>> help me understand, because my perspective on our entitlement today is we can't afford the ones we have. the construct we work with is -- forget the multiple debt. the real challenge we have with our pension plans are underfunded, our health care

we've are already exposed to come so we're talking about a couple hundred trillion dollars of unfunded liability. i just don't know how -- >> that's a great question and i'm glad you asked because i will tell you, again because my professional background, the last thing you ever imagine myself doing as a budget analyst is suggesting we needed a new government program both trying to control the ones we had. but after looking at this for many, many years, and truly the idea -- i've been a pretty big fan, there's got to be a way we can add to work with the private long-term care insurance market to create both changes on the demand and supply side that would, in fact, really give many more americans a true opportunity to ensure. because right now it's my view that there really isn't -- we say people are unprepared. how can they prepare? is not their fault they are not prepared. i don't have long-term care

insurance. i know a lot about it. although my parents -- >> i know some agents who can help you today. >> my parents are signed up under the federal long-term care insurance program. thank you for that. i really appreciate it, especially. but i think that there are ways in which we can work with an insurance program so that it is financed in a way that it is self-funding. and we worked on this a lot actually out my company when we were modeling a class act just a year ago. so we were dealing with a situation where we're trying to analyze what the premium levels would be under a voluntary approach. and the big problem we ran into over and over and over again was that he set the premiums low enough -- if you set the premiums to higher not going to get enough people to enroll and you end up with this actuarial

-- >> adverse risk. >> exactly. so the fact of the matter is i haven't been able to figure out a way to come up with a public policy that we do what we need, what this country needs without going in that direction. i really do think we know enough now to set it up in a way that the premiums would cover or the tax base or however it is you choose to finance, and there are so many different ways could, in fact, pay for the benefits that we would expect to pay out. you're right, it's a risk. i completely understand and agree with that. >> my dear in headlights look is authentic. israel to my office will call your office and figure out what in the world you just said. thank you, ma'am. >> senator baldwin. >> thank you. about to again thank and welcome our witnesses today. and also offer my gratitude to our chairman and ranking member

for bringing us together today. not only do you recognize that the current system of long-term care financing, et cetera, is unsustainable but you have a resolve to continue the committee to focus in on this and i appreciate that very much. i'm hoping to maybe sneak into questions to the whole panel, if i don't have too long of a run-on. i'm kidding. the first focus i'd like to have is sort of the role and value of state innovation in this come in looking at this at the national level. obviously, we have to tackle and debate long-term care financing at the national level. but i don't lots of things are going on in the states. in wisconsin we have a program called family care, currently operates in 57 of our 72 county

-- counties with plans to expand it all. the gist of it is that it improves the cost effective coordination of long-term care services by creating a single flexible benefit. it includes a large number and range of health and long-term care services that would otherwise be available in separate programs. so just as one example of what a state is doing, i wonder what we can learn from innovation that's going on in the states on how to address our long-term care crisis. i don't know if y'all want to take a stab at it. >> maybe i'll start on behalf of the commission as a whole. i think when it comes to delivery systems and workforce, the answer is absolutely. mother something that can be done on the national level, care is delivered locally. they are delivered based on the kinds of providers and irate services you have any community,

in the city, in a state. it is based on the kinds of needs and desires of specific communities, and there's wide variation amongst the states. we, in conjunction with the commonwealth fund, produced a report card that the aarp put out looking at the performance of various states across the country. wisconsin is one of the top performers. that was number five in the country. it is the robustness and creativity and personal centeredness of those programs that really drives wisconsin's results. so are there opportunities to leverage state innovation, particularly what comes to how we deliver services, how we support families and how we address some of these operational workforce questions? absolutely. the single biggest challenge in building teams, the ability to delegate function from doctors and nurses to other members of the caregiving team is all safe

haven, all professionally driven within state law. so there are many opportunities come in wisconsin is a real leader. i do think the financing question quite honestly is one that sort of comes back to the federal level. i think the notion of a broader -- find the right framework which is part of what our discussion is here today, the role of the federal government in providing leadership in thinking about that would be important. states are where that care is delivered, and i think there is a lot we can learn from it. a lot of success out there. >> senator baldwin, i pick up on what was said about financing because i think that really in many respects is the ballgame. i think we've seen a lot of innovation in some states, including many states towards much greater reliance on community-based care. that is encouraged through the affordable care act but we need more encouragement in terms of incentives to states to support that. but as an i noted at the outset,

states are already facing enormous pressure on their medicaid programs and are not -- you can innovate their way out of budget tightness. as we seem innovation in some states, we see tremendous variation across states. that means that there is home and committee based care available fairly widely to some populations in some places, and very little, particularly to the elderly, and others. so the states, and as bruce said care is delivered at the local level, so is medical care delivered at the local level. we can have delivery is between the person and the caregiver. but the financing is critical to making the services available. what we see the state level, and again, i emphasized it at the outset, is that the states in order to control their obligations create waiting lists.

