Affording Boomer Long-Term Care in Minnesota and the Nation

Executive Summary

How to pay for the retirement of 77 million baby boomers will be an intensifying debate.  This report examines one slice of the debate: how to meet the escalating long-term care (LTC) needs of the elderly. Specifically, this report examines how the changing demographics and health of the elderly in Minnesota and the nation will impact both the need for LTC and the resources available to provide LTC.

Most LTC reform efforts center on how to get more people to pay for their own LTC. Efforts to encourage greater personal responsibility and more self-financing may indeed be the most important part of the solution, but it is not the only part. Oscillating Twentieth Century birthrates—a cultural phenomenon—is largely responsible for our present problem: Might other cultural shifts and undulations be part of the solution? The demographic and health trends identified in this report suggest yes. The data show that a number of factors, such as a strong work ethic, robust families, fewer widows, and better eating habits, can have real impacts on LTC.

Demographic Trends and Projections Impacting Long-Term Care:

  • Projected aging trends in Minnesota mirror national trends. Minnesota‘s 65 and older population will double between 2000 and 2030, and the median age will rise from 35.4 to 39.0. At 18.9 percent, the percent of those over 65 in 2030 in Minnesota is only slightly lower than the national average. Populations of the oldest of the old in Minnesota—those over 85—will not grow quite as fast as the national average, but they will still nearly double.
  • More elderly, without more non-elderly workers paying taxes, means the public burden of LTC will be concentrated on fewer and fewer workers as more and more boomers retire. The national worker-to-retiree ratio, estimated at 4.98 working age adults per retiree in 2000, is projected to decline sharply to 2.89 working-age adults by 2030.
  • Higher elderly population growth rates in the South and the West will make the burden of LTC more proportionate by creating a more equal distribution of workers-to-retirees across states.
  • Retirees moving south do not appear correlated with more LTC needs. The three states with the highest net migration rate for 65- to 74-year olds—Nevada, Arizona, and Florida—also have some of the lowest rates of aged Medicaid beneficiaries.
  • Census data suggest that significant numbers of Minnesotans leave for retirement but move back for LTC. Between 1995 and 2000, 20.2 percent of Minnesotans aged 65 to 74 left the state for warmer climates, but for those 85 and over, the migration flow results in a net gain of 9.4 percent.
  • If it were not for the dramatic decline in fertility rates experienced in the 1960s and ‘70s—which fell from a high of 122.7 live births per 1,000 women age 15 to 44 in 1957 to 65.0 in 1976—we might have enough Generation X workers to cover the costs of the boomer generation. Today, the average U.S. family with children under the age of 18 has 1.86 children—not even enough to replace the parents, let alone those who never have children.
  • Elderly widows and widowers use LTC at much higher rates, and so any decline in widows and widowers will also result in fewer people needing LTC. Nationally, the rate of elderly widowed women dropped from 49.4 percent to 45.3 percent between 1990 and 2000. For Minnesota the rate declined by even more from 48.6 to 44.1 percent.
  • Like widows and widowers, those who never marry also use LTC at higher rates.  Unfortunately, the elderly never-married population will increase in the future and add to the LTC burden.
  • Future LTC costs might also be mitigated by the consistent flow of immigrants entering the United States. Already, the foreign-born population in Minnesota contributes a sizable and increasing share of new-born children. During the 1990s, the proportion of births to foreign-born mothers in Minnesota increased from 5.4 percent to 13.4 percent.

