How Do We Pay for Long-Term Care?

Adrienne Glusman was 29 years old when doctors diagnosed her mother, Hetty, with Parkinson’s disease. At a time when her friends were settling into careers and getting married, Adrienne — an only child of divorced parents — moved from New York to Florida to become a full-time caregiver.

Now 37, Adrienne has spent the last eight years managing her mom’s long-term care and figuring out how to pay for it — a job that would have been devastatingly hard if not for her mom’s long-term care insurance. Hetty is one of the very few Americans with this coverage, which pays for her assisted living and allows Adrienne to work — but the premiums are high and nearly unaffordable for most, with a typical annual premium between $2,000 and $3,000, or more.

Costs of care without insurance are likewise unaffordable. According to the 2017 Genworth Cost of Care Survey, the national median cost for a private nursing home bed is $96,000 annually, and a nearly full-time home care aide is $48,000 annually. These costs represent the greatest unfunded economic liability America faces for baby boomers as they age, and every generation after them.

So what options exist for financing long-term care? This is a question at least one in two Americans will wrestle with in his or her old age. Even well-to-do families face a high risk of financial devastation from long-term illness.

Presently, there are no good options available. Family members often quit their jobs to provide unpaid care. And they face enormous out-of-pocket expenses, in some cases running out of money and relying on Medicaid, a joint federal and state program that pays long-term care costs for people without sufficient income and assets to finance it themselves.

The underfinancing of long-term care creates and contributes to enormous economic insecurity for the majority of today’s families, a huge challenge for state budgets, and a massive loss of productivity. These impacts will only grow as the baby boomers soon begin entering their 80s.

After analyzing long-term care financing options for 25 years, including five years as an analyst with the federal Office of Management and Budget, I believe that we will not truly address the national long-term care liability without requiring everyone to participate in a long-term care insurance risk pool — at the federal or state level — and to fund the insurance pool through new, dedicated revenue.

While the idea of government-backed long-term care insurance may seem unlikely during this time of partisan discord, states are taking the lead on the issue. Due to the impending burden on the Medicaid program as the payer of last resort, states are considering and implementing financing programs.

Hawaii now has a program to provide a small financial stipend to working caregivers. Washington state nearly passed legislation to create a long-term care insurance program for residents. And other states are moving the issue along.

But will these policies be implemented soon enough? And do they do enough? Right now, many Americans struggle quietly to support the growing population of family members who need constant care. This population will only grow as demographic shifts occur in the coming decade.

As a society, we need to help daughters like Adrienne who want to do the right thing. We must enact reforms now before the politically combustible moment occurs when demographic changes merge with the inadequacy of the system. That crisis will not be quiet — and it just might break the proverbial bank, and us along with it.

Anne Tumlinson is a health care analyst and long-term care expert and is the founder of Anne Tumlinson Innovations, a health care advisory and consulting firm specializing in issues around the care of our frailest older adults — from caregivers to providers to payers.

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