it is not about state innovation and delivery. they farm it out and managed care plans that may or may not have any capacity and too often do not have the capacity or experienced to deliver care. and so what he becomes is a shift of the risk, and a decline in insurance protection rather than any kind of protection. and, finally, i would say as we go forward, and i'm happy to provide you, we did some analysis of fortified the scan foundation to look at the future demands and the importance of federal financing, as bruce said, for long-term care. if you look at the aging population, in every state the numbers of elderly and the share of elderly grows substantially, but we continue to see enormous creation across states. all states having fewer young people to support more older people. but again, tremendous variation. and i can say and endorse what

anne said at the outset that if we continue to financing that we've got, we already have tremendous variation in tremendous and efficacy in many places. that in equity is only going to grow. if we don't create a federal financing support. >> i pretty much agree with everything that bruce and judy said. >> i'll just quickly know that the commission did hear testimony on some of these states programs. rhode island gaming. they have a medicaid waiver, and many of us were very impressed by the. that program is intended to improve care and to save on costs. minnesota also came in and gave an excellent presentation, and that is on our website. >> it's true rhode island, when they talked about a waiver, it actually give them more money, not less money whereas what we are seeing about federal policy to change medicaid, we are

seeing a proposal to take a whole lot of money out. >> mr. chairman, as the rhode island president we basically got paid to have a waiver because i thin think the administration at the time wanted to encourage waivers so they wanted to get rhode island and. i don't think that's going to be the common outcome. >> you all are very progressive in rhode island. >> in so many ways. >> senator ayotte. >> thank you, mr. chairman. i want to thank the ranking member, and i just want to also thank paul who is here from portsmouth new hampshire who is someone who works in this area and i appreciate him being here today on this important issue. i wanted to follow up on this

issue of waivers because i think it's related certainly to the important issue that senator collins raised, which is how do we make sure that the definition fits to about more community-based and home-based treatments so that we are allowing obviously people to stay in their homes longer because the average cost for care in a nursing home is approximately $80,000 a year. so i can see this being certainly important terms of cost but also in terms of people having a better quality of life. with regard to the rave -- the waiver issue, is it based on the commission found, should we give states greater flexibility in this area for innovative programs that are going to allow more flexible on home and community based care? because i think that also fits in with this, to be defined by the overall federal definition

that we would come up with, but i see this as an area where perhaps states are going to come up with a better idea than what we would come up with in washington. >> maybe i'll start on behalf of the commission and fellow participants can weigh in as well. this was a place the commission gave a lot of thought to, and i think as we listened to the states it was an area of real interest for us. i think the take-home message from that are two things. there is a recommendation that talks really about civil fining the labor process. there so many different kinds of waivers. wafers work in conflict with one another. sometimes they are just that far apart with the problem is you're the person caring for family members that's in a little white space between us to waivers. you're in real trouble. are not sick enough for this, not needy enough for that. so i think this notion of a much simpler approach to waivers was one that was endorsed by the commission. i think the other concerned that was raised in that, obviously is

the issue of individual protections, beneficiary protections, that the waivers deliver on the services that need to be provided. so in that balancing test is how do you create the kinds of flexibility so you get programs like some of the ones that we heard from, but also make sure in the process of providing more flexibility that we are not actually losing services to those who need them and that there's adequate oversight. >> if i may, just to follow-up p on that point, my experience in reviewing waivers and think about ways in which the federal government could do a better job has been that over the years, over the last maybe five to six years we've seen really a lot of loosening of those restrictions to the point where states, in fact, have a tremendous amount of leeway and our the degree to which people did not have access to services has a lot more to do

with budget issues and the need to keep waiver programs limited to sort of numbers of people instead of spending per person has to do with flexible the around the federal requirements about what states can do. >> senator, with regard to cost, whether the waiver process and particularly moving people from nursing homes to home care would save money or cost money was debated, and we heard evidence on both sides. both from witnesses that came in. once said we would, in fact, save costs, but some of the commission members themselves who are providers of long-term care services and supports were skeptical of that. they said, you know, the system is pretty much, puts people in the right space is already. so we did not hear a consensus in terms of whether that would be a cost saver or a spender. >> your point?