The Future Health Status of Aging Baby Boomers:

  • Between 1982 and 2004 national surveys report consistently lower rates of people over 50 years old self-assessing their health as poor or fair. Overall, Minnesotans report lower rates of poor or fair health than any other state on the most recent state surveys.
  • Life expectancies continue to rise, reflecting an overall improvement in the health of Americans. National life expectancies rose from 68.2 years in 1950 to 77.5 years in 2003, and the life expectancy of those who reach 65 years rose even more dramatically on a proportionate basis, from 13.9 years in 1950 to 18.4 years in 2003. Minnesotans had the second longest life expectancy— 79.1 years—in 2000.
  • Between 1950 and 2000 death rates among the elderly dropped 42 percent among 65- to 74-year-olds; 39 percent among 75- to 84-year-olds; and 23 percent for those 85 and over.  Minnesota‘s overall death rate—713 per 100,000—trails only Hawaii for the lowest rate in the U.S.
  • Combined, Alzheimer‘s disease, senile dementia, and other mental disorders represent the primary diagnosis for 26.6 percent of all nursing home residents. Because the rate of Alzheimer‘s increases exponentially with age, and more people will survive other diseases allowing them to live longer with Alzheimer‘s, the prevalence of Alzheimer‘s and related conditions will likely quadruple by 2050 unless advances in medical technology intervene.
  • Recent surveys show upward ticks in the prevalence of many chronic conditions among the elderly, including hypertension, strokes, asthma, breast cancer, prostate cancer, colon/rectal cancer, lung cancer, melanoma, skin cancer, diabetes, kidney disease, and liver disease. Boomers also experienced increasing rates of many of the same chronic conditions.
  • Most research on health status of the elderly focuses on disability as disability directly affects independence and the need for LTC. Since the 1980s, most measures of disability among the elderly have declined, with the most pronounced decline taking place in the 1990s. Likely contributors include: improving medical technology, healthier behavior, increasing use of preventative measures, increasing use of aids, higher education levels, rising wealth, and less exposure to disease. Elderly Minnesotans report both lower disability rates and less severe disabilities.
  • Slimming America‘s waistline would go a long way to soothing fears that disability rates might rise. Nonetheless, obesity rates continue to grow rapidly. Between 1990 and 2002, self-reported obesity in population surveys increased nationally from 11.6 percent to 22.1 percent. For Minnesota the numbers were worse, rising from 10.2 percent to 22.3 percent. Some predict disability rates will start increasing once obese boomers start experiencing the disabling effects of obesity—diabetes, heart disease, hypertension, cancer, and arthritis—which, if true, will be costly.
  • Future cost control depends on the largescale adoption of preventative measures. Are today‘s elderly and baby boomers taking the necessary steps to prevent debilitating and costly disease? Yes and no. When the prevention can be had through a doctor‘s visit or a drug, like cancer screening and cholesterol lowering drugs, the answer is mostly yes. But when prevention requires more day-to-day self discipline, like diet and exercise, the results come in mixed.
  • Despite overall health gains, LTC costs may increase if the diseases that create LTC-related needs become more numerous. This fact highlights how important treating the specific diseases that lead to LTC can be in any strategy to keep boomer LTC budgets affordable.
  • Longevity will likely increase LTC costs. Studies find that increasing longevity will impact acute care and LTC expenditures quite differently. In general, the studies find that better health might possibly lower lifetime acute care costs, but that it will most likely raise LTC costs.

Looking broadly at what the demographics and the health of the boomers tell us, three lessons stand out.

  • First, a strong economy, by keeping people in the workforce and by keeping their salaries growing, will guarantee more public resources to pay for LTC and, at the same time, constrain demand for those public resources.
  • Second, larger families also will add to public resources for LTC, as well as lower demand for it, by adding more people to the workforce and increasing the number of informal caregivers.
  • Third, the health of boomers and the elderly is generally improving, but we cannot depend on such improvements to lessen the need for LTC. On one hand, they may lead to less need for LTC since they are tied to declines in circulatory system diseases and disability rates, which in turn, precipitate much less need for LTC. On the other hand, and as noted, studies likewise suggest that healthier, longer-living boomers will require more LTC.

Some may say that it is too late for policy solutions that address demographic and health issues. The boomers are already at retirement‘s threshold. But, assuming many boomers won‘t need LTC until they turn 85, the last of them will begin needing it around 2049, a long way off.  Policies and personal practices begun today that make working and building businesses more attractive, that make families more robust, and that reduce health problems would indeed make a difference.