The Cost of Living Longer

Andee St. John is searching for an assisted-living facility near Columbia, S.C., for her 69-year-old mother, who was hospitalized recently after several falls. But finding the place with the right combination of price, amenities and services has been difficult. 

So far, Ms. St. John has consulted with a financial adviser, a geriatric social worker and an elder-law attorney as part of her research.

"It's been very eye-opening," Ms. St. John says. "You don't just pay one fee a month for assisted living. There are all these different add-ons."

A growing number of families are wrestling with the same dilemma: rising costs for long-term care and a mind-boggling array of options.

Nationwide, long-term-care costs in a number of categories have risen faster than inflation over the past year, according to research released on Tuesday by insurer MetLife's Mature Market Institute. At the same time, care providers are changing the types of services available or bundling services in new and at times confusing ways.

But there are strategies that can help. People who identify the specific services their loved ones need, haggle aggressively on price and explore alternative-care options can save money -- or at least get more care for the money they do spend, experts say.

The broad category of "long-term care" includes a variety of health and daily-living services, either in facilities or in people's homes, for people with chronic illnesses or disabilities.

Costs are rising for most kinds of care, according to the MetLife study, which surveyed nearly 6,700 long-term-care providers and is the first to analyze the ways providers have started bundling together various add-on services, such as transportation or extra meals, in their fee structures.

The average rent at assisted-living facilities, which provide help with day-to-day activities but not necessarily round-the-clock skilled-nursing care, shot up 17% to $3,486 over the past five years, according to the study. That is based on facilities offering six to nine services.

The price of a private room at a nursing home, meanwhile, rose 4% over the past year to $248 a day. And while prices for home-health aides and adult-day services didn't rise, on average, the brief respite comes after increases in recent years. Home-health-care spending by Medicare beneficiaries, for example, climbed 129% to $19 billion from 2000 to 2010, according to a March report to Congress by the Medicare Payment Advisory Commission.

With fees rising and the menu of services changing, here are some strategies families are using to stretch their long-term-care dollars further.

Paying for Care

Before exploring which kind of long-term care a family member needs, you should be clear about how you are paying for it.

Some consumers have long-term-care insurance, which covers an array of expenses. But the policies often have been money losers for insurers, and in recent years several have exited the business. The ones that remain have raised premiums, cut back on coverage for new policies or both -- meaning consumers will have to pick up more of the tab themselves. 

Most people simply reach for their checkbooks. But there are a couple of ways to ease the sting.

Married couples with some savings might want to consider buying an immediate annuity that pays benefits for a set number of years, to preserve savings for the "well" spouse while the other spouse receives care, says Gary Cotter, a certified financial planner in Sun City Center, Fla.

The benefit: Such an annuity wouldn't count against them in qualifying for assistance from Medicaid, the state and federal program that pays for health and long-term care for the poor. The catch: The well spouse has to live through the entire period the annuity is making payments. If not, the state has the first claim on any remaining payments, Mr. Cotter says.

One often-overlooked benefit is available to millions of families of wartime veterans. The Department of Veterans Affairs' aid-and-attendance benefit pays up to $2,020 a month to married veterans who qualify. Single veterans and surviving spouses might qualify for smaller payments.

Choosing the Right Care

Once the financing is settled, it is time to choose the kind of care you need. That should start, experts say, by cataloging the various daily living tasks you and your loved one can and can't perform. That will give you a sense of whether a few hours a day of personal assistance can do the job, or whether it is time to make a costlier move.

Genworth, one of the country's largest long-term-care insurers, uses five levels, ranging from independent (level one) to completely dependent on skilled-nursing care (level five).

At the second level, the older adult suffers from disease symptoms or early dementia and typically needs help shopping and paying bills, tasks a family member often can perform at no cost. At level three, people need four to five hours a day of help with activities that take place at predictable times. People at level four need considerable assistance from someone who is constantly on call.

Experts say most families wait until there is an immediate need for more care before they research and shop for it. A better approach: asking your loved one's doctors for help anticipating what you might need next. That way, you have more leverage. You can figure out in advance which assisted-living facility has vacancies and might waive a move-in fee or other charges, for example, and which one has a waiting list.

Some families turn to geriatric-care managers, typically social workers or registered nurses who charge an hourly fee. The managers can help you figure out what kind of care you need and review contracts before you sign to make sure there are no hidden charges, such as move-out fees.

Assisted Living

Of all of the various long-term-care options, assisted-living facilities are becoming the trickiest to figure out, experts say.

That's because, in the past five years, a growing number of facilities have started packaging more services together, rather than charging for them a la carte. This year, for example, 65% are providing six to nine services in their base rate, up from 59% five years ago, and 31% include 10 or more services.

The problem: People who need added services often must choose plans with a higher base rate that lumps more services together -- and end up paying for some services they don't need. The "personal-care" category -- which may or may not include dressing, bathing or other tasks -- costs an average of $504 a month, according to MetLife.

But many services have wiggle room for discounts, experts say. A good starting point, they say: move-in fees and monthly "wellness fees" that sometimes include only blood-pressure checks, which many residents can do on their own with a $30 cuff from a drugstore.

Kathleen Dempsey, a geriatric-care manager in Minneapolis, often recommends that clients buy a medication-monitoring system rather than pay for a nurse to do so, a service that costs $347 a month on average, according to MetLife. The website e-pill.com offers several different choices.

Jalaa McNeal, a 71-year-old retired physical-education teacher, moved to an assisted-living facility in Cedar Rapids, Iowa, this summer after she was diagnosed with water on the brain and had a shunt implanted. When she moved in, she needed to have her medicine administered a few times a day. But after months of therapy, she was tested by a neuropsychologist who said she can manage her medicine on her own. She canceled, saving $500 a month.