>> just to build on that, i think we got a lot of experience with home and committee based care over the many years we've been trying to expand. i think there is general agreement we get better value for the dollar when were able to serve people at home. and not in institutions when they don't need them. but we have so many people in need that we frequently, we need to build those systems and we're under serving today. when we offer more services at hihome we serve more people, whh is a good thing but it costs. and with respect to the issue of flexibility and savings, i think i've heard representatives of the governors and the medicaid directors say that flexibility is not enough. they've got flexibility. what they don't have are the dollars. and for many, many years, until recently, and i think that's a function of politics. governors in both parties have joined together to call on the federal government to take over

the long-term care responsibility for dual eligibles, or medicaid beneficiaries who are also medicare beneficiaries. recognizing that they are lacking the resources to do that job. does it mean they can't be involved as we said in the delivery and there can be individually on the ground, that they are looking to the fed for dollars spent since i got one question, i appreciate all othef your answers i will submit some questions for the record. and some of the follow-up on something she sits i appreciate all of you being here. thank you. >> senator warren. >> thank you, mr. chairman. ranking member, for holding this hearing, another important one. it just seems like to me this is another example of how middle-class families are getting squeezed. it's hard enough for any family to put aside anything for savings today, given the squeeze on families. now we expect families to save

for retirement and for long-term care at the same time that many are absorbing the costs of caring for an elderly family member. we just doubled up. there's a growing conversation about the retirement crisis in america. and in the face of this, the lack of a basic safety net on long-term care is just more fuel to the fire on the kind of problems we're going to face. and as you've made clear, retiring baby boomers are ill-equipped to cover the full cost of their long-term care needs. we've got fewer people -- they've got lower savings than their parents did. only 80% have retired benefit plans. a third of all seniors have less or as they approach their senior years have less than a years worth of income to a third have no savings at all. so that leaves us with medicaid.

as sort of the backup program here, which can cover some of the costs, but the current system forces seniors to spend most of their assets in order to qualify. every bit helps but to qualify when it got to sell off all their assets, this has other economic implications. so where i wanted to start is asking, dr. feder, can you tell us a little about the financial instability? >> when people talk about seniors relying on savings, i think that they come to finance long-term care, i think their incentive to the variety of risks that come with getting older. there is the risk, a concerned that having adequate resources to cover your needs.

you don't know how long you're going to live so you've got to plan for that. the our ups and downs in what happens to your assets, as we seem painfully with the recent economy, what happened to resources in that period. it is the ability to deal, to assist your children in taking on their new lives and enabling them to do what parents did for -- grandparents did for the now parents. in dealing with the fact that we've got many young people, even those with an education, not able to get jobs. and so need more assistance from parents as they age. and i am a grandmother and looking forward to supporting my grandchildren, and encouraging them in their education and building their independent lives. and there is uncertainty all the way around. when people talk to relying on your assets, in order to take

care of those needs, what you're saying is that one lump. when you use them, they are gone. you have sony risks including, i didn't even mention the health care risk, uncovered health care costs that seniors face. you are using your assets. that's what you've got to protect you against a whole array of risks. and a catastrophic risk like a serious need for intensive long-term care is just beyond the capacity of this little, this nest egg, low or moderate, or in some cases larger, to take care. that's why it's important that we need some kind of insurance mechanism to which people can contribute in order to give everybody security. >> let me just build on that and frame the question of a little bit differently and asked if i can, ms. tumlinson, if you could explain why medicaid is not a very good substitute for a

predesigned, well functioning long-term care system. if you could just summarize that for us. >> i'll be thoughtful in this response. so i think the primary -- when you think about what medicaid was really designed to do, it wasn't designed -- it's not designed to protect individuals against risk. it's really designed to be there when everything else has failed. which is really the opposite of insurance. is that succinct enough? >> the go ahead. it's a very good point and i think it's critical to understand. a lot of people think we've got medicaid, so i'll be okay. and maybe another way to say it is to ask, is this a sustainable path that is counting on medicaid to be the safety net?

and at best only modest savings that people are putting aside during their working years. >> when i think about also from the perspective of what i see people to in the market place right now, which is essentially using the savings to purchase something that will keep them from being on the medicaid program eventually. in other words, it's not in theory what you would want an insurance product to do is to enable you to purchase the services that you need in the a setting that is actually most appropriate for your needs. whereas a safety net program is really, again, designed some but to absorb sort of in the most, you know, kind of custodial and warehousing situation, their bounds -- bare bones fund. the opposite of what you'd expect an insurance product, a good insurance product to do. when my own parents, which i encourage them to buy insurance, my dad said my federal bench

