Californians Unprepared For Costs Of Growing Old

A new poll finds two-thirds of California voters are unprepared for the costs of growing older. They are cutting back on current expenses and largely unable to meet future ones, such as the cost of long-term care. The SCAN Foundation and the UCLA Center for Health Policy Research polled California voters and found voters' ability to save for long-term health care costs are hampered by the state's weak economy.

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Dr. Bruce Chernof, president and CEO of the SCAN Foundation

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CAVANAUGH: This is KPBS Midday Edition. I'm Maureen Cavanaugh. How much will it cost to take care of your health problems when you're in your 60s, 70s, 80s, and beyond? You may not know the answer to that, but like most Californians surveyed in a new pole, you're probably concerned about it. The poll by the scan foundation, and center for policy research finds many people uneasy and uninformed about the costs of growing older. My guest, doctor Bruce Chernof is president and CEO of the scan foundation. Welcome to the show.

CHERNOF: Thank you so much.

CAVANAUGH: What is the SCAN foundation?

CHERNOF: The SCAN foundation is a relatively young foundation here in California devoted exclusive to the development of a sustainable continuum of quality care for seniors. It's really about how we help seniors and all of us age with dignity, choice, and independence, particularly in the home and community we pick.

CAVANAUGH: As I say, your foundation teamed up with the -- with UCLA to pole Californians over 40, over the age of 40, about how they're planning for healthcare in their senior years. What's the over all theme of your findings.

CHERNOF: Well, a couple of key findings. First is that Californians are really worried about the costs of growing older. A second really important finding is that really a majority of voting Californians under estimate the likelihood of needing health at this age, other and another finding is that Latino voters in California are more worried and less prepared than voters over all.

CAVANAUGH: One of the focuses was how many people are actually saving for or can afford to pay for long-term healthcare. Why is that important?

CHERNOF: That's a great question. We find -- believe these findings are really important and should be a up with call for all Californians. The vast majority of California voters said they could not afford more than six months of home and community based services or three months of nursing home care. That's really important because it is people's personal savings that get spent when they need those services. Medicare doesn't pay for long-term care either at home or in the community with rare exception. And for most folks, that means spending down your resources until you qualify for med Medi-Cal, unless maybe you've bought long-term care insurance.

CAVANAUGH: How expensive is long-term care insurance?

CHERNOF: It can be quite expensive. It really depends on the policy you buy. It is based on the number of years of coverage you're looking for. And the kinds of coverage, whether it's going to be just nursing home or home and community based services, and finally long-term care insurance and generally under written, meaning you have to talk with the insurance company about the medical problems you have, and then they get to decide whether you qualify for long-term care insurance or not, and how much it will cost.

CAVANAUGH: One of the things that struck me in your pole was that nearly half of the respondents said their household income decreased over the past year. They're cutting back on saving for retirement, taking money out of savings just to make ends meet. So it seems like for at least, well, almost half the population that we're talking about, paying for long-term healthcare insurance doesn't even seem realistic.

CHERNOF: That's exactly right. One of the things we looked at in the pole was not just how prepared people are today, but their ability to weather the economic crisis that the state is facing. What we found is that Californians are really stressed. And that shouldn't be ape surprise to any of your listeners. But it impacts our ability, all of our ability to plan appropriately for our future. And a really important and interesting finding is that it is clear that 70% of people over the age of 65 will need some long-term services and supports as they age. And on average, they're going to need about three years. It's about a month or two, but it's an extended period of time. The vast majority of individuals we poled didn't know that. 63% of the individuals poled under estimated the likelihood that they would need long-term services and supports. So the real challenge here is people have very few reserves, they're stressed right now because the economy is so tough. They on the other hand estimate the likelihood they need help when they age, and finally, this is the second year we've done this pole. In last year's pole, we asked folks whether they thought Medicare will cover this or not, and the vast majority of Californians still believed Medicare would pay for long term care. And that's just not true?

CAVANAUGH: It also comes at a time when California is cutting back on social services and in home care to the sick. Tell us about that.

CHERNOF: California like many states is facing enormous challenges in its budget. And states are required to balance their budget every year and can't float costs quite the way the federal government can. And we've faced some very hard challenges here in California. And in the current budget, there is a proposal. It hasn't gone all the way through yet 'cause there's a court challenge. But there's a proposal to end adult day healthcare services, which for 33, 34,000 individuals provides daycare for really frail adults. That program, like I said, is slated to go away entirely. In home support of services, which is a program that provides help in somebody's home has also faced some cuts, and other programs have been really challenged as well. At a moment when Californians have fewer resources, less ability to plan, some of the key safety nets that have been available are actually being eroded.

CAVANAUGH: One of the things you said originally, you found that California's Latino population was especially concerned, and yet statement especially unprepared for the costs of retirement and senior healthcare.