Independent Living

Some families are delaying or avoiding costly assisted-living care by moving to so-called independent-living apartments. Traditionally, most of these communities were little more than age-restricted apartment complexes. But in recent years, many have added nonmedical services such as transportation, meals and concierge desks. Families can hire their own home care separately if they need it.

One big advantage: Unlike fancier continuing-care retirement communities, independent-living facilities typically don't require lump-sum payments, says Mr. Cotter, the Florida planner.

"A lot of people prefer independent-living apartments because they can contract with a home-health provider themselves," he says. "It puts them in control of the whole thing."

Kevin Skipper, a financial adviser in Columbia, S.C., paid $2,000 a month for his mother's independent-living apartment, which included rent plus three meals a day. When he added companion care, the total cost was $2,900 a month, allowing him to delay moving her to a nearby assisted-living facility, which was charging $4,500.

Home Health Care

Many people prefer to remain at home rather than move to a facility. It can be costly, but there are ways to save. People who don't need 24-hour care can sign up for hourly services. Rates average about $20 an hour for basic services such as housekeeping and meal preparation, and $21 an hour for hands-on assistance with bathing, dressing and other activities, according to MetLife.

Families using home care on a consistent schedule, or for several hours or more every day, might be able to cut the rate by a few dollars an hour, experts say. A good starting point is Medicare's Home Healthcare Compare tool (medicare.gov/homehealthcompare), which allows you to search for local agencies and see their quality of patient care.

To get a better deal, consider hiring caregivers on your own, rather than through an agency, which usually runs about 25% more, experts say.

You might get lucky and find a caregiver through word-of-mouth from a friend also caring for elderly loved ones. Otherwise, you probably will need to place ads online or in newspapers.

Alternative Options

Other types of care often are overlooked, but can relieve family burdens and financial stress.

"Adult-day services," for example, provide health, social and therapeutic activities in a group setting for people with functional and cognitive problems. Some are free-standing; others are housed within nursing homes, assisted-living facilities or hospitals. Some offer a high level of medical care, and charge an average daily rate of $79. The services work well for patients who can sleep through the night at home, experts say.

Another option: Many assisted-living facilities offer "respite-care" programs, through which older adults who are cared for at home can check in for a weekend or longer when a family caregiver needs to leave town. It is an option that can help a family delay having to use a more expensive assisted-living facility, says Rona Loshak, a long-term-care insurance broker in Roslyn, N.Y.

Many families also can tap hospice care, generally meant for patients in the last stages of a serious illness, earlier than they might realize, and often with Medicare's backing.

Linda Fodrini-Johnson, a geriatric-care manager near San Francisco, recently moved her mother, who qualified for Medicare-backed hospice care, from a skilled-nursing facility costing more than $10,000 a month to a small residential-care facility with six private rooms -- at about half the price.

(Source: The Wall Street Journal, 10/29/12) 

Gen Y, Boomers on Same Smartphone Page

Boomers...they're just like Millennials, at least when it comes to smartphones.

According to research commissioned by Consumer Cellular (which is the official cell phone plan provider for the AARP), Boomers use their smartphones in much the same way that younger customers do.

One survey conducted by the company found that 90% of current 40-plus smartphone owners taught themselves the features and functions of the device, and nearly 60% cite email as the most-used app on their phones.

The survey also indicated that Boomers wanted to use their phones to access the Internet as much as younger consumers. A full two-thirds of the respondents said they use the phone's WiFi features to connect to the Internet.

According to the survey, 64% of male smartphone owners and 48% of female smartphone owners most frequently visited news Web sites (although men were three times more likely to visit sports Web sites, while women tend to visit social media websites).

Meanwhile, a quarter of them have given up their landlines in favor of cell phones. "These surveys show that Boomers are as interested in the latest phones and technologies as younger generations," said Consumer Cellular CEO John Marick, in a statement.

(Source: Marketing Daily, 12/23/11)

Baby Boomers: Building With Multiple Generations In Mind

The recently released “MetLife Report on American Grandparents” revealed that 1 in 10 households is headed by a grandparent with at least one grandchild living there. The study reports that part of the reason for this is high rates of unemployment among the children’s parents. Interestingly, in 1980 there were only 28 million Americans living in a household that included two adult generations or a grandparent and at least one other generation. By 2008 the number was 49 million Americans living inter-generationally.

In a recent New York Times story about this trend, Kermit Baker, a senior fellow at the Joint Center for Housing Studies at Harvard and the chief economist of the American Institute of Architects, said, “Immigrants are a source of growing demand (for intergenerational homes), and their household composition is different in fundamental ways from the domestic-born.”

In 2007, a developer was set to break ground on a condo community in Sunnyvale, Calif., when the market crashed. In early 2011, developer Taylor Morrison revisited those plans and won approval for a town home project specifically targeting multiple generations living under the same roof.  This style of living appeals to the engineers coming to Silicon Valley from India and China with their extended families, according to the Times report.

There are signs, however, that this isn’t just a trend in the immigrant population. In a new book, Unassisted Living: Ageless Homes for Later Life, authors Jeffrey Rosenfeld, director of the Gerontology Program and Gerontology Center at Hofstra University, and Wid Chapman, the interior design program chair at Parsons School of Design, discovered that a number of Boomers are designing and building for their older years with multiple generations in mind. Whether creating a “compound” with multiple structures on the same property or a single home that embraces all generations, there is a clear desire to age at home, both supporting, and with the support of, adult children and grandchildren.

