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President and CEO of Presbyterian Homes & Services
Civic Caucus, 8301
Creekside Circle #920, Bloomington, MN 55437
March 5, 2010
Verne Johnson (Chair); David Broden, Janis Clay, Marianne Curry, Paul
Gilje, Jim Hetland (phone), Jan Hively, Tim McDonald, Jim Olson (phone),
Wayne Popham (phone), Clarence Shallbetter (phone), Bob White
Context of the meeting
and hospital services are one of the principal sources of pressure on the
state budget today, and will be a main cost driver over the coming years
with the potential to overshadow all other areas of spending. As
Minnesota’s population grows older, lives longer, and tries to make do on
less savings, the state is faced with a basic choice: continue delivering
long-term care and services for seniors as it is now, and see the
financial health of the state traverse a long, debilitating decline that
decreases its quality and limits options.
Or, state leaders in
cooperation with businesses, insurance companies, and non-profit service
providers can re-examine how the state delivers and finances services
associated with health and long-term care.
a near 35-year veteran of the industry and an executive with a mind toward
innovation, will visit with the Civic Caucus today on what he calls a
“paradigm shift in long-term care.”
Welcome and introductions
- Lindh has
served at Presbyterian Homes and Services for 34 years, the last 14 as
President. Presbyterian Homes is a faith-based not-for-profit organization
headquartered in Roseville, MN, that serves nearly 17,000 older adults
each year. Approximately two-thirds of those are served at 36 community
locations and one-third through home & community-based services.
Presbyterian Homes partners with nearly 5,400 employees and 3,200
volunteers to provide care and services for older adults as a ministry and
Lindh grew up as a
“preacher’s kid” which among other things allowed him to learn more about
different parts of Minnesota including Russell (near Marshall),
Paynesville, St. Paul, Cottage Grove and Cambridge. Dan graduated from St.
Paul Park High School in 1971 and Bethel College in 1975. This was
followed by Long Term Care Administration at the University of Minnesota
and an MBA in Healthcare and Not-For-Profit Management at St. Thomas
University. Lindh is married to Jeannie and they have three sons ages 20
Lindh is the immediate
past chair of Aging Services of Minnesota, current Chair of Bethel
University, has been active in leadership roles at Calvary Church of
Roseville, and serves on several other not-for-profit boards. Dan is a
member of the House of Delegates of the American Association of Homes and
Services for the Aging (AAHSA) and had the opportunity to serve on the
AAHSA Finance Cabinet that developed “the framework for financing long
term care” which became part of the framework for the Class Act
Comments and discussion
Lindh's visit with the Civic Caucus, the following points were raised:
and e-learning are going to become core components to higher education--
As the group gathered
a member remarked that in addition to his role with Presbyterian Homes,
Lindh chairs the board of trustees at Bethel University. He asked Mr.
Lindh about conversations the Caucus has had recently about online
education, and its role in colleges and universities.
“Within a time of 10
years or so,” Lindh said, with firmness, “if you’re not proficient with
online learning it will no longer be a matter of foregoing a tactical
advantage—but instead you will be behind, missing a core offering.”
The university world
is still in the early stages of the uptake of what’s now being called
e-learning—a term that accounts for IT-enabled learning that is not
exclusively online. Soon its quick pace of adoption will become more
apparent, “flipping upward.” This will be driven as much by changes in
culture as by new technologies. “The flip will be when the young people
start taking over.”
* * *
The remainder of
Lindh’s visit with the Caucus covered long-term care.
provided an overview and context for the challenge Minnesota has in
providing older adult services longer term--
The next 25 years
will see a doubling of Minnesota’s population of people over 65 and a
tripling for those over 85. Slightly over 12.6% of our population is
presently over the age of 65, which will likely increase to 25% by 2035.
spends approximately $1.0 billion on older adult services each
biennium. HHS is about 29% of overall general fund budget for
FY2010-2011. $1 billion represents 11% of that 29% or 3.2% of state
only general fund amounts (no federal or Non-GF spending included).
At our current
projected rate of growth, Minnesota will spend $20 billion per biennium
by 2050, which will amount to an estimated 20%+ of total state only
general fund amounts, i.e., we have an approximate 3% structural gap for
91% of long-term
care is provided by informal caregivers, which is down from 97% as
recently as 1990. Each 1% decline in elder care provided by informal
networks costs Minnesota an additional $30+ million per year.
