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Testimony on Older Americans Act by Jeanette C. Takamura
Assistant Secretary for Aging
U.S. Department of Health and Human Services

Before the Senate Special Committee on Aging
February 18, 1998

Thank you for this opportunity to present testimony on the status of older Americans across the nation and on the Older Americans Act (OAA), which established the national aging network of State and Area Agencies on Aging and Tribal organizations and is overseen by the Administration on Aging (AoA), the agency I head. I am particularly pleased with your request that we discuss how we can work together to ready America for longevity, taking into account personal savings, long-term care insurance issues and other resources which will be essential in order for present and future generations to remain as self sufficient as possible. I would also like to take this opportunity to acknowledge my distinguished colleagues, Nancy-Ann Min DeParle, Administrator of the Health Care Financing Administration (HCFA) at the Department of Health and Human Services, and Kenneth Apfel, Commissioner of Social Security. Our joint appearance here today is reflective of this Administration's commitment to the issues of importance to our nation's elders and their families. And finally, I would like to acknowledge you, Senator Breaux, for your continued leadership in the issues important to an aging America, as well as for your continued support for the Older Americans Act and its programs. Of particular note is the support you and Chairman Grassley have given to AoA's very successful pension counseling program and projects. Because of your efforts, we are now able to continue to assist older Americans to better understand and access their pension benefits, giving our older adults new hope that they will not be denied that which they worked to earn.

Since 1965, the Older Americans Act has provided the authorization for the spectrum of services and programs which enable millions of our nation's elders to maintain their dignity; to live as independently as possible; to be free from fear of abuse, neglect and exploitation; to avoid the pain of hunger, social isolation and loneliness; to be assisted and cared for in their own residences if they are vulnerable and frail; and to have their families receive support as they provide elder care.

Let me take this opportunity to briefly highlight some of the important Older Americans Act programs which serve older persons in your great State of Louisiana. The Administration on Aging provides grants to States and local communities for infrastructure development and the building of comprehensive and coordinated service delivery systems. OAA funds provide critical services such as transportation and nutrition, and are also used for advocacy, coordination and other activities which help meet the needs and protect the rights of older adults. State and Area Agencies on Aging administer not only OAA programs, but Medicaid, Social Services Block Grant, HUD and State revenue programs as well.

Here in Louisiana, the Office of Elderly Affairs, in partnership with some 36 Area Agencies on Aging throughout the State, fulfills these OAA responsibilities. Currently, Louisiana receives $4.5 million for supportive services under title III of the OAA, including $133,000 for protective elder rights services such as the Long-Term Care Ombudsman program and elder abuse activities; $5.6 million for congregate meals; $1.7 million for home- delivered meals; $141,000 for the provision of in-home services for the frail elderly; and $233,000 for disease prevention and health promotion activities. According to our latest information, over 170,000 older Louisianans receive these services authorized under title III of the Older Americans Act. In addition, the Louisiana Long-Term Care Ombudsman program responded to complaints from more than 2,500 nursing home and board and care residents.

As a group, Americans are among those who live in nations blessed with the gift of longevity. America's people have an average length of life which is approximately 76 years (72 years for men, 79 years for women). Today, there are approximately 48 million older Americans 60 years of age and older, with persons 100 years of age and older the fastest growing segment. From the turn of the century to the year 2010, there will be a 47% upsurge in the number of older Americans 55 to 64 years of age. Since the average American can claim more living parents than children, Census Bureau indications are not surprising: that in two short years, four-generation American families will be the norm.

In less than 13 years, 76 million baby boomers born between 1946 and 1964 will begin to join the ranks of older Americans. Equivalent in number to one-third of the current U.S. population, the boomers currently comprise 44% of the nation's households, 60% of which are headed by married couples. According to the U.S. Census Bureau, one out of every nine baby boomers will survive to at least 90 years of age.

Here in Louisiana, the demographic trends for older people parallel those of the country at large. For example, the Census Bureau projects that the State's 65 plus population will rise to 862,685 in the year 2010, a 30% increase from 1995. During that same 15 year period, the 85 plus population will increase by 54%. In planning for the future, Louisiana and its citizens will need to seriously consider the implications of such changes.

