Monday May 10, 1999
Peter G. Peterson, Chairman of the Blackstone Group, Founder of The Concord Coalition, and a former Secretary of Commerce, is a tireless advocate for balanced budgets, tamed entitlements, and generational equity. World-class investor Warren Buffet says "Pete Peterson is a modern-day Noah. His facts are correct, his reasoning is correct, and his prescription is correct. Read [his] book and then send it to your congressman." The book to which Buffet refers is "Will America Grow Up Before It Grows Old?: How the Coming Social Security Crisis Threatens You, Your Family and Your Country." Here's a snippet we found especially relevant.
"[W]e must face tough choices about the most explosive cost of senior dependency: long-term care for the frail elderly. Medicaid, the health-benefit program which is jointly administered by the states and the federal government, currently pays for about half of all U.S. nursing home bills. Though nominally a means-tested program for which only the elderly poor are eligible, the test is so riddled with loopholes that middle- and upper-income seniors easily qualify. Among Americans aged sixty-five and over, only 12 percent are below the official poverty line-and fewer than 7 percent receive means-tested cash assistance under the SSI program. But over half of seniors get a Medicaid subsidy from the day they enter a nursing home. [Actually, 78 percent of people are already eligible for Medicaid when they enter a nursing home. Source: CLTCF]
"Two facts make this gentrification of Medicaid unaffordable. First, per capita nursing home spending on the frail elderly aged eighty-five and over is OVER TWENTY TIMES HIGHER than spending on the young elderly, aged sixty-five to sixty-nine. Second, the number of these frail elderly is expected to triple or quadruple as America ages. We have no choice but to close loopholes that allow seniors to qualify for Medicaid through subterfuge--for instance, by transferring assets to their children. The government--that is, the taxpayers-can no longer pay for long-term care for middle- and upper-income families who are able to save, insure, and pool resources on their own. These families must be encouraged to purchase private long-term care insurance--something Medicaid's de facto universal entitlement now gives them no incentive to do. Everyone agrees that it's bad policy for dependent children to become wards of the state without first demanding that parents live up to their responsibilities. But what about deadbeat kids? No doubt this suggestion will offend the senior lobby, which claims that federal subsidies give the elderly the 'dignity of independence'--as if relying on your grown children rather than the public Treasury is ignoble dependence."
Source: Peter G. Peterson, "Will America Grow Up Before
It Grows Old?," Random House, New York, 1996, pps. 176-77.