There is great interest in how Boomers are currently living and how and where they will choose to live in retirement.  It will not be their parents’ retirement.  It appears that Boomer idealism is being translated into realism that their children and grandchildren will not have the same quality of life, so they must be there to help fill the gaps. The National Association of Realtors’ new campaign on home ownership taps into this fear. It features a grandparent and grandchild talking about the American dream of homeownership.

Social Site Elders Click Through More

SocialCode, reporting on a new Facebook advertising research study examining over four million data points from a wide variety of industries, says that for ads with a 'Like' button, older Facebook users have a higher CTR while younger Facebook users will tend to click 'Like' directly within the Facebook ad.

While propensity to click-through on Facebook is positively correlated with age, writes Marketing Charts, propensity to like is not. Age has a strong positive effect on whether a user will click, but has a less pronounced opposite effect on the likelihood of them becoming a fan of a page.

Fifty-plus-year-old users, the oldest segment in the study, are 28.2% more likely to click through and 9% less likely to like than 18-29-year-old users, the youngest group observed. Compared to the rest of the younger population, 50-plus users see a 22.6% higher CTR and 8.4% lower like rate.

Laura O'Shaughnessy, CEO, SocialCode, observes that "... younger Facebook users are more comfortable using the 'Like' button than older users at this point... (though) older users have a high level of interaction and curiosity about the ads... (but) are also the newest subset to join the social network... "

When broken down by gender, age has a much more pronounced effect on CTR for women than it does for men, whereas for men there is a stronger effect on 'Like' rate than women:

• Overall, women are 11% more likely to click on an ad
• 'Like' rates are almost even for men and women; men are actually 2.2% more likely to 'Like' an ad than women
• For women, CTR is 31.2% higher for the 50+ age group versus 18-29 year olds; men only see a 16.2% difference between the age groups
• Versus all age groups, 50+ women's CTR is 22% higher versus a 16.4% difference for males
• The oldest male segment has an 11.7% lower 'Like' rate than the youngest segment, and 9.5% lower 'Like' rate versus all age groups; Women only see a 7.2% and 7.9% difference respectively

(Source: The Center for Media Research, 09/09/11)

Debt Hobbles Older Americans

Most people used to pay off their debts before retiring.  But as wages have barely kept up with rising prices over the past 35 years Americans have pushed debt higher, living beyond their means.  Now, people are postponing retirement, cutting living standards or both, says the Wall Street Journal.

All kinds of debt held by this age group have risen, but the big problem is mortgages.

• Thirty-nine percent of households with heads aged 60 through 64 had primary mortgages in 2010 and 20 percent had secondary mortgages, according to research group Strategic Business Insights' MacroMonitor.
• That was up from just 22 percent and 12 percent, respectively, in 1994.

Debt isn't the only issue clouding retirement prospects.  People aren't saving enough either.

• As calculated in a Wall Street Journal article earlier this year, the typical American household nearing retirement with a 401(k) retirement account has less than one-quarter of what it needs in that account to maintain its standard of living in retirement.
• Four out of five households with heads in their early 60s and with mortgages had too little savings in 2008 to pay off debts without dipping into retirement accounts, according to Boston College economist Anthony Webb.

Debt levels of older Americans have been rising for more than two decades.  Indeed, of households with heads aged 62 through 69 and with mortgages, the median amount of mortgage debt hit $71,000 in 2007, five times the 1987 inflation-adjusted median, according to a study by William Apgar, then at Harvard's Joint Center for Housing Studies.

Source: E.S. Browning, "Debt Hobbles Older Americans," September 7, 2011.

Boomers Will Be Spending Billions to Counter Aging

Baby boomers heading into what used to be called retirement age are providing a 70 million-member strong market for legions of companies, entrepreneurs and cosmetic surgeons eager to capitalize on their "forever young" mindset, whether it's through wrinkle creams, face-lifts or workout regimens.

It adds up to potential bonanza. The market research firm Global Industry Analysts projects that a boomer-fueled consumer base, "seeking to keep the dreaded signs of aging at bay," will push the U.S. market for anti-aging products from about $80 billion now to more than $114 billion by 2015.

The boomers, who grew up in a culture glamorizing youth, face an array of choices as to whether and how to be a part of that market.

Anti-aging enthusiasts contend that life spans can be prolonged through interventions such as hormone replacement therapy and dietary supplements. Critics, including much of the medical establishment, say many anti-aging interventions are ineffective or harmful.

From mainstream organizations such as the National Institute on Aging, the general advice is to be a skeptical consumer on guard for possible scams involving purported anti-aging products.

"Our culture places great value on staying young, but aging is normal," the institute says. "Despite claims about pills or treatments that lead to endless youth, no treatments have been proven to slow or reverse the aging process."

Its advice for aging well is basic: Eat a healthy diet, exercise regularly, don't smoke.

"If someone is promising you today that you can slow, stop or reverse aging, they're likely trying hard to separate you from your money," said S. Jay Olshansky, a professor at the University of Illinois-Chicago's School of Public Health who has written extensively about aging.

"It's always the same message: 'Aging is your fault and we've got the cure,'" Olshansky said. "Invest in yourself, in the simple things we know work. Get a good pair of running or walking shoes and a health club membership, and eat more fruits and vegetables."

But such advice hasn't curtailed the demand for anti-aging products, including many with hefty price tags that aren't covered by health insurance. These include cosmetic surgery procedures at $10,000 or more, human growth hormone treatments at $15,000 per year and a skin-care product called Peau Magnifique that costs $1,500 for a 28-day supply.

Another challenge for consumers is that many dietary supplements and cosmetics, unlike prescription drugs and over-the-counter medicines, aren't required to undergo government testing or review before they are marketed. The Food and Drug Administration and the Federal Trade Commission do crack down at times on egregiously false anti-aging claims, but generally there's little protection for people who don't get hoped-for results.

