RETIREMENT EXPLOSION; SOCIAL SECURITY JUST ONE OF GOVERNMENT PROGRAMS THAT NEEDS REFORMING.

Byline: Fernando Torres-Gil

THE Clinton administration and Congress are prudently working to shore up the viability of the nation's retirement system, as last week's White House Conference on Social Security illustrates. Since Social Security affects generations of Americans, preserving its benefits and discussing options for its survival is important. However, if truly addressing the retirement security of our nation's elderly, lawmakers need to examine all the government programs relied upon by seniors.

The elderly who count on the government for their retirement income also look for assistance with their health care needs. As elderly on the Social Security rolls increase in number, so too will the number of elderly having health care needs.

By addressing just Social Security, policy-makers will fail to acknowledge the full scope of the looming crisis, and they will have missed completely the complex issue of long-term health care for the elderly. Just as 77 million retiring baby boomers will alter the solvency of Social Security, so too will they put pressure on Medicare and Medicaid.

How can government programs that will all be stressed with the aging baby boomer generation be examined separately? The answer is they cannot. The stage is set for reform.

Consider this: 90 percent of all long-term health care services are paid for by the government - they are paid for by Social Security, Medicare and predominantly Medicaid. What will happen to our health care system when the baby boomer generation nearly doubles the elderly population by 2030?

The answer is obvious and startling. The cost of Medicaid for home health care and nursing home care will skyrocket from $120 billion in 1998 to $215 billion in 2007, according to the federal Health Care Financing Administration. The approaching tidal wave of aging baby boomers will push the already financially squeezed Medicaid program into bankruptcy.

It is clear the financing system for long-term care under Medicaid will not be able to withstand demographic demands that will more than double the number of its elderly beneficiaries. Nearly one in two Americans will require long-term care at some point in their lives. Yet, only one in four can afford nursing facility care, and less than 5 percent have purchased long-term health care insurance. The rest are forced to rely on Medicaid - qualifying only after they have forfeited all of their assets to the poverty level.

Recent data from Scudder Kemper Investments shows that, on average, baby boomers in particular have only set aside $30,000 in assets for their retirements, an amount that would cover less than one year of the nursing facility costs. Yet the average stay in a nursing facility is 2.3 years. The devastating costs of long-term care could wipe out a retiree's entire life savings in just a few years, with or without a solvent Social Security program.

It is no wonder that with health care costs and the number of patients on the rise, Medicaid is perched precariously on the brink of disastrous collapse. The sad reality is that Medicaid was never intended to be a long-term care program for the middle-class elderly, but more Americans rely on it than on any other health care program, including Medicare.

How can we truly ensure the financial security of America's golden years? As the Clinton administration and Congress work to prepare for the retirement of the baby boomer generation, we must create a system that meets everyone's needs. Fixing Social Security is only part of the solution.

We must also address Medicaid, the only government program that pays for long-term care. Congress must work with the president to find an answer to financing long-term care that offers planning incentives to all Americans while maintaining a social safety net for the truly needy. Congress and the private sector must join the president in convening a commission to address how the full continuum of services required by the elderly can be provided and paid for.