AN OUNCE OF PREVENTION IS WORTH A POUND OF CURE
Dear ABILITY Readers,
Benjamin Franklin’s time-tested bits of wisdom hold relevance to modern-day politics, life and leisure more than two centuries after his death. A public servant, philosopher, scientist, printer and inventor, the 18th century statesman left a legacy that continues to shape our American way of life 229 years after he became the oldest delegate to sign the Declaration of Independence. As a 21st century federal lawmaker working to craft policy for the public good, I agree with Franklin’s no-nonsense advice for life.
One famous Franklin quip arose from his efforts to prevent severe economic loss and personal hardship created by fires ravaging Philadelphia: “An ounce of prevention is worth a pound of cure.” His fire-prevention crusade also led Franklin to help found an insurance business to help homeowners get back on their feet and avoid irreversible economic damages.
As chairman of the Senate Finance Committee, I’m leading an effort in Washington to help folks mitigate risk and avert a financial meltdown sparked by expensive long-term care services needed for chronic illness or impaired physical or mental abilities.
As Americans lead longer, healthier lifestyles, people from all walks of life look forward to maintaining a comfortable standard of living in retirement. Our society is experiencing a remarkable shift in demographics that will require a major shift by both the public and private sectors to accommodate the needs of an aging American population. Longevity has launched a transformation of sorts across America. Just consider the needs and challenges facing our health care delivery system and community infrastructure, from housing to transportation and other social services, as the enormous baby boom generation lives for decades beyond retirement. As family units become separated due to job transfers and relocations, aging parents increasingly must cope without the security of knowing a loved one will be there to tend to them.
People used to equate long-term care with the hometown nursing home. And although nursing homes serve a great need in a community, I have yet to meet one person who can’t wait to become a resident. In fact, for most, institutional care is an option of last resort. Few people prefer to trade their independence for the around-the-clock care provided by the nation’s 17,000 nursing homes. Beyond that, nursing home care is very expensive, costing up to $70,000 a year. Now that’s sticker shock.
As longevity climbs, so does the diversity of long-term care choices in America. Consider the real estate developments cropping up in communities across the country. Planned retirement communities, assisted living facilities, home health care agencies and other long-term care programs offer people of varying ages and abilities the opportunity to choose the quality and level of care that best suits their needs.
Making long-term care affordable, of course, is the real issue confronting the public and policymakers. That’s why I’m promoting bipartisan legislation, the LongTerm Care and Retirement Security Act of 2005, that would offer tax incentives for people to buy long-term care insurance policies. Our bill would give people an above-the-line tax deduction for the cost of their longterm care insurance policies. (This special type of deduction applies before adjusted gross income is calculated, thus providing additional benefit to eligible taxpayers regardless of whether they itemize or take the standard deduction.) The bill also would allow employers to include the deduction provision in their benefits menu, along with flexible spending accounts that let employees set aside pre-tax earnings to pay for longterm care insurance.
Many people in their 20s and 30s may not give much thought to their retirement budgets, much less consider what it would take to pay for long-term care. But younger workers need to be prepared for the unexpected. The invincibility of youth can tragically be taken away by an accident or chronic illness. As a policymaker, I’d like to put incentives in place that create a mindset among all individuals, regardless of age, that you can’t afford not to buy private long-term care insurance. My plan would promote personal responsibility, reward smart money management and restore integrity to the public financing of long-term care.
In June, I led a two-day hearing to examine the federalstate Medicaid program. The public health insurance system provides coverage for 53 million Americans. Through Medicaid, taxpayers now cover roughly half the cost of nursing home care each year. Witnesses at my hearing revealed how the system is being used by many middle- and upper-income families to shift the cost of nursing home care to the government. Medicaid is not an asset protection program. Gaming the system is a disservice to the millions of low-income families and individuals with disabilities who depend on Medicaid for health coverage. Closing down the legal loopholes that could bloat the system by as much as $1 to 2 billion over the next five years would help Medicaid serve those it is intended to serve: the elderly poor, individuals with disabilities and uninsured children in lowincome families.
My long-term care legislation also seeks to recognize and reward the sacrifice of those I call the laborers of love—family caregivers. Our society owes a debt of gratitude to these individuals who offer their time and tireless service to friends, neighbors and loved ones in need through countless hours of personal care, supervision, housekeeping and meal-making. Family caregivers help loved ones retain independence longer and live in the comfort of their own homes. Don’t forget, this legion of Good Samaritans is keeping countless frail elderly people and individuals with disabilities out of expensive institutional settings. My bill would allow individuals or their caregivers a $3,000 tax credit to defray long-term care expenses, such as medical supplies, home nursing care and respite care.
Franklin’s advice remains wise. An ounce of prevention is worth a pound of cure. More people ought to plan ahead and capitalize on financial tools available in the private sector to make long-term care affordable, promote smarter stewardship over retirement dollars and alleviate the risk of impoverishment in their golden years.
Senator Chuck Grassley