With the growing number of baby boomers transitioning into retirement, securing affordable long-term care has become increasingly difficult. “We’re on the brink of a major crisis in our country, with a lot of people unable to care for themselves,” shared Rep. Tom Suozzi, D-New York, speaking at the Employee Benefit Research Institute’s policy forum in Washington, D.C. on Thursday.
Reflecting on his own upbringing, Suozzi recounted how all his grandparents lived under the same roof as his parents, who diligently cared for them. This personal experience motivated his parents to invest in long-term care insurance, enabling them to live comfortably at home well into their 90s, he noted.
However, today’s landscape is much different. The cost of long-term care insurance has skyrocketed, making it unattainable for many Americans. “People just can’t afford long-term care insurance these days,” Suozzi explained. “When insurance companies first got into this market, they underestimated longevity, which led to significant financial losses.”
Meanwhile, options like nursing homes and Medicaid aren’t fully equipped to tackle this mounting issue. To remedy the situation, Suozzi plans to reintroduce a legislative proposal known as the Well-Being Insurance for Seniors to be at Home, or WISH, Act. This bill encourages the federal government to establish a funding source for catastrophic long-term care, aiding seniors to live independently at home.
The initial version of this bill, introduced in 2021, aimed to extend long-term care benefits to retirees facing disabilities, severe cognitive impairments, or difficulties performing daily routines.
Much like Social Security and Medicare, participation in this program would require Americans to contribute via a payroll tax. Beneficiaries could expect to receive between $3,600 to $4,000 monthly, a figure derived from the median cost of receiving six hours of personal assistance daily. Access to benefits would also vary based on income, with more affluent individuals facing lengthier wait times.
Convincing people to support a tax increase, however, is no easy feat. “The real challenge lies in the universal aversion to tax hikes,” said Suozzi. It’s a “tough sell” introducing a mandatory tax for long-term care, especially when not everyone will necessarily need it, pointed out Ben Veghte, WA Cares Fund’s director, during another discussion at the EBRI conference.
The WA Cares Fund, specific to Washington state, is a public long-term care insurance initiative supported by a 0.58% payroll tax. Although 70% of people are projected to require long-term care at some point in their lives, there remains skepticism about why all should contribute when 30% might never use these services.
In the coming decade, Veghte suggests that at least a couple of states will experiment with similar programs, with California, New York, Massachusetts, Pennsylvania, and Minnesota showing interest. Once these programs are established, the private sector will likely offer complementary insurance products.
“As we face this impending long-term care crisis, collaboration will be key,” Veghte emphasized. “It’s a collective effort involving private industry, government, employers, and family caregivers. The costs go beyond just financial aspects.”
