From Kentucky and the New Economy/Challenges for the Next Century: The
Conference Proceedings
p. 91-104, published 2001
Moderator
Panelists
Dr. Thomas Ford, Professor Emeritus of Sociology, University of
Kentucky
Dr. John Watkins, Director of Graduate Studies, Gerontology and
Associate Professor of Geography, University of Kentucky
Representative Susan Westrom, Kentucky General Assembly
Senator Jack Westwood, Kentucky General Assembly
I’m Dr. Graham Rowles from the University of Kentucky and I’m also Associate Director of the Sanders-Brown Center on Aging. It’s my privilege to serve as the moderator for what I hope will be a lively discussion this afternoon. To get straight to the business at hand I’d like to start by introducing our panelists today to give you a little background. Then I’d like to provide you with what I propose as the way in which we proceed to maximize the amount of time we have and to maximize the dialogue we have.
First of all, to my immediate left is Professor John Watkins, from the Department of Geography at the University of Kentucky. He’s also the Director of Graduate Studies in the Doctoral Program in Gerontology and is affiliated with the Sanders-Brown Center on Aging. Sitting right in front of me here, running the whole show of not only this particular session but also this whole conference, is Mike Childress, the Executive Director of the Kentucky Long-Term Policy Research Center. We also have with us today the first Kentuckian I ever met, actually the first Kentuckian I met as I got off the plane to come to Kentucky for the first time. Professor Tom Ford is Professor Emeritus of Sociology and is a former director of the Center for Developmental Change, an individual who has a long history of working with disadvantaged populations and trying to understand in particular the Appalachian regions of our state. In addition, we also have representation from a political community and I’m pleased to be able to welcome Representative Susan Westrom from Lexington. She currently serves as Co-chair of the Subcommittee on something, but she’s going to have to explain it to me, the Subcommittee on Seniors, Military Affairs and Public Safety. I have to really think about seniors as a public safety hazard, but I’m going to be fully informed here. (Laughter) We also have Senator Jack Westwood, a Senator from Erlanger, not too far from here. He also serves on this joint committee of Seniors, Military Affairs and Public Safety and is currently working with Susan on trying to work out what their explanation is going to be. Finally, we must apologize for the absence of Lt. Governor Steven Henry. He was unable to be with us and, so, as we always do in situations, we’ve asked Mike Childress to step in and to play the role of the Lt. Governor for the discussion part this afternoon.
Let me provide you with a little bit of context for the remarks that you’ll be hearing. First of all, it’s no surprise to anybody in this room, particularly after our lunchtime speaker, to know that there is significant growth of Kentucky’s elder population and that growth is projected to continue. There’s also going to be, even more important, a significant growth in the proportion of our population that is elderly, as defined as being 65 or over, over the next two and three decades. In fact, as the writer Isaac Asimov once said, “We’re entering the age of age.” Age is going to be the dominant theme on the agenda. Now what’s even more important is the growth of not just the elderly population but the oldest old population; and the thing that should be of most concern to us will be the growth of the population 85 years of age and over. Being 65 these days is not really a problematic phenomenon, except for those of you who don’t wish to retire, I suspect. But, being 85, which is the lot of a lot more people, does generate the kinds of problems that we’ve never had before, at least on this scale, that we’re likely to encounter.
There are major issues to be faced by our state in the next two decades, major quality of life issues that relate to the aging of the baby-boom population. To use the image that was used a few minutes ago, as that pig moves through the snake and becomes 65, that is not really going to be a problem, many people will tell you. But as that pig ages and becomes 75 and 85, that’s when we start to encounter the problems. There are going to be problems of income support, at least potentially those problems; problems of health care; problems of long-term care for the increasing number of those who are likely to need assistance with activities of daily living, particularly as they move into their 80s.
However, even more fundamental, I would like to suggest to you, are questions that relate to our degree of preparedness for what’s occurring in our society and in our Commonwealth. How well has each of you in this room prepared for your own financial future? Have you made appropriate arrangements to ensure adequate health care as you age? Are you sure? Probably not. Who will provide day-to-day care for you should you become unable to take care of yourself, which may happen as you enter your 90s? And what role do you expect your government to play in ensuring the quality of your life as you grow older? And, perhaps even more important, what kind of age do you want to have? What do you want your life to be like? We’re talking about a phase of your life now which may be 15, 20, 25 years. It’s not just a question of how you survive, how you provide health care, but what role will you play in our Commonwealth? What will you contribute as well as what will you receive? These are issues that we desperately need to consider.
Now my guess is that most of you in this room will do OK, but I suspect that this is not a very representative group, that there are in fact many people in our Commonwealth who are far less fortunate. How effectively is our planning proceeding for those folks, for the time when one in five of the people in this Commonwealth will be 65 or over? How are we planning for the disadvantaged? Now in this Commonwealth we’re in the midst of a project, as we speak, a major initiative to consider these issues and that’s what we want to talk with you about this afternoon. What we would like to do is to provide you with some information and also discuss some policy recommendations that will enable our Commonwealth to deal with the approaching age of age.
As a result of a collaboration between the University of Kentucky Sanders-Brown Center on Aging, the Survey Research Center of the University, and the Kentucky Long-Term Policy Research Center, we’ve been engaged over the last two years in a major initiative to consider the future of aging and to try and understand some of the dimensions of this problem. We’ve worked in addition with representatives from the Appalachian Center and also from the Department of Aging Services. The initiative involves three components.
First, it involves detailed demographic analysis of trends and projected growth paths, a very difficult thing to do as you will see, and Professor John Watkins has been heading up this particular initiative. Second, we’ve completed and will be reporting to you the preliminary findings of the Kentucky Retirement Survey and Mike Childress will be focusing on some of the preliminary results from that survey. And, third, and most exciting, and partly representative of the personality and character of our Commonwealth, we’ll be looking in depth at a small group of people who have looked at this survey, and we’ll try to understand a little bit about what the statistics mean for them on the ground. We’ll be talking in depth with a selection of elders and folks who are pre-retired folks and we’ll be trying to see what life is like for them, how they’ve planned for their future and to put a face on the statistics that you’ll be getting this afternoon. This will all be put together in a major report that will be developed through the Kentucky Long-Term Policy Research Center, and discussion of preliminary ideas and preliminary results from this is our focus today.
I propose the following format. What I’d like us to begin with is some presentation of information. First, from John Watkins, we’ll talk a little about demographics, and then Mike Childress will share with us some of the preliminary results of the survey, telling us what Kentuckians really think about their future, how prepared we are for our future, and this hopefully will provide a nice context for our distinguished panel to offer their comments. We’ll then ask Professor Ford, Representative Westrom, and Senator Westwood to basically comment for five or ten minutes on the findings. At that point, I’d like to open the discussions to the floor and hopefully we’ll have sufficient time to have an open and hopefully productive discussion. Let me start by handing over the floor to our first speaker, Professor John Watkins.