Mary Engle, director of the FTC's division of advertising practices, said her agency focuses on the cases that could cause serious harm, such as bogus cancer treatments that might prompt an ill person to forgo proper care.

She said the agency lacks the resources to crack down comprehensively on ads with exaggerated claims that exploit customers' hopes for better looks or more energy.

"Often it doesn't rise to the level of fraud," she said. "There are so many problematic ads out there and we really have to pick and choose what we focus on."

In contrast to the caution of mainstream organizations, there are many vocal promoters of anti-aging products and procedures, including the American Academy of Anti-Aging Medicine. It hosts annual conferences in the U.S. and abroad, and claims 22,000 members, mostly physicians.

In its mission statement, the academy says the disabilities associated with normal aging "are caused by physiological dysfunction which in many cases are ameliorable to medical treatment, such that the human life span can be increased."

One of the academy's co-founders is Robert Goldman, a doctor of osteopathic medicine. He contends that much of the resistance to the anti-aging movement comes from sectors of the health and pharmaceutical industries that feel threatened financially -- for example by the surging use of over-the-counter nutritional supplements.

"It all has to do with who's controlling the dollars," he said.

Though many anti-aging interventions are expensive, Goldman said people on tight budgets still can take useful steps such as drinking purified water, taking vitamins and using sun screen.

"People should be healthy and strong well into 100 to 120 years of age," Goldman says in a biographical video. "That's what's really exciting -- to live in a time period when the impossible is truly possible."

Olshansky, who over the years has been among Goldman's harshest critics, believes there will be scientific breakthroughs eventually, perhaps based on studies of the genes of long-lived people, that will help slow the rate of aging.

In the meantime, Olshansky says, "I understand the need for personal freedom, the freedom to make bad decisions."

A look at some of the major sectors in the anti-aging industry:

Hormone Replacement Therapy

Numerous companies and clinics promote hormone replacement drugs, including testosterone for men and custom-mixed "bioidentical" hormones for women, as a way to slow the aging process.

Many consumers have seen ads featuring muscle-bound Dr. Jeffry Life, now 72. He used testosterone and human growth hormone in his own bodybuilding regimen and recommends hormonal therapy for some of the patients patronizing his age-management practice in Las Vegas.

The FDA has approved hormone replacement drugs for some specific purposes related to diseases and deficiencies, but not to combat aging.

"Finding a 'fountain of youth' is a captivating story," says the National Institute on Aging. "The truth is that, to date, no research has shown that hormone replacement drugs add years to life or prevent age-related frailty."

Dr. Evan Hadley, director of the institute's Division of Geriatrics, says hormone replacement drugs can have harmful side effects. He said there is a need for more research, such as an institute study of testosterone therapy, to identify the potential risks and benefits.

"There is indeed potential that people can be healthier in old age," Hadley said. "But it still requires evidence about what's going to help and what's not."

Hormone drugs can be expensive. HGH shots can cost more than $15,000 a year, according to the institute. A hormone-based dietary supplement known as DHEA (dehydroepiandrosterone), a precursor of estrogen and testosterone, is marketed online for $12.95 per capsule by Utah-based NutraScriptives.

Some proponents say over-the-counter DHEA supplements can improve energy and strength, boost immunity and decrease fat. The institute says there's no conclusive scientific evidence of any such benefits.

Life says he's a staunch advocate of exercise and healthy eating, but insists that hormone replacement therapy, under a doctor's supervision, is a crucial addition for some men, and that includes him.

"There's no way I could look and feel the way I do if all I had done the last 13 years was exercise and eat right," he said. "Even if you do everything right, if you have a deficiency in testosterone, you will lose the fight."

Life acknowledged that the cost of testosterone replacement, probably more than $5,000 year and not covered by insurance, could be daunting for some. But he contends the investment pays off in more vitality.

"It's hard to put a price on good health," he says.

Cosmetic Surgery

According to the American Society of Plastic Surgeons, there were 13.1 million cosmetic plastic surgery procedures performed in the U.S. in 2010, a 77 percent increase over a decade.

One notable trend is increased preference for less invasive procedures that enable patients to get back to work and social settings without a long leave of absence.

The most popular of these is treatment with the wrinkle-smoothing drugs Botox or Dysport. They account for 5.4 million procedures, averaging about $400 per treatment. Other popular noninvasive procedures include soft-tissue facial fillers, chemical peels and microdermabrasion.

More invasive procedures come at a higher price. Face-lifts can run from $6,000 to $15,000; the plastic surgeons' academy reported performing 112,000 of them in 2010.

Dr. Peter Schmid, who runs a cosmetic surgery practice in Longmont, Colo., says his field is flourishing because of evolving attitudes among appearance-conscious boomers. A recent Associated Press-LifeGoesStrong.com poll found that 1 in 5 boomers either have had or would consider cosmetic surgery.

"Cosmetic surgery has become table talk at home. There's a lot of satisfaction and acceptance from people who've had it, friend to friend, word of mouth," Schmid said.

While the noninvasive procedures cost less than a face-lift, the effects won't last as long and repeat treatments might be needed several times a year, Schmid said. He advised patients to calculate carefully which type of procedure makes the most sense for them financially.

Schmid, who is on the board of the American Academy of Cosmetic Surgery, cautioned against any rush to try new procedures that get a burst of publicity.

"There's a certain vulnerability because everybody's looking for that quick fix, that fountain of youth," he said. "Many people will shop emotionally instead of objectively, before something has been tried and tested."

Some critics of the anti-aging industry are supportive of cosmetic surgery, provided the patient can comfortably afford it.

