tv Key Capitol Hill Hearings CSPAN December 27, 2013 10:05am-12:31pm EST
magnificent building. sorry it's dark outside. i invite you to come back here during the daytime. it's magnificent view of the bay. but that's not the topic of in this night. we will speak about food waste, sorry to be in front of the panel, but i'm afraid the microphone would collapse. let me start with a quote from a dutch ceo from unilever which is one of the biggest retail, food retail offices in the world, i think. it's a dutch-anglo company. he had been invited by ban ki-moon to be part of the sustainability goals for the whole world.
and in a speech be he delivered on the 10th of december this year, so a couple of days a he said there is no excuse for 750 billion u.s. dollars in food waste per year. when we only need 80 billion u.s. dollars to feed the hungry. and this comes from a businessman, one of the biggest businessmen there is. so he is really sincere. i'm very convinced he is. nevertheless, roughly i one-third of our food is waste, and i think others you will have better figures of that, but let's say in kilograms or pounds or whatever measurements, but one-third -- let's keep it at one-third. and it gets lost or it gets wasted.
this washington causes emissions to the environment, pesticides, fertilizers, methane, and that is 23 times more potent greenhouse effect than co2. than the food leads to loss of amounts of labor income, water, you know, agriculture uses loads of water. it's the first user of waters which, fresh water we have lack of in the world as well. fertile soils get lost. in developing countries, of course, we are speaking about the early stages of food which is not the topic of today. food gets lost in the supply chain in the early stage of the harvesting techniques, the storage, the cooling, the transport.
we could have other meetings to improve that part. and i think there is an obligation of us all to help developing countries to improve that part of their work. but on our side in developed countries, we are speaking about labor status. supply chain such as the behavior of the retailer, of the supplier and the consumer. so that's us. so, for instance, the united states, the united kingdom, they still landfill with organic food or organic wastes. i think it's the second material they landfill. well, while in the netherlands it's zero landfill because it's just strictly forbidden to landfill any organic waste.
so sometimes you need a lawyer. i'm a lawyer. [laughter] but -- well, sorry. [laughter] i'm not angry. [laughter] so passionate, i am. yes. [laughter] it's time for action, i would say, both at the global level, so there's global partnership needed for development both with the developing countries like the scaling up the nutrition initiative. and that is the topic of tonight. of we need action at the local level. multistakeholder partnerships. so let's discuss this. let's discuss circular food supply, let's see what our aim could be, how close can we get to zero waste cycle. thank you very much. [applause]
oh, yeah. let me give the floor to the local food lab, michelle and kristin. >> hi, everyone. thanks so much for coming tonight. thank you to the consulate general of the netherlands for graciously hosting us in this space. i wanted to thank our moderator, austin kiessig, who's a partner of mine as well as for providing the delicious treats. my name's michelle paratre, and co-hosting this event with christa. >> i also want to let you know that in addition to hosting events like this one, we've also just launched a platform that's dedicated to bridging the gap between the talent and the opportunities in the good food movement, so if there's anyone here who is a freelancer, a consultant or looking for work in the industry or likewise a start-up or an organization or business who's looking to hire interns or full-time employees, we have some invite codes. our platform is still invite only, but we have codes for
everyone here so, please, grab one in the back, and thank you so much for coming. i'm going to turn it over to austin. thanks very much. >> thank you. how do i anchor this here? [background sounds] how is that? can you aero-- hear me? all right, thank you to all of you for coming, thank you to the consulate for having us. this is the second event that local food labs has been able to host here, and i was lamenting the fact that the sun had already gone down because usually the view's spectacular, but not so bad now either. i wanted to start with some baseline facts. they are staggering, and i think it's easy to gloss over what a they really represent. we waste 40% of our food here in the united states. consumers throw away an estimated 25 percent of what they bring home or eat at restaurants. 64 billion pounds of surplus food is dumped into landfills
each year, and that's 2.6 million garbage truckloads just to size that in your mind. that's right at $165 billion and costs $750 million to service and dispose of. an american family of four throws away $1600 in food at home each year. and i think you alluded to it nicely, but think about the underlying resource or waste that represents. agriculture takes something on the order of 80% of our fresh water here many california. we're throwing away a lot of energy as well. so this is a big problem, one of the biggest out there, and we have a great panel. i'm very excited at the breadth and depth of what's represented here. i'll begin by introducing everyone, but i also want to show you this graphic. we're going to turn it off, but i i was trying to think about how to orient the conversation. i want to talk about the supply chain in food and where the waste is really occurring. it's important in the u.s. and
western world largely, consumer losses represent the vast majority of what we're throwing away. so this is what you're eating at restaurants or taking home and disposing of. there's also a sizable amount of production loss. and in the middle, there's less loss. it still represents a vast amount of food, but where food companies have an economic incentive to steward and shepherd that food efficiently, they're doing so. so we're going to talk about everything along that supply chain, but, michelle, how do we turn this off? great. so i'll start by having everyone introduce themselves. i'll introduce myself to start. my name is austin kiessig, my most recent affiliation, i was at the stanford school of business, spent a lot of time thinking about big issues in the food. now working with michelle on edible start-ups, we're a blog that represents entrepreneurship in the food base. we will not flood your inboxes, but we're aspiring to do more.
now working on two of my own food prompts, one is a true start-up, but let's get the focus on the panelists where it belongs. so i'll ask that you each introduce yourself, tell us about what your organization does. i'll kick it off and then give it to each of you. so ashley beleny, pronounced correctly? >> beleny. >> thank you. she is with zero waste energy. >> first of all, thank you for having me and our company represented here tonight. like you said, i'm with zero waste energy based in lafayette, california. we handle waste management with an emphasis on organic waste. what we are focusing on is our dry anaerobic technology which basically speeds up the natural come ohing process -- compost toking process. so after 48 hours, it begins producing methane gas and all of the bigases. and then after 21 days, all you
have left is an agriculture-quality compost, and all of that gas that has been collected is, um, transformed into either electricity or cng fuel. so it is a completely closed-loop cycle that we have, and we just celebrated the grand opening of our project in san jose which is 1.6 megawatts of electricity, about 34,000 tons per year of compost if i remember correctly, and it's processing 90,000 tons per year of organic waste. so that's just one of our projects, and tsa what we do. that's what we do. >> i want to point out that's the largest facility of its kind in the world. >> yes, it is the largest in the world. >> that energy produced is eligible for inclusion in the renewable portfolio standard. for those of you who don't know, that's a goal set out by the government of california. of utilities have to produce a third of their energy from renewable sources by 2020, so
this is an important component of meeting regulatory goals set forward by the state. >> and it's also lead platinum certified facility. >> they're nailing it. all right. [laughter] >> and that's just one of them, but i'll move on. >> roger or gore don, co-founder of food cowboy. >> my brother and i started food cow boy along with barbara cohen about a year and a half ago. richard's been a trucker for about 25 years mostly pulling produce. barbara wrote the hunger assessment tool kit, and we pulled this together pause for about 20 years whenever richard had a load of produce, carrots that are too short, he's called me. and this was before cell phones and the internet, pulled over, and i've had a desk job, and i've tried to find a school or food bank or synagogue or someplace to take the food. so we finally got smart a little while ago and said this kind of technology could be used to help truckers route food to food banks and composters and
facilities like yours when instead of landfills because the problem is they just need to get rid of it and get rid of it quick. to give you a sense of what the supply chain does, all the food donated to all the food banks by all the companies to feeding america, the largest food bank network in the country, equal all year -- equals the amount of food they waste in the supply chain in 19 days. so we could do a lot better than that. the government spends $80 million a year -- $80 billion a year on food stamps. we spend $160 billion a year on food that we throw away as consumers. so there's limited ability to interdict that waste, to recapture that waste post-consumer because of food safety issues and scale issues. but in the supply chain when it's in transit, it's been professionally handled, the missing element is information. because without knowing where to take the food quickly -- because food is perishable, it's expensive to move -- you can't do anything with it. our goal is to, our next step is
to develop, the crowd source a food waste map of the entire united states, all those nodes where food leaks out of the system, facilities like yours or animal feed manufacturers and so forth that could use the food. because then the charities and the entrepreneurs can get to scale by building efficient systems. so we're going to ask for your help with that. thank you. >> great. nia botton from valley girl foodstuffs. [laughter] >> i am a chef turned insurance agent turned chef mentoring at-risk teens. i think that's the best way to by the my history quickly. i started valley girl foodstuffs about a year and a half ago after volunteering for about five years with a nonprofit in sonoma called -- it's teen center in sonoma. and a lot of food was coming in
that was being donated from the local grocery stores, and a lot of kids who like to be in gangs were at the teen center. and so i started a program there, a cooking program to teach some of these kids how to not get pregnant and not kill people by cooking. so, and the grocery stores in sonoma were desperate for someplace where they could offload the food that they were throwing away. and so we started picking up seven days a week through the teen center, and i quickly realized that basically what was happening is all the food was going to the food center and promptly getting thrown into the dutchster because they could not -- dumpster because they could not deal with the sheer math of food that is tossed away at grocery stores. and we're not even talking about all of the production ahead of that. so we're only talking about the 8% -- my notes said 10% of food and retail is tossed out. that's all i'm dealing with, is that 10%. however, in california 50%, 52%
of produce that is grown, so farmer -- i know there are people here that grow food, and there are people here that grow meat, and there are people here that cook. so 53% of food that you see in your produce shelf is thrown away every year. so that's basically what i'm dealing with, is that 52%. and be so i'm teaching kids, i was teaching kids at the teen center how to can and bake and ferment and dehydrate and do all of these sort of old school skills that nobody knows how to do anymore, although there is a renaissance. i have seen it. and then, however, when you work with a nonprofit, it is a nonprofit which means there's no profit, which means nobody gets paid. so these kids were doing a lot of work for no pay. and they were still showing up every single week to go to the farmer's market with me. as was i. i was not getting paid either,
but i had four girls that showed up with me every single week. we would stay until one in the morning on friday so we could go to the farmer's market the next day. and these girls were amazing. a year and a half ago i decided to start a business, it is a for-profit business, to the not nonprofit -- it is not nonprofit. i pick up food four days a week from whole foods locally, and i distribute that to these nonprofits. and whatever they can't use, i then take and make food with it with these kids. so there are some, there's some in the back. i brought just to show people what we do, there's raisins back there that we make from the 80 million cases of grapes that we get every summer, and there's always some quince jam. quince isn't a super popular item in terms of people buying it in grocery stores, so when it is in season, i get it. and then we also started this year a farm in sonoma. so valley girls foodstuffs now
