Tuesday, January 10, 2017

Elderly Care

Elderly Care
Written by: Allison Rokus

As the Baby Boomer generation is reaching retirement age, concerns regarding their financial well being are arising.  For the entire second half of the 20th century, the baby boomers were clearly the largest generation in America. When they were children being supported by parents, or members of the workforce, this was not an issue. However, as they are becoming dependents once again, their retirement preparations clearly have not been sufficient.  Studies show that 70% of elderly people will now need at least three years of full-time care in their lifetime (Bowser).
Furthermore, 21% of married Social Security recipients and 43% of single Social Security recipients age over 65 years depend on Social Security for 90% or more of their income (NCOA). However, Social Security was intended to supplement an income or a retirement fund, not replace it.  Many elderly people have found that their Social Security benefits alone are not enough for them to live a comfortable lifestyle. The current solution has been to spend all of their retirement and savings to the point that they can qualify as poor enough to receive Medicaid, which will pay for a bed and a full-time care facility while Medicare will not. This becomes a problem, because Medicaid was not intended to be used by all elderly people. It was intended for the poor, and these people were not expected to become so poor. Now, it becomes an issue for Medicaid, as Medicaid is a means-tested program meaning that it is intended for people already in poverty who have demonstrated need, not people quintessentially trying to become poor. With their 401(k)s, IRAs, and a variety of other long-term investments, elderly people are expected to be prepared for retirement. That leaves economists with the question of what went wrong.  One large factor is that elderly people are living much longer than expected. When they entered the workforce at age 20, the life expectancy for males was only 66 years old (Berkeley).  Now, that life expectancy has increased by 14 years to 86 years old (Social Security Administration).

If this change in life expectancy was not accounted for and an elderly person spent an average amount of money per year per year of about $55,000, they would be over one million dollars short of the money they expected to need (US Bureau of Labor Statistics). This does not account for long-term illnesses or other unexpected costs, which are high in this demographic. With their retirement now imminent, it is imperative that a solution is quickly found.

This video is pretty dramatic, but is has a quality explanation of why seniors retirement resources are becoming so depleted.

Many experts find the best solution to be long-term care insurance. Part of the reason that long-term care insurance has not been widely effective in the past is that the risk for all recipients is so high. Because 70% of elderly people will need three or more years of care, this makes him very high risk to be insured. If auto insurance companies knew that 70% of people would get into accidents they would not issue as many policies.  Also, the current long term care insurance policies that do exist are not being bought or have not been bought by the elderly. This seems to show a lack of demand. However, when interviewed, most elderly people indicated that they would buy such a policy. This then becomes a market failure, as there is a good that is demanded, but not supplied by the current market, even though the resources needed to create such a product are available.  The best solution currently seems to be a reform in long-term care insurance that would help the elderly to receive long-term care without having to deplete their life savings. By working with healthcare providers to develop policies that work and are effective, insurance providers could potentially receive more customers, more revenue, and a great benefit to society that cannot afford to support so many elderly people in their current behaviors.  









Works Cited
Bowser, Betty Ann. "Why Long-Term Care for U.S. Seniors Is Headed for ‘Crisis’." PBS. PBS, 20 Mar. 2013. Web. 10 Jan. 2017.
"CONSUMER EXPENDITURES--2015." U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, 30 Aug. 2016. Web. 10 Jan. 2017.
Donnelly, Laura. "Elderly Care Crisis Looms as Ministers Accused of Living 'in Fantasy World'." The Telegraph. Telegraph Media Group, 11 Oct. 2016. Web. 10 Jan. 2017.
"Life Expectancy in the USA, 1900-98." Life Expectancy in the USA, 1900-98. Berkeley, n.d. Web. 10 Jan. 2017.
NCOA. "Poverty Facts About the Elderly." NCOA. National Council on Aging, 20 Dec. 2016. Web. 10 Jan. 2017.
"Sans Everything." The Economist. The Economist Newspaper, 01 Oct. 2016. Web. 10 Jan. 2017.
"Social Security." Calculators: Life Expectancy. N.p., n.d. Web. 10 Jan. 2017.
Sodha, Sonia. "Underfunded and Overstretched – the Crisis in Care for the Elderly." The Observer. Guardian News and Media, 10 Dec. 2016. Web. 10 Jan. 2017.
"What's Behind America's Elder Care Crisis." Stanford Graduate School of Business. Stanford, n.d. Web. 10 Jan. 2017.

