By 2050, 18.9 million Americans will be over the age of 85 and, if patterns continue, more than 40 percent of them will need long-term care (LTC) — the care that helps people with everyday activities. Our current insurance and provider systems are not adequate to meet these needs. Although it will be expensive to overhaul our fragmented and broken system, it will be more costly not to act.
A commonly touted barrier to comprehensive reform is financing. However, just because the federal government is not footing the bill does not mean that no one is paying for it. These costs are largely borne by the backbone of the long-term care system in this country: women. These are the same women who have left the workforce in droves because of child care responsibilities during the COVID pandemic, the same women who are currently caring for seniors too afraid to go to a nursing home, where 0.5 percent of the population lives and up to 50 percent of the COVID-19 deaths have occurred.
President Biden has released his plan for older Americans, which provides substantial support for caregivers:12 weeks of paid family leave; a new $5,000 tax credit for expenses associated with caregiving; Social Security working credits for time spent caregiving, which will help low-income caregivers when they approach retirement; and a substantial revamping of Medicaid, the insurance program for the poor and currently the largest provider of LTC services, to include home- and community-based care in all states.
No doubt, passing Biden’s plan would make material improvements in many people’s lives. However, it does not challenge the premise that, in this country, long-term care provision and financing will remain primarily a family responsibility, especially for the middle class. It is time to question this principle.
LTC is expensive. Median earnings for home health aides are $25,000 per year. Nursing homes cost $90,000 to $100,000 a year. Meanwhile, the average after-tax income of individuals ages 65 and over is less than $50,000.
LTC is the largest uninsured financial risk facing the elderly. Medicare does not cover it, and private long-term care insurance is available but has never been popular — in fact, the market has almost disappeared in recent years. Individuals pay for care themselves until they qualify for Medicaid, which covers half of the LTC expenditures in this country. Yet personal care services remain an optional state benefit and there are long wait lists to get services.
Without adequate insurance, most people rely on family members to finance and provide care. Over 75 percent of individuals needing LTC who are not living in nursing homes rely on care from family. While spouses are the predominant care providers, adult children — primarily daughters and daughters-in-law — are a close second. As the number of older divorcees increase, the shift toward adult children is expected to intensify.
While no money is exchanged in this “informal” care system, it is far from costless. Informal caregivers experience increased rates of depression, lower self-rated health, and use more psychotropic drugs. They often have to cut back on paid work or leave the labor market altogether. While this may be intended to be a short-term solution, it often winds up being permanent because of the difficulty of re-entering the labor market, especially as a 50- or 60-year-old woman. Research suggests that we would have to pay daughters up to $100,000 a year to compensate them for caring for a parent. In addition, new research shows that adult children work less and live closer to their parents in anticipation of the future need for care, suggesting that we are constraining the entire economy long before the onset of a disability necessitating long-term care.
Biden is offering much-needed assistance for caregivers in the system, but more comprehensive reform will allow us to address many of the problems we currently face. We need nursing home reform to address the financing and safety issues highlighted and exacerbated during COVID-19. To get us out of the pandemic-related recession, we need women to get back to paid work and to stay there. Is a $5,000 tax credit really enough?
It is time to act boldly to make LTC safe, affordable and accessible for everyone, to push for reform that recognizes the burden we have been placing on families, and shift some of that responsibility towards the government. Helping our elders will help the next generation, employers and the economy as a whole. We can’t afford not to act.
Norma B. Coe, Ph.D., is a senior fellow at the Leonard Davis Institute of Health Economics, a faculty research fellow at the National Bureau of Economic Research, and associate professor in the Department of Medical Ethics and Health Policy at the Perelman School of Medicine, University of Pennsylvania.