Paul Hogan Address Featured in the Vital Speeches Newsletter

May 1, 2011

Paul Hogan Address Featured in the Vital Speeches Newsletter

From, Vital Speeches of the Day, May 2011

Paul Hogan, Chairman, Home Instead Senior Care

I appreciate having the opportunity to speak to you on aging. Not because senior care is our business, but because aging has the potential to literally change this nation and the world in unprecedented ways. Since 1994, our firm has helped more than 1 million seniors around the world stay in their homes. For a long time now, we’ve seen first-hand the needs of aging societies. As apparent as the needs are to us, though, it’s only recently that we’re seeing aging featured prominently in the media. Can anyone guess why?

Of course—the Baby Boomers! Just two months ago, the first Boomer turned 65. There are 78 million more Boomers right behind No. 1. For the next 20 years, some 10,000 people will turn 65 every day. So, our aging population numbers are set to soar. By 2030, we’ll have more than 70 million seniors in the U.S. That’s 75 percent more than we have today!

And not only will we have a lot more seniors; they’ll also be living longer than any generation in history. Centenarians will increase even faster. Right now, we have 80,000 people over 100. But by 2025, just 14 years from now, we’ll have more than double that number—175,000. And by 2050, there will be as many as 600,000 centenarians in the U.S.

It’s important to recognize that aging isn’t just a U.S. trend. Worldwide, 2025 will bring us 1.1 million centenarians, and 5 million by 2050. And aging isn’t just a rich-country trend, either. It used to be, but not any longer. Reflecting many diverse factors, developing countries are also experiencing increased longevity.

The urgent question looming is: Just how will we care for our aging citizens? It’s a very complex challenge. We have to make some big decisions.

I recently heard a doctor say, “We’re not living longer. We’re just taking more time to die.” Well, I don’t subscribe to that perspective. Despite these challenges, I’m very optimistic. America already has a much larger and more sophisticated system of care for the elderly than is generally recognized. Moreover, with the right leadership we can adapt our system to allow people to age with dignity, respect and comfort.

The first thing we must address is the retirement age. Do the math. In 1935, when Social Security was established, the retirement age was set at that same number: 65. This made sense then since life expectancy was around 67. Today, average life expectancy has increased to 78—an 11-year jump. But what didn’t jump was the retirement age. It actually went down with an “early-retirement” option beginning at age 62.

What was established as a two-year safety net has become a long-term retirement fund, for more people than we ever imagined. We just didn’t contemplate this growth in longevity back in 1965.

Now, recent legislation has raised future retirement ages. By the year 2025, retirement age will increase to 67. But here’s the rub. Since 1900, life expectancy has gone up about 2–3 years a decade. In 2025, this number will be closer to 80, meaning that we really haven’t improved the situation.

The other thing happening is an imbalance—an imbalance between the numbers of those who are working and those who aren’t.

In 1980, for every 100 people working, there were about 20 seniors. Today, it’s about 27 retirees, for every 100 workers. But by 2050, it will be about 52 for every 100 in the workforce.

Let’s translate that: For every two people paying into the system, one is drawing out.

If this is any solace, the situation is worse in other countries like Japan and Italy, where by 2050 it could be as highas 70 retirees for every 100 workers…almost one to one.

Can you imagine looking at your paycheck and seeing 70 to 80% deducted just for taxes to cover pension programs?

I believe a part of the solution is to base retirement on ability to work, not on age. I say this because we employ about 20,000 seniors throughout the Home Instead network. They are very productive.

Older workers are good for business, and that’s not just in our experience. Studies show that older-worker productivity is high, especially in the retail and service industries. And when you look at manufacturing, older workers are not far behind younger workers, especially when they’re working for flexible, innovative companies.

BMW is a perfect example. For just $50,000, that company retrofitted an entire German assembly line to accommodate a team of older workers. They put in higher work tables, cushioned floors and magnifying glasses. In return, BMW got one of its most-productive facilities, with lower absenteeism and a “zero” product-defects rating.

Aging has also created the opportunity for seniors to care for other seniors. I alluded to this earlier. Of our 65,000 CAREGivers working for Home Instead, about one-third are over 60. We have what you might call the “younger old” actually taking care of the “older old.” These are seniors caring for seniors. In fact, our older caregivers consistently get the highest marks for client satisfaction.

I, for one, am excited about an aging work force. I believe it provides a distinct competitive advantage. Just imagine: if Mother Theresa, Ronald Reagan, Winston Churchill, and Pablo Picasso—even Colonel Sanders—had stopped working at 65? The world would be a vastly different place.

Here’s another improvement we could make. We must involve, encourage and assist the family—more specifically, the family caregiver.

In the near future, millions of us will need to become caregivers for aging parents and relatives, but the reality is we’re just not prepared. Just one unexpected phone call can immediately turn almost anyone into a family caregiver.

As many of us know, caregiving can be a very enriching and rewarding experience. Many people consider it the fulfillment of a lifelong commitment to the ones who gave them life. But it can also be one of the most emotionally and physically draining roles a person will ever experience.

