[Congressional Record Volume 145, Number 11 (Friday, January 22, 1999)]
[Senate]
[Page S928]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        AMERICAN WORKER LONG TERM CARE AFFORDABILITY ACT OF 1999

 Mr. GRAHAM. Mr. President, on Tuesday of this week, Senator 
Grassley and I introduced S. 36, The American Worker Long Term Care 
Affordability Act of 1999, a bill creating a model long-term care 
insurance program for federal employees. Today, I would like to comment 
on a related long term care bill also introduced on Tuesday by Senator 
Grassley and myself. S. 35, The Long Term Care Affordability and 
Availability Act of 1999, would give all Americans a tax deduction for 
the premiums they pay for long term care insurance.
  The cost of long term care has risen to astonishing levels in recent 
years. In 1995, it averaged $37,000 per year. What this means is that a 
chronic illness requiring long term care can represent a financial 
catastrophe for retired Americans and their families. A retired couple 
might have a pension and basic health care, but the couple is not 
secure in retirement so long as their financial resources can be 
depleted by long term care bills.
  Many Americans think Medicare covers the cost of long term care. In 
fact, it covers only the first 100 days of care following a hospital 
stay. Yet the average nursing home stay is 2.5 years.
  Medicaid, unlike Medicare, does cover long term care--but only for 
beneficiaries who use up their life savings and income first. Medicaid, 
after all, is a program for the poor, and long term care beneficiaries 
must become impoverished to qualify. Furthermore, beneficiaries who 
rely on Medicaid must use providers that are chosen for them--not 
providers of their own choice. Even with these restrictions, Medicaid 
currently pays more than $30 billion per year for nursing home care.
  The budgetary challenges provided by Medicare and Medicaid are on 
course to become ever more acute in coming years, as the baby boom 
generation ages. By 2030, as the number of people over 65 doubles, 
fully 32 states will have the demographics that Florida has today. The 
fastest growing segment of the population will be those over 85 with an 
expected 143% increase by 2030. People over 85 are at least 5 times 
more likely to reside in a nursing home than people who are 65. In real 
terms, nursing home expenditures are expected to quadruple in the next 
three decades.
  Mr. President, given the accelerating cost of long term care and the 
demographic pressures on Medicare and Medicaid and other entitlement 
programs, Congress started several years ago to provide incentives for 
people to plan ahead for their own needs. The way most Americans plan 
ahead for long term care is by purchasing long term care insurance. 
With insurance, people can be confident that they won't have to 
impoverish themselves to deal with a chronic illness. They won't have 
to fall back on the Medicaid program or family members.
  In the Kennedy-Kassenbaum health reform legislation in 1996, Congress 
permitted the deduction of premiums on long term care insurance in the 
same manner as health expenses. The trouble is that few people--other 
than the self-employed--can deduct health expenses since the tax code 
allows only the portion of health expenses over 7.5% of income to be 
deducted, and then only as an itemized deduction. Thus, a typical 
employee planning ahead for retirement cannot purchase long term care 
insurance on a tax deductible basis.

  The bill we are introducing today would improve on Kennedy-Kassenbaum 
by allowing Americans to deduct long term care insurance premiums 
regardless of whether or not they are self-employed or whether they 
itemize deductions or have any other health expense. Effectively, the 
bill would put long term care insurance on a par with pensions. Just as 
everyone can save for a pension on a tax deductible basis, everyone 
should be able to purchase long term care insurance in the same 
fashion.
  A better deduction for long term care insurance premiums could also 
help us by encouraging younger Americans to purchase insurance now, 
when the coverage is readily affordable. For example, a quality long 
term care insurance policy purchased at age forty, can cost less than 
$50 per month.
  Mr. President, every person who is covered by long term care 
insurance is one fewer potential Medicaid claimant. A recent study by 
the American Council for Life Insurance indicates that long term care 
insurance has the potential to reduce future out of pocket expenditures 
on long term care by 40 percent and future Medicaid long term care 
expenditures by more than 20%. In other words, long term care insurance 
has the capacity both to protect seniors from financial catastrophe, 
and to help protect entitlement programs from long term insolvency.
  Mr. President, I also want to applaud the President's long term care 
initiative, which he announced two weeks ago. In proposing a tax credit 
for individuals who provide long term care to dependents, President 
Clinton also pledged to increase efforts to educate Americans about the 
importance of long term care. Both of these proposals are consistent 
with the legislative effort that Senator Grassley and I are 
undertaking, and I look forward to working with the White House on this 
important issue.

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