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Dispatches Financial Planning

Informal Care Essential to Narrowing the Long-Term Care Expense Gap

When examining elder care in the U.S., informal care is often more significant than formal care.

by Grace Malone | February 2024

When examining elder care in the U.S., informal care is often more significant than formal care.

Two researchers studied the state of the long-term care system in the U.S. by analyzing 2018 data for those age 65 or older from the Health and Retirement Study (HRS). The key measures of health used in the analysis are based on reported functional limitations, such as dressing, bathing and eating.

With an aging U.S. population, a prominent issue is the cost of long-term care for the elderly who cannot care for themselves. Thirty percent of those 65 or older, and 60% of those age 85 or older, report some limitation to their ability to perform daily activities.

The study noted that the median price of formal care in a nursing home is greater than the total wealth of almost one-third of the elderly, and two years in a nursing home would empty the wealth of almost one-half of this population.

Informal Caregivers by Relationship to Care Recipient

With the absence of a national long-term care insurance program, the public is the primary payer for formal long-term care. The two main public programs that cover this care are Medicare and Medicaid. Together, these two programs pay for 63% of formal long-term care, while 19% of costs are paid by individuals and only 10% are paid by private insurance companies, as reported in the study.

Long-term care for the elderly in the U.S., including the estimated cost of informal care, makes up almost 2% of U.S. gross domestic product (GDP). Informal care by family members amounts to 27% to 40% of this total cost and is privately financed. The study concludes that the importance of this informal care for those who lack sufficient resources for long-term care is often overlooked. Spouses, daughters and sons deliver the majority of informal care.

Source: “Long-Term Care in the United States,” by Jonathan Gruber and Kathleen M. McGarry; National Bureau of Economic Research, November 2023.

Discussion

ROBERT A from NC posted over 2 years ago:

I know we don't always get to choose, but I pray that I kick the bucket before I get to the point where somebody else has to change my diaper. Maybe I should take up skydiving again.


Jean S from USA posted over 2 years ago:

Support state efforts to establish Medical Aid in Dying. Check out "Compassion & Choices"


Don P from USA posted over 2 years ago:

I laugh and then I pray , this is an epedemic that the Federal Government is ignoring . We can start at the bottum and move ALL-the -Way to the TOP and see how the Federal Government is milking the American Taxpayer and the benefactors are; politicians - individual criminals -Foreign Governments. America is now the 'Land of the Free Handouts ' who are brazen enough to destroy the Hand that feeds-it


JOHN L from NJ posted over 2 years ago:

If you are rich you are on the hook for long term care if you need it; but you can afford the expense. The poor have no assets and medicaid pays for their long term care. The middle classes pay for long term care until they have no assets and then medicaid takes over payment. Everyone gets long term care if needed. The losers are the children of middle class parents who watch their inheritance go to pay for their parents long term care. Do we really need long term care reforms to ensure a larger inheritance for middle class children?


JEFF D from OH posted over 2 years ago:

To Robert A: "If at first you don't succeed, then perhaps skydiving is not the right hobby for you"


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