Making family caregiving even more difficult is the financial sacrifice that often occurs. One of our recent studies showed that about 80 percent of caregivers will change jobs and lose wages as a result of their caregiving responsibilities.

Now, government can’t directly address the physical or emotional elements of caregiving; it’s up to us as people to do that. However, it could, for instance, expand the “Child and Dependent Care” tax credit to offer family caregivers greater financial breaks, or to include people serving as caregivers for aging parents who live with them.

Another aging challenge involves dealing with devastating diseases, the most devastating of which is Alzheimer’s. Did you know if any one of us lives to 85, we have a 50-percent chance of developing this disease?

Last year, the worldwide cost of Alzheimer’s was more than $600 billion. That’s because it costs about four times as much to care for a senior with Alzheimer’s than a senior without the condition. There are currently five million people with this disease in the U.S. and more than 35 million globally. By 2030, those numbers will double, and by 2050, they’ll more than triple.

Obviously, we need to cure Alzheimer’s. In the meantime, we need to address it from a care perspective—both informally and professionally. At Home Instead we’re trying to do our part by offering an expanding family-caregiver training program. Our program is free and it helps people learn more about caring for someone with Alzheimer’s.

I’ve been talking to you about chronic health conditions, but perhaps our most chronic condition is this: denial. We are simply ignoring the topic of aging.

It was never a secret that millions of Baby Boomers would start turning 65 this year. Yet, we ignored that reality. As Americans, we have done very little to prepare. Our research shows that nearly three-quarters of U.S. adult children have neither planned for nor even thought about senior care. Even more surprising: 50 percent of seniors also have admitted to denying the topic.

And, this same research shows that people don’t know how they’ll pay for senior care. Or, more specifically, they don’t know that they’ll be primarily responsible for covering the costs of their care.

Most people think Social Security or Medicare will help pay for all their care. Medicare only pays for medical care, some rehab and hospice. This leaves huge gaps. Long-term-care insurance can fill these gaps, but in our survey, only about one in five people mentioned either having or wanting a policy for long-term-care.

It’s not just seniors; it’s people of all ages. We are just not doing enough to plan or save for our old-age years. It’s a real quandary, since people just don’t want to confront the issue. To paraphrase Yogi Berra: “If people don’t want to do something, it’s tough to stop them.”

What more can we do here and do it now? What are the initial steps? First, let’s recognize that aging really has been a victory for our society; in particular, it’s been a big win for medicine.

It’s important to note that, in countries where there is increased longevity, you find increased quality of life for both men and women. There’s also a correlation between the longevity of a country’s population and its economic prosperity. This is good. We’re achieving our goals!

The other thing we need to recognize is that we’ve faced enormous challenges before, and we overcame them. We survived the Great Depression. We prevailed in World War II.

We confronted the Soviet Union and opposed the spread of world communism. We won the Cold War. We’ve also wiped out a long list of dreaded diseases. It really wasn’t that long ago that we were afraid to send our kids to school for fear of polio.

It’s easy to look back and say these outcomes were inevitable. In their time, these problems looked almost insurmountable to many people, and they created enormous uncertainties. But we did pull together as one nation to deal with them.

What else can we do about aging? We can start with this thought: let’s never forget that those in their later years are still people—real people who need real care. And let us not forget that in a few years they will be those of us in this room.

Next, I’ll say firmly that government is not the only answer. Even if Washington wanted to, it couldn’t afford to provide all that’s needed. Ultimately, individuals must take personal responsibility.

But, I’ll also say that government can play an important role. We’ve used federal policies time after time to encourage certain behaviors. Witness how 401(k) programs stimulated savings. Mortgage-interest deductions encouraged home ownership. And we passed a dependent-child-care tax credit to enable women to stay in the work force. Both Washington and the states can adopt similar policies to meet the aging challenge.

Most of us know to save for our retirements. But old-age care is a whole different matter and very little planning is taking place. The tax code can be liberalized to better help people plan for their well-being in old age—for example, by encouraging more people to purchase long-term care insurance.

And additional government incentives can help support the growth of entities that care for older people, from home care services; to senior citizen centers; to assisted-living facilities; to skilled-nursing homes.

Government should also create a comprehensive plan to encourage people to pursue careers in the senior care field. This is critical because one of the greatest weaknesses of our healthcare system is that there aren’t enough geriatric workers.

Today, we’re short about 8,500 geriatricians. And yet, just one half of one percent of residents who graduate from U.S. medical schools choose geriatrics as their specialty.

How did this “doctor deficit” happen? Well, our current system rewards specialists over general practitioners. The average orthopedic surgeon makes more than $400,000 per year, while a primary-care doctor makes less than half that amount.

It’s expensive to go to med school. We already offer loan-forgiveness programs for primary care doctors to practice in rural areas, or work with underserved populations. So why not use the same approach to entice more med students to go into geriatrics?

