Social Insecurity with Long-Term Care

Across all demographics, health care costs continue to rate at the top of voters’ minds in nearly every public opinion poll.

Today marks 80 years since the first Social Security check was issued, but the anniversary stands as a reminder that the federal response to long-term care needs remains unaddressed. The first check was issued on this day in 1940 to Ida M. Fuller under the Federal Old-Age and Survivors Insurance Trust Fund. In the following 80 years, Social Security has been a critical lifeline to alleviate acute poverty and provide a social safety net to provide retirement security, disability and survivor benefits.

While Social Security is best known as social insurance for retirement benefits, neither Social Security nor Medicare cover long-term care – services that meet a person’s health or personal care needs over an extended time. Medicare provides limited assistance after hospitalization and Medicaid covers only low-income populations. This leaves working and middle-income families extremely vulnerable to financial stress when long term services and supports are needed to help a loved one live safely when unable to perform everyday activities on their own.

Ida Fuller’s first Social Security check, dated January 31, was for $22.54. Adjusted for inflation in 2020, that $22.54 would equal $413.73 today – a help, but only one small segment of healthy retirement income. Planning for long term care needs is a critical part of this equation because it is estimated that 47% of men over age 65 will need long-term care.  Fifty-eight percent of women over age 65 will require it (Morningstar).

Even with basic awareness of the need, long-term care costs surprise many families. I know this first-hand because between 2009 and 2011, both of my parents needed long-term care. Like many families, we lived in different cities. This made it necessary to pay for help that cost $6,000 per month for services from a home health agency.  It was an exhausting, scary, and expensive ride.

We were not alone in this experience. When I mention long-term care to friends (most of whom are also first-generation professionals), everyone has a story involving similar outlays and the associated anxiety of covering long-term care needs.

Across all demographics, health care costs continue to rate at the top of voters’ minds in nearly every public opinion poll. This makes it even more striking that with the presidential campaign season in full swing and the Iowa Caucus on Monday, not a single candidate has focused significant attention on long-term care.

While the Medicare for All plan endorsed by some candidates includes long-term care provisions, cost and implementation make it an unwieldy solution. It is much more likely that practical and scalable long-term care policy will incorporate public and private market solutions based on convertible insurance that is paid privately or subsidized.

In late 2019, Congress and the President made progress toward helping people save for retirement by passing and signing into law the SECURE Act, the first major retirement-related legislation enacted since the 2006 Pension Protection Act. The bill expands opportunities to save and raises the age at which savers must take distributions of those savings, in recognition that people are living and working longer. The bill also makes it easier for small businesses to offer retirement plans. Omitted from the consideration of retirement needs was the looming issue of long-term care.

Progress is often incremental and today’s anniversary of Social Security stands as a reminder that 2020 is more than an election year. We should take bold and decisive steps to tackle the high price of prescription drugs and health care costs, but leadership on long-term care is needed now more than ever. What will the next 80-year anniversary bring?