Similar to any other states in America, Michigan has a huge population of seniors and the rest of the age group is rapidly aging. In 2000 alone, there were millions of Michiganians aged 65 and older, and more than 90 percent of these seniors need long term care services. The U.S. Bureau of Census said that in 2010 the senior population will have reached 1.6 million and half will stay in nursing homes. The census illustrates that 12.4 percent of the population is over the age 56, a figure that implies the staggering demands in long-term care services. Otherwise, the growing demand in long-term care services has significant implications on the state’s financial system for health care. Some of financial drawbacks of the ever-increasing requirement for long term care are as follows: â€The average annual cost in fiscal year 20001 for nursing home care per resident was $54,000. Say for example there is 3.3 percent annual inflation; thus, the cost in 2020 will rise to nearly %97,000. â€People prefer home health care than institutional care, but the state’s Medicaid program allocates more funds on institutionalized care. Home health care is cheaper to around $12,500 annual cost. â€In 2001, Michigan Medicaid expenses for LTC reached approximately %1 billion; 3.3 percent annual inflation may increase it to about $1.9 billion by 2020. â€In 2000, the nationwide LTC nursing home spending from all institutions (state, federal, public, and private) totalled $92 billion. The LTC is estimated to increase nationally by 2.6 percent annually and will eventually reach $207 billion in 2010. Based on the study, Medicaid expenditures carry substantial effect to the financial stability of the State of Michigan. The largest percentage of Medicaid’s budget goes nursing home care with annual spending of over $1.2 billion. Older adults wish to receive care in their own home whenever possible; however the state does not support home and community-based services and, otherwise, drive more funds on institutionalized care. Home-based long term care services are limited, so people are prompted to depend on nursing home care. Currently, a very small population of around 6-7 percent elders have secured long-term care insurance. Many people are discouraged to purchase policies mainly for unreasonable costs of around $400 to $500 per year, the rate depends largely on the policyholder’s age, health, and benefits. In a study, only 10-20 percent of elders are able to afford LTC. Moreover, even if you are covered with LTC insurance, there are still outside expenses that are not covered by the policy; for example a policy can cover $120/day in a nursing home, but if the rate rises to $160, the policyholder is required to the remaining $40. Michigan P.A. 4 of 2001 mandates LTC insurance companies to provide detailed explanation or notice to the policyholders about what or what not the policy covers. The state of Michigan has been trying to persuade people to purchase LTC insurance to pay for their own nursing care rather than relying on the state-funded Medicaid. The state have tried several options to reduce the spending for institutionalized care, and one of these programs is the Michigan partnership for long term care. This partnership program was established under the Deficit Reduction Act of 2005. The program aims of financing affordable long term care insurance through the help of private insurance companies and Medicaid. However, the insurance partnership policies are subjected to the requirement of providing inflation protection, asset disregard, and tax deductions.
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