Semro column: Long-term care — a perfect storm?
There may be something of a “perfect storm” on the horizon for long term care in this country. Like hurricane forecasts, we’ve seen this storm coming for a long time. We’ve seen it building and we know how powerful it could be.
The key elements of this storm are demand, cost, financial security and most recently the availability of the long term care workforce.
To begin with, the United States is facing a demand for long term care that’s historically unprecedented. There are currently more than 70 million baby boomers, the generation born between 1946 and 1964, living in the U.S. Every single day, 10,000 baby boomers turn 65. In 10 years, one-fifth of the country’s population will be 65 years of age or older
Seventy percent of Americans over 65 live with multiple chronic health conditions and will probably require long-term care at some point. Today, there are about 6.3 million adults over the age of 85, the age range where people are most likely to need long-term care. That number is expected to triple, reaching 19 million by 2050.
The demand for home care, assisted living and nursing homes could well outstrip the current supply. That will be especially true in rural areas, where 25 percent of Americans over 65 live and where long-term care facilities and home-care providers are becoming ever harder to find.
The second element is the cost of long term care. According to the 2018 Genworth Cost of Care Survey for Colorado, the current median cost for full-time home maker services is over $57,000 a year ($25/hr.). Full-time home health aides cost around $59,000. Assisted living facilities average $48,000, and the annual median price for nursing-home care ranges from $94,000 to $108,000 depending on whether you want a private room.
Eight years from now, full-time homemaker services are projected to average $77,000 a year ($34/hr.). Assisted living will increase to $64,500 and nursing home average costs will jump to $127,000 to $145,000.
The third element of this perfect storm is the financial security of this country’s aging population. According to 2018 data from the Federal Reserve and Federal Deposit Insurance Corporation, baby boomers and older Americans have an average of $274,910 in savings. Unfortunately, half of that population has saved less than $24,280. For those people, professional long-term care services would obliterate those savings in a few months. Even for those with more money stashed away, long-term care costs would have a substantial financial impact.
But it doesn’t end there. According to the Kaiser Family Foundation, average out-of-pocket spending on health care alone, for people on Medicare, was over 40 percent of the average Social Security check.
On average, boomers and older Americans are more than $110,000 in debt. A third of home owners over 65 are still paying off a mortgage. That debt averages around $80,000. And 2.8 million Americans over 60 years of age still have unpaid student debt.
Bottom line, private pay long term care may be financially out of reach for a substantial number of older Americans. Once the savings are gone, that population will be dependent upon Medicaid and other social safety nets.
Finally, there’s the problem of the caregiver workforce. For many, long term care is delivered informally by friends and family. Most are unprepared for that role and lack the training necessary to care for someone when their condition worsens. At some point, private pay long-term care has to fill the gap.
Unfortunately, there may not be enough caregivers in the future to meet the need. In 2018, the median hourly salary for a home health aide was around $11.57. That’s about $8,000 more a year in salary than the federal poverty level for a family of two. About 88 percent of domestic caregivers don’t get paid time off, sick leave or health insurance. Over half of domestic caregivers rely on some form of public assistance. Roughly a quarter of these workers are immigrants.
With a 3.7 percent unemployment rate, long-term care providers may not be able to attract enough workers to meet the demand. And employee turnover rates, which have always been high in this industry, will make that problem even worse. According to the research organization, PHI, the long-term care sector will need to fill 7.8 million jobs by 2026.
We have a closed circle developing here. The demand for long term care will continue to grow at an unprecedented rate. In order to maintain a workforce, caregivers will need to be paid more. That will increase costs that a large portion of the aging population will be unable to afford. And in rural areas the problems will be even worse. It’s time for all of us to pay more attention to the storm that’s coming our way.
Bob Semro of Glenwood Springs is a former health policy analyst for the Bell Policy Center, and a legislative and senior advocate. His column appears monthly in the Post Independent and at postindependent.com
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