Soon one-half of all
workers in Minnesota will be caring or relating to an older adult in
Within 10 years we
will have more seniors than children, a Minnesota first. Approximately
30% of Baby Boomers do not have children.
35% to 40% of
Minnesotans between age 50 and 70 are at “high risk” of having
inadequate retirement income and may be unable to afford long term care
Changing our financing paradigm for older adult services for our state and
country from a welfare model to an insurance model:
The current Medicaid model will continue to exert significant
financial pressure on Minnesota and most states, and our Medicaid model in
Minnesota is simply not sustainable.
state has a challenging Medicaid budget which can only get worse” – OMB
quoted the recent Civic Caucus notes of John James and Senator Pogemiller
who discussed the structural imbalance of in the state budget and the
rising costs of medical and hospital services, respectively. “We need to
look at alternatives.”
Demographic shifts resulting in fewer workers supporting more older adults
will exacerbate the problem.
Minnesota’s current financing structure is a current biennium allocation
from general funds that attempts to optimize federal match.
that can’t go on forever, don’t” - Herbert Stein
Minnesota has the opportunity to take a leadership position in
helping our state and country move from a welfare model to an insurance
model and to a financing paradigm that is actuarially sound and
sustainable. The current economic climate creates a glimpse of what the
future may be and a window of opportunity for change.
Minnesota can become a leader in the financing paradigm for older
adults two ways:
Implement a state specific comprehensive LTC insurance program. (Perhaps
modeled loosely after Hawaii’s attempts.)
leadership at the federal level to establish a mandatory national long
term care insurance model.
Begin changing public expectations for care from welfare to
insurance--Outlined in his proposal below; Lindh argued that all people
should be required to buy long-term care insurance from a
“quasi-governmental” program. This is not that radical, he argues, because
it actually has a larger degree of self-determination than Medicare and
Medicaid, which are welfare-style programs and cover the largest portion
of medical and hospital costs paid out for seniors.
programs we use only kick in once personal assets have been exhausted and
benefits typically follow program and licensure type. People will prefer
choice and personal direction, which insurance provides,” Lindh stated,
He cited a German
model that takes a list of Activities of Daily Living (ADL)—basic
functions such as bathing, dressing, feeding, medication, mobility—and
uses them as a standard to determine when an individual’s benefits kick
in. “When a physician determines an individual to have 3+ ADL needs, they
can begin drawing on their benefits.”
cash and carry and similar programs that put the dollars in the consumer
hands have proven to work well. Older adults’ motivation, preferences and
spending tendencies are aligned with societal priorities. That is, older
adults are highly motivated to avoid institutionalization and will
leverage the informal caregiver network and spend wisely to remain at home
for as long as possible when given the opportunity. “What is it about the
model that cuts the cost?” a member asked. Lindh responded that, “When
you put the money in the hand of consumers, there is a remarkable
alignment of needs and purchases.”
Once payment is
initiated does it go to an individual, or to the medial service
organization? “Once you show that you are eligible you may choose cash
payment or direct pay to the provider.”
Personal responsibility is often touted as the longer term solution
for paying for LTC. What does that mean? How does that happen?
Mandatory LTC insurance with appropriate opt out provisions if individuals
have demonstrated that they have taken personally responsible steps is a
reasonable alternative. Social security has become an essentially
required program as a safety net for retirement. Automobile insurance is
required if we drive. Property and liability insurance is often required
if we own a home.
The need for care and services is predictable and insurable. LTC
is as “an insurable event” as auto, health, property or other but is not
financed that way.
relatively predictable in the aggregate, but not on an individual basis.
For those turning 65 today: 31% will not use LTC; 17% will use less than 1
year; 32% will use 1 to 5 years; 20% need care for more than 5 years.
for using LTC increases with age, but 40% of those needing LTC are under
for those with lengthy and/or extensive needs can be catastrophic.
welfare system approach does not fit all LTC needs.