John Watkins
Thank you, Graham. Before I get started, I’d like to make two admissions. Number one, this is the very first PowerPoint presentation I’ve ever made, so if things get a little fouled up in the slides, I apologize for that. Hopefully, they will all be legible for everybody. The second element is that I have a tendency to elaborate, sometimes to an extent where I can really run overtime. To avoid doing that, I will try to stick more or less to basically a script that I’ve prepared just to avoid that elaboration to provide enough time for everybody to have an opportunity to provide input and ask questions. So we can field those questions and again, hopefully, have a lively discussion near the end.
The aging of America’s population has attracted increased attention in both public and research arenas during recent decades. In the 1970s, for example, we saw the entry into retirement ages of individuals born during the post World War I fertility peak, and saw elders for the first time representing about one tenth of the total national population. That decade also gave witness to waves of retirement migration, especially toward selected states of a magnitude never before recorded. As we moved into a new century, almost 13 percent of the United States population was age 65 years and older. And growth within the oldest age groups, that is to say 85 and over, was more rapid than any other segment of the population and that’s across all ages.
Society had become well aware of the many impacts of population aging from the explosive growth of many popular retirement areas, to heightened demand for health care and housing services and the tenuous state of Social Security. What does the future hold in store? And what, in particular, might we expect to find as we look at and within states, including the Commonwealth of Kentucky? These are important questions as we attempt to maintain and enhance our citizens’ lives and livelihoods in the years ahead.
The central purpose of this presentation is to offer demographic context for the Kentucky aging project, and especially the survey component of the project, which Mike Childress will address in just a few minutes. I’ll cover the general elements of elderly demographic change in Kentucky, examining not only historic change in the state’s older population, but anticipated growth through the first quarter of the 21st century. I will close this brief overview by addressing some of the possible influences of elderly population change on Kentucky’s future. Before getting into the numbers, I should touch very briefly on the need for demographic examinations. First of all, how many elders will there be in the future? What are the characteristics of the elders and especially those characteristics that warrant increasing attention? And, finally, what processes cause change in future demographics?
Now I will say that demographic studies are not the end result of anything. They do provide only a context for further studies. I say this out of recognition of the tremendous diversity in any population within a state and especially within the United States. Making sense of changes in an elderly population requires more than a cursory overview of the total of elders alone. Possible implications of an aging Kentucky must be cast within the context of such elements as historic patterns of total and elder growth and decline, expressed as both volumes and elder shares or the percentage of population within certain elder age groups. We need also to explore such characteristics as age, sex, race and ethnicity to better appreciate the diverse experiences of aging as they might occur in differential needs of specific populations.
And now for some data—in this case, a look at how total populations have grown during the 20th century and, again, this is the total population for the state of Kentucky as compared to the nation (see Appendix B, Watkins, slide 1). Most obvious is that the pace of increase has been slower in the Commonwealth than the nation as a whole. The impact of the Second World War is clear as national growth plateaued and state populations fell. Although Kentucky’s population rebounded slightly by 1950, it slowly declined again for the next five years. Similar perturbations continued in Kentucky through the rest of the century, caused dominantly by changing economic conditions which stimulated sudden and often unpredictable migration flows. These early migrations trends will, as we will see, have implications on future trends in elderly population change.
Kentucky has not been immune to processes that promote population aging. In 1970, for example, the Commonwealth had a slightly higher elderly population share than did the nation as a whole (see Appendix B, Watkins, slide 2). This is 10.3 percent compared to the national level of 9.83 percent. This imbalance is largely a consequence of labor force outmigration from the state of Kentucky, which depleted the numbers within younger age groups despite fertility levels that were slightly higher than national averages. Toward the turn of the century, the pace of aging was quite similar for both Kentucky and the United States as a whole and this is reflected in the very middle of this graph near the dotted line. Fertility dropped in the Commonwealth, especially among teens, and we experienced labor force growth through net inmigration. A glance toward the future suggests an acceleration of aging within the state, so that by the year 2025 Kentucky may expect almost 21 percent of its population to fall within older age groups, compared to about 18.5 percent nationally.
Just over one half million elders currently reside in the Commonwealth and they account for about 13 percent of the total population (see Appendix B, Watkins, slide 3). Recent growth in the elderly population, about 9.5 percent between 1990 and the year 2000, is actually slower than what has been experienced throughout most of the 20th century. Indeed, the most rapid growth occurred between 1930 and 1940, when the population increased over 33 percent, from around 142,000 to almost 190,000 individuals aged 65 and over. The elderly share of the total population during this period increased from 5.4 to 6.7 percent, reflecting a simultaneous increase in size within younger age groups. The next 20 years, through 1960, saw growth rates of about 24 percent per decade. Despite the nationwide recognition of an aging population during the 1970s, Kentucky’s elder population growth began to decelerate. The decade rate of growth during the 1970s fell to below 22 percent and the pace of growth continued to decline to only 13 percent during the 1980s and again about 9 percent during the 1990s, the lowest rate recorded during the century. The slowing of elderly population growth in recent decades, and especially through the 1990s, is principally because fewer people were aging into the 65 and above age groups, which is a direct consequence of post World War II labor outmigration from Kentucky. In fact, Kentucky’s total population, as I mentioned before, actually declined between 1940-1945 and between 1950-1955. Individuals and families, during those periods, were leaving the Commonwealth for job opportunities in the booming cities dominantly of the north.
Kentucky will not continue the existing trend of slow elderly population growth or the trend of little change in the share of the total population that has aged. Labor migration trends reversed during the 1970s. Many of the young inmigrants of that period and later have now aged in place and will soon be retiring. The aging of the baby boomers, which will be felt nationally, will be more acute at the state level because of the peculiarities of migration that concentrated baby boomers disproportionately within Kentucky. Kentucky’s aging population should be viewed with regard to population diversity, or the mix of people according to their characteristics. Age and sex are perhaps the most popular characteristics. Within the elderly population, for example, older ages commonly include those with poor health and more disabilities than younger elders, and older elders potentially place a higher demand on service programs and institutions. The pre-retirement population is commonly viewed as the caregivers through individual efforts or through their labor in service industries, spending, and contributions through taxes. Young elders, aged 65-74 years, in general often are quite healthy, contribute many social benefits through care for older parents, voluntarism, and discretionary spending and also the transfer of savings when they are migrating into destinations.