Professor Robert Binstock, an expert on aging at Case Western Reserve University's School of Medicine, told of a recently widowed friend whose spirits lifted after getting the bags under her eyes removed. "If you feel better looking in the mirror in the morning, fine," he said. "I have no objection to people being narcissistic."

Skin Care

One of the industry's booming sectors is anti-aging skin care, featuring wrinkle creams and facial serums. By some estimates, the U.S. market for cosmeceutical products -- cosmetics with medicine-based ingredients -- is approaching $20 billion a year.

The FDA, which oversees cosmetic safety and labeling, doesn't require manufacturers to prove the effectiveness of cosmetic products before they go on sale, and many ads make claims which critics say are exaggerated or unverifiable. The American Academy of Dermatology recommends consulting a dermatologist on what skin care products have been proved safe and effective in human studies.

Consumer Reports has ventured into the realm of anti-aging cosmetics several times recently, using high-tech optical devices and other scientific methods to assess the products.

Last year, the magazine tested nine face serums, available at drug stores for prices ranging from $20 to $65 and all claiming to reduce wrinkles.

"After six weeks of use, the effectiveness of even the best products was limited and varied from subject to subject," according to the review. "When we did see wrinkle reductions, they were at best slight, and they fell short of the miracles that manufacturers seemed to imply on product labels."

Earlier, the magazine tested wrinkle creams.

"Even the best performers reduced the average depth of wrinkles by less than 10 percent, a magnitude of change that was, alas, barely visible to the naked eye," it said.

Its top-rated product, Olay Regenerist, cost about $19 at the time of the testing. La Prairie Cellular, the most expensive at $335, was rated among the least effective.

Similar conclusions were reached in testing 16 over-the-counter eye creams.

"Even among the best-performing products, wrinkle reduction around the eyes was generally pretty subtle," the magazine said. "After six weeks of daily use, none came close to eliminating wrinkles."

It said the most expensive, Perricone MD at $95 a jar, was no better than cheaper drugstore brands.

One recent development in anti-aging skin care is the use of stem cell technology. ReVive's expensive Peau Magnifique is among the new products, claiming to "recruit adult stem cells into brand new stem cells."

Neither Consumer Reports nor the FDA has conducted any specific assessment of Peau Magnifique's effectiveness. On a Web site called Makeupalley.com, some customer reviews raved about it; others trashed it as a waste of money.

(Source: USA Today, 08/22/11)

Three Simple Ways Medicare Can Save Money

The most significant reason for our out-of-control deficit spending is health care.  And the biggest federal health care program is Medicare.  That's why almost everybody agrees that Medicare must be reformed.  A good place to start is recognizing that what Medicare is trying to do is impossible, says John C. Goodman, president and CEO of the National Center for Policy Analysis.

Each price Medicare pays is tied to a patient with a condition.  And with the 7,500 things doctors could possibly do to treat a given condition, Medicare has to be just as diligent in not paying for inappropriate care as it is in paying for procedures that should be done.  So, in fact, Medicare isn't just setting prices.  It is regulating whole transactions.

What happens when Medicare gets it wrong?

• One result is that doctors face perverse incentives to provide care that is costlier and less appropriate than the care they should be providing.
• Another result is that the skill set of our nation's doctors becomes misallocated, as medical students and practicing doctors respond to the fact that Medicare is overpaying for some skills and underpaying for others.

A more sensible approach is to begin the process of allowing medical fees to be determined the way prices are determined everywhere else in our economy -- in the marketplace.  Here are three ways to start:

• First, Medicare should allow enrollees to obtain care at almost all walk-in, free-standing emergency-care clinics that post prices and usually deliver high-quality care. Since these fees are well below what Medicare would have paid at a physician's office or hospital emergency room, this reform would lower Medicare's overall costs.
• Second, Medicare should allow enrollees to take advantage of commercial telephone and e-mail services. Again, it is important to pay the market price, not Medicare's price, although Medicare patients should probably pay a good portion of the cost of each phone call out of pocket.
• Finally, Medicare should encourage physicians to repackage and reprice their services in ways that are good for the doctor, good for the patient and good for Medicare. For example, Medicare should encourage concierge doctor arrangements.

Source: John C. Goodman, "Three Simple Ways Medicare Can Save Money," Wall Street Journal, August 11, 2011.

The Death Of Ageism

An exercise like this may not be very appealing or comfortable, but it can be invaluable for your business and yourself. Understanding ageism may seem like an odd subject when discussing advertising to Boomers, but it's actually crucial. Eliminating ageism is one of the keys to successfully communicating with them because it will help enable what every Boomer strives for: Positive Aging.

Here are a dozen thought-starters to help you begin what will be a very profitable process personally, as well as professionally. Think about these issues and, over time, it will reduce negative attitudes against young and old alike.

1. Do you believe that you're an ageist?
If you take umbrage at the very suggestion, perhaps you protest a bit too much. Take a closer look at your most cherished and certain beliefs about aging, and see if there's any prejudice to be found.

2. Are you afraid of aging? It's a natural fear, particularly in our youth-worshipping culture. But if you don't face down that fear, you're setting yourself up for a horrendous fall if you're lucky enough to grow old one day. In the meantime, your fear will color your advertising and marcom decisions, much to your company's detriment.

3. Have you made an effort to learn about key aspects of aging? The more realistically informed you are about aging and what to expect, the better you'll be able to evaluate and resist the inaccurate and negative stereotypes so often associated with the aging process. Strive to understand the differences between what's relevant in aging and what isn't, and you'll be on the path to enlightenment.

4. Do you harbor misinformation and erroneous beliefs about aging? Once you understand the important aspects of aging, do you use facts to actively challenge the misconceptions and myths that can distort your thinking and behavior? Be sure to analyze your "positive" prejudices as well as your negative ones.