has a farm. and so there are some cow peas back there that we grew. we're not certified organic, it's sort of a big process, but we do grow everything using organic and sustainable processes. so that's my side job. my real job is still being a state farm agent, so -- [laughter] >> very great mission, very cool operation. hoping to hear more from you later. to my right is stu ruddic, co-founder of food star partners and also a longtime investor, founding arter in of mindful investors, so i'll let him talk about everything he does. >> well, i won't talk about everything, but i'll share a few secrets with you about food waste reduction. as austin said, my day job -- seems like a lot of us have other day jobs -- is an investment fund called mindful investors where we focus on investing in companies with what we call life impact. so it's innovative, breakthrough
technologies this which positively impact our lives and help bring a foundational impact to what we're doing. we're investing in food, water, agriculture and the environment. and two years ago two of my buddies from the food industry, anthony and bill, saw me at a conference and said, stu, we're working on this food waste reduction issue. you know, this is a huge problem in our country. will you help us with this? and i said, anthony, i help you with everything you ask. so i said the wrong thing. and so i ended up getting involved with them in this food waste reduction business, and when they first looked at in this, they looked at from the issue of how do we change the world and how do we reduce all the waste that's occurring in every side of food first starting with animal protein? and we spent a year and a half looking at this and considering how we could do that, bringing this product that was a shelf-stable product that was normally going to waste and bring into the food channel particularly focusing on taking
food that was going to be thrown away and getting it at very low cost and then creating a product which would be, i'll say, great value for a consumer that would be a shelf-stable product. and after about a year and a half of working on that and talking with retailers, we were too early. and so we said, okay, how can we make this work now. we realized the first place to start was, quote, the low-hanging fruit and starting with fresh produce. we created a business called food star partners, and we were fortunate to encounter some really smart people that were focused in this area, and one of my partners, ron, is here. ron, say hello. and ron's been working in the food waste business for over a decade focused on bringing food that was coming from farms and going to be wasted and bringing it into mostly the food banks and not-for-profit sectors. so we created food star as a technology business and technology platform. similarly, as a for-profit wiz focused on how -- business
focused on how can we take this business and not make it be a sort of throw away and let's see what we can do in a small way, how can we take those 64 billion pounds of food and put them to use and bring them for people to eat and particularly in low income communities is where we are trying to focus. and so we created food star with two specific ideas. the first is ron has great relationships with farmers throughout the valley that are having significant amounts of food that are going to waste. they might be going to animal feed, they may be with going to juicing, or they may just not with be picked. and so we are sourcing and finding that those sources of fruits and vegetables, and we're bringing those into retail markets. and we started a program where we bring in on a spontaneous basis, so it's not every week or every month, whatever's available and whatever's excess, we're bringing that to market. and we're doing so at prices that are anywhere from discounts of 25% to 75%. and consumers love it. it's great food, and it's great
fruits and vegetables that's got nutritional value, and it's great value to the consumers. their lows love it, it's been an incredibly successful program. and we're looking to expand that program with other retailers in the west coast and eventually expand it beyond the west coast. the second aspect i mentioned to you was about technology. and we are developing primarily with third party vendors and partners and leveraging technologies that are created today to use technology to, as gordon said, roger said, to improve the efficiency of supply chain. and so there are a lot of very sophisticated tools that exist today to be able to improve everything from understanding, of course, the entire growing process to looking at transportation, looking at the time that food is spent at a distribution facility, when it is in at your dock, when it's in the back room, how long it takes from getting from the back room
out to the shelf, how long it's on the shelf, what's the life cycle of that food, when is it likely to be going to be bad and where is it becoming, quote, short code date. so we are beginning to integrate a lot of these technologies and bringing these to retailers to enable them to become much more efficient and reduce their so-called shrink and reduce that waste. and instead of just putting a bag out there that's a plastic bag that's got black bananas and, you know, hell loans that are completely -- melons that are completely juicy, getting it and letting customers know you can get great value by buying these products. and we've created flash sales. so two or three times a week we have flash sales notifying customers, or you know, tomorrow at 4 p.m., from 4 to 5 we've got bananas, we've got melons, we've got cucumbers and they're, you know, 60-80% off. consumers, once again, have loved it. it's great product, it's great value to them.
so we're bringing these kinds of ideas and technologies to the retail industry to help reduce food waste s and we're interested in bringing more of us that are focused on this together. because this is a collaborative issue, and we need to work together. and so that's what we're desirous of doing. and it's all about you all as well. and so one of the things you talked about is there's technologies that exist today to reduce that 23% figure where you can reduce, i, we all can reduce food waste in our home. and there's a lot of ideas, and maybe we'll talk about that as we go further along, and i'm just pleased to see this great interest for all of you to be part of the solution. thank you. >> great. kelly friedman, she's the program director at food shift. >> hi. my name is kelly, i am the program director at food shift, and food shift is an oakland-based nonprofit. we've been around for about two years, and what we're working to do is we're working to reduce food waste. we're interested in doing this in a couple of different ways. the key is education and action. people need to know about this
problem, what we've learned from campaigns overseas is that a lot of people have no idea about problem of food waste or what they can do to solve it. so about a year and a half ago we started an education and action campaign. some of you may have seen our ads in bart with. they ran through september and october. and we're not only telling people, you know, about the environmental and the social and the financial consequences of wasted food, we're also trying to arm them with tips and tools to reduce it. so what do you do before you go to the grocery store? how do you help plan your meals? how do you get your family involved this moving food that's soon to be spoiled to the front of the fridge? what are just some everyday tips and tools to kind of arm the way that you're thinking about food and meal planning. also storage, how do you better store herbs, how do you -- where's the proper place to put eggs if they're from the market or from the farmer's market. so these kinds of everyday tips and tools for our consumers. we're also really excited about some programs that we're launching in 2014, excuse me.
we're currently working with the oakland unified school district to do a food recovery program. so what we do is we work parents on site, and we help them with food safety and food be handling, and we take the recovered surplus food that's perfectly edible but because of federal meal plan regulations can't be returned to the calf fear ya, and we -- cafeteria, and we help distribute that to schools in most need back to their students. one off of institutes, 98% of the students are using some kind of food assistance, so this helps supplement their meal times. we're also working on a program in partnership with a local grocery store to create jobs in the recovery, processing and distribution of food. we're really inspired by valley girl foodstuffs and also foodstar, d.c. central kitchen and l.a. kitchen and people who are familiar with those and trying to figure out ways to make this problem into a solution. you know, we're not -- we're interested in, definitely, the
source production which is, obviously, the first step in reducing food waste, but food that is going to go to waste, food that can't be resold at a grocery store, excess food from a restaurant that they won't sell to a customer but is still otherwise edible, what can we do with that food, and how do we tush that into -- turn that into a positive? so we belief we can create jobs in the recovery and distribution of food and kind of turn the tables on how typical food recovery operates which is volunteer based and run from nonprofits, and how can we use and create a revenue generation model with food waste. >> perfect. patricia kelly from lean -- >> thank you. patricia kelly, i'm with business development. it's kind of fun watching us go around the panel, i sit at the space of source reduction. we started with ashley at the end of the food chain, and now we're going back to the very beginning. so lean path is automated food waste reduction systems. we've been in business for ten years. we have clients in 49 states,
we're working in canada, and we're in conversations with many countries outside the u.s. that are looking for automation. we live by three statements in the company, one of which is you can't manage what you can't measure. you can control pre, but you can influence post. that's sort of where my thought process goes when i'm meeting somebody that's new. typically, a presentation consists of me providing all the information, the data that you've heard so far, and then we plug into, okay, if you understand that you can't manage that you can't measure, let's look at the lean path, and lean path consists of an element of software, hardware and then also a lot of coaching and consulting that goes with it. so we have a once food has been identified to go to waste, it has a scale, and on top of that scale is a camera, and attached to that is a tracker. and this is a tracker. it's, essentially, a tablet. and be this tablet is encased in steel so that it's ready for
that, you know, durable kitchen environment. sure, go ahead. we can pass it around just to show you how easy it is to work and how easy it is to transact. we have created a user interface. it's so simple that front line employees can engage with us, but also reporting and analytic capability that's extremely sophisticated and state of the art. so we want to make sure that, yes, our technology is the best in the world, but equally important is that we stop and say nobody's going to be successful without a cultural change. we do a lot of training, we do a lot of coaching. so all of this ultimately allows baseline understanding of metrics, and then we establish goals, and then we work with coaching, and then, you know, working on a day-to-day basis on how that affects procurement, how it affects menu planning, production. and all of these are part of the systems that are created, again, through metrics for management. >> and to visualize a little bit, i looked at their web site, and there are some nice photos, but you're selling to food service operations.
they're preparing large volumes of food? >> most often it's commercial, but in the end of q1 of 2014, we're going to have a mobile app that's basically a mobile audit that for those, for small owner-operated businesses so that they can actually participate as well. but what you'll see on the web site now most often is commercial, and it's probably an annual food spend that's somewhere in excess of $250,000 a year. >> okay. so when they're producing foods, they can start to measure, capture and repurpose what used to be food waste in their own production supply chain. >> that is correct. >> great. >> through measurement. >> okay. excellent. so as you can see, we've got a lot of different perspectives here. one common thread is that there are a lot of economic gains to be had whether it's in the nonprofit, for-profit be, every stage of the value chain. that's the good news. i think people stand to profit from doing something differently which is a great momentum driver whenever you're talking about
making change. i want to talk by starting about the low happening fruit, so to speak, and it is an apt place to focus because a lot of this is centered on fresh produce. fruits and vegetables spoil very quickly. i know seafood is another area where there's a lot of loss. but i read a great report, and i encourage you all if you want to dig deeper into this topic, the national resources defense council, there's a woman who works there, dana, who's quite prolific, and she put out a report called "wasted," and it'll have all the summaries, statistics you could ever want. but let's focus on the consumer losses which is just over half of the total food waste, about 40% that's wasted in the united states. this seems, to me, to be the area of greatest promise in terms of sheer volume of food. so let me direct this question to some of you. how is your company addressing consumer losses, and what are the biggest areas of opportunity and the biggest challenges?
