Hawaii and the nation are in the midst of a crisis. Many do not even realize the crisis exists while others are all too familiar with the challenges of what has been referred to as the “silver tsunami.”
The “silver tsunami” is here
Hawaii has the highest percentage of residents over the age of 85 than any other state. More people are living longer but not necessarily without health issues. Many require costly institutional care in nursing homes and foster homes, others need private caregiver support, but most wish to remain in their own homes or with family and rely on their loved ones to provide uncompensated care.
The inevitability of old age is something most of us hope for, even with attending disabilities. Yet long-term care may be needed by younger adults as well—a person of any age in a major work or auto accident, with a serious health condition, or with disabilities resulting from combat or other military service. Severe, lifealtering disability can hit at any age.
The high cost of long-term care
The costs of providing what is called long-term services and supports (LTSS), otherwise known as long-term care (LTC), can be significant. Nursing home care costs, on average, $12,000 a month. Foster homes, where skilled nursing care is provided in private residences, can run from $5,000 to $7,000 a month. Private caregivers who provide services in a person’s own home charge about $25 an hour.
Even having loved ones provide care is costly. The family caregiver may be employed, having to rely on limited paid or unpaid family leave, or may even have to resign or retire early and sacrifice his or her own retirement security. Even more importantly, the stress of juggling schedules and dealing with the care of another is a cost that has no price tag but exists nonetheless.
Most of us are not prepared financially for these long-term care needs. Many think that government will take care of these expenses, that Medicare (for eligible seniors age 65 or older) will pay for long-term care or that Medicaid (for low-income adults with few assets) will be available. But Medicare does not cover long-term care—only the cost of acute care and skilled nursing care for rehabilitation. Medicaid has eligibility requirements that many will not be able to meet. And the cost of Medicaid is ultimately borne by taxpayers through federal and state taxes.
Long-term care financing is needed
So what is the answer? Advocates and legislators have long supported a financing program to help pay for costs associated with long-term care.
In the early 1990s, the Family Hope Program was introduced to require an income tax increase to establish a fund to pay for long-term care. It failed.
In 2003, Care Plus was passed, then vetoed, and would have required a $10 a month payroll tax to provide $70 a day for long-term care services. The veto was not overridden
In 2015, a measure was floated to require a half-percent surcharge on the General Excise Tax (GET) to provide for long-term care. The measure did not pass but is still alive.
In 2016, the Legislature will again consider the GET surcharge for a longterm care trust fund.
Who benefits?
The proposed long-term care fund is not intended to address the high cost of institutional care but is meant to help the frail elderly and disabled remain at home with support from family caregivers who will be paid $70 a day for up to 365 days.
Family caregivers are currently estimated to provide 162 million hours of uncompensated care each year, valued at close to $2 million. The fund to support family caregivers will allow much needed financial assistance for some caregivers and respite services for others.
Not only will patients and caregivers themselves benefit, employers will also benefit by retaining valued and experienced employees. Caregivers who still hold jobs must take time off, paid or unpaid, to attend to caregiving duties. That means their employers are short-staffed for short or long periods of time and must hire and train new employees if the caregiving employees quit, representing an additional cost to employers.
The benefit of $70 a day is not enough to cover the cost of institutional care, but allowing the elderly to “age in place” at home will help to delay or eliminate the need for institutional care and thus reduce taxes needed to support Medicaid.
Lieutenant Governor Shan Tsutsui with members and retirees from the Maui Division on Opening Day at the State Legislature. Twelve members from Hawaiian Commercial & Sugar Company (HC&S) were part of the group.
Who pays?
The half percent surcharge on the General Excise Tax will be paid by everyone who consumes goods or services in the State. Legislation seeks to ensure that only retail, not wholesale, transactions will be subject to the surcharge, thereby eliminating the “pyramiding” effect of the GET that has raised opposition.
Significantly, about one-third of the GET collected is paid by tourists—yet they will not be eligible to receive benefits from the long-term care fund unless they file tax returns in the State.
A GET surcharge is a regressive tax, and lower income families may feel its effect disproportionately, but they are also eligible for the benefits. Tax credits are being considered to mitigate the impact of the GET increase.
Inaction is not an option The “silver tsunami” is already here. If we do nothing, it will inundate us. The time to act is NOW. Please support a half percent surcharge on the GET to fund longterm care for Hawaii residents.
Contact the Local at (808) 949-4161 for more information.