5. Do you believe in the stereotypes of aging? To begin to answer this, examine the language you use when talking about aging, then go from there.

6. Do you appreciate the difference between ageism and discrimination? You may never have done a single discriminatory thing to any older adult, yet still be an ageist at heart. In fact, some very well-meaning people overcompensate.

7. Have you carefully listened to how ageism can affect Boomers? You can do this informally by speaking with them one on one, or you can do it more formally in a series of focus groups. Whatever you choose, there's no substitute for going directly to the source.

8. Have you monitored advertising, marcom and the media, observing how they reflect aspects of aging and ageism? Carefully considering the negative ways in which older adults are portrayed in marcom, ads, commercials, films and television is crucial to understanding and overcoming ageism.

9. Have you considered advocating against ageism? Obviously, sponsoring an initiative that champions the fight against ageism can do wonders for your company's image. But on a personal level, when someone you know uses ageist language or images, do you tactfully advise them to reconsider their attitude? Face it, even innocent jokes help keep ageism alive.

10. Are you careful about your own language and behavior toward older adults? No matter how loving and generous you may be, nobody's perfect. A little self-examination just might prove profitable.

11. Do you talk openly about aging issues and ageism with your staff? Hidden ageism that's never spoken about can be even more destructive than the overt kind, because it makes it easier for people to wallow in ignorance. A powerful way to fight ageism is to showcase people who don't fit any stereotypes in your advertising and marcom.

12. Can you build intergenerational bridges to promote better mutual understanding? Ageism thrives in the Petri dish of ignorance. However, when all generations understand that they're interconnected throughout their lifespan, they'll begin to appreciate the power they have to affect each other's well-being.

By Vincent Vassolo Thursday, August 4, 2011

 

Senior Customers Require Balancing Act

TrueCar.com's review of the purchasing behavior of more than 200,000 car buyers from 2009 and 2010 shows that seniors (people 65 years of age and over) choose vehicles from brands they grew up with. Topping the list of brands purchased by seniors in that period, by percentage of buyers, were Buick, Lincoln and Cadillac.

"It's sort of a good-news, bad-news scenario for automakers," says TrueCar head of industry analysis Jesse Toprak. "It's good news because of the high loyalty and admiration for the brands among these older consumers. It's bad news because, well, they won't be alive forever.

"So it's a balancing act, really. I talk to these guys and it's a challenge they live. It's something they think about every morning when they get up: how do we not alienate our loyalists while trying to bring younger buyers into the brand?"

If the relative percentages of older buyers among brands were low, it wouldn't be such a nightmare for marketers. But the numbers say it all: 57.5% of Buick owners in 2009 and 2010 were over 65, per TrueCar stats. For Lincoln, it's 47.7%. Cadillac sold 44% of its cars during that time to seniors. After that comes Chrysler at 36.1%. General Motors sees a more youthful balance with GMC, at 32.4% over-65 buyers, and Chevrolet, which is just above Porsche, at 31.2%. After Porsche (29.5%) come Lexus, Jaguar and Hyundai, a quarter of whose buyers are 65 or older.

Toprak says the key to appealing to all consumers is to have (and market) tech-forward cool vehicles that younger buyers like, and trim levels that older consumers may also respond to. "It all comes down to the product. In spite of image, you can still sell to a younger and hipper audience with the right vehicle." Case in point from some years back before Buick had begun revamping its lineup with vehicles like the Enclave: the Buick Rendezvous, introduced in 2001 and built on the same platform as the (much mocked) Pontiac Aztek had waiting lists in California, notes Toprak, who said those buyers were 40-somethings. Same drill for the Enclave.

Another pattern emerges with a quick glance at the specific models with the highest percentage of older buyers: about 90% of buyers of the Lincoln Town Car are 65 or over. Next is the Buick Lucerne full-size luxury sedan, 86.6% of whose buyers are seniors. After that comes the big Cadillac DTS, the CTS Wagon, STS large car, the Hyundai Azera full-size sedan, and Chevy's largest car, the Impala. The list also includes the Toyota Avalon full-sized sedan. The only mid-sized cars on the list are Buick LaCrosse and Lincoln MKZ, 58.9% and 53.8% of whose buyers were 65 or older in the past two years. For the most part, big cars mean older buyers.

"That's the general issue; large cars don't appeal to younger people; it's really a category problem," says Toprak, who notes that luxury brands like BMW and Mercedes-Benz have smaller vehicles in market or in the pipeline to appeal to younger buyers: BMW launched the 1-Series in 2004 and Mercedes-Benz plans a small car for the U.S., perhaps based on its Europe-market A-Class platform. These are "leapfrog" cars that a 20-something can buy and then move up from as they get older and hopefully more affluent, notes Toprak.

"It's not just image -- it's practicality, he says. "If they offer vehicles with very attractive lease payments that younger buyers with better cash flow can get into, you get a much higher chance of succeeding."

(Source: Marketing Daily, 07/29/11)

What Google+ Means For Mature Marketers

If you're involved in marketing to mature consumers, you're familiar with their growing enthusiasm for social media. With compelling studies and statistics to boot, organizations working with Boomers and beyond have more information than ever to help them understand the value of social media; many now have a good grasp of how to use most of the current tools.

 

But there is change in the air.

Recently, Google unveiled its own foray into social media with the limited rollout of the Google+ project. Touted as "Real-life sharing rethought for the web," it gives the company a means to extend its prowess in assessing how we interact with the fabric of the Internet based on an organization's experience with search, mail and mobile within the social media realm. Google has already rolled out integrated Google+ components on its search engine optimization arm.