because a lot of this has to do with established behavior patterns, with psychology. these are sort of mushy areas where it's hard for a company to affect what consumers are doing at home or at the point of consumption. >> right. at the place where we're working, in that area, there is a lot of opportunity. right now about 60% of what's going to the landfills is organic waste. in california there's legislation that is telling, well, that is requiring that landfills divert 75% from landfills by 2020. so the way we look at dealing with waste is, first, you take out your recyclables, and then you take out your organics, and then you have that small fraction of trash at the end. and so the opportunity for that organics is just fantastic. i mean, i mentioned the 1.6 of electricity, but we have smaller plants that is generating 100
kilowatts. we have a facility that we're working on right now that is converting it into cng fuel. so that way one route of picking up trash will create enough fuel for that collection vehicle to run for the rest of the day. so the opportunities are grand, and they're everywhere. so then what the biggest obstacle is twofold. one, getting the word out there. so everybody knows that this technology exists, that it's economically feasible, that there are just a host of benefits for it. but then what makes it a little bit more difficult is the collection side of it. in some places you have the green bins, right? you put your stuff in there. but a lot of places don't have that yet. and every waste district, every place handles it a little bit differently. in the area where i'm from where we actually put our first facility, there is a restaurant
program. and and all the -- a number of the restaurants in the area have signed up, and there's a special collection from those restaurants. and the food waste from those restaurants is what fuels that smaller facility that we have. but it's definitely in collection, and and as far as improving it, it's all about education but not just education of the consumer, because it doesn't matter if the consumer is educated if the system isn't there to take that separation and correctly convey it the whole way through to the digester. so it's a whole stream of education, and along with that is just getting the technology in place so that way it can be utilized to its maximum abilities. >> great. and, um, let me ask forfood shift, how do you address this problem of consumer attitudes and consumer behavior in the home or at restaurants? i was thinking about this, and i thought about my experience with my roommate. i'd say about half of them were pretty good about turning off
the lights, composting. things we had a clear economic incentive to do to drive down bill, and the other half just didn't care, and nothing i said could get them to change. and i'm sure you all have said this. i feel like the population's split along those lines. how are you reaching out to people who aren't that receptive to the message and trying to get them to do things differently? >> um, and that's perhaps one of the biggest hurdles that we or any sort of education and awareness group faces is how do you deal with some of these different behavior changes. the epa has a food too good to waste tool they're working on, and one thing they found is one of the biggest motivators to people is not the environmental concern, not the financial concern which is a lot of the individuals we work with in oak lambed, their motivation, it's this innate feeling of sadness when you see wasted food. there's something that's within us that we can't really name, and it's difficult to talk about. and that's something that we're trying to tap in as well. so for us, we have a couple of
different sort of angles that we talk about. we talk about, you know, how 25% of the fresh water that's used in food production goes to food that we never eat. we talk about how one in six people in alameda county don't know where the next meal's going to come from, and most of those are children and senior citizens. we talk about the financial implications, that 1600, in some estimates up to $2200 a year for the average consumer in what they're spending in food that they never eat. so we kind of do a lot of of these different levels, and i think the biggest issue is -- and stu kind of spoke to this as well -- is it's coalition building, it's working together. we need macro, and we need my row change. in the trenches we need more food recovery programs, we need people working on gleaning programs. we need to figure out all of these different ways that just in everyday practice we get that food from what would be the trash can and into people's bellies. but we also need macro change. we need to talk about policy changes. we need to really evaluate the way that food recovery operates. the other issue that we're
finding, um, is that, you know, for example be, san francisco food runners is an amazing program. they have about 200 volunteers. they move something like 15 tons of food a week, and they are just making a dent in the amount of food that goes to waste in this city. and part of the issue is, you know, they're going for foundation funding. they're kind of in the mire that a lot of us in the nonprofit world are in where we're not able to pay our volunteers. therefore, we can't provide a reliable service. how do we change that? one of the thing we're working on is creating a job training and job recovery -- placement program, and that way we can use, we can train people, we can pay them to go and recover food, to process food, and that money comes back, you know, not as profits, but that comes back and goes back into the program so we can get another grocery store onboard be with, another restaurant onboard. another program we're working on is called -- [inaudible] it started in brazil. it's very similar to one out of austin, texas, but it's
encouraging consumers and restaurants to have smaller portions. and so the program, for example, you have a restaurant that signs on, and they can offer an entree which is about two-thirds of the size of the original entree by the same price. and that difference goes towards a local nonprofit that's working to end childhood hunger. so all of these different tactics need to work together, and we need to work together to be able to when we have a client that comes in or we have ab issue we can say, oh, you know what? that that's not what we do, but let me tell you about leanpath and how they can help your large scale grocery store deal with waste in terms of source reduction. >> great. either of you want to chime in? >> yeah. there's some really interesting technologies -- loud -- [laughter] that are starting to be developed relating to oxygen, and oxygen's the key factor that's affecting food and for it to age. so there's two companies, one called fresh paper, one called
blue apple that have created products you can have in your refringe rater that you can put with your produce, and it extends the shelf life anywhere from five days up to three weeks. so there are technologies that are now becoming developed that, one, you can use in your home. there's technologies as well that are coating fruits and vegetables in a vegetable-based gel that extends the shelf life of them. and then there's other innovative practices that more, i'll say forward-thinking companies are using. so we have a company called organic girl, you may have seen the product in the markets that is a organic salad business. and what have they done? they've create inside their own packaging some oxygen deprivation, so it reduces the amount of oxidation that occurs in food. and they also are focused on as soon as it is picked and picked at, you know, 2:00 in the morning, that within 24 hours that product is in your store. and so there are ways that even the growers can become much more efficient, and it is truly economical for them to do this.
and for the ones that actually even care and want to reduce food waste, as you said, the farmers hate seeing this food being thrown away. and we all hate seeing that green muck that's in our refrigerator. and so there's another company called zipongo which is a san francisco-based company which is using interesting applications for consumers for giving recipes. so when you've got that stuff that's aging, you don't have to throw it away, you can cut it up and mange a sauce or a soup from it. so there's a lot of things we can do as consumers to reduce that 23% figure which is so significant. >> i think it's worth mentioning on this topic, too, there's a lot of great writing on this. you can find some work on this as well, but food labels for expiration dates, there's no uniformity and standard there. it's up to the food manufacturer what to write and what date to put on there, and that anchor point may mean something or may not. typically, it's a date to signify when it should be moved out of retail, but it may have
another few weeks or months of refrigeration life. so anyone want to speak to innovation in this that space and consumer education? >> i can speak to that a little bit. >> great. >> so to your first question, one of the things i can say as far as education, get some teenagers onboard, and they will get out there and tell everybody what you're telling them and make their parents do what i'm telling them to do. [laughter] they're very effective at this. and they're very persistent as well. and they're super irritating when they get on their soapbox. [laughter] one of the, one of the things that i've been trying to work on as far as be, um, you know, what do we do with all this food, and so, for instance, i think, stu, you were talking about recipes for different things. so we see things like bananas will come in, and those are -- probably that and salad greens are constant.
and so the bananas, however, once they look a certain way, people don't want them. and it's purely aesthetics. it has nothing to do with taste, it has nothing to do with what you can do with a banana, it's got only to do with the fact that it's got brown on it. so trying to reeducate people around aesthetics can be really difficult. and, i mean, id say like -- i would say like generational. you almost can't get there. so trying to be innovative in that space with these foods, now salad greens i have not figured out what to do with. basically, you just have to eat them or compost them and that's, basically, what i do with them. but with bananas, i've discovered these different ways that you can use them. so part of the reeducation process for me is for many me as well. for me as well. because what i'm noticing is i have to change the way with i think about things in order to be able to create something out of them. i mean, i'm fine with eating brown bananas. i think they taste good myself.
i know some people don't. but when you have five cases of brown bananas, suddenly you hate them with a passion. [laughter] so i have probably eight different recipes that i've, that i have just figured out. i scoured the internet for recipes x there are none. so now i have them. i have the recipes. if you want them, you have to pay me lots of money. [laughter] but this, the education process is, it's not just about educating other people, it's about educating ourselves as well. and it's about making sure that we understand what it is that we need to do. and so i think i just circumvented your whole question and went totally off into bananas and's nettics. >> you go girl. [laughter] >> all right. at any rate, the education process really does start at home first. and it starts with ourselves and asking certain questions about what it is that we will eat. because really what i have noticed is these at-risk kids that i work with, i mean, and these kids are, these are from families where the homes are broken, the mother might be in
jail because she did something to the dad or the dad might be in jail because he did something to the mom or because they shot somebody that they were pissed off at because they were drunk, and these kids don't always eat at night. and so what they do eat is often what i'm bringing them from whole foods who just donated to me. and so these are the kids that need food. and then i'll go to the local high school where the kids actually have some money x they don't need food so much. but when you talk to these two different demographics, the kids who need food who you'd think don't know anything actually are a lot more open to listening to what i have to say than the kids who have food. and so that blew me away. i didn't expect that. i didn't want expect kids -- i didn't expect kids whose parents know stuff that they would not want to listen. they don't want to do things differently because it's too
hard. it's too hard to stick something if your refrigerator that's going to keep your food from turning brown. it's too hard to move your food from the back to the front. it's much easier to stick it in when you get it, and that's the attitude a lot of you kids had. and i was like, you little punk. [laughter] and so then i went to the at-risk kids, and they just listened to what i said. and because nobody had said it to them before, they weren't being inundated with media or their ipad or their iphone or whoever, they would listen to what i said. and they would actually make a change. and so they would take the tomatoes that they all use in their households because most of them are hispanic, and they would cut the brown spot off of it rather than throwing it away what is what they had done before that. and once they started doing that, then their moms started doing it. and maybe their brother will never do it, but their grandma started to do it and dad would actually wait for mom to cut it. i mean, we're talking about cultural differences here.