America's gift of longevity comes with many opportunities and many challenges. Provided that Americans have adequate retirement incomes to sustain themselves over lengthy lifespans, access to quality, affordable health care, places to live, and transportation options which accommodate some possible physical and mobility decline; they will have the option of "active aging" and the chance to be engaged in stimulating, contributory careers, volunteer work and avocations. The President's strong support for Social Security and Medicare, as well as the Administration's recent calls to preserve, strengthen and protect these critical programs, are significant steps toward addressing the challenges and capitalizing on the opportunities of a longevous society. In addition, the Administration's ongoing efforts to combat fraud, waste and abuse in the Medicare and Medicaid programs, play critical roles in helping to prepare our nation for the 21st century. I am very pleased that the Administration on Aging and our national aging network has had an important role to play in Operation Restore Trust, a very successful anti-fraud demonstration project launched by President Clinton in 1995. Together with HCFA, the HHS Office of the Inspector General and the Department of Justice, we have worked hard over the last three years to reach out to thousands of older persons by recruiting and training local ombudsmen, aging service providers, volunteers and retired professionals to identify and report waste, fraud and abuse in their own States and communities. That is why I am particularly proud to announce that as part of AoA's ongoing consumer protection and education efforts, we are awarding $50,000 each to three additional States including your own State of Louisiana. We look forward to working with your State and the Governor's Office on Elderly Affairs in this important anti- fraud initiative.

We are pleased that there is so much growing interest in attending to the opportunities and challenges of an aging America. I believe that the only way we can succeed in meeting these challenges and taking advantage of these opportunities is to build partnerships, and to collect and share as much information as possible in order to be prepared for what lies ahead. While there is growing consensus that America must have a financially literate population if the nation is to be ready for longevity, the 1997 Retirement Confidence Survey found that "dismal [retirement] planning crosses age and gender." It is because such "dismal" retirement planning occurs that AoA's pension benefits counseling program is so important It is also the reason that the public and private sectors must present as many opportunities for Americans of all ages to gain financial literacy and to understand their long-term income requirements. For example, all Americans should know that 56-year-olds retiring today with retirement incomes of $3,000 per month will find the purchasing power of their monthly retirement income to equal $930 when they are 80 years old, $571 when they are 90 years of age, and $351 at age 100.

At least one study has found that boomers' greatest financial concern is the inadequacy of their retirement resources. Fortunately, many baby boomers are taking responsibility for their financial futures and are attempting to save for their retirement. Unfortunately, a study by Stanford University economist B. Douglas Bernheim concluded that American families, including baby boomer families, are saving at about one-third the essential rate, assuming that retirement at age 65 with an adequate retirement cushion is a goal. That is, Americans are saving only about 38 cents out of what should be a whole retirement dollar -- 1/3 the amount that they should be setting aside for their older years. Although baby boomers are expected to rely on Social Security in the same proportions as their parents, only half of the boomers are covered by employer-sponsored pensions. Because they will tend to have defined contribution plans instead of defined benefit plans, boomers may be at greater risk, unless they have other investments and other assets. Moreover, seven out of ten of all baby boomer women are expected to outlive their husbands and spend approximately 15 years alone as widows, in many instances on fixed incomes that lose purchasing power over time. A significant number of boomers face economic risk and deprivation in retirement because of a poor history of earnings, sporadic employment, discrimination, and inadequate or poor education. To help baby boomers be financially prepared for their own potential longevity, programs such as the pension benefit counseling program which I have referenced several times can enable the aging network to more effectively partner with and help facilitate appropriate public and private sector collaboration to ensure that all Americans are able to proactively determine their retirement needs; understand their pension or profit sharing plans; and understand savings plans and other options which may be available to them. The Retirement Confidence Survey findings suggest that such concerted efforts would be productive because most Americans have started to save for their retirement and retirement education campaigns can have a real impact on individual saving behaviors.

Unlike any generation before them, boomers must not only be prepared for their own older years, they must be prepared now to contend effectively as members of the "sandwich generation" - a generation caught among the demands presented by their children's college tuition, the need to help their children with grandchild care and with the costs of daily living, the requirements which arise at work, and elder care giving. It is no wonder that boomers have also been dubbed the "worried generation."

While disability rates have fallen steadily since the early 1980's, the sheer number of baby boomers means that the need for long-term care assistance will not diminish. Since these trends are expected to continue and to become more dramatic in the 21st century, it will be important to ready all Americans by familiarizing them with caregiving techniques as well as the spectrum of supportive resources in communities all across the country. Many of these services can be accessed via the Eldercare Locator, a national toll free information and assistance service funded by the Administration on Aging in partnership with the National Association of Area Agencies on Aging in collaboration with the National Association of State Units on Aging.