Most people are wondering what Google+ is. Currently, Google+ is composed of a few different products that work in tandem:

• Circles

Circles is the platform on which Google+ is built. While Facebook doesn't distinguish between users' different groups of friends, Google+ will make sure they don't accidentally share the same content with their grandmother and their fraternity buddy.

• Sparks

Sparks is comparable to Facebook's "Wall." It's a customized stream that takes into account the user's interests.

• Hangouts

Hangouts is a feature that will allow users to video-chat with one another. It will accommodate multiple users and has a feature that will determine who is speaking and enlarge that person's video accordingly.

• Huddle

Huddle will be a text-based version of Hangouts where users can chat with groups of their friends.

• Instant Upload

Instant Upload will allow users to get pictures and videos onto the Google+ platform. It integrates mobile platforms with the Google+ platform.

Google+ will have applications in our industry on a number of fronts. From the beginning, for example, Google was comfortable enough with advertising to allow ads onto its platform. But within the mature market, relevancy is going to be a must, and Google certainly won't dilute its product with ads that aren't relevant to users' interests and needs. There's speculation on other ways companies will be able to interact with users, but Google will be rolling this product out very slowly -- and that's part of the strategy.

Do we believe this will be an immediate social media game-changer for the mature market? In reality, it probably won't make "waves" (pun intended) with most users for the next few years. But expect Boomers to be curious about what they can gain from Google+ if it is successful with a younger demographic. Given what we now know about the mature market's proclivity for social media, this may give Google a chance to develop a platform with Boomers in mind from the beginning.

By Kendra Metz Thursday, July 28, 2011

As Single Becomes New Norm, How to Market Without Stigma

When Selling to This Growing, Aging Group, Don't Assume That They're All Focused on Getting Married -- or Must Be Singled Out

They are a growing -- and graying -- force.

Never-married single people ages 25 to 34 now outnumber the married crowd by 46% to 45%, a stark reversal from just a decade ago, when couples held a 20-point edge in the age group, according to an analysis of new Census data by the Population Reference Bureau. In essence, selling to singles no longer means just targeting teens and those in their early 20s.

Some marketers are taking notice: More ads are featuring singles and some companies are reaching out to them, such as Coldwell Banker and Norwegian Cruise Lines. But for the most part marketers are only slowly adjusting to the new normal. And in some instances it doesn't make sense to exclusively target singles, according to interviews with multiple ad agency executives.

"We see many examples of brands -- from soft drinks to cellphones -- who talk to the traditional 18-to-24 year-old single. But the new single, the single parent or the more affluent, later life-stage single is a segment that's still emerging and expanding," Adam Bowen, VP-strategic planning director at DraftFCB Chicago, said in an email interview. "We'll need to spend more time with this group, gaining a better understanding of their unmet needs."

It's a coveted group, for sure. Freed from the restraints of family life, singles have a reputation for splurging.

"They have more money to spend on themselves and they're more willing to indulge on things that might seem frivolous or [a] non-necessity," said Ann Mack, director of trend spotting at JWT.

In 2009, singles of all ages spent a higher share of income on alcoholic beverages, clothing, shoes and tobacco products compared with other households, but less on housekeeping supplies and insurance, according to new data from the Bureau of Labor Statistics.

Still, several ad agencies contacted by Ad Age said they do not have a dedicated unit studying the single market. One reason is that some goods are marketed the same no matter the consumer's living situation.

Beauty products, for example, are "purposely nebulous about marital status," said Denise Fedewa, an exec VP-strategy director at Leo Burnett. That's because married or not, when a woman is dressing up to go out, "I think she always goes back to that vision of herself as that 25-year-old single woman," she said.

But some companies are aggressively targeting singles. Coldwell Banker Real Estate, for instance, touts its YouTube real-estate channel as a way to reach singles ages 25 to 34. And video will be prominently featured in an iPad application the company is planning.

"Video is a stronger, better way to communicate with this age group," Coldwell Banker Chief Marketing Officer Michael Fischer said in an interview. "You can't ignore the single buyer because they make up such a big portion of our target market."

Single women accounted for 21% of all homebuyers in 2009, and single men made up an additional 10%, according to the National Association of Realtors.

In the travel industry, Norwegian Cruise Line is reaching out to solo travelers by offering single-occupancy rooms on its new Epic ship. "In the past, single cruisers have had to pay a double occupancy for traveling alone, but these new accommodations ensure affordable and an alternative way of traveling for singles," spokeswoman Kristine McGlinchey said in an email.

In the restaurant industry, communal tables are hot -- making it easier for singles to mingle -- and more eateries are offering breakfast and staying open all afternoon as a way to cater to singles on the go, said Clark Wolf, a New York-based restaurant and hospitality consultant. Also, singles are behind the surge in trendy food-trucks that "allow for a lot of standing around in line, which is where people like to meet and talk," he said.

Dating sites such as Match.com that have long targeted singles are seeing an uptick in business. Match reported an 8% bump in subscribers for the second quarter, excluding irregular transactions, according to parent company IAC. And slowly but surely, more ads are featuring singles to keep up with the trend, said Adrian Fogel, VP-planning director at Leo Burnett. "We always put families on because families made you feel better. But the reality is more people are living alone for whatever reason," she said.

Ms. Fogel pointed to McDonald's ads, which she said had reliably featured families enjoying a Happy Meal or sharing fries but now include more singles, such as recent spots featuring solo diners enjoying Quarter Pounders with cheese. McDonald's "is about family, but they've found the balance of understanding that there's a single population within their adults that they are targeting," Ms. Fogel said.