but the fact of the matter is behaviors started to change. so i'm small. i mean, i only have, i've only had about eight employees over this last year, that's all i can afford because i'm cycling it through my insurance business, but the fact of the matter is i did see change, and so it is possible. and this education process that we're talking about, it really does require a lot of work, and it requires a lot of passion. so if we can figure out a way to clone my dna, then we'll be able to do it. [laughter] >> topic for another night, perhaps. [inaudible conversations] >> you know, i want to move up the supply chain a little bit to foodstar and waste cowboy. we know the losses are less from, between production and post-consumer. retail is still a problem though. this is where you deal with the consumer pickiness issue, and i know you're both addressing this with your respective organizations. can you talk about retail, if you drop the price low enough,
are people happy to take it or create value where there was none and the distribution part of the supply chain? what have you seen work and what doesn't? >> right. so we waste about 28% of the produce that we buy at a supermarket. produce makes up 10% of the sales but 15% of the profits. so if we were to cut down our produce waste to. 14%, the supermarket would go from 1.5% profit to 0.7% loss. so waste is essential right now to america. if we stopped wasting food, the entire economy would go into cardiac arrest. it would be like a longtime alcoholic going dry cold turkey. it would be catastrophic. the opportunity here, and if you read dana's report, it's, what, 10% of fresh water, 8% of -- 20% of fresh water, 8% of the energy and 25% of the land. if we stopped, just as consumers stopped wasting money, the
truckers would be out of business, the supermarkets would be laying off people. so we didn't get into this situation overnight. what we've got to do ises, basically, you know, restructure the american economy. and that's a long-term process, but it has to be done because be, you know, the resources we're burning through. what we're trying to do here is develop a system for investing in new sectors. for example, you can recapture some of that energy if you do it right. it's very, very tough, but you can do it. you can use some of that food to feed animals, and you can use it as compost and replace chemical fertilizers. that's a lot of displacement of existing investment and, basically, lobbying dollars. but it requires some organization to. the other thing is we've come to look at hunger as a monolithic thing. that 50 million hungry people number is a result of the answer to the question in the last year did you feel hungry, or did you worry about where your next meal was coming from. so that equates people who are
on the streets with long-term comorbidities, with people who just lost a job and will get another one. so unless you break it down and take a look at why people are hungry, what are the behaviors that lead to hunger, what are the behaviors that lead to waste, we're not going to make a dent in things. for example, senior citizens. a lot of them are hungry and have poor nutritional outcomes because when the spouse dies, they don't like to eat alone, or they don't like to cook alone. and who does? so there's some programs out there where you have college students going in there not just dropping off the meal, but also sitting down and eating. you can do all sorts of things with social media to hook people together. but if you look at it simply as a logistics problem, it's always going to boil down to a cultural problem. we have robert edgar who started d.c. central kitchen, and he's starting l.a. kitchen, mike -- [inaudible] is a retired marine corps one star who spent 30 years in the marine corps and then started
the greater chicago food depository and brought it up to seed logistically, changed the face of the industry. he said, look, you can have all the apps and technology you want, ultimately, it comes down to culture. and so the combination of approaches here has to sustain to build a new economy and build a new culture, and cha's the goal. -- that's the goal. that's how you do it. >> good. i think as roger's saying, essentially, this is all about economics at some point. and it is really hard for the farmer, for the retailer to really look at this and justify making investments and changing relatively entrenched industries to say how can we make this more efficient, how can we make this more profitable more us. and so i think the key driver that we're seeing starting this is more of a moral issue, and people are saying we want to do well. we want to really look at this issue and say how can we reduce this waste? no one wants to throw the food
be away. and so as an example, we approached original hi our first customer was -- originally, our first customer was walmart. walmart throws away, i'm not going to quote the numbers, but the numbers are insanely high, the amount of food that they throw away each year. and they know it. and they actually are one of the few that weighs and measures every single piece of food that goes through their system. and they know what's happening with it. and so when we came to them and gave them some solutions, they didn't take them for reasons i won't go into, but what they ended up doing was realizing there was an opportunity for them to change, once again, their supply chain and look at their purchasing patterns and how they take certain of their products instead of taking and distributing all the products to all their distribution centers, to hold some of that product that they know they probably aren't going to be able to sell because they bought so much, they'd never have enough consumer demand for it because they get so much at such great prices. to hold it there and figure out ways they can take that product and bring that into more often
than not a not-for-profit opportunity which donate that food. the numbers are, once again, so, so, so large. and they truly are interested and caring that they want to do this. but effect live i, i think -- effectively, i think it's going to start with more of this feel-good basis, and we need to show that the economics behind this are really important and really valuable. and it's not just about just what's lost, but it's where there is true profit margin opportunity. and so those are some of the tools that we are bringing forth and the partners we're bringing forth that have those kind of tools that show there are really significant economics, and we don't just have to accept the fact that we're just going to throw away a certain amount of our food whoever we are and wherever we are on the sly chain. >> while we're talking about walmart for a second, walmart from arkansas can tell when any of its coolers anywhere in the world has a leaky seal. there are five supercenters that can read the temperature in every cooler, and they know when
the coolers are broken, because they don't want to washington money. everyone's supply chain moves 24/7, 375. you get to be late for walmart once. food banks are open 9 to 5, monday through friday. walmart can bury every food bank in produce every day of the week. the food banks are the problem. they don't have the resources to move that food, right? they should be in the composting business so there's always an answer to the problem, and aggregate someplace where you can get it without burning more gas than you generate. so the culture, when walmart says do it, every walmart in the country, in the world will do it. the culture problem is solvable on the business end. it's the nonprofits, the charities that don't have the, you know, i ran nonprofits for years. you just never get that grant to think, right? to take your staff offline and say, huh, how would you like to do it? so at some point the policy issue is not just food policy or tax benefit policy, it's, you
know, do you really give these people the resources to do what you say you want them to do? because it's not just about shoveling food into a hopper or dropping off food for people and say there you go. it's a real question, do we really want to make the investment it takes to feed people the right way? >> did you want to add something? >> yeah. i was just going to make a quick comment. we have multiple business articles, colleges and universities, health care, casinos, hotels, but the ones that we've had the most challenging time with are the retail. and i've developed these theories. you, obviously, have more exposure than i do, but first of all, it was a concept of waste is negligence, therefore, it could lead to job insecurity. there are a lot of reasons, and it all comes down to economics. but then as i listened to the conversations and i listened to the objections, it seemed to come to a psychology where they didn't want to confront the metrics. they didn't want to see the numbers. they weren't ready. they didn't want to have to create a solution once they saw those numbers in black and
white. and we're still struggling with it. but because we know that there's a huge amount there, and depending on how big they are as a retailer the smaller they are, the more receptive, but i the bigger they get, i mean, like i said, it's a group think here because you're exposing me to stuff i hadn't thought through because i was concluding it's the psychology they're just not ready to see that in black and white. >> facts are stubborn things. [laughter] i want to invite audience questions. make your way to the back. there's a microphone there. we need that to register the question. i'm going to ask one final question of the to panelists and request short answers. but, um, the european union, they have a common food waste policy across 27 different countries. they have a target of 50% food waste reduction and a 20% reduction of food chain inputs by 2020. that's an aggressive goal coming on the heels of the least productive session of u.s. congress in recorded history, is
there something we can hope for in the u.s. on par with this, federal or state-level food waste reduction targets, or is there something that people in the audience should be asking local representatives or elected officials to do to grease the wheels for your various goals? is there something missing there that the government could spur in food waste? >> um, so as i mentioned before, in the state of california there is actually, um, legislation that is pushing the waste sector to deal with the organic waste. 75% reduction -- or diversion from landfills by 2020 really makes people confront that. and because of that, we have seen an increase in interest here in california. but we're also seeing interest in other places where people are realizing that it's, that there is an economic benefit to do it. ..
>> this section needs to be amended to change the enhanced tax benefits for donating food to credit. that way was smooth -- spur a lot of movement. the federal food waste reduction act is most hypocritical thing you've ever read. it says that any contract over $25,000, the administrators will require the contractor to take measures to reduce food waste
and to recover from. the next paragraph says they will in no way take any responsibility for those efforts. if that were true you guys could find yourself like that. >> i already said it. teenagers. get the teenagers. spink i just wanted to add we just launched a couple of days ago a petition to the epa administrators. i mentioned there was a project called the food too good to waste toolkit. it's an amazing start. it's aimed at in his palace by growing and what we're wanting to do is put their funding and backing behind this toolkit. there's videos giving cooking lessons, factoids on foodways, training programs for people are interested just spreading the word in your community about food waste and what you can do about it. if you have the opportunity to go to the facebook page our website and signed the petition
and help us get epa funding behind the toolkit. >> i don't have any confidence in the political system to effect any change some sort to say, not any optimism. i think it's up to us. we have to become educated. that's what the process is. the more we all become educated in understanding what we can do in the own personal life and her personal home, and how, if we can integrate that. and then for the businesses, just understand how it is truly an economic benefit for them. whether pure profit driven or whether marketing and branding and feeling good about it. that's the approach that we think is going to drive the change we need to see happen. >> like stu, i'm not confident on the federal level have confidence in his system of bottom up, dealing with a lot of municipalities like stop waste that are very active, doing recruiting processes. they are putting in local bans
on organic feel to landfills. so maybe eventually the federal will catch up her right now the activity is from bottom up. >> i'm very pleased at the level of specificity. we even had the tax code sided over there. this is good. >> if i could make one less common. one of the things that he think is important is how we frame this. we say there are lots of problems with food waste and there's always problems with food waste and loss of problems everywhere, but whether is is not just problems with foodways. there's lot of opportunities. all of us are in fix now that didn't exist before. i'm sure a lot of you are involved in movements that didn't exist before. this isn't just about the problem of food waste. it's about the opportunities of foodways that didn't exist before, making sure people are aware of the opportunities. people hear about problems every day but what can happen now that couldn't happen before. i think that's where we can make headway.
>> are there any audience questions? a microphone that is very lonely back there. thank you. >> hi. i a on a grocery delivery servie company in new york city called principle. the thing that kept hitting me about what everybody is saying is that the problem is with retail. so other than the really wonderful thing about the flash tales, what i'm wondering is if the result system is so broken, what do we do to create a new way of selling food that doesn't have so much waste quick i would rather see as redesigned away his own people that don't have so much waste. let's go back one step in the problem and figure out how we do this. my question is less than a year old and we have between three and 6% waste already. most of that is going to by employees. that's my question to you.
>> there is a man maybe all have heard him in the news a lot lately, doug. he was the previous president of trader joe's. duck has been focusing on food waste reduction solutions and talking about the short code day. just because the state is stamped is not really mean that food is not good or that you have a health risk. and so there needs to be greater education about that. and what doug is looking at doing is he's in the midst of trying to create a retail store that sells all out of export or short code date product. he gets them essentially given to result in a dramatic discount including a retail store for to come and shop and get great values for foods that are finding it and maybe need to eat them are continued let them sit
on yourself for a long time. as you said, the solution is a key issue after many solutions we could be looking at. once again is usually up to us. certainly we look at the bowl combine we to costco, sam's club and not a voice that can occur there is just enormous. i don't need to be taking anything out of them because they're providing great value to us. often it's too much. we to think about that and look at how we as consumers can reduce our purchasing. is fascinating food service is begin to have, food services and really starting to look -- economics are so big. one of the things bon appetit management it, really, fidel said how we going to start looking at this issue? number one, the reduce the size of their trash cans and reduce the amount of trash cans. they saw the food waste be reduced by over 50% by that simple technique alone.
so i'm not sure if i'm really answering your question but i think there are ways we can do this better and smarter, and it's just accepted. the shrink, people say that's just what happens. that's what's always been done. the youth are saying no more of that. the old ways are broken and we're going to do what we can going forward. so we're young entrepreneurs are creating all the technologies that can enable us to be a lot more educated about our choices, and to really take action to reduce the waste. >> i think doug's idea needs a lot of work. you know, food has utility. food waste has utility. people wasted. if you read michael moore's book sal chaka fattah, you will know it's not just caloric value. the idea of having for the rest of us won't be, taking it to the and had the need it, i think is poor compared the idf changing our behaviors.
taking care of the environment, reducing food waste is not the duty of the poor. and shoveling it to them i think institutionalizes the problem and i think it ratifies the narcissistic gross value come effect of those best buy sell by dates. >> i wanted to add one more thing. i would love to see in the same way the local campaign really took off and people would go and go to a local restaurant because they had that were of local business comes something along the lines of a foodways warrior with kickoff for a retail store. store. we're seeking places that work and waste reduction in terms of what they are buying, how they are displaying their food pixel a grocery store having an amount of grapefruit to put a cardboad box with the amount of grapefruit on top in each of the image of abundance but you don't have all of the food that is going to waste. getting together with these
entrepreneur's and these changemakers, saying how can we displace this differently? i'm not sure in terms of a delivery service but having people say -- they are great about taking produce that is about to turn enduring value back. for 1 dollar you get huge amount of food that is that ago. and i speak out because i know to do that. i go to stores that have that same mindset around foodways. each shift are what we need as well spent i think we will and another to allow the point of optimism touched on here. the concept of nudging in the april economics, this is a common area study. a lot of environmental structure, changes you can make that would change beepers -- people's behavior. think about that you can construct your own apartment or impact the day-to-day life in that manner, but thank you all for being a great audience. thank you so much for a painless. alesia for to catch them.
