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May 16, 2000, Tuesday

SECTION: PREPARED TESTIMONY

LENGTH: 1035 words

HEADLINE: PREPARED TESTIMONY OF SENATOR SUSAN M. COLLINS

BEFORE THE SENATE GOVERNMENTAL AFFAIRS COMMITTEE SUBCOMMITTEE ON INTERNATIONAL SECURITY, PROLIFERATION AND FEDERAL SERVICES

SUBJECT - "LONG-TERM CARE INSURANCE FOR FEDERAL EMPLOYEES"

BODY:
MR. CHAIRMAN, thank you for convening this morning's hearing to explore ways we can establish a program through which federal employees, members of the uniformed services, and both civilian and military retirees may purchase long-term care insurance.

This is a tremendously important issue. Long-term care is the major catastrophic health care expense faced by older Americans today, and these costs will only increase with the aging of the baby boomers. Clearly we must do more to encourage more Americans to prepare for their long-term care needs. As our nation's largest employer, the federal government should be the model for employers across the country. By giving its employees the opportunity to purchase long-term care insurance, the federal government can set the example for other employers whose workforce will be facing the same long-term care needs. We can also use the lessons learned through the federal experience to help other employers to offer this option to their workers. MR. CHAIRMAN, most Americans mistakenly believe that Medicare or their private insurance policies will cover the costs of-long-term care should they develop a chronic illness or cognitive impairment such as Alzheimer's disease. Unfortunately, far too many do not discover that they do not have coverage until they are confronted with the difficult decision of placing a frail parent or loved one in long-term care and face the shocking realization that they will have to cover the costs themselves.

With nursing home costs ranging from $40,000 to $70,000 a year, a chronic illness requiring long-term care can bankrupt a family and result in the taxpayers picking up the cost through Medicaid. Concerns about how to finance long-term care will only multiply as our population ages and is at greater risk of chronic disease. By 2030, the number of people over 65 will nearly double. Moreover, the fastest growing segment of our population is Americans over 85. These older Americans are at least five times more likely to reside in a nursing home than people who are 65.

Americans should think about and plan for their future long-term care needs just as they plan for their retirement or purchase life insurance to protect their families. Private planning for long-term care through the purchase of long-term care insurance will not only provide families with greater financial security, but it will also ease the growing financial burden on Medicaid and strengthen the ability of that program to serve as a safety-net for those Americans most in need.

Moreover, private long-term care insurance provides Americans with a greater choice in the type of services they can receive. While government programs predominantly pay for nursing home stays, private long-term care policies provide a wide variety of services ranging from personal assistance with activities of daily living -- such as bathing, eating, and dressing -to 24-hour skilled nursing care. Many policies also cover assisted living, home care, adult day care and respite care, giving seniors greater flexibility and enabling them to retain the dignity of choice in their retirement years.

During consideration of the Patients' Bill of Rights, I offered an amendment, which was approved by the full Senate, to expand the tax deductibility of long-term care insurance to encourage more Americans to purchase it. The provision -- which is currently pending in conference -- will permit individuals who purchase long-term care insurance on their own, without an employer subsidy, to deduct 100 percent of the cost.

I was also pleased to join with Senators Grassley, Mikulski and Cleland last month in introducing the Long-Term Care Security Act, which has been referred to this committee. This bill, which was approved by the full House last week, will make affordable private group long-term care insurance available to federal employees, members of the uniformed services, civilian and military retirees, and their families.

The bill sets up a process through which private companies will compete to provide long term care insurance to the federal workforce. While federal employees would pay the full premium for their long-term care insurance, they will be able to pay at group discounted rates and the purchasing power of the federal workforce will enable them to get the best deal. Moreover, the bill extends the option of coverage to their spouses, parents, stepparents, parents-in-law and certain children age 18 and over.

Postal service employees from Maine were the first to alert me of the need to provide viable long-term care insurance options to the federal workforce, and I am pleased to be able to respond to their concerns by sponsoring a bipartisan bill that stands a very good chance of becoming law.

The Long-term Care Security Act will provide peace of mind to over 4.9 million current and former civilian and military employees and their families.

I suspect that Maine is typical of other states in that a surprisingly large share of its population would benefit from this bill. According to the Office of Personnel Management, there are 13,369 federal civilian employees in Maine, including 5,291 Postal Service employees. According to the Department of Defense, 2,507 active duty military personnel are located in the Pine Tree State. In addition, according to the Maine Bureau of Taxation, there are 14,100 federal civil service retirees and 13,800 military retirees in Maine.

In sum, over 43,000 Mainers and their families would be eligible for the long-term care coverage provided under this legislation. By encouraging these individuals to plan ahead for their retirement through the purchase of long-term care insurance, not only are we helping to ensure their future financial security, we are also giving them the assurance that they will be cared for if they develop a chronic illness, disability, or cognitive impairment such as Alzheimer's disease. Moreover, it will be the care of their own choice and on their own terms.

In closing, I want to welcome Senators Grassley and Mikulski and thank them, as well as Senator Cleland, for all of their hard work and leadership on this issue.

END

LOAD-DATE: May 17, 2000

Document 60 of 268.


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