Optional Long Term Care insurance will simply not be sufficient,
primarily because of its affordability, those that need it the most often
don’t qualify given current underwriting standards and because of
psychographic perspectives. Lindh commented on a “psychographic block”
that he has identified among the public, when they are planning for their
post-retirement lives. “When we look at long-term care insurance,” he
said, “people take where they are now in health and vitality, and project
that out 30 years figuring they’ll be the same person, only with a higher
number of birthdays. So they don’t feel that they need it,” they feel that
they’ll be able to take care of themselves. They under-plan.
“The United States can learn a lot from counties who have 18% or
more of their population over the age of 65,” Dan said. Germany, for
example, faced a similar but more advanced demographic predicament (18%)
and a Medicaid economic paradigm near collapse, state government, in
particular the governors, banded together and ignited the national agenda
for change. Once instituted in Germany, the state Medicaid budget was cut
in half within just a few years and has stayed at lower levels. Other
“longer term oriented countries” including the Netherlands, Luxembourg,
and Japan (voucher blend) have implemented mandatory long term care
The sooner a mandatory long term care insurance policy is
implemented the more affordable it will be and the sooner state government
At the national level, legislation has been introduced in the
Barton and Kennedy CLASS Act. It was initially authored on a bi-partisan
basis, but is only about 60% of what we advocated for in our “framework
for financing long term care” initiative.
Don't use the Social Security model-- A member asked if Lindh
believes the idea is applicable at the state level. “I do. We’d need to
do serious actuarial work” to implement it. “Flat premium; does not vary
with age.” Again, he held that this was a better approach in the public
interest than the model of Medicaid. This could be seen, a member
observed, as something in addition to - on top of - Social Security. “I
don’t want it to be part of Social Security,” he said. “Germany holds it
semi-autonomous from government. It can’t be raided like Social Security,
which really is a pyramid scheme.”
A member asked: Are we
moving toward an age-neutral arrangement, targeting money at needs, not
age? “Yes, in a way—the new paradigm does end up working out that way.”
Informal support networks are key to controlling costs--“Informal
support—networks of families, friends, neighborhood capacity—is key. For
every dollar spent on providing long term care, seven times that amount is
provided through informal networks.
91 percent of long
term care is provided by informal caregivers, which is down from 97
percent as recently as 1990.” The impact of that decline in informal care
on state finances is significant. “For each 1 percent decline in elder
care provided by informal networks, the costs to the state rise $30
Families shoulder the
large majority of responsibility. “Approximately 10 percent of Minnesotans
have private long-term care insurance,” which compares to 7 percent
annually. “The average cost of care for older adults is $5,531. Families
and unpaid caregivers absorb 68 percent of long-term care costs. Public
funding pays 28 percent and private insurance only pays 4 percent.”
A large portion of Minnesotans will not be able to support
themselves--“35 to 40 percent of Minnesotans between 50 and 70 are at high
risk of having inadequate retirement income and may be unable to afford”
the costs associated with their long-term care.
Informal care will affect the productivity of Minnesota’s
workforce--“Soon one-half of all workers in Minnesota will be caring or
relating to an older adult in need. It is estimated that lost productivity
due to employees having to miss work to provide care and services for
older adults’ amounts to $800 million per year in this state.”
Restructure government to improve effectiveness and efficiency--“We
should consider a new state department dedicated to older adult services,”
Lindh submitted, “that represents Minnesota’s interests in older adult
services in a comprehensive manner.” Concentration of administration is
essential for efficiency. Older adult issues are currently managed in
several different areas of state government.
“There needs to be
more coordination and less redundancy,” and there is opportunity to
address this. He provided an example in the potential to streamline the
use of the ‘Elderly Waiver,’ a Medicaid device that provides funding for
home-based services. “We currently have 87 counties and nearly as many
policy and contractual approaches to how Elderly Waiver is administered
and contracted for. This is confusing to customers and providers,
administratively cumbersome, and less efficient than it could be.
Improve and align the
regulatory process--“Our regulatory process is uneven and there is an
opportunity to improve it substantially. The Minnesota contract system in
assisted living is productive and effective. Regulatory oversight of our
care center system (Presbyterian Homes) is uneven and has negative
unintended consequences because it is punitive. The current regulatory
system adversely impacts delivery and quality of care.”