i know some have to rush off in the next few minutes, but there's more wine and beer i've been. stick around and continue the conversation, and thank you again to our host. [applause] >> [inaudible conversations] >> richard baker is the u.s. senate historian america's and author of the american senate, an insider's history. user guest on q&a today at 17 eastern on our companion network c-span. at eight, c-span year in review with a look at the government shutdown and the budget battles of 2013. we wish the congressional debate leading up to the shutdown and amounts of congress and administration officials reacted once the government closed. then at nine, "first ladies: influence and image" tonight and i'll go look at kamala, jaclyn get it is time in the white house from 1961-1963.
the chairman and vice chairman of the bipartisan federal commission on the long-term care testified before the senate aging committee last week. they said more un-american should purchase long-term care policies. senator bill nelson of florida chair the almost two-hour long hearing. [inaudible conversations] >> good afternoon. long-term care is an issue that comes up repeatedly. it's an issue that many of us not only have a legislative interest in, but a personal
stake as well. many of us have spoken in prior hearings about caring for our parents, as well as planning for our own futures to alleviate some of the decisions our children. currently, about 12 million americans have long-term care needs. and that number is rising rapidly. across the country middle-class families are going through the same tough choices on how best to care for elderly parents. medicare and most traditional health insurance plans don't cover long-term care expenses. and while private long-term care insurance is available, most people don't have it because they see long-term care at something that they will never need.
well, additionally, who's going to deliver long-term care services? do we have the right workforce? with nursing home costs rising, some families are turning to assisted living facilities or trying to provide care at home. all of these situations raise additional questions and potential challenges. all of us have heard from constituents about the trade-offs that they have to pay to provide care for their loved ones. give you an example. karen from inglewood shared that she is a full-time caregiver over 79 year old mother who is paralyzed after a stroke.
she wrote that every cent i have goes in to helping my mother at home. her mother cannot cook, clean, or even wash herself. so i'm sure that many of our colleagues here would share similar stories, because they are obviously quite common. more than half of the long-term care in this nation is delivered through family caregivers. cbo estimates the valley of such care is roughly 231 -- $234 billion annually. and despite these enormous costs, most americans have done little or nothing to prepare for the future long-term care needs, according to a recent study from
the scan foundation. so our current system of providing long-term care is unsustainable for both the government and for families. cbo predicts that expenditures for long-term care are likely to increase from 123% of gdp do as much as -- 1.3% of gdp to as much as 3.3% of gdp by 2050. but as we continue to struggle to find ways to address it, let's don't be naïve to believe that we are going to find a solution and just one hearing. but we need to start. the panel that we have assembled will give us a wide array of ideas for us to debate as we strive to find a bipartisan
solution. and so i want to thank our witnesses. i want to thank our bipartisan co-leader, senator collins. and senator collins, if you would share with us. >> thank you very much, mr. chairman. as you've indicated, more than 12 million americans rely on long-term care services and support to perform the routine activities of daily living, and to maintain their quality of life and their independence, if possible. i appreciate your calling this hearing to explore the options for improving our current long-term care financing and delivery system. as the senate co-chair of the bipartisan congressional task force on alzheimer's disease, i
am deeply concerned and sensitive to the complex care needs of alzheimer's patients and their caregivers. i, therefore, particularly look forward to discussing ways to provide more support to the 62 million family caregivers who, in 2009, provided an estimated $450 billion in uncompensated long-term care, more than double the value of all paid long-term care. long-term care is the major catastrophic health expense faced by older americans today. and these costs will only increase as our nation ages. it is not just that there will soon be a greater number of
older americans, it is also that older americans are living longer. americans, 85 and older, are our so-called oldest old, are the fastest-growing segment of our population. and this is the very population that is most at risk of the multiple and injuring health problems that can lead to disability and the need for long-term care. at the same time, declining birthrates mean that there will be fewer family members and paid caregivers to care for our nation's growing aging population. today, there are approximately seven potential caregivers for each person over 80, as this chart indicates. by the year 2030, there will be only for.
and i 2050, the number drops to fewer than one in three -- fewer than three. as a consequence, more people will have to rely on fewer caregivers. what does that mean? what are the implications for the quality of care that will be given? it is clear that we have to do more to support family caregivers and to recruit and retain a robust and competent long-term care workforce. while there is a need for both public and private financing of long-term services and supports, i do believe that we must do more to encourage americans to provide for their own long-term care needs. many mistakenly believe that medicare, or their private medical insurance policies, will
cover the cost of long-term care, should they develop a chronic illness or cognitive impairment like alzheimer's. unfortunately, far too many do not discover that they simply don't have coverage and killed they are confronted with a difficult decision of placing a frail parent or loved one in a long-term care facility, and face the shocking realization that they will have to bear the costs themselves. americans should consider the future long-term care needs just as they plan for their retirement, or purchase life insurance to protect their family. private planning for long-term care will not only provide families with greater financial security, but also will ease the growing financial burden on the
medicaid program, and strengthen the ability of the program to serve as a long-term care safety net for those americans most in need. again, thank you, thank you for calling this hearing and a look forward hearing from our witnesses. >> out of a spirit of mind of the sense and solicit the, -- felicity, i would in the spirit of the season extend to our two most distinguished committee members the opportunity to say a word or two before we turn to our witnesses. >> let me just say that first of all i appreciate, mr. chairman, you holding this hearing, and to ranking member collins because it's such an important issue. i come to you, come before you have a son, grandson and former governor that dealt with these matters are personally. i can tell you there's no greater thing that we can do to add dignity and respect to a persons life as they grew older than try to have them living in
the pet lifestyle. i'll give you one story. my grandmother was 85. used to stop and see it all the time. one time i stopped and she was very, very lethargic and just kind of sitting there. i said grandma, she said everything is okay, honey. i could tell something was wrong so i told my mother. i said you ought to go see grandma again. my mother always wanted her to live with us and she always wanted to be independent. and this one time my mother went to visit her and she said okay, i will come down and visit the kids. well then, she stayed for 50 more years, lived 100 years of age. the thing about it was she was lonely. she was poor in nutrition. just trying to feed herself. she wasn't working properly. all of these things. it's right before your eyes and you don't see. when you do you see the difference in life it makes. i took that with me as i became governor. timmediate wanted to do was create programs that really true attention to help people live independently.
we start some programs in west virginia, i'm not sure if other states had ever started before, that i use my lottery fund and table games licensing fees. 100% went into long-term care for independent living. and we called it fair. that their program basically all it said was, whatever you debate, you pay. we helped you. we sent people into lead to live independently. a lot of people didn't have family support. there's so much we can do in government doesn't have to do it all but we are to be the best part is they have ever had. that starts from the federal to the local levels. we had a lighthouse program to about long-term care need to allow in home as long him home as long as it allowed and the medicare program, home respite, needs a break every now and then. just to break. there's some compassionate things we can to end it doesn't break the bank to do it. i'm just so thankful that you dedicate your lives to helping those of us to go on the front line. my mother is 91 right now, and
if it wasn't for my sisters and my nieces who take care of my mother around the clock, we never put her in a nursing home. that's not where she intends to be or where she wants to be. most people don't. but they don't have the support, we have to give them that support so they can live independently. you hopeless to that end we look forward to your testimony. thank you. >> senator scott. >> thank you, mr. chairman. i can tell it's a holiday season as again we're sitting democrat, republican, democrat, republican. this is an odd thing for us in the senate. >> i'm feeling lonely over here last night. >> i just didn't want to get to your left. >> you are well, anywhere and anytime, senator scott. >> thank you very much. we will figure it out in the second half. i will tell you for me, as senator manchin talked about, the issue of long-term care is certainly an issue that i take seriously and have expressed personally, when i think my grandmother at 77 when she
passed in 2001, she had parkinson's and alzheimer's, and the last seven years of her life my family, thank god for my grandfather, my mother and my aunt who spent inordinate amount of time taking care of her out of their home. fortunately, we have the resources to do so. unfortunately, there are a lot of folks, when you look at the demographic breakdown of who can stay in home and you cannot. unfortunately, minorities pay a heavy price of not having resources and adequate time to care for their loved ones. so we had a unique experience in a very special way. i think it's a wonderful opportunity to care for those who took care of you. there's an old saying that you are twice a child. unfortunately, we've experienced that in this very powerful picture, those of us have had the opportunity to care for our loved ones. that's why this issue is incredibly important for our country. my second experience has been as a guide in the insurance industry for the last 24 years where i've sold long-term care
policies, and understand the adls and activities and daily living and how many people have not been properly educated on the opportunities to make a decision when you're young enough to make that decision because it's a payoff is you don't exhaust all your resources trying to get down to the to or $3000 level where medicaid takes them. in south goa that extends to $1.2 billion medicaid has put out trying to help folks who have exhausted all the resources. to have a conversation about where we're going as a nation and that this government can play a role i think it's an important decision. thank god for the chairman and ranking member who have the foresight to put us in this position, and i look forward to having a robust discussion about the future opportunities and creativity in the marketplace that will provide the type of resources and future planning that gives us we'll hope that more americans will retire and live for the rest of their time of their retirement indignity,
to include the last years of their life. thank you. >> thank you. we are going to start with ms. anne tumlinson. she is the senior vice president at avalere health. she will set the stage on what the current landscape is like, and then we're going to hear from members of the long-term care commission. they're going to share -- bruce chernof, dr. bruce chernof, the president and ceo of the scan foundation. dr. chernof serves as the chairman of the long-term care commissioner. dr. mark warshawsky, we're going to hear from dr. warshawsky,
adjunct scholar at the american enterprise institute. he is the commission's vice chairman. and then dr. judy feder, one of the commissioners of the long-term care commission to dr. feder is a professor at georgetown public policy institute fellow at the institute. and also served at the commission staff director under my former colleague, of which i was the president of the claude pepper fan club. and she served for claude pepper. and by the way, i mean, there was an example. for those of you who were not here in washington in that era, claude pepper and ronald reagan would go to it. but at the end of the day they were personal friends, where then they could work it out together. and one of the great examples of
that, also with the leadership of the speaker, tip o'neill, was when social security was within six months of becoming bankrupt in 1983. they said, we're going to take it off the table so that you can't hit your opponent over the head with it. they appointed a blue-ribbon panel. they made the recommendations on what to do, set it to the congress. we passed it overwhelmingly, and it made social security actuary with sound for the next half-century. that was 1983. so those folks knew how to get along. ms. tumlinson. >> thank you. chairman nelson, ranking member collins and members of the committee, thank you very much for holding this hearing, especially for the opportunity to testify today about the future of long-term care policy.