Looking first to changes in Kentucky’s population age structure, it might be argued that the state could be in a more favorable position in terms of its elders than the nation as a whole (see Appendix B, Watkins, slide 4). The population of Kentucky is expected to age more rapidly than most other states when the percent aged 65 and over is considered alone. Yet the oldest old, again those aged 85 and above, will comprise a smaller share than the nation, hinting that service demands will be less than the national average. Kentucky will by 2020 also have a larger share in the youngest elderly 65-74 and in the pre-retirement years 45-65. Both of these categories tend to offer net benefits to society, especially over the short term. The proverbial pig through the snake is where we’re starting now.
A second view considers the combined influences of age and sex differences through the use of population pyramids. Now I’ll have a series of three sets of population pyramids. The first set is for the year 1980, again through the year 2000, and 2020, and I suspect, if this turns out right, you will be able to see the beast moving through the snake, so to speak. It is a classic example of the aging of the baby boom and its influence on age structure. Let’s go ahead with the show. Again, Kentucky is on the left (see Appendix B, Watkins, slide 5). The national pyramid is on the right. We’re starting with 1980, move to the year 2000 (see Appendix B, Watkins, slide 6). We can see the baby boom moving from the prime labor force ages really through late labor force, or middle-aged adult, I guess. Now we move to the year 2020 and we can see the baby boom continuing to age both nationally and for the state of Kentucky (see Appendix B, Watkins, slide 7). Most noteworthy in comparing Kentucky and the nation, at least, is that there is a much greater clustering right around that retirement age of about 65. But we see it truly clustering at the age group just above 65, the very young elders, and also those people who were just pre-retirement, perhaps 55-65 years of age. We see this much more pronounced in the state population pyramid than we do the national population pyramid and we also see the implications of a reduced fertility level within the Commonwealth where we’re finding slightly smaller percentages in the very youngest age groups, the childhood age groups. Also notice that there is the distinguishing sex imbalance that favors women especially among the oldest age of the elderly age groups. We will see this continuing through the next several decades of this century.
It is worth considering that by 2020, gender roles among elders will likely be quite different than they currently are among today’s elder cohorts. More women in the future will have durable experience in the labor force, with individual Social Security contributions, pensions and savings that are above those found in today’s elderly cohorts. Unlike today’s elderly women, the future’s older women will also more likely have higher levels of drivership, which means that they’ll be licensed to drive and have more years of driving experience, thus increasing their independence through later ages than is currently observed. Still, it would appear that among the oldest ages, that aging really is focused on issues relating to women.
OK. Characteristics of race, which is dominated by genetic predisposition, and ethnicity, dominated by cultural identification, have recently become important features within population forecasts (see Appendix B, Watkins, slide 8). This inclusion is largely a result of recognized differences among racially and ethnically distinct peoples in terms of the demographic processes of fertility and mortality and also of migration. National estimates for 2000 indicate that white persons, and these are non-Hispanic whites, account for 84 percent of the 65 and over population; blacks for about 8 percent; Hispanics for 6 percent and Asians and American Indians combined for just over 2 percent. Within the nation, these shares will vary widely. All of these populations have distinct historical location and migration patterns that have caused specific distributions. Kentucky has relative proportions of non-Hispanic whites that are above national averages and minority shares for all ages that are below national averages. Just over 94 percent of the state’s 2000 population, aged 65 and over, are white; black persons accounted for about 5.2 percent and all other minorities represent less than 0.8 percent of the state’s total elderly population, 1 percent of the nation’s share that is not black or white. Elderly population change through the next 20 years may reflect little change in these proportions.
By 2020, the white elder share will have fallen half a percentage point; the black share will fall only slightly and all other minorities will amount to about 1.4 percent. Hispanic and Asian elders should exhibit the greatest increases of all minority elder populations by the year 2020. Nationwide, we anticipate more rapid growth within such minority populations as blacks and Hispanics across all ages than is expected for white populations. Blacks on average have higher fertility rates than whites and although mortality is also higher for blacks, the difference is less than for fertility and the rates are converging with whites. Hispanic populations also have higher fertility and slightly higher mortality than do whites, but in this case migration tends to play a large role in rapid population growth, international migration, and internal migration both across and within states. The anticipated consequence of these demographic differences is a trend towards a more uniform mix of population characteristics than we have witnessed in the past.
The low minority shares within the Commonwealth, both today and in the near future, are largely a consequence of history. Social, political, and migratory patterns essentially deterred significant permanent settlement and continued growth of minorities through the 20th century. Elder minority population change in particular over the next 20 years will reflect this history. Still, we can anticipate more rapid increase among most minorities than among the single majority elder group. Hispanic and Asian elders, in particular, may increase three times as quickly as whites by the year 2020. Elder American Indians may increase at twice the speed or more of the white majority. Finally, if population age is viewed as the number of elders within a specific group compared to the full size of that group, we find that most minorities will remain younger than the white population, whose proportion age 65 and over grows from about 13 percent to just over 19 percent. The black, Hispanic, and Asian populations all have elder shares that continue to be well below the white elder share. Only American Indians might be expected to age as a group more quickly than whites, with the former elderly percentage growing from 10.5 percent to about 18.3 percent of the total population by the year 2020.
A purpose of this report is to provide a demographic foundation that will allow both further study of and planning for aging. Kentucky’s population is getting older in terms of both absolute numbers of elders and their size relative to the whole population. Despite the trend of more rapid aging than the nation as a whole, we will find our state comprised of a younger elder population with more folks clustered right at age 65, both retirees and pre-retirees. Women will continue to be a dominating group among elders and especially older elders. Minorities will remain a comparatively small component of the elderly population, although minorities are aging quickly.
One advantage to examining the future of population aging is that all elders who will exist in the coming decades are already born and alive right now and that makes the projection process a little easier because at least we know who we’re dealing with. This is an often-cited reality, which is conveyed in an effort to support our ability to prepare for and accommodate an aging population during the coming years. To this end, it is safe to say that the Commonwealth will have more elders in the future who will require increasing levels of health care and social support and who will impose an increasing burden on the state’s economy. Communities and even families will feel the pressure of an aging population. Yet, there is a pervasive difficulty in knowing where people will be living when they are elders, which causes trepidation with any projections of future conditions. Migration across all ages will influence population aging at subnational levels, and the smaller the area, the more pronounced the impact of mobility.
Finally, census statistics hide characteristics that are perhaps most important in trying to assess future impacts on population aging. Even controlling for age, sex, and ethnicity, people have tremendous diversity in such terms as health behaviors, knowledge of social support systems, and even cultural perceptions of what it really means to grow old. Demographic studies can offer a good outline for a story of aging in Kentucky, but it takes much more detailed explorations to really tell the whole story. Thank you very much.
Graham D. Rowles
Thank you, John, for an excellent background. We need to find out more about what the story is from the perspective of the folks out in the Commonwealth in terms of how aware, even subconsciously, they are of the growing needs that may appear in our Commonwealth. That was really one of the things behind the survey which we undertook and which Mike Childress is going to share of our findings.
