Long-term care is expensive. By expensive, I mean break-the-bank expensive. As people begin to live longer, they don’t always live well longer. Medical science can keep people alive long after they are no longer able to function. The lack of affordable long-term care is a problem that has no easy solution.
The nursing home referral agency, A Place for Mom, pegs the median cost per month for a private room in a nursing home at $9,034. I have a family member in an assisted living facility where the cost is about $11,000 a month. It’s not easy to shop around. If you go online looking for nursing home prices and dial what you think is a local assisted living facility the call often goes to a referral agency. They inform you they represent numerous nursing homes and create a file on your loved one. They assure you it’s a free service, paid for by nursing homes. Referral agencies earn about equal to one month’s fees for each referral. If your family member can afford to pay cash, they are a much sought after client. There are hedge funds, private equity investors and real estate investment trusts who own nursing homes. They want your money. If you say your family member is broke and needs long term care paid for by Medicaid, few agencies want to talk to you and fewer nursing homes want your family member. They generally direct you to the state Medicaid agency. If you do manage to talk to an actual nursing home, you quickly find they rarely have enough staff to answer your questions. They often say they have little availability, especially if you’re not a cash-pay client. It’s a growing problem that will only get worse with time.
The New York Times reported on the skyrocketing cost of elder care. In less than 30 years the number of Americans over age 65 will increase 50% to 86 million. Of those, Americans over age 85 will triple to 19 million. There aren’t enough nursing homes to care for them, or enough money to pay for all who will need them.
Sheila Littleton, 30, brought her grandfather with dementia to her family home in Houston, then spent months fruitlessly trying to place him in a nursing home with Medicaid coverage. She eventually abandoned him at a psychiatric hospital to force the system to act.
The United States has no coherent system of long term care for those who are unable to care for themselves. About two-thirds of long term is paid for by Medicaid. However, states and the federal government cannot afford to expand long term care to accommodate all who will need it. Few families can afford $100,000 a year to place a family member in assisted living. Few private investors are willing to build facilities that rely on Medicaid funding. Even in situations where family members can take care of aging parents, the price is often at the cost of their own livelihood.
Feylyn Lewis, 35, sacrificed a promising career as a research director in England to return home to Nashville after her mother had a debilitating stroke. They ran up $15,000 in medical and credit card debt while she took on the role of caretaker.
Sometimes an elderly mother or father just needs help with daily activities, such as shopping, food preparation and laundry. Yet, at some point their physical needs overwhelm their caregivers and require full-time professional care. To qualify for Medicaid seniors must exhaust their assets (which makes sense considering Medicaid should not be in the business of protecting inheritance). Where I grew up some rural counties owned and managed nursing homes for local residents. I doubt if that is sustainable as younger people move away to cities and older, poorer people are mostly all who remain.
A few years ago, The New York Times ran an article that suggested three seniors living together could hire around the clock caregivers cheaper than nursing home care. About the same time, I toured some NORCs in Queens, New York. NORC stands for naturally occurring retirement community. They were basically post World War II communities that came together to help seniors stay in their own homes longer. It was a good idea but not likely something most other communities could duplicate.
The need for elder care is a struggle that many families are ill prepared to meet. Women bear the brunt of care giving and women are who long-term care is mostly provided for. If you go into a nursing home, it’s 75% women. Labor is another issue. Few people want a job working in a nursing home. It will take a lot of outside-the-box thinking to alleviate the shortage of long-term care. I suspect most of the solutions will be painful for all those involved.
Read more at The New York Times:
Hey! What about that Long Term Car? 😎
My advice is to buy German. 🚗
Thanks for another fine article.
Medicaid currently spends about $250 billion nursing home care.
Could we double this? Mathematically yes…….a 5 or 6 per cent payroll tax would be doable, albeit with massive political resistance.
Most societies pay for healthcare with forced savings……whether in Singapore, Germany, or among the Amish.
I predict that America will eventually pony up and raise taxes.
Bob, you comment that “a 5 or 6 per cent payroll tax would be doable, albeit with massive political resistance.”
Massive political resistance means it’s not doable, Bob.
There is good reason for massive political resistance. A 5 or 6 per cent increase in payroll taxes translates into a much larger increase on the tax burden people already pay. How much larger?
Looking at tax foundation statistics, it appears that an additional 6% in payroll taxes would mean an increase to the average American’s tax burden of between 21% and 36%, depending on the taxpayer’s state of residence. Taxpayers in 13 states could experience an average tax increase of more than 30%. In another 25 states the average increase cIt’s destructive. ould be between 25% and 29%. In the remaining 12 states, 20% to 24%.
The US already faces a national debt for which the word “massive” is inadequate. There are even larger unfunded future liabilities in Social Security, Medicare, and Medicaid that aren’t counted in the official national debt.
The government has no idea how to cover those existing liabilities except by raising taxes. For the government to create for itself yet another liability which by itself will increase taxpayers’ tax burdens by the amounts listed above, is not just unrealistic. It’s financially destructive. It’s government malpractice.
Proposals may well arise to increase funding of Medicaid by some, much lesser, amount to help provide custodial care for the poor. Our government will pretend they are “solutions”. They won’t be. Because they won’t be painful enough.
I predict your prediction that America will eventually pony up and raise taxes by 5% to 6% of payroll, just to pay for custodial care, will never happen.
Good points, John. I myself look at each tax incrementally –oh, here’s a new 5%, well, the last sales tax was 5% and that didn’t kill me, etc. Your method of aggregating all taxes is probably more grown up than mine. Legislators probably salivate over constituents like me.
Economists like Wm Baumol have pointed out that Americans think they can solve things technologically, thus postponing painful financial crises. Technology may have met its match in bedpans.
Here are just a few of the so-called solutions that crossed my mind about long term care:
1. Conquer foreign lands, and bring their women to America where they work for nothing in nursing homes. This would not be too woke, however.
2. Give each caregiver a federal salary of $30,000 to work in the homes of disabled seniors.
Wealthier persons could still use nursing homes.
3. Establish a national service corps of young people who would care for seniors as a kind of peacetime draft.
4. Mandate that everyone in the work force buy long term care insurance.
5. Have the federal government borrow an additional $250 billion a year for Medicaid.
Whoops! we’re already kind of doing that.
I met a Canadian couple who live in Costa Rica. He told me that when they get old they plan to build an extra bedroom onto their house and hire a live-in care giver.