The cost of long-term care - ranging from the cost of care provided in the home to institutional care, if such becomes an eventuality, has tremendous economic ramifications for American families and for the nation in general. Long-term care costs can and do deplete or significantly diminish the financial resources of many older adults, their spouses and their children. A nation ready for longevity would ensure that all Americans have access to reliable, user-friendly information about the potential and limitations of various long-term care financing options, including Medicaid and private insurance.

Preparedness for longevity would also include:

  • giving very broad visibility to the importance of healthy lifestyles, health promotion, and disease prevention;

  • creating a facilitative understanding in the general populace about the health care and long-term care service system and how best to access the latter, including home and community-based services such as those provided by the Older Americans Act;

  • ensuring that Americans are knowledgeable about the rights of health and long- term care consumers, as proposed by the President in his Consumer Bill of Rights and as safeguarded by such programs as the Long-Term Care Ombudsman program established under the Older Americans Act;

  • specifically, ensuring that consumers understand the importance of satisfactory discharge planning, long in advance of their departure from a health care facility;

  • creating a universal understanding of caregiving challenges, opportunities, and resources; coordinated community planning for the development and use of home and community-based long-term care alternatives, including those which take strategic, cost-conscious advantage of technology; and

  • allowing ample opportunities for experimentation and testing of best practices such as those which have been made possible in recent years through title IV of the Older Americans Act. OAA research, training and demonstration activities funded under title IV have been the catalyst for many successful programs for seniors, such as the home-delivered meals program, long-term care ombudsman program, and pension counseling projects throughout the country.

In the final analysis, an America ready for longevity would be an America with policies and programs that acknowledge both the universal and the differential needs of the older American population, i.e. it is a nation that recognizes that each generation of older adults has distinct, distinguishing general characteristics, perspectives and value orientations. A nation ready for longevity has recognized that as we age, we grow more heterogeneous. We acquire and develop our own personal interests, pursue more or less education in a spectrum of fields, follow our own career pathways, live in different communities, engage in a variety of friendship and professional networks. It is an America in which transportation systems, urban planning and housing, the financial industries, the travel and hospitality industries, mechanisms for consumer protection, the food service industries, public safety systems, lower and higher education, information systems, and other structures and institutions which are part of the fabric of every day life are designed and operate in a manner which embraces longevity as a social reality and accommodates those older persons who enjoy "active aging" as well as those who may be frail or vulnerable. An America ready for longevity is also one in which employers readily accept workers in a variety of jobs without evidence of ageism. I believe that by working together, we can help prepare America for longevity.

Let me conclude by re-emphasizing three key areas where more attention must be focused at the Federal level if we are to empower all Americans to prepare themselves and this country for longevity.

  1. We must give greater emphasis to consumer education and protection. This is particularly important as it relates to health care and long-term care, but certainly applies to taking responsibility for retirement savings and retirement planning as well. Although increased choices are leading to healthy market competition and in most cases, improved potential consumer options, the number and magnitude of these choices is bewildering to many older persons. We are pleased to be working with our colleagues in the Health Care Financing Administration to educate, inform and protect consumers, in particular as it relates to getting the word out about the new preventive benefits and managed care options authorized through the Balanced Budget Act, as well as through the Administration's anti-fraud, waste and abuse efforts.

  2. We must encourage more public/private partnerships as well as partnerships within Federal agencies which can generate more resources, new creative approaches, and that recognize and address the diverse needs of a longevous population. There is hardly enough we can do in this regard, particularly if we are committed to fostering the development of more coordinated and effective long-term care services for older persons and their families. The Administration on Aging and I take these coordination and advocacy responsibilities seriously, and we continue to explore options at the Federal, State and local level, as well as throughout the private sector.

  3. We need vigorous experimentation and testing to determine what is working and at what cost. I submit again that activities funded under title IV of the Older Americans Act are an important vehicle for conducting the type of demonstrations that can inform and improve our response to increased longevity and the need for retirement planning.

I look forward to ongoing dialogue with my colleagues here today as we look for new and improved, ways to collaborate within and across the Federal government to reach-even more older persons and their family members and to help prepare our nation for its longevity. I commend you for your recognition of and attention to this enormous challenge and tremendous opportunity, for your leadership in national aging policy issues throughout your career in Congress, and for convening this important hearing today.

Thank you once again for the opportunity to testify and to be in your home State. I would be happy to answer any questions.

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