Michael Childress
Thank you, Graham. As Graham indicated, we’ve been working with the Sanders-Brown Center on Aging on this survey really to get some hard data. I want to begin by first talking just a bit about the survey. The University of Kentucky Survey Research Center mailed out 2,500 questionnaires. There were 962 completed surveys and we sent them out to people ages 45 years and older. We wanted to get the retirement cohort as well as the pre-retirement cohort. There were 69 questions on a variety of topics: finances, health, work, computer use, transportation, you name it. In this presentation today, what I’m going to be focusing on, though, is the health care and the finance part of it.
Here is a little bit of information about the sample. The average age is about 61 years old; about one third or 31 percent are over 65 years of age, not 65 and older, but rather over 65; they range 45-93; about half are currently retired, 45 percent; 95 percent are white; 52 percent are female; and about half are urban, which reflects our population quite well. The geographical distribution is about 16 percent from the western part of the state, 19 percent from the east, 16 percent south central, and 49 percent from the urban triangle (see Appendix B, Childress, slide 9). In terms of education, about one fourth have less than a high school diploma; about one third have a high school diploma or GED; about one fourth have some college; about 25 percent have a bachelor’s degree or higher; and then you see the distribution in terms of income.
One of the first things that jumped out at us is the disjuncture or incongruence, if you will, in terms of when people retired (see Appendix B, Childress, slide 10). We asked two questions. If you were retired, we said, “OK, how old were you when you retired?” And that is the yellow bar. And then we asked the people who were still working, “How old do you think you’ll be when you retire?” And that’s the orange bar. Now, if you look at it for a second or two, you’ll see what’s going on there is that people are retiring much earlier than what they anticipate. For example, only 3 percent of the current workers expect to retire at 54 or younger. By comparison, about one fourth of the retirement group retired when they were 54 and younger. We also asked folks, basically, when they had expected to retire (see Appendix B, Childress, slide 11). “Did you retire about when you expected? Did you retire earlier? Did you work longer?” And what we found was that 60 percent retired earlier. Well, the natural follow-up on that was, “Well, why?” And you think they must have accumulated a significant nest egg and they’re ready to slide into their retirement. But, in fact, we found that nationally the same thing’s going on, that 40 percent in the U.S. and 46 percent in Kentucky retired earlier because of a health problem or a disability (see Appendix B, Childress, slide 12). Now the U.S. data come from the EBRI, Employee Benefit Research Institute, and they have done surveys periodically. We got copies of their survey instruments so that we could replicate and compare some national figures. If you look at it, only 8 percent—let’s be generous with the numbers and say one out of ten—of Kentuckians retired earlier because they could afford it. That 8 percent is down at the bottom. So, the message, I think, to take away from this is that, if I had to gamble, I’d say that each of us would probably retire earlier than expected and more than likely it would be because of a health problem than because we had accumulated a significant nest egg.
Now what about some of the health and health care issues? Let me just give you a little background here. We asked a whole battery of questions about physical and mental functioning and mobility, but I’m not going to show you any of that. The reason I’m not going to show you any of that is because we don’t yet have the national data to compare it, and the scores are very abstract. They don’t mean anything really to a lay group in isolation. There is a professor at UK who was going to provide us with the national data, and that just simply wasn’t able to happen before this conference. What we can say is that, as we all know—I mean it comes out all the time in the newspapers—there are accounts about how unhealthy Kentuckians are compared to the national average, and there are a lot of reasons for this. We tend to smoke at higher rates (see Appendix B, Childress, slide 13). We tend to be a little bit more overweight. This is the body mass index (BMI) for all age cohorts, anything between a 25 and 29 is considered to be overweight, 30 and over is considered to be obese (see Appendix B, Childress, slide 14). And you can see, compared to the U.S. average, we tend to have a little higher BMI scores than the nation. Next slide, please.
All of this is translated in this lack of good health, if you will, into additional costs, for one thing. We asked people who are currently retired how much they spend of their own money each month on their health care, and it’s the exact question I’ve got listed right there above (see Appendix B, Childress, slide 15). You can see the distribution. About 23 percent, about one fourth, spend $100 or less a month; about 30 percent $100-$250; about 32 percent between $251 and $500; and about 15 percent over $500. Now the median monthly amount is $250, and if you take the median annual income, monthly income, divide it by 12 and get the monthly income, the people in the sample, this health expenditure amounts to about 13 percent of their income at the median amount. This is not even considering the people who are above the $250 amount. The point is that they’re spending a lot of their own money. We’ve had a lot of discussion about what the implications are for the government. We’re going to talk about it a little bit here in a minute. But a lot of their own money is out-of-pocket, too. Can they afford it? This is based on a sample of 406 individuals who are currently retired (see Appendix B, Childress, slide 16). We asked them if they could afford their current medical expenses, and roughly half said they couldn’t.
We asked them what they thought were the most important sources of health care and retirement, both what they are now and what they will be once they retire (see Appendix B, Childress, Slide 17). This is based on the complete sample. A couple of things jumped out here. Just last week, there was a news piece. Some researchers at the Rand Corporation published an article in the Journal of the American Medical Association where they’re analyzing Medicare data. Now what you see here is that a significant portion of the retired population in this state, 54 percent, are depending upon Medicare as the chief source of health care. For the current workers, the folks who are not retired, the single source of medical coverage that they plan to depend on is also Medicare. What they found out in this Journal of the American Medical Association’s published study was that fewer than two thirds of the people, or just under two thirds, who are currently on Medicare are receiving the coverage that they deemed to be necessary. So what it’s suggesting is that slightly over a third, obviously, of the people who are depending upon Medicare are not getting necessary coverage. One of the things they found, for example, is that only about half the people who are currently diabetics have received any kind of eye examination. So they were looking at some very basic things. I guess what this suggests is that if people are planning on Medicare, not only is it on somewhat shaky financial ground over the long term, they may not be getting the best kind of medical care as well.
We also asked people a series of questions about how confident they were about health coverage and affordability (see Appendix B, Childress, slide 18). One of the things that we asked them, and this is in the orange bar here, the Medicare system will continue to provide benefits of at least equal value to the benefits received by retirees today. In about half, the people are either very confident or somewhat confident and about half aren’t confident at some level. So we’re really sort of split here. And, also, a significant portion, when asked if they think that either they have or will have enough money in retirement to take care of their medical expenses, over 50 percent, a majority, think not.
Now in terms of income security, one of the questions that we asked people was “Compared to the end of your working career, would you say your current standard of living is much worse, worse now, about the same, better now, or much better now?” (see Appendix B, Childress, slide 19). The bar chart shows the distribution for Kentuckians. OK. These are people who are retired and we’re asking them to reflect back on the end of their working career. And almost 60 percent say, “I haven’t really experienced a drop off. It’s about the same.” About 16 percent have experienced an increase and a little over one fourth have experienced a decrease in the standard of their living. Now the text that goes with this reflects national level figures and you can do the math and compare how that looks.