But it’s not just doctors; it’s nurses too. By the year 2025, the senior population will reach some 60 million, and they’ll likely need plenty of medical care. But we’ll still be 260,000 nurses short.

Since we have lots of underemployment, there are plenty of people that want to be nurses. The problem is that we don’t have enough people to teach them. Credentialing requirements for nursing school instructors are stringent, and the pay is comparatively low. Nurses often make more.

If we can reverse this situation to some degree, I believe that will translate to more trained nurses.

Then we come to the home care workforce. By 2017, we’ll be short almost 1 million home care workers. One solution here is to encourage retirees who are in good health to go into a home care career. Remember “seniors caring for seniors?”

Another simple thing government can do is implement a long-term, public information campaign. It could be supported jointly with the private sector—to educate people about aging issues and preparing for life in their 80s and 90s.

My organization has done extensive research on what people know and what they don’t know about aging, and some of the things we learned are pretty surprising. For one, far too many people in the U.S. believe that when they can no longer live on their own at home, the automatic next step is a nursing home. That may have been true in 1980 but not now lisinopril 10 mg tablet.

And there are significant misconceptions and ignorances that exist. For example, most people underestimate the cost of a nursing home, and overestimate the cost of the less-expensive forms of care. And on top of this, a majority of people don’t even know that other care options exist. Consequently, they often make poor choices about care.

The private sector has its own very large role to play here. Companies should recognize that caregiving for an aging parent is a significant family responsibility. They should adopt policies to support workers who take on these tasks.

I remember in the 80s and 90s the most attractive employee benefit was child care—to help working women with children. Today, it’s long-term care insurance, which can help people care for aging loved ones.

For my company, offering long-term care Insurance is an advantage as we compete for the most talented employees. Employers can also make simple, common-sense accommodations for older workers, like BMW did.

Creating environments that are age-friendly is in the best interests of business. Experience shows that seniors are more reliable, stay on the job longer and aren’t worried about climbing the corporate ladder.

Innovation is another key to meeting these challenges. Sixteen years ago there were no companies like Home Instead to provide non-medical home care. Today, there are dozens that provide alternatives to the old binary choice of staying home or going into a nursing home.

Choices range from home care—medical and non-medical— to senior centers and adult care centers, to naturally occurring retirement communities, to independent-living facilities; to assisted-living communities, and others—all the way to hospice care for end of life.

And there’s also unlimited potential for technology here. For instance, the Veterans Administration is a leader in remote-monitoring “telemedicine.” The VA found that this in-home technology can reduce hospital admissions by 20 percent and days of care by 25 percent. This could lead to savings of about $200 billion over the next 25 years. Once again, innovation is producing widespread benefits no one could have foreseen.

Here’s yet another example: because of the growth of the home care industry, hospitals have realized tremendous savings.

Dr. Frank Lichtenberg of Columbia University found that the U.S. may have saved as much as $25 billion in total hospital payroll costs in 2008 alone, thanks to the growth of the home-care sector.

I know we can expect a lot more innovation and the corresponding benefits in the years ahead. But let’s not assume this will happen on its own. We must encourage it. Speaking of encouragement, I’d encourage everyone to look outside our borders for solutions. For instance, organizations like the Centers for Medicare and Medicaid Services can look to countries like Ireland, Switzerland and France.

While about 14 percent of our population is currently 65 and older, for many years in these other countries this number has been 18 percent or more. As such, they’ve adopted innovative policies to maximize the use of limited senior care resources.

For example, in Ireland, they aren’t building more nursing homes; they’re extending tax relief for those who care for their loved ones at home. In fact, they allow a 41 percent deduction on payments up to 50,000 Euro.

Consider this: While skilled nursing homes are vital to our care continuum, the average cost of a nursing home is more than $70,000 a year. The average for home care is about $18,000 annually. I think Ireland is on the right track. In England, the National Health Service has gone to a system of self-directed care, where seniors hire caregivers of their choice and then pay them with designated government funds.

One of the more creative adaptations is in Germany, which actually permits young people to choose caring for seniors as an alternative to military service. Let’s adopt (and adapt) good ideas from wherever we might find them. When all is said and done, one thing is for sure: Every one of us will get older. I call for embracing our aging society.

This is a rare opportunity: To generate millions of new jobs in health care; to unleash the power of entrepreneurship and to encourage the creation of new products and services; to forge more public private partnerships that combine the power of government and the initiative of the private sector; to incent people to take individual responsibility and thus plan wisely for their futures. Like never before, we can tap into the experience, judgment and knowledge of our older workers.

I said at the outset that I’m optimistic about our future. I’m optimistic about our nation’s ability to respond. But we must engage to make it happen. We’ll need strong, well-informed leadership. We need the help of all who can influence the best ideas. Undoubtedly, that includes many of you in this room. We must speak up.

We have to break the paradigm which portrays aging as the problem. Aging is not the problem; the problem lies in the failure of society, and individuals, to adapt to this changing reality. 


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