Ms. Fogel said ads that work for singles are "not about making them being single a negative. I think it's about trying to connect them with what they do or love." She cited a recent Bud Light ad that features a group of men and women browsing a garage sale.

One caution: Singles expert Bella DePaulo said too many marketers engage in "matrimania," assuming that all that singles want to do is find a mate.

Conventional wisdom is "all singles want more than anything is to be coupled, so that's what we should sell them is a ticket to coupling," said the psychology professor at University of California Santa Barbara and author of "Singled Out: How Singles Are Stereotyped, Stigmatized and Ignored and Still Live Happily Ever After." But the reality is singles are "leading full, meaningful, happy lives, and they don't need to be patronized or stigmatized."

The Most Affluent Also Seek Bargains Online

The nation's most affluent consumers are shopping online more often than other consumers, but that doesn't mean they're heading to sites that appeal to only the wealthy.

According to Unity Marketing's most recent survey of ultra-affluent consumers (those making more than $250,000 in annual income -- the wealthiest 2% of Americans), Amazon.com is the top shopping destination for about 45% of the demographic. That is more than two to three times greater than the next-most-popular Web site, Unity Marketing's President Pam Danziger tells Marketing Daily.
 
"[Amazon.com] has been a cornerstone of Internet shopping since e-commerce first began and has consistently adapted to the needs of its customers in order to build a loyal following," Danziger says. "For the most discerning affluent shoppers, Amazon offers outstanding levels of customer service along with an expansive product selection."
 
Yet the nation's wealthiest consumers are also looking for bargains online. Fourteen percent of shoppers went to eBay, 10% used Groupon and 8% hit Craigslist.com. Wealthy shoppers are also heading to flash-sale sites such as Shopittome.com, Gilt.com, Hautelook.com and Amazon's entry into the category, MyHabit.com.
 
"They don't get wealthy by spending all their money. They [like to] compare prices and features," Danziger says. "We have to recognize conventional wisdom doesn't apply. They'll go to Craigslist for bargains."
 
It's likely, she adds, that these wealthy consumers are heading to sites such as eBay and Craigslist to unload some of their own possessions, as well. Regardless, the wealthiest of consumers are clearly heading to these sites, and it would be a good place for marketers to find them. "It is important for marketers to realize that their wealthiest shoppers are keenly interested in value and bargains, particularly online," Danziger says. "These deal-oriented sites attract even those at the highest income levels."

by Aaron Baar, Friday, July 8, 2011

Marketing to Baby Boomers...It's Maslow, Stupid

Great article by Jim Gilmart of Coming of Age, Inc...

In April 2010, I wrote "Writing a Brand New Book" for this newsletter and cautioned readers to be careful about using euphemisms like "elder," "of a certain age" or "senior." Many may become more than a little upset with being labeled. After all, they aren't simply writing a new chapter of their lives, they're writing a brand new book -- and each book is different. They are diversifying more as they grow older. That diversification, plus the segmentation of 21st Century advertising, is making them much tougher to reach through advertising.

Age and experience will bring the Boomers a greater appreciation for the finer definition that nuance and subtlety give to a matter. As they move from the crowd thinking of their youth to personal uniqueness in their older years, marketers should offer those messages that generally reflect a conditional tone allowing each reader/viewer to interpret the message based upon their needs and desires. Advertisers should be careful about labeling the aging boomers at all. This huge mass of people defies pigeonholing or categorizing beyond their age bracket. They have vastly different needs and wants in food, clothing, health services, travel and entertainment. All this will frustrate advertisers' normal "desire to put every consumer in some category that allows marketers to predict their behavior."

Our colleague, David Wolfe, is a strong proponent of Abraham Maslow's famous "Hierarchy of Needs." To recall, they are:

• Self-actualization

• Self-esteem and esteem of others' needs

• Love and belonging needs

• Basic safety and security needs

• Basic physiological needs

Maslow said that a person must experience "substantial gratification" at one level before advancing to a higher level. For example, the newborn infant's basic needs are first and foremost "basic psychological needs." As the infant grows and develops, needs of a higher order begin to emerge.

Maslow called the highest order of basic human needs "self-actualization." The term stands for a person's basic need to reach his or her fullest potential. Most of us may experience the processes of self-actualization in varying degrees but do so while lower-level needs remain the dominant focus of our attentions. The fact that most marketing messages either project values associated with lower-level needs or fail to reflect the transcendent values of self-actualization suggests that relatively few marketers have a Maslow 101 level of understanding of the older people to whom they direct their marketing messages.

In July 2008, David Armano wrote in Advertising Age, "The problem with marketing is that it often doesn't allow marketers to go deep, to gain an intimate understanding of human behavior. We're strapped for time, spread thin and torn between making our clients or bosses happy while trying to do what we think is right. We may have access to the latest trend reports, market segments, personas and metrics. We may be surrounded by smart, capable people who know what they are doing. But there's a question we need to ask ourselves. Are we making the time to walk in the shoes of the people we market to? Are we willing to swim in the deep end?"

If your target is Baby Boomers and you're spending most of your switching from iPhone to text to chat, you'll need to understand first hand that not everyone lives like this, even though you might be. It stands beyond any need to defend the proposition that marketing success rises or falls according to the marketer's understanding of the customer's worldview, values and aspirations. However, this basic need of marketing cannot be satisfied by asking customers about such issues. Few people know themselves well enough to give a marketer the answer he or she wants. You likely need to step outside of your own behavioral patterns.

The understanding of the older psyche that every marketer working in older markets wants is rooted in empirical research. While Maslow actually did little empirical research, he was gifted with an awesome level of intuitive insight about human behavior; others have investigated many of his insights in empirical studies.

Jim Gilmartin Tuesday, July 5, 2011