CHERNOF: That's exactly right. We found that more than eight in ten Latino respondents said they worry a lot about their income and that they will not have enough money to be able to pay their expenses and their billings. And the majority of our Latino respondents, 73%, couldn't afford even a single month of nursing home care, which is significantly higher than the general respondent rate. And I think it just shows the real stresses on working families in California.

CAVANAUGH: Well, are let's look at some of what the statistics mean in the real world in real situations. What actually happens to people when they can't afford to pay for nursing home care?

CHERNOF: Well, so if you haven't made arrangements of some sort, if you haven't bought long-term care insurance through your own resources or through work, and you or your spouse now needs support beyond what you can provide in the home, let's start by seeing a lot of responsibility ends up falling on the family of that individual. Those individuals. So we actually see family care being a really important piece of the puzzle. Folks tend to use their own resources, try to cobble together their own resources to purchase home or community based services. But ultimately they need to be in a nursing home. In either case, folks are generally spending their own dollars. And in California, you can't qualify for Medi-Cal until you've spent down to about $2,000 of personal resources. Most Californians don't know that. That's a very low level. And then at that point, you qualify for Medi-Cal coverage for things like nursing homes. It's a pretty relentless ride down to poverty if you don't have other plans in place or a lot of resources available.

CAVANAUGH: Now, doctor Chernof, we have been hearing about this sort of bump that we're going to get in the single population because of the baby boomers am we've been hearing about that for at least the last 20 years. And it seems that from what you're saying that many of the people who are getting older, many of us, are going to be needing long-term care at one time or another for some reason, a health problem or another. Is there any -- is there any movement to get Medicare to maybe shoulder some of that burden.

CHERNOF: There well, there are -- well, there are a number of changes under way could be helpful. There are efforts in the Medicaid program to modernize it. As part of the affordable care act that was pass indeed 2010. But even before that, there have been efforts to expand home and community based services and the resources to support them. And actually, California as a state has done a good job trying to expand those services. It's really taken vehicle of those. And there are some new opportunities out there now that we know the state is exploring. And we applaud those effort it is. A secretary really important thing is that Medicare is looking at new ways to be flexible. Now I don't want your listeners to take from this that I think Medicare is going to pay for long-term care 'cause I don't see that happening. What I do see is new efforts to integrate Medicare and Medicaid in ways that will be more specify to the needs of individuals. The third observation I make is that we also poled something called the class act, which is a new program that was part of the affordable care act, which hasn't bye-bye implemented yet but is part of the law, and if it goes to implementation, it will allow individuals to put away a little bit of money every month while they work. It's completely self funded, it has now under writing, and it allows people to prepare for their long-term care needs so that when they have 2 or 3 serious needs, what we call needs of activities of daily living, that they could be receive tile a daily cash amount between 50 and $75 to help pay for services. So that would actually provide a whole new manning tool, which doesn't currently exist. And interestingly at the federal level, it's been shown that it would likely save several billion dollars in Medicaid funds to the federal government alone. And likely there are some similar savings as individuals have more availability to plan. So there are some hopeful finds out there, but we still need real change to make those finds real.

CAVANAUGH: What would you advise someone to do about this? They find their own resources strained, maybe paying for long-term care insurance right now is something that's really not an option. And yet they are concerned about not being a worried on their families or society as they get older. What kind of options does someone have? In other words, do you just lobby the Congress or do you start a savings account? What do you do?

CHERNOF: I think there are a couple of things that folks can do that are really important. What's clear from all of our work here at this foundation is that the general public wants two things. And what's also really interesting is that the vast majority of Californian, Republicans, Democrats, independents, want officials, federal officials, state officials, to act on public policy, to do something to start to address these concerns. And I think what that gets at is that aging and vulnerable issue is not a partisan issue. We're all going to get older and have needs. I think there's a couple things that folks can do that would be really helpful. One is to begin a discussion within your own family and plan. If we can get beyond the two kind of common misconceptions. Your and my discussion right here is a big step forward for your listeners. That Medicare isn't going to pay for this, and that it is important for people to realize that the vast majority of us will have needs. It's not like what's the chance of being struck by lightning. It's the understanding that most of us will have needs as we age. To begin a discussion in the family of how prepared are we, this is not likely to be a problem that's going to happen today or tomorrow for most people. But it may be 5, 10, 15 years off. We have an opportunity to plan longer than the kind of economic challenges we face at this moment. Starting to understand what you would or wouldn't want. The importance of being able to live at home. I think beginning that discussion and planning now is something that we can all do. And having family members and friends understand what those desires look like. I think the second thing folks can do in their own lives is to look to see if there is a long-term care insurance product that makes sense for another resource. To the degree that there are tools available, if something's available at working that folks explore all those options and make good decisions. The other piece is that whole systems issue. We do need to work with federal and state officials to come up with better options at a more sustainable system. And that's going to require new laws, new efforts to integrate programs to bring things together in a way that is more person centered.

CAVANAUGH: I've been speaking with doctor Bruce Chernof with the SCAN foundation. Thank you very much.

CHERNOF: I really appreciated it.