  
• As individuals become more personally responsible for their LTC planning, gradually reduce government-paid LTC services, except for the lowest income population. An LTC safety net should be maintained for the neediest population; however, the vast majority of the public should save and purchase insurance for their long-term care needs.
  
  
• The state should seek to redesign the Medical Assistance program to create stronger incentives for individuals to save for their own LTC needs.
  
  

Educate through employers:

• The public should be aware of the projected costs, choices and options available for LTC planning. The credibility of employer-provided information is key to increasing public awareness of the importance for LTC financing; and to increase the awareness of the availability of a variety of older adult service options, especially those lesser-cost options, available in most communities. Given this, the Chamber encourages the business community to share tools and information to assist employees with financing LTC needs and with choosing the “right service at the right place at the right time.”
  
  
• Employer LTC educational opportunities need to be expanded in the workplace. Employees need a platform for securing benefit information relating to their options for planning and financing expected expenses for themselves and family members. As a result, they will be less dependent on county and state services which have driven up costs which, in turn, have raised residential and commercial/industrial property taxes.
  
  
• State law should provide options for employers to promote employees to have LTC savings. For example, Section 125 plans are a tool for employers to encourage employees to save for LTC. Employers may offer an employer contribution to encourage saving similar to 401K employer-funded matches.
  
  
• Employers can help retain and support employees by providing flexibility for employees who are providing or preparing for LTC for family members.
  
  
• Promote the business community’s use of standardized materials such as the National Association of Insurance Commissioners Shopper’s Guide to Long-Term Care Insurance to help consumers compare LTC insurance plans in a meaningful way and choose the one that fits their needs best.
  
  

Encourage Innovation: 

• Support new technologies and services that allow individuals to age in their home longer before seeking formal LTC services.
  
  
• Minnesota should encourage the growth of these products and consider pilot projects to deploy new technologies to those individuals who could benefit. Public-private partners could be an option to test-run and study the effects of the demonstration projects related to new technologies in home care and telehealth.

Business Impact

Employees who are unpaid caregivers cost U.S. businesses an estimated $33 billion annually in lost productivity . That equates to more than $2,100 per employed person who also is a caregiver. The most expensive factor is employee absenteeism estimated at $3.4 billion per year totally and $489 per employee per year.  More than 84 percent of the employed population who are also caregivers report having to take time off from work to provide care.  

Absent these policy changes, the estimated burden on the state budget is significant. As previously mentioned, the majority of care is informally provided by family members. Every 1-percent decline in family care-giving costs the state an additional $30 million. Family caregivers are essential for meeting the needs of older adults. According to a recent report by Minnesota Department of Human Services, if those Minnesotans born between 1936 and 1965, who are projected to have inadequate retirement income, turn to Medicaid for long-term care, the total state and federal costs will be more than $19 billion a year by 2019. This is an unsustainable growth trajectory which results in cost-shifting to employers, and will absorb a significant portion of the state budget at the expense of other essential services.

The Medicaid program is a federal-state program, but many services are administered and supplemented at the county level. Funding shortfalls in the Medicaid program can shift the payment of programs and services to counties. This increased burden onto counties translates generally in either increased individual homeowner property tax increases, which are unfavorable with the public, or increases in commercial/industrial business property taxes. Minnesota has ranked among the worst states in business tax climate surveys. Additional tax burdens to cover these anticipated shortfalls will negatively affect Minnesota businesses.