One of the interesting things that we found out, though, was that, if Social Security is the major source of income in your retirement, you have a much higher probability of experiencing a decrease in your standard of living compared to the way it was at the end of your working career (see Appendix B, Childress, slide 20). Without getting to the details, we controlled for a number of factors statistically, and what the bar chart reflects is relative dependence on Social Security. The orange chart bars are folks who had indicated that they are not heavily dependent upon Social Security, and you can see they have a much lower probability, 17 percent compared to 30 percent, of having said, “My standard of living is worse” or much worse. Now, that’s important because people are really depending upon Social Security. What this chart shows is that, when we asked them, we gave them a bunch of options and said, “OK, which will be the most important source of income in your retirement?” (see Appendix B, Childress, slide 21). People are heavily dependent upon Social Security, especially the people who are retired now. The current workers, you can see, anticipate on being less dependent on Social Security, and much more dependent upon employer-funded funds and 401K kinds of plans. Another element of uncertainty here, and I know that Ron Crouch has talked about this many times, is that there is some question about the future of corporate-provided private pension plans. As our economy changes and mergers take place and as companies go bankrupt, are they fully funding these things? Well, we certainly hope that these pensions are in good shape, because, as we can see here, Social Security and these pension plans are the two single largest sources of income that current and future retirees will depend upon in retirement. Now, of course, we each have a responsibility to save for retirement.
We ask people, both the retired and then current working career people, if they’re saving for retirement and you can see here the results of that. About half of them didn’t (see Appendix B, Childress, slide 22). Of current workers, about three fourths of them are saving and about one fourth aren’t. We look very similar to the U.S. When you look at the national average, that EBRI data, you see the same thing nationally. When we ask people how much they saved, this is what we found (see Appendix B, Childress, slide 23). I think one of the more troubling things about this is that about 20 percent, about 1 out of 5, have saved nothing. And a significant portion, you can do the math, let’s include under $5,000 and under $9,000, you’re getting to a fairly large percentage of the population. About one third have saved less than $10,000 for their retirement and that’s not going to take people very far, obviously.
So, we ask people, “Well, do you plan on working in retirement?” (see Appendix B, Childress, slide 24). And, again, there’s an interesting difference between people who are currently working and people who are currently retired. Of the people who are currently working, not retired, 60 percent of them say, “Yes, I plan on working part-time,” and another 33 percent said, “No, I don’t plan on working, either part-time or full-time.” But when you talk to the people who are currently retired, what you find is 72 percent of them are not working, so maybe it’s because of the health problems. I don’t know, but these are some of the things that I hope that we’ll be able to explore when the in-depth interviews are done, to get behind these statistics to find out what are some of the stories and what are some of the situations behind the statistics.
We asked people some of their major reasons for working in retirement and the first one there, almost 50 percent—and they could circle as many responses as they wanted, so it’s not going to add up to 100—49 percent said “to have money to make ends meet” (see Appendix B, Childress, slide 25). So fully half are doing it as a result of a financial impetus. Still 45 percent said, “I want to stay involved; I enjoy work.” A lot of them are doing it to keep benefits. So there are a variety of reasons here.
We asked them about their confidence about their retirement system. Although they did not have the benefit of Dr. Steuerle’s presentation before we gave them this survey, nonetheless there’s still a significant level of lack of confidence, if you will, in the future of some of these programs (see Appendix B, Childress, slide 26). You can see that almost 40 percent think that they’re not too confident or not confident at all about whether Social Security is going to be there and this is the whole sample, workers and people who are currently retired.
What about the role of government? “How important is government support?” (see Appendix B, Childress, slide 27). We asked people for a variety of programs. People want the government. People, at least the people who answered this survey, have indicated they think government is very important, and we’re not differentiating between levels of government here, for income support, medical care, and prescription drug coverage. Look at that 82 percent who think it’s very important, and somewhat important, and if you just look all the way to the column to the right, “not very important,” you see some pretty small numbers. And so people are really counting on government to take care of this. Well, we understand that there are limitations in what government can do, and so we asked people a series of questions about whether financial need ought to be tied in any way to the provision of some of these programs (see Appendix B, Childress, slide 28). There seems to be a fairly strong level of support to tie financial need to a variety of these programs.
So, in conclusion, today’s workers will likely retire earlier than planned and most likely due to health problems. Pay for medical care will be a challenge with many depending upon Medicare. Their standard of living more than likely will be about the same; however, those who’ve indicated that they plan on Social Security being their major source of retirement income are likely to experience a decrease in the standard of living. The future of Social Security and pension plans will clearly affect income security for future retirees. Citizens believe government support is important for a range of programs, and ultimately they seem to believe that these services should be tied to financial need at some level. As I indicated, these are all preliminary cuts at the data. We’ve got an important and extended story to tell from these data, but we wanted to give you all a quick overview of some of the high points as it related to income security, working and pensions, and health and health care.
Graham D. Rowles
Hopefully the two presentations so far have given people a sense of some of the dimensions of the issues that we’re going to be confronting. In particular, hopefully, you’ll see how the issue of aging and the way it affects people in our Commonwealth and our ability to support our elders is very much tied into the generation that’s involved, and then basically looking at the current elderly population, folks now who have retired. It’s not going to be exclusively providing us with enough information in the same way that the information on those between 45 and retirement is going to provide that kind of information. And so, basically, we need to start thinking about not just the statistics but also what it is as a Commonwealth that we want our elderly populations to be like. What do we want to have our lives like as we move into that phase in 10, 15, 20 years’ time? And we’re very fortunate today to have a number of the people around who have some influence on what we create as our own ways to the future. So we’ve asked three people to comment on some of the information that you have received and particularly in the case of the politicians to tell us what they’re going to do about it. But, first of all, let me introduce Tom Ford again, who is going to provide some of the first observations on the data that you’ve seen.
Thomas Ford
Thank you very much, Michael. It’s my pleasure to be able to serve on this panel to discuss some of the consequences of aging on Kentucky’s population. When I told my wife that I was coming up here, she asked, “Well, what are you going to do up there?” And I said, “Well, I’m going to serve on this panel and we’re supposed to look at the consequences of the aging of the Kentucky population.” And she said, “Well, are the other members of the panel as old as you are?” And I said, “No, in fact, I might even be the oldest person in the room.” And, I suspect that’s true. She said, “Well, then, you’re really sort of a token elder, aren’t you?” And, I said, “Well, I guess you could say that, but I prefer to think of myself as a designated senior citizen.” So, now you know the words that you’re getting from this part are from a designated senior citizen and you can judge by the quality of the study that we have this characteristic that I happen to possess.