Need for a policy
framework--A member asked Lindh how he would pull this all together into a
policy framework. First, “Support the notion of ‘older adult affairs’ in
government,” he reiterated. “Right now there are many different competing
But isn’t that a
contradiction, if a larger number of young people are to be involved as
well with insurance?
“There are two
separate pieces here,” Lindh said. “One is restructuring the executive
branch, so that it concentrates its efforts in dealing with long-term care
and services for the aging. The other is this new insurance scheme,” which
would encompass all of society.
workforce initiatives to improve quality and staffing availability--“Conceptually,
the state can help position infrastructure and workforce to align with
future demand. One potential solution is some restructuring with the
introduction of an ‘older adult social worker.’” Sweden and Norway do
this. “Their role is tailored to the chronic care world,” and varies from
that of an RN in an institutionalized setting.
The older adult social
worker model is lower-cost, both for the salary of the professional and
because the client remains in his home. “A structured redesign” that moves
care more toward assistance in the home “could result in a win-win outcome
and improve quality.”
MCTC is offering a
program like this now, called Personally Designed Living. “They are now an
accepted apprenticeship option,” Lindh said, but needs to be further
developed and expanded.
Over the long term
there is risk of a significant shortage of RN’s and other medical
professionals. Combined with cost pressures on states and families, this
model could be emerging at just the right time.
strategic investments for innovation and policy change--“Strategic
intentionality may have profound impact,” Linda said, “but must be
“Minnesota does a
great job of prioritizing Home and Community Based Services (HCBS). With
those investments comes an opportunity for strategic initiatives and
development of innovative models of care.
“Recent legislation by
Representatives Tom Thissen (DFL) and Laura Brod (R) enabled ‘consortium
grants’ that provide incubators for innovation and community involvement.
“Perhaps the largest
short term implementation effectiveness can be focusing on case management
utilizing open and integrated care plans that include the physician and
In addition “policies
that draw in families and older adults and support groups into the process
will personally and financially have an opportunity to make a difference.”
There is a program at work in 31 states called Person Centered
All-inclusive Care for the Elderly (PACE) that is not available in
Minnesota. It is more “relational and informal,” providing better care at
a lower cost.
“We had a bill for it
in 2005, and could have had it in Minnesota. We would have been the 5th
state. Now, by the time we get it, we’ll be something like the 35th.”
Proposal is still in its early stages--After
hearing his vision for policy, a member asked Lindh if he had a political
plan. “Not really—not right now—but I have been visiting with people at
Health and Human Services.” Visiting with many people, not just sitting
complacent. He asked, rhetorically, “At what point are we ready for this
as a society? I don’t think that the pain at the state is severe enough
yet for a paradigm shift.” Internationally, most changes have occurred
when the percent of population over 65 – who vote – is over 18%.
Minnesota is a decade away on that basis.
He added a caveat.
“This does not address the tidal wave that is coming,” in terms of
demographics—or even get to the roots of the uneconomic nature of the
medical-hospital services market. “It can’t change that.”
Faith-based and philanthropic organizations can innovate in delivery of
informal care, philanthropy, and innovative programming have helped align
and influence older adult services. Major philanthropic and community
investments are being made nationally but appear to be more limited,
As needs rise,
Minnesota will need philanthropies more than ever—particularly their
ability to fund and pilot alternative ways of delivering public services.
“Minnesota Senior Health Options (MnSHO), a Minnesota program that is
known nationally was made possible by a grant from the Robert Wood Johnson
foundation.” He also cited the significant effect Alt-Care has had leading
the nation on the innovation and implementation of assisted living
“Where is the
Minnesota philanthropic community,” Lindh asked, “on the important topics
of older adult services? What can Minnesota do to engage them in a more
long-term care financing--Lindh
closed by stating that, “Our long-term care system of financing is ready
for and needs change to be relevant in the future.” Changes should promote
consumer choice, informed by awareness of quality and service; promote
personal financial responsibility and wise stewardship of public
resources; and promote equitable availability of benefits.
financing paradigm to an insurance model may be a productive alternative,”
he re-emphasized, and believes that it has the potential for broad appeal.
The chair thanked Mr.
Lindh for a productive and engaging visit, and thanked him especially for
his thorough preparation and presentation of such thoughtful policy