the perspective but i'm about to share comes from my work over the past 20 years, first at the office of management and budget asked the person responsible for the medicaid budget. and also the last 10 or 15 years consulting to nursing home providers, assisted-living providers, and working with a number of my colleagues here on the panel, analyzing the budgetary impact of a whole variety of ideas of reforms, including the class act. i just want to start by saying as many of you of all ready noted, we spend well over 200 billion, but we pay for very little care. we depend on over 60 million americans to provide most of the care, and they provide it i'm paid. and they do this because most americans are not insured against the financial risks of long-term care and they really want to avoid and medicaid nursing home bed. so the long-term care system is woefully underfinanced for the job that has to do now and for the job especially that has to
do in the future. all of the other problems that we talk about, the delivery system, the workforce, the quality of care, all of it stems from this fundamental fact of underfinanced in. i'm going to make three points to frame our discussion today that i hope will help you all in the work that you're doing in the future, and that will make our discussion a very interesting one. i'm going to star with something a little bit controversial, and hopefully a former governor will not come across the table at me. the problem that we have to solve, my opinion, most primary is not one that is a medicaid budget problem. i worked on the medicaid budget for many years and i don't see this as primarily actually a medicaid budget problem. it is an issue, of course. states have to pay for -- had to fund their medicaid programs and their people entitled to services under those programs. downers and state governments was a huge challenges as the opposition aged by the real issue is in managing these
challenges, even more of a financing gap is going to be created and that gap is one had to be filled as it currently stands by families through the own personal finances and her unpaid caregiving. long-term care is shrinking as a percentage of the medicaid budget. at its lowest percentage in two decades. over the last 10 years medicaid on terror -- lock and piston has grown at an annual rate of less than 5% a year. it's true we will have many older americans by the large concern is that in preparing for these demographics, states are doing very smart and logical things from a budget perspective and they are demonstrating they can and they will exercise the budgetary lovers that they have to both reduce the number of people who receive medicaid long-term care services and the amount he received and the dude in all settings, not just nursing home. we see that reflected already in the growing interest among states and moving people into managed care for the long-term care services and out of fee-for-service. in other words, relative to the number of people who need
long-term care there will be a lot less medicaid to be spread around and among those people. secondly, my second point, the inability of -- point to my opinion to the real problem. that the underfinanced a long-term care creates and contributes to enormous economic insecurity, which is already a major problem in this country and this is a big part of it. it's instituted for the majority of american families, and they think about what they might be facing in the future. so when they're faced with this crisis most americans is a cobbled together a variety of resources to provide what they can. less than 2 million of the 12 that we have talked about today who need long-term care are living in a nursing home. that's because the rest live in the 20 were medicaid dollars are the scarcest and where a third of all american families report providing some long-term caregiving. when they provide this care, they do it at a rate of 20 hours per week.
that time spent doing the really hard physically and emotionally challenging work of caregiving. they do while 75% of them are holding down another job. we know from industry data that over a million people are paying privately right now for assisted-living or other type of senior housing, and it costs $42,000 per year on average. this isn't just for rich people. these views are being financed through the sale of homes, their contribution from adult children a providers to meet the residents exhaust their resources while in assisted-living and after moving to nursing home to continue to care under medicaid because medicaid doesn't cover assisted-living. very little of this is captured international day. we don't have a good way of getting a handle on these expenditures. after years of working with providers, analyzing data, my conclusion is it's much like a medicaid is something to be avoided rather than as a mechanism to exploit for wealth protection. and to some of his job was to
work improving the efficiency of medicaid to find scorable medicaid savings and who wasn't shy about it i might add, i'm telling you there's not much to suggest we have enormous opportunities to further tighten medicaid. in fact it's quite the opposite. my final point and this is probably the least popular point the we made here today, is the evil people are educated about the risk of long-term care and even when they are presented the long-term care interest policies, anytime you managed to do that for many americans, we will not truly address under financing without requiring everyone to participate. i say this after being a proponent of expanding coverage to bollettieri private approaches. and analyzing the budgetary impact of these. i learned from that experience and i know them of the few that in or get ugly protect americans against the risk of long-term care need, in order to correct for the under financing problem that we currently deal with, some part of the solution for the future must be mandatory participation. we have this vigorous debate over private versus public insurance options that it
doesn't mean anything because neither works very well. actually cover in of people when the participation is optional. it's an important debate, the debate between public and private for sure, but not when we should be having without facing the reality of what it would really take to protect americans and in doing so we will address the medicaid budget issue in the process. i look forward to your questions. thank you. >> thank you. dr. chernof. >> thank you, mr. chairman, ranking member collins, and members of the committee. dr. warshawsky and i are pleased to be today to present recommendations on the long-term care commission and i want to begin by saying i'm going to walk us through the highlights of the report. this is work that mark and i did together, and it comes from a spirit of fundamental bipartisanship which we think is the way forward. so can i make opening comments on half of all report and more will have specific comments to follow. assaulting of the commission had a very compressed guideline to
we reset with a six month schedule but after going through the provision process would roughly 90-100 days to do our work there in work we had four public hearings with 34 witnesses, over 100 submissions of public testimony and nine working sessions. on september 12 as required by the law, the commission voted by a bipartisan vote to issue the final support. want to provide you with an overview of the commission's work process and the development of the final recommendations. want to begin by saying the commissioners were a talented, knowledgeable and really diverse group of people. our expectations as commissions were that we would identify as much common ground as possible and establish that as the foundation for moving for our long-term services and supports issues. the discussion in areas of agreement and disagreement would be evidence-based and we would be open and willing to challenge accepted thinking we couldn't find substantial evidence. we are really pleased with the amount of common ground reached.
this makes the point that addressing long-term services is not an attractive a problem but this is something we can work on in a bipartisan way. in the process each commission was asked to submit proposals. all proposals for discussion are included in appendix a of the report. commissioners selected i guess they felt merited the most attention, and this subset was discussed and developed as potential recommendation. proposals that could not achieve broad agreement were not included as final formal recommendations. let me state clearly that developing a thoughtful, comprehensive report in 100 days is an important success in and of itself, and a direct results of the commissioners dedication. let me provide you an overview. the report is friend by clear call to action. i think it's important for the general public to understand this, and that broad agreement for shared vision for the problem we're trying to solve together. a shared vision really serves as
a framework that supports 28 specific recommendations. at me touch on a few key points of the vision. it starts with the notion that we must have a fiscally sustainable and effective long-term services and support delivery system. built on concepts of person and family centered care. it provides individuals with supports and services in the least restrictive environment appropriate for their needs. it is delivered by well-trained and adequate support array of family caregivers and aid workers. and, finally, the conference of financing requires an approach with really three prongs. a balance of public and private financing to ensure the most catastrophic expenses, encouraging savings and insurance for more immediate long-term services, and finally providing a strong safety net for those without resources. the 28th recommendations i could take it all through them, but we don't have the time for that's what i do is boxed them up and highlight them for you in a way that is useful.
the three key areas our service delivery, workforce and financing. with respect to service delivery, i think it all hinges on a recommendation we start with a better balance of community-based and institutional care choices. finding that balance is important because most folks want to be and should be in the community. other recommendations include a single point of contact, a uniform and standardized assessment that's used by all providers and actually engages the family and the individuals themselves. accelerating development of a new generation of quality measures that includes home and candy-based services and experience of individuals receiving care. finally, promoting payment reforms that focus on outcomes rather than betting. with respect to workforce, central to this set of recommendations would be a bride ever conditions focus on improving training and support for family caregivers. including identifying the family caregiver in the chart and assessing the family caregivers as part of a care plan and the
care team. other important workforce recommendations included taking on the scope of practice and delegation, integrating direct care workers more directly and encouraging states to improve standards for home care workers. finally, and financing, we've given the winter days, the commission did not have a single recommendation on financing but it outlined a common vision as i already noted. and then identified two different approaches that could be the basis for a broader discussion. one focus more on public social can insurance solutions and the other based more on private market solutions. i will say when you look at both of those approaches, there are some really interesting commonalities that bring them together and are right for for the workers i will say the public policy details, the cost and funding mechanism for both approaches remain to be specified in many commissioners felt they would require significant new data, design work and careful analysis of cost and consequences for
fiscally responsible proposals would be before. finally, purify specific recommendrecommend ations relative to medicaid and medicare. next steps which i think one of things it brings us here today, the commission felt very strongly that it's critical to have a follow on body for the commission to pass along the baton the work that is still needed and not complete. we also called for a 2015 white house conference on aging and partnership with the national council on disability, to focus on long-term services and supports issues. with that i would want to thank the commissioners for all their hard work, our staff who really gave their summer to get as a product done on time. i want to thank mark for one more time because his knowledge, leadership and engagement throughout this process was really important to we worked as a team from day one and i think that will be critical to get this job done. thank you. file of what you think of the opportunity to testify today. >> thank you. dr. warshawsky. >> thank you. chairman nelson, senator
collins, and members of the committee, my name is mark warshawsky and i would like to add to bruce's discussion my own views on the financing issues in more detail. the commission did reach a consensus at a higher level of the need for personal savings at insurance coverage and significant -- for the lower income population. we did not agree on structures of abortions. at least some of the diversions arose from a lack of clarity on several aspects of the problem, which we tried to address in the commission but we didn't have enough time and resources to resolve them. i'm referring to our debates and whether medicaid is now an ltc insurance program for the new income or higher income households, where there is significant capacity working age adults with severe functional limit those -- to produce the in the labor force and how to improve the private insurance labor market. focusing on older population
summit expressed the view that medicaid is no program just for the poor. i see their significant extent that medicaid coverage for those who are in the middle income and above groups in their working years and through retirement. evidence presented to commissions as was our state of the medicaid eligibility rules indicated in many states significant housing, retirement, life insurance i set aside and considering medicaid eligibility. many people who are in the income group and above do in fact get medicaid benefits. still there is much to learn about how significant, what is the to expensive getting it in medicaid eligibility? what would additional efforts by the states bring in a stay recovery? how much of the elderly care about leaving our have expanded care option to what medicaid currently provides? some of us believe one way to find out, these are all these questions set up an option for a medicaid card out whereby upon retirement individual have the
choice of receiving a lump sum payment for the government for a significant portion of their expected value of the medicaid benefits. this will be most for the poor, little or nothing for the best off. retirees would use the payment to purchase private private long-term care insurance is decided benefit design in place of medicaid coverage. turning to the working age population with functionafunctiona l limitations, what little we heard and discussed indicated conflicting views about the extent of the capacity of return or continue to work if support were to be provided without the intended medicaid requirement for impoverishment. so my understanding, past expect and david is not encouraging about the capacity. we also support the commission's recommendation to assist states to achieve greater uniformity in the state medicaid buy-in programs for lds as. hopefully we can learn much from these projects. but even assuming the results are positive it is likely that changes will be costly.
in light of the severe fiscal condition of this we must be willing to prioritize needs such as by typing the currently lives eligible to standards for workers above age 50 to qualify for disability insurance and medicare. finally, does it discredit about the possibly to improve the functioning of private long-term care insurance market. we all agreed that currently it is a mess, but there was less a consensus on the wide which, of course, leads to the prescription before. in my view the problems is named one of inadequate demand arising from the effect of the medicaid program and also lacked public understanding. at the same time there are problems on the supply-side partly stemming from the restrictive state rule on interest policy design and federal tax law. so some of us propose the following. following. first, provided tax preference for long-term care insurance policies through retirement and health accounts.