Looking first at John Watkins’ data that he has produced, as I had already learned from knowing John, it is of good quality. He addresses the population changes of the past. Well, you were here. You heard what he had to say, and I think very well. He also provided us with some caveats and implications that should be taken seriously. There’s nothing really startling, I think, to most of us in his findings, but it’s the kind of base work that you happen to put the rest of the information on.
Now one of the things that caught my attention was his note that today’s elders are alive today. Well, a lot of them were alive yesterday, too. We have, I think, a tendency to think of the baby boomers going on as a tsunami, a great wave that goes through and turns up things. But I got to thinking, “Well, I wasn’t a designated senior citizen at that time, but I did contribute to the baby boom.” And there were certain kinds of things that aroused my attention. If you look at it, it isn’t an explosion, even though we used that term with it. It was something that developed over a period of time, but beginning right after World War II, around 1947, and it was shortly after that I began making my contribution to this group. And because of the nature of the development over a period of time we would see it swelling and then starting to dwindle and actually see it as moving down. Whether it’s the pig moving in the pipeline or, as I used to prefer, the metaphor of the ostrich swallowing an orange whole, you could see it. But it turns out that it was much more difficult to decide or determine what was going on in the beginning of this baby boom group than it is for the current cohort population, even though it’s the same population, but in different stages.
But the characteristics of the 1940s group were quite different. In the first place, there were more of them and that was true in Kentucky as well as nationally, but also there were different kinds of developments of this group that made it harder to compare with the current thing. Of course, they were much younger to begin with. But this was a situation where it was much more difficult. I was a demographer at that time and we sat around wondering, “Why is this baby boom continuing?” We had thought that after World War I, you know, you got a spurt when the guys came home from France and Germany, but the changes that we had then compared with the changes now, were considerably greater. So I’m not playing down the difficulties, you just have to look at some of the survey data to realize that there’s a great difference, even though you’re looking at the same group of people over these different periods of time.
Looking at the survey of present and coming retirees we have a number of interesting findings, even though as was pointed out, the analysis of data is incomplete since it would not be feasible to try to analyze all the data that Michael and his staff and John have. I look first, you know, at my own priorities. “What is most important here and did they ask questions on it?” Since Michael was kind enough to send me the questions, I was very pleased to find you had covered all of the questions that I was interested in and a good many more besides. The ones that I had looked for in order of priority was health; then health and medicine; then labor force participation, which is very important now as we’ve already noted; and income and housing, and I think there were some questions on housing.
But this is an area that is shaping up quite differently from what was anticipated. For one thing, we’re finding that the elderly people, the older people, don’t want to go to nursing homes. The earliest studies were looking at quality. They want to stay home and they want the services provided that will permit them to stay home. I had an insurance salesman a couple of weeks ago come in and offer to extend the policy to coverage for remaining in home and care there and offered this as a extension of the existing policy. I asked him, “Well, why are you doing this extension?” Incidentally he said it wouldn’t cost any more and I hope he’s right, but at any rate it is there. And, he said, “Well, the reason is that people are coming to my office and saying, ‘We’ve gotten these other various forms of coverage, but we don’t have anything that will take care of people who remain in their homes.’” So this is one of the developments.
One of the most rapidly growing groups once, and I guess still are, is those single individuals who live alone and, as Ron is nodding his head, this is important because this has a whole lot of complications that go with it. How do you handle elderly people in their homes and what benefits can you get? So I think this is one area that we want to look at and keep track of. This is one area that I would like to see expanded in the future with questions which provide some longitudinal analysis over time. I know there are a few questions and it is possible to do this, but this is something that you’re going to be very much interested in by the time you get to be a senior citizen.
There were a few other matters in there that aroused my immediate interest. One of them was comparing the smoking rates in Kentucky and the nation. I had the idea that Kentuckians smoked a lot more than other people, but there was a relatively small spread there and I think that we would want to explore that more. In the case of the medical expenses of retirees, again, I would have guessed that the monthly expenditure would have been higher than they were. They were high, but not startling, but enough to catch our attention. Looking at the high percentage of respondents whose main source of retirement income is Social Security, I was surprised to see the effects of possible diversion of sources of some future Social Security payments. This is one of the things that, if they can ever get out of the current debacle, they will want to look at what the meanings really are from putting part of their Social Security income into stocks and bonds, or whatever the area would be.
Finally, you had a lot of questions on this and they were good, about whether the government should become involved in this. In reading the preliminary conclusions, I had to wonder why, if such high percentages of citizens believe that government support is important for a wide range of programs and services, this information has not reached the talk show pundits who see our government as a great inefficient operation. You wonder if it is so bad, why are so many people clamoring for it? It’s a strange world we live in. Thank you.
Graham D. Rowles
And now we move to solutions for the problems, which always, I’m told, comes from government. And so, Susan?
Susan Westrom
Well, obviously I won’t be around long enough to have all the answers to the problems. But one of the answers that I have been working on during the last two years has to do with the abilities of our senior citizens versus the liabilities. We hear very often, especially serving on the Health and Welfare Committee or the Seniors, Military Affairs, and Public Safety Committee, that the aging population as it ever expands will become an increasing burden to the economy. Yet at the same time, we hear very often that senior citizens contribute so much to our society with the benefits that we have through voluntarism and, of course, our senior citizens are the very ones that provide the in-home care for the frail elderly as well.
As we look at the statistics today, we’re finding that a large number of people will be retiring around the year 2010, but the question is who’s going to be filling the place of those employees? One of the questions that I had as a legislator was what Kentucky is doing to prepare for a large exodus of workers during that time. How are we going to fill in the gaps? And the answer to me appeared to be that we would need to tap the resources of these senior citizens. Certainly they have just as much to contribute in a professional life, while they’re working, as they would as they retire and the majority of us sitting in this room probably aren’t looking at retiring even, I would guess, by the age of 60. If you plan on retiring before that, raise your hand. Well, we have a few.
The reality is, though, that many of us will not be able to retire when we want to. When you look at the research shown today there are various reasons for senior citizens to remain in the workplace—ranging from having money to assist in making ends meet, because they enjoy working, or they require the extra benefits that they get, such as supplementing their subscription coverage so they can afford their medications. As a result of my questions a year ago, I had a meeting, bringing together various people from different state government agencies to question whether this truly is a situation we need be concerned about in the state of Kentucky. I know in Iowa they are welcoming Hispanics into their population because the senior population is aging so rapidly they do not have enough people in the workforce. I don’t know what they’ve done to increase the number of seniors in the workplace, but, as I did research, I found that there were no states that were doing any investigation about maintaining senior citizens in the workplace.