will cover the cost of a nurse to go. i said, wouldn't you like to stay at home? let's talk about -- let's ensure against being in a nursing home. >> nice point. thank you cannot ask dr. chernof also to respond? dr. chernof. >> yes, i agree. i think we have public policy -- i've said this before and i'll say it in front of all the. public policy that is properly built for 1972. the reality is that, you know, medicaid is a program in its conception, which predominate focus on women of childbearing age and their children. that was really it's kind of constitutional core way back when. the average life expectancy in 1965 was 69. as a physician if i was in practice then you have just seen the first icus and cc use. the likelihood of surviving

fairly morbid or moral event like serious stroke or heart attack, we live in a very different time and place. people are living much longer and will live with parsers chronic illness and functional limitations. the reality is our public policy has not kept up with it. i agree with anne's sort of description of the role of medicaid. i would just offer to all of you, if we do nothing is incredibly -- medicaid will bet the burden of that. we will all bear the burden to families with their the burden to states that the burden the federal government bears the burden. in kind of an unstructured way. as you think about the work of the commission, while we did make a specific financing recommendation and the having a broad discussiodiscussio n here about the ranges of ways one might consider solving it, every single commissioner thinks there needs to be -- the notion of this different one addresses, ma

conference the long-term care this country faces as what taking pressure off some of the boat programs. and what would it really take? what would it really take to design a program that is fundamentally shores of serving medicaid but also medicare to a degree. i was just as a doctor, and i will stop the promise, the nightlight in this system is the emergency room. so i get the point that medicare doesn't pay for long-term care, but at the end of day when something happens in somebody's family and you throw up your hands, it's a trip to the emergency room. i will tell you that the emergency room doctor takes one look at that person as is upstairs we go. and the process begins. so i think what we're having together, us and all of you, is a fundamental discussion about the need to think about a different structure to take on this issue. in the process of shoring up our public programs. >> thank you. the question addressed earlier to ms. thomas is about how we're going to pay for this. if you give us all a reminder,

if we don't design a program, we will state pay for it. we will just pay for it in some really terrible way. so thank you. thank you, mr. chairman. >> thank you, ma'am. senator whitehouse. >> well, i hesitate to jump in because as far as closing words go, what senator warren just said, if we don't do something we are still going to pay for it. which is going to pay for in really terrible ways, it's kind of a good closing salvo for the whole thing. but i go after you so i get to go ahead and file up what was a great closing. [laughter] i did want to follow up with ms. tumlinson about what we're seeing in rhode island is people who have made the responsible choice, invested their money into a long-term care insurance policy, are now finding that the

premium is going up pretty dramatically to the point where, for some people it is no longer doable and that's particularly frustrating because you paid in all this time. you kind of have a connection to the policy, and detail on it makes everything your data looks like money down the drain which, in fact, it is. so it strikes me that in terms of relying on the private sector to handle this problem, they are actually going the wrong way in terms of where the prices are headed and where the likely market share of affordable long-term care coverage is headed. is that your feeling? >> that's definitely national, and again, not to be did this come to much but when my parents premiums without quite a bit, and that was in a really good program and a really, you know, about the best run i think employer-based long-term care

insurance program that exists. i think it points to, you know, not necessarily that the private sector is not up to the task but that we don't have enough -- we don't have enough people in the risk pool for it to be a stable financial bet for an insurance company, particularly when you're paying benefits on a set of products that are coming to 30 years after you've sold them. when we model this for a class -- an incredibly challenging thing to do. really to the insurance companies, you know -- >> out of the actuarial front your? >> yes, exactly. i wish i had thought of that. exactly. that's where we are standing and it's not very comfortable. >> given the problems that they have, let me turn to doctor fred, and we don't each other for a while. judy, welcome, good to be here with you. you talking of testimony about public-private models.

what would a couple -- you think the most likely insensible models look like they're generally in terms of bringing private contribution and public participation into this? >> as i said, and it's a pleasure to see you, that the public, a public benefit has to be at the core. and what i have begun to consider and would like to see us spend more time on and think there is some interest in is thinking of a limited public benefit that would be available to people after a waiting period. that would be determined, thinking of the retiree population, we would adapt this for the younger disabled population. but the waiting period of we depend upon what your earnings, your lifetime earnings look at retirement so that would give a

clear indication to families of what they were expected, with the whole they were expected to pay before a public benefit would kick in. it would give insurance companies come and i was interested to see recently general has been talking -- >> you would know in advance what the waiting period would be for the public program, and you would have to buy the first few years of it and you would know that. >> right, and people who have not earned much would have a shorter waiting period. and people who had earned a lot would have a longer waiting period. so he would be adjusted income. and jen were this will get something like this because the insurance companies and insurance industries have the biggest problem and when it out on actually of frontier, with the tail, the biggest expenditure. so they're essentially you're giving them some protection at the backend. i think that is something to explore. i th