13 comments:

  1. I found it especially interesting (and sad) that this population is consciously trying to become poor. This just goes to show that there will always be some people who try to manipulate these government anti-poverty programs to receive benefits. Ironically though, it seems that if the long-term care insurance is out of their budget, there only option IS to become poor. While it is surely a good thing that life expectancy has increased, it further emphasizes the need to start saving and investing as soon as possible to allow yourself the best future possible.

    ReplyDelete
  2. It's very concerning that people live their whole lives at a standard of living higher than what should be normal since they make little to no effort to save for their retirement and then turn to the current taxpayer's wallets for assistance when they get old. This concern manifests itself in the problems discussed in this piece. I do not believe the solution is the Ponzi Scheme that is Social Security or other large government programs. The problem with social security is that it is one pool of money, rather than individual pools for individual people, so it is very easy to give out more money than what is warranted or available.

    ReplyDelete
  3. I found your topic very interesting and feel that this is a prevalent issue in economics today. The only criticism I have is I feel as though some of your transitions were not fluid and the post at times felt difficult to follow. I would suggest maybe reading the piece out loud to identify areas that don't sound as if they would be spoken.

    ReplyDelete
  4. I think this is an important and growing issue like you said. I feel that people in the workforce today need to be informed of these situations so that they can better prepare for when they themselves will be in the same predicament as these elderly people now. As for now, I agree that we are in need of a reform in long term care insurance like you indicated. This could help the situation now and in generations to come.

    ReplyDelete
  5. I thought it was very interesting to see how many elderly people are purposely trying to loose their money to become eligible for Medicaid. All people want is a nice place to live, a bed, food and shelter. By going bankrupt they can obtain those goals. I hope that these people won't feel the need to purposely spend all of their lives savings in order to be set for retirement.

    ReplyDelete
  6. I had no idea that this was an issue in today's society and I, too, find it extremely concerning. The fact that the elderly are taking advantage of this government program is honestly sad. We need to encourage them to contribute to the economy and get jobs, even minimum wage jobs will be a huge help. I'm not sure if there's any way we can set more guidelines as to who can receive Medicaid, but I would highly encourage it. The elderly deserve to live a prosperous life after retirement, but not by cheating off of these government programs.

    ReplyDelete
  7. I think that your topic is very interesting. With the baby boom era we do have a lot of seniors that are going to need help in the future. I also thought it was interesting that some seniors are purposely spending and losing their money in order to become eligible for Medicaid. It's sad that the seniors are struggling like this in our current economy that they have to spend all their hard earned and saved money to get in return a somewhere to live, a bed, and food. I think that we really need to reconfigure how the money is spend.

    ReplyDelete
  8. I work at an assisted living facility and have always wondered how these people are able to pay for all of their medical needs, living needs, and day to day care when they are no longer working. I had never thought that the elderly might be purposely losing money in order to qualify for medicaid. I found this very informative and it got me thinking about how medicare is not as effective as it used to be for the elderly. This is a very important topic that, with the baby boom era, will only get worse. Especially because eventually the social security money will run out, so they should really think about how to improve insurance.

    ReplyDelete
  9. I had considered your topic before from a medical perspective, knowing that the baby boomers would increase the need for medical personnel, but had not thought about the extent to which they rely on government aid. I agree with your proposal for increased focus on long-term care, and definitely think setting aside more money for retirement starting at a young age will help this situation.

    ReplyDelete
  10. The topic chosen was intriguing to learn about because it not only effects the victims of this economic issue, but their families, as well. It's important to become knowledgeable on topics like these to know how to prepare for when it is our turn for retirement. I find it especially sad the paths these citizens are having to take to get the necessary coverage they need as they age.

    ReplyDelete
  11. This topic is very interesting in the way that some people live in at a higher standard of life but disregard saving for when they are older. Then once they are out of money, look toward to government programs to support them. I believe that this won't be a issue in the future as much with a smaller amount of elderly because then there will be more money to go around.

    ReplyDelete
  12. The ways people have tried stay safe in the US economy is very Interesting.People can only afford health care when they have no money so in-turn their Idea is to spend all of it. In our current state In later years its almost better to be lower class than middle class. Something that Im interested in is what are they spending this money on to get rid of it and its greater effect.

    ReplyDelete
  13. BlueHost is one of the best website hosting provider with plans for any hosting requirements.

    ReplyDelete

Related Posts Plugin for WordPress, Blogger...