So I brought together people from the Cabinet for Economic Development, the Department of Education, Long-Term Policy Research, Workforce Development Cabinet, Chamber of Commerce, KET, Senior Citizen Groups, Library and Archives, the Attorney General’s Office, the League of Cities, Associated Industries, the Office on Aging, the Kentucky Community and Technical College system, the Governor’s Office, the Speaker’s Office, the Kentucky State Data Center and the Kentucky Center for Public Issues. My mission at that time was to determine if this is something we need to be looking at in the state of Kentucky. It was overwhelming the information that we got in a two-hour meeting and the results of that information I’ll share with you in a moment. But basically, because of this meeting, we came up with issues that we see the state of Kentucky facing in the near future and the people that will have to be taking responsibility for leadership roles are varied from change-makers, leaders, employers, policymakers, senior citizens and teaching institutions.
This is just a brief outline of some of the things that came out of that meeting. Some of the concerns that change-makers and leaders in our communities felt were that there were so many myths and stereotypes concerning older learners that were inaccurate. The question arose, “Why are there so many willing and able to work unemployed that are just age 55 at this time?” What are the barriers that seniors face as they attempt acceptance into the workplace? We wanted to determine to what extent the aging of our society presents an untapped opportunity rather than a problem in the state of Kentucky. We wanted to learn more about the interest of senior citizens in job training to improve their related skills. We wanted to figure how we could look at senior citizens as a resource that we need to plug into. We wanted to find out how to get employers to recognize the demographic trends and folding in the labor force so that they could harness these changes to a competitive advantage. And we wanted a goal that would maximize the potential of those people 55 years old and older, just as we have been working on harnessing the benefits of children under the age of three.
As policymakers, some of the issues that we brought up were areas in public policies, programs and regulations that need to be changed or looked at or enhanced or encouraged to be reviewed to get older people into the workplace. I hate to say older people when I’m looking at the age of 55 or 60. I’m getting so close to that, that’s not old to me and I’m sure some of you can relate to that in here, too, but I won’t point any fingers. At the national level, we’ve already addressed the Social Security issue, so those income levels are raised, but we also might possibly want to look at personal tax credit limits for work-related educational experiences for senior citizens. We might want to create a comprehensive plan to coordinate training and employment of older people or expand what’s already available. We need to coordinate between labor, business, and aging populations so we have a process of everybody knowing where everyone else is, so they can access each other. We need to consider tuition waiver programs for students over 60 beyond what we are currently.
We need to create avenues or statewide clearinghouses of communication regarding résumés. So often the 60-year-old will have an incredible résumé, but where do they take it? There really are no headhunters that are specializing in senior populations. We need to promote policies that provide incentives and reduce barriers for seniors that want to participate in the workforce just like we do tax incentives to get an industry in our community. We need to look at how privately defined benefit pension plans create disincentives for continued work past normal age. We need to think about the formation of an elder corps. It appears that employers have a mixed value of an older worker. We need to find out why. We also need to look at health insurance obstacles. For the employer, the employer must recognize this generation has done better than any other generation as far as getting an increase in their education as well as an expansion of their income, but they also need to determine the cost-benefit ratio associated with employing senior citizens. We need to determine what corporate policies may need to be changed. We need to determine where a senior workforce might fit in—certainly not in the physical aspect of labor, but somewhere else.
Corporations will need to adjust their management styles. When you have senior populations working, your management team is probably a little different than when you have a younger workforce. Corporations will need to take a look at phased retirement, flextime, job sharing, and job redesign, simply because many senior citizens as they retire are phasing out of the workforce. They don’t want to work full-time, maybe a few days a week or part-time during each day. No doubt about it, the baby boomer population is going to be a healthier lot and capable of filling many gaps in our workforce, if they’re invited and if they’re able and if they are identified as a potential candidate. However, recruiting senior citizens will also be a challenge because senior citizens are not normally registered with headhunters. They’re not normally located on college campuses. And they’re not where we normally look for employees.
Our senior citizens have a responsibility to the future for seniors in the workforce also because they need to recognize that their skills have value beyond voluntarism or entry-level positions. We have degreed people that are greeting people at Wal-Mart and yet these degreed people certainly have something to contribute within industry or the workplace in the state of Kentucky. We’re worried about brain drain of young people leaving the state and yet we’re not concerned about the brain drain of unemployed senior citizens for the amount of IQ and skill that they actually have. Senior citizens will need to determine how they meet the business demands of the modern corporation. They’re going to have to communicate about barriers that they’ve encountered reentering the workforce. They will need to improve their computer literacy to be more marketable. And they will need to make learning a lifelong goal just as we’re looking at children three years old; we don’t want their education to stop as they get out of college.
We need to look at teaching institutions. Teaching institutions must get prepared for an increase in demand for employment services for senior citizens. With that population aging and growing larger, more and more people will be going into job training, but the institutions will have to change their programs to fit the senior citizens’ needs as well. They’re going to have to accommodate senior citizens. They’ll have to look at issues such as parking and steps, how far they walk from one place to another, but they’re also going to have to expand their services to meet a greater number of people. And they’re going to have to remove the intimidation factor that many senior citizens would face on a college campus. These are all pieces of information that came from a two-hour meeting.
As a result of that we determined that the failure to accommodate older citizens in the future workforce could very definitely raise the cost of government entitlement programs for the aged. It could decrease the nation’s savings rate and it could erode the gains made in reducing poverty among senior citizens. As a result, the investigative team determined that what might be good is to have a task force that would meet to look at this issue more broadly, to lead our legislative body to a new depth of knowledge regarding senior citizens in the state of Kentucky. So we drafted House Joint Resolution No. 73, which would bring a task force of various entities—senior citizens, professionals, cabinet level people, and outsiders—to determine where we need to be going to tap into this vital resource for the state of Kentucky. I’d like to give you an update of that task force; however, we’ve not been meeting because we are not having Interim Joint Committee meetings. So we might have to do that a couple of years down the road. I will not give up on this. I think this is a very important task force that all of us in this room need to be very, very interested in and concerned about. And I do encourage you, when this task force does start to meet, all of you sitting in this room since you’re here for a reason, to participate in that process because you have something to contribute as well. We’re not talking only about employment for senior citizens, but we’re talking about meaningful roles that senior citizens must have to remain healthy and viable and provide purposeful activity for senior citizens. And when you think about it, many of the world’s towering intellects were not recognized as such until they got much older. Senior citizens are like great wines, they grow richer and fuller with time. I hope I grow richer, but not fuller, and I wish the same for you.
Graham D. Rowles
And, finally, the view from the Senate.