we feel that in terms of the savings that would arise from medicaid, this would cover the costs in terms of lower tax revenues. second, we wanted to support combination policies such as a lifecare annuity. such products would marry immediately annuities for long-term care insurance allowing individuals to finance their gear as well as they retirement. combining long-term care insurance and life annuities would increase the combined costs and considerably these underlying standards enabling more seniors to afford and obtaining coverage. i would also like to note that although five out of six republican commission voted in favor of the commission, we all stated that the commission's recommendations were not increasing existing budgetary -- likewise we believe that raising taxes to fund additional is unwise especially given recent tax increases to pay for the aca. in closing i want to echo bruce
by stating my appreciation for the tremendous effort of my fellow commissioners. they did the impossible and produce an important product on a very tight schedule. i also want to thank bruce for his incredible leadership. he was a great partner who worked diligently to install trust and create an assignment conducive to collaboration and dialogue. thank you. >> dr. feder. [inaudible] >> turn on your microphone, please. >> thank you, mr. chairman, and ranking member collins, and members of the committee for the opportunity to testify before you today on a passport for long-term services and supports. i appreciated at the outset, mr. nelson, you were mentioning my services as staff director of the pepper commission which begins about 25 years ago. so as you can see i've been at this a long time and hope we will make some progress before i need long-term care. so we definitely need to get on with it.
but the experience most recently as a member of the congressional commission on long-term care is what i'm testifying before you today on, as well as my experience, and i can tell you there's a lot of work to be done. although policymakers are grappling with the challenges of assuring americans a portal access to quality health care, we have yet too seriously tackle the equally important issue of long-term services and support. despite the continued political battle, even critics of the affordable care act recognize the need for insurance to assure access to health care and protection against financial past few. there is much less acceptance of the need for insurance when it comes to an of health related risk, one for which virtually all americans are uninsured. the risk of needing expensive pashtun extensive help with basic task of daily living like dressing, bathing or eating, generally referred to as long-term services and support
our long-term care. on the financing that is critical to the building an effective long-term care system, the recently concluded commission stopped short of recommendations. but five of us felt compelled to step up did not support the commission report, and offered an alternative report explaining as charged why and how congress should a college this goal. and i request that you include that alternative report that i submit it with my testimony in the record. as you said, about 12 many people have a need for long-term care today, and i would remind us while this is a special committee on aging, that 5 million of these individuals are under the age of 55. as you said, the vast majority of these individuals count on their families for help, but families can only do so much. and when people need paid care, whether at home or in an assisted living facility or a nursing home, these costs and exceed most families ability to
pay. that's where insurance ought to kick him. the private health insurance does not cover long-term services, and few americans have private long-term care insurance which typically costs a lot, offers limited on any subject to bring increases that can cause purchasers to lose coverage have paid into for years. on the public side, medicare which older people and some younger people with disabilities rely on for health insurance, does not cover long-term care. the federal medicaid, federal-state medicaid program to serve as a valuable last resort for people who need long-term services and support for its protection, special home care, and varies considerably from state to state. and become available only when people are or have become impoverished taking care of themselves. i would have to take issue with mark's comments because the evidence that was presented to
us is that medicaid is not a program for the rich. the benefits are overwhelming going to low and modest income people. they need for expensive long-term services and support these precisely the kind of catastrophic, unpredictable risk for which we technically rely on insurance to spread costs. these costs are obviously unpredictable for people under ththe age of 65, and i think we all get that. only 2% of the population needs services. almost half a long-term care population because it's a small percent of a very large number of people. but the likelihood of needing long-term care and extensive, expensive long-term care is also unpredictable for people when they turn age 65. and estimated three in 10 people age 65 today are likely to die without needing any of these services, while two in 10 will need more than five or more years of service. when we think about the risks in
financial terms, half of the people that turn age 65 today will spend nothing on long-term care, depending on their families when they need it, while a very small percentage will spend hundreds of thousands of dollars. if, as you've indicated and is often claimed, we really want people to be financial prepared to manage this unpredictable catastrophic risk, we need to establish a reliable insurance mechanism, whether public or private or some combination, to which they can contribute. it's easy for experts to agree that we need a public-private partnership, but the real challenge is what role is each sector going to play your to effectively spread risk and reach the broadest possible population, although, social insurance that really spread risk and everybody participate in, and must be at the core of
future policy. private insurance can play a complement to the role but even if proponents recognize that building future policy around a private market will at best leave eight in 10 americans uninsured. public insurance can be designed in different ways that it can offer relatively comprehensive and defined benefits like or even through medicare, oregon offer basic cash benefits and a new program. and it can be funded in different ways. in part through taxes like a surcharge on income tax, and a savings for which medicaid which would otherwise have to spend the i would emphasize what anne said at the outset, although there can be some savings to medicare, medicaid is woefully underfunded and will need new financing to support it in the future. regardless of the specific of a social program will protect all of us at risk and require all of
us to contribute. in closing i want to emphasize that public insurance will not eliminate personal or family responsibility. rather it will make shouldering that responsibility manageable and affordable through private insurance, private resources and family care. and no social insurance mechanism is likely to eliminate the need for an adequate public safety net. whether within or through a continued, albeit smaller, medicaid program. the enactment and the location of the aca demonstrates that it will not be easy to enact long-term care insurance, public long-term care insurance rogue ran. but we should not kid ourselves. without our policies will continue to help people stay young and old, now into the future, who need care. building an effective long-term care insurance system with public protection that is for is the only way to enable americans
to prepare for the risks we all face, and building it is our responsibility. thank you. >> thank you. i am going to withhold my questions, and i'll do cleanup so we can get to our members. senator collins. >> thank you very much, mr. chairman. about a decade ago, i authored legislation that became law to allow the federal government to provide a long-term care insurance program for federal employees. it was not a subsidized program, but at least federal employees were offered that benefit and the vantage of a group program that they could buy into. and there have been some issues with the program, and but one of them is that not very many federal employees signed up for the program, which really shocked me because if you look
at the demographics of this country, one would think that one at a young age can buy affordable long-term care insurance and that would be protected. i'm curious, dr. warshawsky, i'll start with you on this issue. because you talked about one of the reasons that the long-term care private insurance market is, quote, a mess, is inadequate demand. and i'm wondering if most large employers offer this as a benefit? like fortune 500 companies. >> my understanding is that about half of large employers offer it as an optional benefit. very, very few will contribute to it. so it is unemployed all benefit but about half will offer. i think the experience is similar to what you've indicated
in the federal government that many do not use it. i think even very large, well-paid organizations about five or 6% of the workers use, purchase long-term care insurance. i think there are a couple of reasons for the. as i indicated in my testimony and as we heard, by an eminent economist, medicaid does represent a type of social insurance. it is a crowd out. that is a significant factor. most of the benefits, retirement benefits or health benefits that are given by employers are tax-advantaged, which provides an enormous incentive to get the benefit, clearly long-term care insurance is not tax advantaged benefit. and i would say it is a difficult subject, to be frank. although health has its downside, it has its upside to retirement issue is something people look forward to. long-term care, unfortunately, is a difficult subject.
in my opinion i think a subject which is best handled at the point of retirement, which is why i have proposed and some of the commissioners supported this in creating a combination policy which would be at the point of retirement accounts a life care community. >> i'm very intrigued by that idea, and certainly if we made long-term care insurance tax preferred -- tax-deferred the way health insurance is, it seems to me you would see a larger uptake by doctors and employees. on the other hand, we are all aware that that is the largest tax expenditure if you will that we have with employer provided health insurance. so it's the cost of doing that as well. i continue to believe though that another issue is that people are under the missed
impression that somehow the medicare program is going to cover them, or their normal health insurance or their supplemental insurance program is going to cover them. and as people are living longer, and if you look at the statistics on alzheimer's disease, which are truly fighting, it's, the need for long-term care is only going to grow. so i think we need to do a better job in making private long-term care insurance available and attractive to people. dr. chernof, let me just ask one more question. my time is rapidly running out. and it has to do with home care. most people i know would much prefer to receive home care rather than going to a nursing home.
and yet we have a very outmoded definition for qualifying for home health care that has a homebound requirement. and that homebound requirement ignores the fact that we have made technological advantages that allow people who have disabilities to leave their homes at times, and i'm wondering what you think of changing the definition or qualification for the home health benefit. ..
with serious clinical illness is what drives the cost and actually puts pressure on families and systems by sort of starting their i think you get to the right answer which is a slightly different answer than the one we have today and you are correct, the commission as a whole the liberated the homebound requirement is one of those areas we thought needed to be revisited. on behalf of the commission, i think people understand the risk
that you don't want to create something that just radically and grows a program and increases cost. this is something that would need to be done thoughtfully and it's about finding the right definition that helps the right people get the right surfaces in the right place, but the commission as a whole, republican and democratic appointees came to see this as a place where there is the need for the definition that is frankly more efficient and effective and person centered. >> thank you. >> senator scott. >> thank you, mr. chairman. it's been an interesting panel as it relates to the topic. you are certainly well-educated on the topic and passionate eye can see in your eyes and hear the frustration in the number of years you've worked on this project but without any progress. i appreciate that. you go from the mandatory let's all get in the boat together and
find free-market solutions. certainly i'm going to fall more on the free-market site but i realized in the best case scenario we can take from the doctor feders and improve drastically the results having these policies i will tell you that part of the challenge we face it seems to me when you go into a large group whether it's the united states government or some of the larger groups i dealt with, in forming the individual that works for the company that the available benefit is there, totally different conversation than getting them to sign up for the benefit so the challenge is when you have large employers unless you have enough agents or folks to help sell and motivate and take a second look at with the benefit package includes it's difficult to get people to sign up for something they are not informed about as a part of the process and that is one of the challenges i would like to have
dr. warshawsky -- may i call you mark because i'm going to butcher your name that time i say it. the misinformation really takes away the motivation. so the misinformation somehow, someway your health insurance policy is going to cover this one day and if it doesn't and you will be eligible for medicare and understand you have to exhaust your resources. so there is a misinformation in my opinion that has to be addressed and there is a marketing opportunity as well. when you look at the policies emerging with long-term care are we looking for an opportunity to have the balance to create a different actuarial basis to than reduce. they add a tax preference to that in an attempt to then create more affordability and access. is it similar to in fact, the
longest run off in american history right now it is that similar to what the life insurance companies started doing with sylvia devotee to get your life insurance benefit before you expire the last 50% of your life if you know what i'm talking about. >> i am familiar with those. >> you have adopted to the senate very well. [laughter] >> i like to hear myself talk. [laughter] i will try to address those. he indicated ample evidence that there is confusion about what the government covers or what insurance covers and what it doesn't and every survey is done by the professor jackson at harvard law school, jeff brown at the university of illinois. it's quite pervasive with a lack of understanding and i think a part of that is that there isn't
a good structure right now. and in this, i think we all agree on the panel, regardless of our viewpoint on other issues in terms of public and private emphasis. there isn't a good structure and i think part of it, part of the responsibility of government is to create that structure and in terms of our viewpoint and in terms of emphasizing the private sector and private resources that would include the tax incentives and would also include as you indicated encouraging the life care annuity. isn't the motivation a little different than -- >> a life insurance product that you've indicated basically in brief the it litigious that you create pulling the the populations that are currently excluding from purchasing the long-term care insurance because they are in poor health or insurance companies think they
might be likely to come to disabled and therefore they cannot purchase the long-term care insurance that is precise those people would be attractive to the company in terms of the life annuity segment of the combined policy. if you combine the two, you attract both populations and it is fair to both populations because of getting a benefit they wouldn't otherwise and would be a reduced cost. and more significantly it could be offered to pretty much everybody. with a very minimal underwriting which is a greater advantage in terms of creating the opportunity for more private long-term care insurance coverage. >> with a life annuity hybrid, that would work pretty well for those typically in your moderate income level and higher perhaps for those folks that are struggling to make ends meet, the life annuity premium would probably be on significant.
