Long-term-care action urged
By James Gonser
Advertiser Urban Honolulu Writer
Gov. Linda Lingle knows her proposal to offer tax credits to people who buy long-term-healthcare insurance will not solve the needs of a growing elderly population, but she said it is a step in the right direction.
Gov. Linda Lingle has proposed a two-pronged approach to address the cost of long-term-healthcare insurance: • A tax credit for those who buy the insurance. Maximum amount would be $1,000 or 50 percent of the cost of the premium. The credit would apply to any insurance policy that covers an immediate family member. • A $25 per employee tax credit to employers who buy the insurance for their workers. The tax credit would increase to $50 per employee in 2007.
"If we wait for the perfect solution, we will be five more years down the road," Lingle said yesterday at a meeting of the Hawai'i Health Systems Corp's executive management advisory committee. "If others have ideas, they should bring them forward this session; but we should agree that we should come out of this session with some help for families on this long-term-care issue."
Lingle's plan for long-term care
Details of the plan were released yesterday.
In her State of the State address Monday, Lingle said there is a growing problem as more people reach the age when they may require long-term healthcare. In Hawai'i, there are 127,000 people age 70 or older, and by 2025, the number will be 209,000, a 64 percent increase.
Linda Smith, Lingle's senior policy adviser, said there are about 50 insurance companies in the state that sell long-term-health insurance with an option to cover the cost of home healthcare.
Smith said that only a few companies in Hawai'i currently offer long-term-insurance coverage to their employees, but the administration is hoping the tax incentives will increase the numbers.
Beverly Harbin, president of The Employers' Chamber of Commerce, said a $25 tax break is not much of an incentive, but it is something.
"Now that the economy is starting to turn around, the more incentives you can give to employees to keep them that aren't mandated the better it is," Harbin said.
Harbin said if the credit can be applied to the gross excise tax, all businesses will be able to use it, but if it is from the corporate income tax, only companies that make more than a $50,000 profit will benefit from the plan.
"At least it is a step in the right direction," she said. "At least they are not mandating it to the business community and are involving the business owners, not telling them what to do."
Lawmakers have been grappling for years with how to make long-term-care resources more affordable and accessible to people in the state with the longest life expectancy.
Life expectancy here is 80 years, three years longer than the national average. The irony is that while healthcare technology and life expectancy have soared, so has the price of living longer.
Long-term care can be expensive. Nursing homes start at about $230 a day or $7,000 a month in Hawai'i, with additional rehabilitation services costing extra. The frailest seniors who need the most comprehensive chronic care check into nursing homes.
Adult residential care homes, or facilities that take in small groups of seniors, don't offer skilled nursing care and typically cost at least $2,000 a month.
State Rep. Dennis Arakaki, D-30th (Moanalua, Kalihi Valley, 'Alewa) chairman of the House health committee, said tax credits won't help those most at risk from high healthcare costs.
"The people that need it most are more at the lower end of the income bracket and can't afford to buy insurance," Arakaki said. "It takes up too much of their limited income. For younger people, no amount of tax credits will provide that incentive to buy long-term-health insurance."
He said lawmakers have worked for years to create a long-term-care program that would have helped the elderly stay in their homes as long as possible.
In 2003, Lingle vetoed legislation that called for a monthly $10 tax to create a state program providing about $70 a day in cash benefits for up to a year to those who qualified. The legislation also included tax credits of up to $120 a year for people who bought the insurance.
Arakaki said a similar bill calling for a monthly fee is being retooled and will be introduced again this year.
Alicia Maluafiti, associate director for advocacy at AARP Hawai'i, said people need a variety of options for long-term care.
"For my folks, they don't need long-term-care insurance, I will be taking care of them," Maluafiti said. "Others don't have 'ohana here, so they need a long-term insurance policy to help them get through. For those well off enough to afford that, it will help. Not everybody will be able to afford it. That is what is so important about having options."
Reach James Gonser at jgonser@honoluluadvertiser.com or 535-2431.