Jack Westwood
Thank you. Actually Susan didn’t ever talk about what the Seniors, Military Affairs, and Public Safety Committee does. I was hoping she was because I wasn’t sure myself. That was something that was formed two years ago, and it was actually formed in the House and they just invited some of the Senate members if they wanted to get aboard to come on aboard. But if you’re interested in senior affairs or issues or if you’re interested in military affairs or issues, or if you’re interested in public safety, somehow they put all those things together under one umbrella. I think there’s probably some rationale in that some of the military folks are retired veterans who are now seniors; and because they’re seniors, there are some public safety issues involved. Don’t ask me how; it’s just one of those strange things that take place in the legislature, and it’s just one more example.
But, you know, we’ve heard some things today about statistics and figures and certainly they are important things that we need to be taking a look at. Meeting the needs and addressing the issues that are going to be facing our senior citizens probably will be the most challenging public policy issue that we’re going to deal with over the next decade or so. And it’s going to be a formidable task for all of us to be working toward that end. We’ve seen that the number of seniors is growing by leaps and bounds. The good news is that seniors are living longer and living more healthily, and that’s the good news, especially if you’re my age because we’re real happy about that. I’m glad Tom’s here because otherwise I would have been the senior representation here and now I don’t have to be. But, it is going to be a formidable challenge for all of us to deal with those kinds of things.
The downside, of course, is that because we’re living longer and because we’re living more healthily, someone is going to have to pay for that. And one of the more disturbing things that I noticed on the survey was that a lot of people are looking to the government to be that entity. I don’t want to seem like a wet blanket on this day, but frankly I think that may not be the best answer. Because if we look to the government to be the solution to the issues that are facing our senior citizens I think seniors are going to be sadly disappointed. I don’t think government can pay for all of it without raising taxes in a highly incremental fashion. The private sector is going to have to play a big role in this and I don’t know if the question allowed that option to be there or how that question was phrased. But I believe the private sector is going to have to play a role by providing ways for workers to ensure against future risks that they’re going to be facing. If we don’t find a way to decrease our dependence on government and learn to integrate some of the private sector to finance the multitude of retirement costs, health costs, and all the kinds of things that are facing our seniors, I think our seniors are going to be suffering. And, when the seniors suffer, I believe we’re all going to be suffering because, as I said, we’re all living longer and participating as part of that.
Now I don’t know that we have solutions in the legislature. I certainly think that Representative Westrom pointed out in her talk all very good points. I think that she very aptly indicated that you have to look at all areas: the institutions of higher learning, the various agencies that look out for the seniors, the private sector, the insurance sector certainly, and the government. And we all need to be taking a certain amount of responsibility to this.
One thing that I would be concerned about, and I think that was brought out as one of the topics, is this issue of long-term care for our seniors. I think if you look at any one aspect of the high cost of being a senior, that is obviously going to be in the long-term care area. As I said, we’re living longer, but that means that we’re going to have more people who are going to be needing long-term care in one form or another. My mother is 81 years old and for the last five or six months before my father died, just a little over a week ago, she was his primary caregiver. Now that was a struggle for her at 81 years old, but she was able to do it because she is quite healthy. The thing that she said over and over to all of us kids is that, under no circumstances, was he going to go into a nursing home. And it wasn’t financial, because I think financially we could have handled that, although let’s face it, that is an expense. The cost of a nursing home can pretty well impoverish a middle-class family within just a few short months. So that’s certainly not a good option, but the reason she didn’t want it was she felt she needed to be the primary giver as long as she was capable of doing it.
And so we were looking for alternatives: home health care services, something intermediary without actually going into long-term home care, some of those kinds of things, or nursing homes. Those are the kinds of things that they were concerned about. But again, how do you make home health care something that would be a whole lot better than a nursing home, because it’s certainly a lot less expensive? How do you make that work if you don’t have caregivers, or if you don’t have people in the family who can take care of that? You can hire people to take care of home health care, but again there are a lot of problems with home health care.
There are some suggestions. I would like to, in the three or four minutes I have left, talk about some of the suggestions that we could be doing for home health care that might make that solution a little better option so people don’t have to go to nursing homes. One of them would be to implement co-pays. Now this is tried and unfortunately even saying a co-pay of maybe $5 for some felt that was way too much because it would be unfair to the poor. So we’re going to have to deal with that issue. Can we do co-pays to help relieve some of the high cost even of home health?
Managed care is another option that we can look at, using managed care dollars. Certainly managed care would be interested in doing home health because it would be a lot less expensive than sending them into a high-cost facility, but the jury is still out. A lot of seniors are nervous about managed care because they want to make sure that the quality of care they are receiving is the same quality of care that young people are receiving. They don’t want the thought that since he’s 80 years old, do we really want to go to this expense to give him 10 more years, or five or two more years or a couple of months? So that makes some nervous: “How valuable is my life as I grow older and older?” And that’s an ethical question we’re going to be faced with as well.
President Clinton offered a suggestion about tax credits after the fact; that is, if families decide to take care of their loved ones instead of sending them to a nursing home, they would get a tax credit. The problem with that is, he offered around $6 billion over five years, and there’s probably going to be a need of $27.6 billion. So that’s not going to pay for it and they’re either going to have to come up with more money through taxation or it’s going to have to be reduced down, those tax credits. So tax credits after the fact I don’t think is particularly viable, but maybe tax credits before the fact would be a possible solution. That is, give people who buy long-term care insurance a tax credit for what they purchase. If people would buy long-term care insurance, then they would have that pool of money waiting for them when they are prepared, or when they are involved in going to a nursing home or whatever long-term care situation they’re involved with. The trouble is, not many of us think about long-term care insurance when we’re young and healthy and, when you’re old and not so healthy, then it’s impossible to get it at any kind of reasonable rate. Tax credits might make that a little more desirable.
Another possibility would be to enhance access to people’s assets. Older folks, very frequently, are fairly wealthy because they don’t have to pay house payments as much. Their car payments are reduced. Their families are moved out and they don’t have to worry about those costs; so despite the fact that they may not have a whole lot of income coming in on a monthly basis, they don’t have a lot of outgo except for those medical costs. And they do own their homes, they do own their cars, and they have other assets in stocks and bonds and perhaps things of that nature they could be able to transfer and have access to those. The problem with that is that under Medicare, if you own these things then you’re not eligible for Medicare, and you have to pretty much impoverish yourself before you’re able to latch onto the Medicare. And lawyers have figured out how to get rid of those assets before the time comes. So that’s a struggle and we’ll have to be looking at those aspects. We might adopt new options for creating assets, such as depositing payroll taxes into privately owned individual retirement accounts. Something like that would help build up a little nest egg. Tightened Medicaid eligibility would be another one that might help out in solving some of the financial aspects, and one more is deregulating home health care regulations. You know, right now, there are so many regulations on home health care that it’s almost impossible to make it work. If we could deregulate it so it’s a little bit easier for people in the home health care industry or even family members to take care of their loved ones by deregulating, it might make it more attractive.