it's for people that have some retirement. >> one final question is done on the mandatory. plight now written it on too many pieces of paper. >> on the idea that we need some type of mandatory enrollment into an insurance product in order to actually create economic security for most americans. >> so, from my perspective -- i wish we had more time that my time is up. do you get five minutes in this committee? >> welcome given the nature of this meeting, please continue. [laughter] none of my other committees will do that. that's why i have that incredibly long run on sentence. help me understand because my perspective on the entitlement
today is that we can't afford the ones we have to read any construct we work with, forget the trillion dollars of debt that is nothing compared to what you're speaking to. the challenge we have in the penchant plan seems underfunded and the health care we already are exposed to so we are talking about a couple hundred trillion dollars of the unfunded liabilities and we had in a new component -- >> that is a great question and i'm glad you asked because i will tell you again because professional background the last thing i would imagine myself doing is is adjusting to anyone we need a new government program trying to control the ones we had. so, but after looking at this for many years and truly the idea -- i have been a pretty big fan. there has got to be a way we can actually work with the long-term care insurance market to create both changes on the demand and supply side that what in fact
really give many more americans an opportunity to ensure because right now it is my view we say people are unprepared. how can they prepare? it's not their fault they are not prepared. i don't have long-term care insurance. i know a lot about it also might parents -- >> i should point out that my parents are signed up better than the long term care employees. so thank you for that. i really appreciate that especially. but, i think that the -- there are ways that we can work with an insurance program so that it is financed in a way that it is self funding and we worked on this a lot at my company when we were modeling of the class act in just a year ago so we were dealing with a situation where we were trying to analyze what the premium levels would be
under a voluntary approach and the problem we ran into over and over again is you set the premium low enough, you know if you set premium to high you're not going to get enough people to enroll and you end up with an actuarial 56 the fact of the matter is i haven't been able to figure out a way to come up with a public policy that would do what we need, with this country needs without going in that direction and i really do think that we know enough now to set it up in a way that the premiums would cover or the tax base or however it is you choose to finance and there are so many different ways to cut pay for the benefits that we would expect. but it is a risk. i completely understand and agree to beat >> my dear in the headlights look isn't authentic. it's real. my office will call your office
and figure out what in the world you just said. >> center. >> i want to welcome our witnesses today and also offer my gratitude to the chairman and the ranking member for bringing us together today. it not only do you recognize that the current system of long-term care financing etc. is unsustainable but you have the resolve to continue to convene the committee to focus on this and i appreciate that. i am hoping to me these began to questions for the panel if i don't have too long of a runoff. the first focus on a what like to have is the role and the value of state innovation and looking at this at the national
level. obviously we have to tackle and the date of long-term care financing at the national level but i know lots of things are going on. in wisconsin we have a program called family care that operates in 57 of the 72 counties with plans to expand to all and the gist of that is that it approves the cost effective coordination of long-term care services by creating a single flexible benefit that includes a large number and range of health care services that otherwise would be available in a separate programs some just as one example of what the state is doing i wonder what we can learn from the innovation going on in the states and how to address our long-term care crisis. i didn't know if he would all want to take a stab at that. >> i will start on behalf of the commission as a whole.
when it comes to the delivery system and work force, the answer is absolutely. while there are some things that can be done, care is delivered locally and on the kind of providers and the range of services you have in a community and city and state and it is based on the kind of need and desire specific communities and there is a wide variation among the states so in conjunction with other commonwealth fund produced a report card at the public policy institute looked at looking at the performance of the various states across the country and wisconsin was one of the top performers, number five in the country. and it is the robust creativity and person centered mess of the programs that really drive the results. so are there opportunities to leverage the innovation particularly when it comes to how we deliver services and
support families and address some of the operational work force questions absolutely. the biggest challenge for example the ability to delegate functions from doctors and nurses to other members of the team is all state based and professionally driven so there are many opportunities and wisconsin is a leader in that. i think the financing question quite honestly is one that comes back to the federal level and i think the notion of a broad framework which is what the discussion is today the will of the federal government providing leadership would be important. the states are where that care is delivered and there's a lot we can learn from that. >> i would pick up on what bruce said about financing because i think that is in many respects the ball game. we have seen the innovation
moving in many states towards a much greater reliance on home and community-based care and that is encouraged in the affordable care act but needs more encouragement in terms of incentives to support that. but as noted in the outset, states are already facing enormous pressure on the medicaid programs and are not -- you cannot innovate your way out of budget tightness. even as we have seen improvements in the innovation in some states, we see tremendous variation across the states and that means there is home and a community-based care available in some populations and some places and very little particularly to the elderly and others. so the states that say the care is delivered at the local level it is always medical care delivered at the local level. we can have the delivery between the person and the caregiver, but the financing is critical to
making the services available. what we see that the state level and again, amplified at the outset is that the states in order to control their obligations create waiting lists and it is not about state innovation and delivery. the farm it out to the managed care plans that may or may not have any capacity and often do not have the capacity or experience to deliver care and so it becomes a shift in the risk and a decline in insurance protection rather than any kind of protection. finally i would say that as we go forward, he and i am happy to provide you we did some analysis supporting the foundation to look at future demand and the importance of the federal financing for the long-term care that if you look at the aging population in every state of the numbers of elderly and the share rose substantially, but we
continue to see enormous variation across the state's having fewer young people to support more old people, but again tremendous variation. and i can say i endorse what and said at the outset that if we continue the financing that we've got, we've already got tremendous variation and inadequacy in many places that inadequacy is only going to grow if we do not create a federal financing support. >> i would pretty much agree with everything that bruce and judy said. >> i would note the commission did hear testimony on some of the state programs. ryland came in and they have a medicaid waiver and many of us were very impressed by that. the program has intended to improve care and to save on costs.
minnesota also came in and gave an excellent presentation. senate it's also true that rhode island when they talked about the way for it actually gave them more money, not less whereas what we are seeing in the federal policy to change medicaid we are seeing a proposal to take a whole lot of money out. >> we basically got paid a to have a waiver because the administration so they wanted to get rhode island in but i don't think that is trying to be the common outcome. >> you all are very progressive in rhode island. >> in so many ways. >> senator ayotte. >> i want to thanks a ranking
member and also paul who is here from portsmouth hampshire who is someone who works in this area and i appreciate him being here today on this important issue. i wanted to follow-up on this issue of the weavers and -- waivers because it's important to what senator collins raised which is how we make sure the definition fits to allow more community-based and home-based treatment so that we are allowing obviously people to stay in their homes longer because the average cost for care in a nursing home is approximately $80,000 a year so i can see this being important in terms of costs and also in terms of people having a better quality-of-life. so with regards to the waivers issue is it based on what the commission found should we give
states greater flexibility particularly in this area for innovative programs that are going to allow more flexibility at home and community-based care because i think the also fits and obviously with the overall federal definition that we would come up with but i see this is an area where perhaps states are going to come up with a better idea of and we would come up with in washington. >> maybe i will start on behalf of the commission and fellow participants can weigh in as well. this was a place the commission gave a lot of thought to and i think as we listened to the states it was an area of interest for us and i think the tecum message is there is a recommendation that talks about simplifying the process. there are so many different kinds. they often work in conflict with one another. sometimes they are just that far apart but the problem is that you are the person caring for a family member that is in that little white space between the
two waivers. you are in trouble. you are not sick enough for this, so i think that this notion of a much simpler approach to the waivers is one that was endorsed by the commission. i think the other concern was raised obviously is the issue of individual protections that the waivers deliver on the services that need to be provided. so in that balancing test is how do you create the kind of flexibility so you get the programs like the ones we've heard from but also make sure that in the process of providing more flexibility that we are not actually losing services for those in need them and that there is adequate oversight. >> if i may follow up on that point, my experience in reviewing the waivers and thinking about the ways the federal government can do a better job in the flexibility has been that over the years in the last five to six years we
have seen a lot of loosening of those restrictions to the point where states in fact have a tremendous amount of leeway and the degree to which people do not have access to the community-based service has a lot more to do with budgetary issues than the need to keep the waivers programs with a number of people and spending per person than flexibility around the federal requirement about what states can do. >> with regards to the costs, one of the waivers process these in moving people from nursing homes to the home care would save money or cost money and we heard evidence on both sides both from witnesses that came in and one said that we would in fact save costs but actually some of the commission members themselves who are providers of long-term care service support for skeptical on that and felt
the system pretty much puts people in the right space already. so we didn't hear a consensus in terms of whether that would be a cost saver or spender. >> just to build on that i think we have got a lot of experience with the home and community-based care over the years we've been trying to expand it and there is a general agreement we get a better value for the dollar when we are able to serve people at home and not in institutions when they don't need them. but we have so many people in need that we need to build the system and we are under serving two days of that when we offer more services at home we serve more people that is a good thing, that it costs. and with respect to the issue of flexibility and savings, i have heard representatives of the governors and medicaid directors say that flexibility is not
enough. they've got flexibility. what they don't have are the dollars. and for many years until recently and i think that is a function of politics, governors in both parties have joined together to call on the federal government to take over the long term care responsibility for the dual eligible for the medicaid beneficiaries who are also medicare beneficiaries, recognizing that they are lacking the resources to do the job. it doesn't mean they can't be involved in and that it can't be delivered on the ground but they're looking at the defense for dollars. >> since i got one question and i appreciate all of your answers, i'm going to submit questions for the record and some follow-ups on things you said. i appreciate all of you being here. thank you. >> senator warren. >> thank you for holding this hearing.
it just seems like to me this is another example of how middle class families are getting squeezed. it's hard enough for any family to put aside anything for savings today because the squeeze on families and now we expect families to save for retirement and long-term care at the same time that many are of a starting the costs of caring for an elderly family member. so we just doubled up here. there is a growing conversation about the retirement crisis in america. and in the face of this the lack of a basic safety net on long-term care is just more fuel to the fire on the kind of problems we are going to face. and - you made it clear the retiring baby boomers are ill equipped to cover the full cost of their long-term care needs. we've got fewer people, lower
savings since the hit retirement than their parents did. only 18% have retired benefit plans. one-third have less as they approach their senior years have less than a year's worth of income and one-third have no savings at all so that leaves us with medicaid as the sort of backup program which can cover some of the costs, but the current system forces seniors to spend most of their assets in order to qualify. every bit helps but to qualify when they have to sell off all of their assets this has other economic implications. so where i want to start is to ask you, dr. feder can you tell us about the financial instability that is settling of the assets causing our seniors? >> thank you, senator warren.