While we may not yet know who our next governor will be, one thing is certain: He or she and our state legislators face a $1. 6 billion shortfall over the next two years. Having already closed huge...

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While we may not yet know who our next governor will be, one thing is certain: He or she and our state legislators face a $1.6 billion shortfall over the next two years. Having already closed huge budget holes in years past through spending cuts and tax increases (plus a variety of budget gimmicks), there’s not a lot of wiggle room left. This time, the outcome is likely to be draconian holes in our state’s safety net.

Although it’s said that most of us are just one job loss or devastating illness away from needing that safety net, few middle Americans do — while they’re young. Age changes the picture. Growing older and needing care are the twin causes for huge numbers of formerly affluent older folks to use the ultimate of safety nets — welfare. Why? Because, not having planned how they’ll pay for their care someday, they end up on Medicaid (welfare) to cover these costs.

Now a report — just out — gives us the grim picture, and it’s a wake-up call for every legislator heading to Olympia next month — and you, the voters and (many of the same people) potential users of Medicaid.

“What We Don’t Know About Medicaid and Long-Term Care is Hurting Washington State,” is a short (21 pages), easy-to-read report that should keep each of us awake at night. Authored by Steve Moses of the Center for Long-Term Care Financing in Seattle, it offers “a tree-top-level analysis of long-term care in Washington and proposes some tough questions that need to be asked and answered as soon as possible.”

The urgency is clear:

First are the demographics.

While our state now has fewer people over age 65 (10 percent) than the country as a whole (12 percent), this is predicted to change dramatically. Over the next 20 years, the number of people ages 65-75 will grow 120 percent (compared to a 72 percent increase nationally), the number of people ages 75-84 will increase 46 percent (compared to 26 percent nationally). The number of people 85 years old or older — the group most likely to need long-term care — is projected to increase 68 percent, compared with 49 percent nationwide. In fact, the U.S. Census Bureau projects Washington will have the second-highest growth of older people in the nation through 2025.

Second are the costs

of care. Growing numbers of very old people create a predictable traffic jam: heavy demand and high costs caring for them. Today, Medicaid pays for 63 percent of people in our state’s nursing homes, to the tune of $657.1 million in 2003, an increase of 21 percent in five years. Medicaid payments for home care skyrocketed 276 percent in six years, to $753.5 million. Medicaid accounts for 22 percent of our state’s spending, of which a third goes to long-term care.

Third, while Medicaid was set up

to be the safety net for people too poor to pay for care (e.g., a single person who has $2,000 or less in assets and income less than the cost of care), “the truth is,” the report says, “most people qualify.”

That is, with the right help (from elder-law attorneys and other “Medicaid advisers”), affluent older people are being shown how to qualify for Medicaid’s “free” care by sheltering or transferring their wealth. The report estimates that the average person in Seattle who engages in these practices has a home owned free and clear worth $250,000 to $400,000 plus $150,000-$200,000 in additional assets, plus income of $2,000 to $2,500 a month.

Medicaid is 100 percent tax-funded. “I suspect that some of the well-off people who weasel their way onto Medicaid are vigorous supporters of big income-tax cuts,” the report quotes Jane Bryant Quinn, nationally syndicated financial columnist. “But where do they think the money for Medicaid comes from? Chocolate bars? … “

Fourth are the consequences

of all this. As budget deficits combine with a skyrocketing increase of older people needing care, something’s gotta go. So far, the victims are quality of care (Medicaid recipients have long had the poorest quality and fewest choices of care) and those who are truly poor. A study from the University of Washington shows that, as state coffers got smaller in 2003, 20,615 people — primarily children — lost Medicaid health coverage between April and December.

Excuse me? While older people with half a million dollars in assets receive free nursing-home and home care with my tax dollars, poor children are losing basic health insurance? There’s something fundamentally wrong with this picture.

So what can we do? The report offers numerous possibilities. The key, in my book, is basic: Each of us needs to wake up and realize we’re all “aging rapidly and dying slowly,” as the report says — and prepare now for our future needs. Long-term care insurance and reverse mortgages are options that responsible people need to explore.

And our legislators need to act — in a host of ways that the report outlines.

To see the report (available online only), go to www.centerltc.com/pubs/washington.pdf.

Liz Taylor’s column runs Mondays in the Northwest Life section. A specialist on aging and long-term care, she consults with individuals and teaches workshops on how to plan for one’s aging — and aging parents. E-mail her at growingolder@seattletimes.com or write to P.O. Box 11601, Bainbridge Island, WA 98110. You can see all of her columns at www.seattletimes.com/growingolder/.