Only 19 percent of seniors could afford long-term care costs by 2029, suggesting a need for a middle market.
Half of middle-income seniors won’t be able to afford long-term care, assisted living, or other healthcare services by 2029, according to a new study out of NORC at the University of Chicago.
The study, which investigated patient financial responsibility for assisted living, noted that there is opportunity to develop a middle-income market for long-term care.
“In only a decade, the number of middle-income seniors will double, and most will not have the savings needed to meet their housing and personal care needs,” Caroline Pearson, senior vice president at NORC at the University of Chicago and one of the study’s lead authors, said in a statement. “Policymakers and the seniors housing community have a tremendous opportunity to develop solutions that benefit millions of middle-income people for years to come.”
The researchers – joined by experts from the National Investment Center for Seniors Housing & Care (NIC), with additional support from AARP, the AARP Foundation, the John A. Hartford Foundation, and The SCAN Foundation – found that healthcare costs and assisted living rent will be a considerable out-of-pocket cost for senior patients in the future.
Note that Medicaid does have some options for low-income seniors seeking long-term care. Medicaid covers some care at skilled nursing facilities for low-income patients and is implementing more coverage for long-term care. Low-income patients are also receiving some tax subsidies to help with housing.
But there is still a significant cohort of patients who do not qualify for those federal supports who will struggle to make ends meet.
The average cost for assisted living rent and other healthcare services will total at about $60,000 annually by 2029. This cost will be insurmountable for 54 percent of seniors. Specifically, this cost will be insurmountable for seniors even if those individuals sell their houses and use that equity to pay for assisted living.
Should seniors choose to keep their current assets, the number who would not be able to afford assisted living would reach 81 percent, the researchers found.
The research team did not disclose the number of patients who choose not to sell their homes and use that equity to pay for assisted living facility rent.
They did, however, note the likelihood that a senior will need to access assisted living. As more members of the Baby Boomer generation age into Medicare, there will be an influx of patients needing more complex care. By 2029, the researchers estimate that there will be 14.4 million individuals over age 75.
Sixty percent of those individuals will have mobility limitations, while 67 percent will have three or more chronic illnesses and 7 percent will have cognitive impairment.
The results suggest a considerable opportunity for building a middle market for senior healthcare. This middle market will be more affordable for seniors and will account for their numerous projected chronic illnesses, the researchers said.
Specifically, this middle market will include more basic housing options and better or more efficient use of health IT to meet patient healthcare needs.
“We still have a lot to learn about what the emerging ‘middle market’ wants from housing and personal care, but we know they don’t want to be forced to spend down into poverty, and we know that America cannot currently meet their needs,” said Bob Kramer, NIC’s founder and strategic advisor. “The future requires developing affordable housing and care options for middle-income seniors. This is a wake-up call to policymakers, real estate operators, and investors.”
Organizations can also subsidize some middle market options with profits from higher-income seniors. Additionally, innovative real estate programming could make assisted living facilities more affordable for patients.
The government can foster a middle market by creating tax credits for those who participate. Additionally, expanding subsidy or voucher programs, expanding Medicare to cover the social determinants of health, creating a comprehensive long-term care Medicare benefit, and broadening Medicaid coverage for home and community health programs could also provide support.
“This research sets the stage for needed discussions about how the nation will care for seniors who don’t qualify for Medicaid but won’t be able to afford seniors housing,” said Brian Jurutka, NIC’s president and chief executive officer. “This discussion needs to include investors, care providers, policymakers, and developers working together to create a viable middle market for seniors housing and care.”
Date: May 07, 2019