The following 3 articles hit the news Thursday and Friday of this week. The message here: it’s unrealistic to expect the government to be able to pay for long-term care. Long-term care insurance needs to be a core part of your financial planning. 

The total federal deficit is expected to exceed $14 trillion next year – about $47,000 for every US resident.

Medicaid rolls swell by 3.3 million nationwide By Catherine Candisky, Columbus Dispatch. Feb 18, 2010, Between June 2008 and June 2009, Medicaid enrollment rose by 7.5 percent and all 50 states saw increases, according to an analysis released Thursday by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured. Medicaid currently pays for approximately 50% of long-term care in the US.  

States consider Medicaid cuts as use grows By Kevin Sack and Robert Pear, New York Times. Feb 19, 2010 States are already unable to make budgetary ends meet with the influx of Medicaid recipients resulting from the country’s economic woes, yet health care reform could add more than 15 million more people to the rolls. Many states are considering cutting vision and dental care which are considered optional benefits, and some other states are discussing new taxes on tobacco or levies on doctors and hospitals.

Deficit panel: Budget cuts will hurt By Andrew Taylor, Associated Press, February 19, 2010. In a poisonous legislative atmosphere, almost no one is willing to go on the record with budget solutions like raising the Social Security retirement age, ordering broad-based tax increases, or increasing co-pays and deductibles for Medicare. On Thursday, President Obama created the new National Commission on Fiscal Responsibility and Reform, charged with coming up with a plan by December 1, 2010 that will reduce the government’s annual deficits to 3 percent of the national economy by 2015. 

A very scary report from the U.S. Centers for Medicare and Medicaid Services was published today in the journal Health Affairs. 

According to this report, even if healthcare reform falls by the wayside, federal and state programs will pay for more than half the cost of healthcare in the US by 2012.

Health care spending jumped to $2.5 trillion, or 17.3 percent of the economy in 2009, the report states. The annual increase in share of gross domestic product, from 16.2 percent in 2008, was the biggest since record keeping began in 1960.

President Obama’s budget director, Peter R. Orszag, told the House Ways and Means Committee yesterday that health care costs will fuel a growing budget deficit and “we cannot close the long-term fiscal shortfall” without bringing them under control. 

All health care spending will probably grow at an average annual rate of 6.1 percent from 2009 through 2019, which is 1.7 percentage points faster than the projected growth in the economy, as measured in gross domestic product, economists said.

 Even as the economy shrank because of the downturn, health care spending grew by 5.7 percent from 2008. Government health care spending grew nearly three times faster than private spending.

Driving much of the cost surge was Medicaid, the federal-state program for low-income people. It grew by nearly 10 percent last year. 

Many long-term care insurance specialists believe that lots of the increase in Medicaid spending is due to the relative ease with which ordinary middle-class people can artificially impoverish themselves down to Medicaid eligible income thresholds. Medicaid currently pays for approximately 50% of long-term care costs in the US. 

This is really scary stuff! If you’re over 55 and don’t own long-term care insurance, you have your head buried in the sand, which won’t help you much if you ever need care.

Sources: Associated Press and Bloomberg News