Record number of retirees will be a ‘dose of reality’
A record number of Americans will be eligible to retire next year, putting an unprecedented amount of stress on our nation’s health care system and challenging many social service programs, businesses and units of government. Whether or not these “golden years” are tarnished by out-of-control health care costs and shortages in services depends greatly on our understanding of and preparation for what lies ahead.
Nearly 77 million Americans who were born between 1946 and 1964—referred to as baby boomers—will enter their retirement years starting in 2011 and are expected to live longer than previous generations. Baby boomers will be part of the fastest growing segment of the population for the next 30 years and will most likely need long-term health care service options after age 85.
According to the U.S. Census Bureau, by 2020 the number of people across the nation age 85 and older will increase by more than 40 percent. By 2050, estimates show another 118 percent increase in that age group. In Indiana, that figure is expected to rise by more than 180 percent. Here in the northwestern region of the state, the age of our population is already higher than the national average.
America’s aging population is a major driver of the demand for health care and therefore a major force behind of the annual growth in health spending.
Future projections show total national health care spending reaching $4.35 trillion in 2018—six times what it was in 1990, according to the U.S. Centers for Medicare and Medicaid Services. Nationally, long-term care costs are already growing faster than any other state expense. With the recent passage of the federal health care law, the independent Congressional Budget Office estimates the expanded federal role in health care will cost up to $1 trillion throughout the next ten years. The cost to Hoosier taxpayers for the same time period is estimated to be as much as $3.6 billion.
In addition, lawmakers continue to face serious fiscal challenges. Last year saw one of the worst revenue declines in Indiana history. Although revenue figures for the current fiscal year are steadily improving, Indiana and the country have a long way to go before revenues return to pre-recession levels.
As revenues shrink and the aging population grows at a dramatic rate, so do the legislative challenges of financing health care for the elderly. But, there are healthy investments available now that could pay off in the future.
Some states dealing with shrinking budgets are building partnerships with the private sector. Arizona, New Mexico and Tennessee recently enacted laws relying on private companies to ensure a broad array of long-term health services are provided to the elderly without additional costs to consumers. These states privatized services like meal preparation, personal home care assistance and home improvement projects.
Another growing trend among states is the use of Home and Community Based Service Programs (HCBS) allowing individuals to receive required care while remaining in their homes or living in a community setting. Reports show HCBS helps slow the rate of growth in spending for care of older persons. Funds allocated to HCBS last longer while helping more people. In fact, an American Association of Retired Persons (AARP) report found that Medicaid funds spent on HCBS can support three individuals for each resident receiving nursing home care. Although the AARP found that nationally a majority of long-term care dollars from Medicaid is being funneled to nursing homes rather than home- and community-based services, funding for these services is on the rise.
In Indiana, the Bureau of Aging and In-Home Services (BAIHS)—a group operating within the Family and Social Services Administration—provides funding for in-home, community-based and protective services. This is financially supported by 15 state and federal funding sources providing more than $131.5 million for older adults as well as individuals with physical disabilities.
To prevent premature or inappropriate placement in long-term health facilities, this program provides screening of Hoosiers in need to better assure they are in the right setting. They can live independently in their homes and communities with attendants and receive respite care, health supplies, transportation, home-delivered meals and therapy. By offering care in the home or community, states can help contain health care costs by delaying the use of nursing home and hospital care.
According to the Indiana State Department of Health, the state experiences significantly higher rates of chronic diseases than the national median and these chronic diseases are among the most prevalent and costly health problems. In addition to the human cost, billions of dollars are spent annually in Indiana for the treatment of chronic diseases and their complications, and billions of dollars are also estimated to be lost due to decreased workplace productivity related to chronic diseases.
In order to avoid costly care by preserving health, many social service providers, businesses and units of government are establishing wellness programs that promote healthy lifestyles and preventive care. Some employers providing health care insurance offer employees lower-cost plans pay a portion of premiums or give other financial incentives for living healthy lifestyles. By teaching healthy habits and taking steps to prevent diseases—like visiting the doctor’s office regularly and exercising—chronic diseases and other illnesses can be better managed, even prevented.
Actions can be taken to better guarantee that an individual’s “golden years” are also “healthy years” —financially, physically and emotionally. Social service providers, businesses and government entities can act and work together to build healthy partnerships, provide choices for the aging and promote healthy habits.
But the most important variable in the equation for a healthy life is the individual. Important decisions on health care proposals will likely be voted on in the coming months. I encourage people to stay informed and voice their opinions on local, state and national health policies, especially those involving our senior population.
State Sen. Ed Charbonneau (R-Valparaiso) is a member of the Senate Committee on Health and Provider Services, chairman of the Provider Services subcommittee and member of the Interim Health Finance Commission. He is the former interim president and CEO of Methodist Hospitals, Inc., and formerly served as vice chairman of the hospital’s board of directors. He represents Senate District 5, which includes Starke County and portions of Porter, LaPorte, Marshall, Jasper, Pulaski and St. Joseph counties.