NEWS RELEASE

February 16, 2007

Contact:         Peter Nelson, Policy Fellow

            (612) 338-3605

            peter.nelson@americanexperiment.org

Waves of Retiring Boomers Not the Only Population Dynamic

Affecting Future Long-Term Care in Minnesota

Minneapolis -- Baby Boomers -- who already have begun retiring -- promise to dramatically increase demand for private and public services for the elderly.  Posing the largest challenge to states will be increased need for long-term care (LTC), insofar as Medicaid, a partially state-funded program, is the primary payer of LTC.  A new study published by Center of the American Experiment outlines just how difficult this challenge might be for Minnesota, given several demographic and health trends in addition to growing numbers retirees.

"Affording Boomer Long-Term Care:  What Do Demographics and Health Trends Tell Us?," by Policy Fellow Peter Nelson, describes many changes -- including shifts in work ethic, family size, immigration levels, disability rates, and life expectancies -- that will have profound effects on the need for LTC as well as the ability to fund it in Minnesota.

Among the study's major findings:

• Between 2000 and 2030 Minnesota will continue having a slightly higher number of taxpaying-workers per retiree than the national average.

• Census data suggest that significant numbers of Minnesotans leave the state for retirement but later move back for LTC.

• Minnesota fertility rates remain near all-time lows, continuing to exacerbate the future elderly population bubble.

• The rate of widows in Minnesota is expected to continue declining, which will increase the number of informal, live-in caregivers, thus mitigating formal LTC costs.

• Life expectancies continue to rise, reflecting an overall improvement in the health of Americans.  This is especially so for Minnesotans, who have the second longest life expectancy in the nation.

• Most studies show national disability rates dropping, with Minnesotans reporting below-average rates both for populations with disabilities as well as their severity, thus suggesting less need for LTC.

• Studies show that longer lives and better health, while possibly lowering acute care costs, likely will increase LTC costs.

• Studies that show longevity leads to higher LTC costs, when taken into account with longer-than average life expectancies of Minnesotans, suggest why nursing home utilization rates are higher in Minnesota than average.  Likewise, such research suggests why Minnesota spends more than most states on Medicaid-funded LTC for the elderly.

Based on these findings, Mr. Nelson concludes that Minnesotans must be especially vigilant in planning for potentially higher-than-average LTC costs.

Copies of the study may be accessed on the Internet here:

http://www.americanexperiment.org/uploaded/files/nelson021407.pdf

Center of the American Experiment is a nonpartisan, tax-exempt, public policy and educational institution which brings conservative and free market ideas to bear on the hardest problems facing Minnesota and the Nation.  For more information, please contact us at:  1024 Plymouth Building, 12 S. 6^th St., Minneapolis, MN 55402, 612-338-3605, www.AmericanExperiment.org.

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