Study Finds Few Elder Households Can Afford Home Health Care

Not a huge surprise, but quantification is helpful.

A new paper issued by the Joint Center for Housing Studies at Harvard University, “Older Adults Struggle to Meet the Dual Burden of Housing and Care,” finds that few older households can afford the combined costs of housing and elder care. While due to the high cost of housing, even without any care expenses a third of households with at least one member aged 75 or older experience housing cost burdens, fully three out of four households cannot afford to pay for a daily care visit after paying their housing and living expenses. The numbers are even worse for renters and older households of color.

According to the researchers, Samara Scheckler, Peyton Whitney, and Jennifer Molinsky, 37% of households headed by an individual aged 80 or older spend more than 30% of their income on housing costs as compared to 28% of those headed by someone aged 50 to 64. No doubt this is in large part because their incomes are lower since they are no longer working.

If you add the cost home health care, the numbers are even worse. Only about 30% of homeowners and 9% of renters can afford to pay for a daily home health visit. And just 14% of Black households and 11% of Hispanic ones can afford such assistance as compared to 28% of white households. (Even that is a very low number.)

While these affordability numbers are national averages, there is wide variation nationally based on variable housing and care costs as well as income, though income appears to play the biggest role. No household with income below 67% of the area’s median income (AMI) can afford a daily home health visit while all those with income twice the AMI can. A bit over a third of those in between these two income levels can afford such care.

But the researchers point out that income is inversely related to age, so fewer households aged 85 and above than those aged 75 to 84 can afford daily home health visits. Unfortunately, of course, those in the older age cohort are much more likely to need such care.

In addition, the ability to pay for care is badly correlated with having a partner available to help out. Just 10% of single households where the individual has some difficulty functioning on their own can afford to pay for a daily home health visit as compared with 31% of households with partners living together where one or both has difficulty living independently.

Market Challenges

As the researchers explain, part of the problem with paying for home health visits privately is how they are structured. Most providers require that their services by purchased in four-hour increments even if the patient just needs an hour of help, or perhaps an hour in the morning and another hour in the evening. As the following chart shows, a much larger number of households can afford fewer visits per week or could afford shorter daily visits.

This is a point Lizbeth Heyer, President of 2Life Communities, made in my podcast conversation with her about their congregate care housing. Their staff social workers can visit many more residents in their buildings at much lower cost because there’s no minimum time requirement.

Some households can make up the difference in ability to care by spending down their savings or dipping into their home equity but, of course, both home ownership and savings levels closely track income. Those with lower incomes and less ability to pay for care are less likely to own their homes and have a substantial cushion of savings.

A third of paid care is covered by Medicaid, though this is likely to fall with the large cuts in funding contemplated in the budget currently making its way through the House.

Families Fill In

The result is that 80% of home care is provided by family members at no out-of-pocket cost. In many cases, families cobble together a support system that combines some private-pay or Medicaid-covered care with assistance they provide directly.

But the study points out that the availability of family caregivers may be less available for aging baby boomers in the future both because they had fewer children on average than prior generations and their adult daughters, “the ones who traditionally assumed these responsibilities, have entered the workforce in larger numbers.”

Solutions?

The researchers considered policies that might assist households that cannot afford necessary care, finding that a combination of providing rental assistance to all renters with incomes up to 50% of AMI plus making home health care available to all Medicaid beneficiaries would reduce the number of households unable to pay for care by more than a million, from 7.5 million to 6.2 million.

They suggest some other policy changes that could fill in some of the gap. “For instance, expanding existing programs such as home-delivered meals and senior transportation services could meet some instrumental needs, even without providing intimate personal care. Service expansions would be especially effective if they targeted places where many older adults lived in clusters. For instance, service models have explored targeting assistance to places where neighbors have aged together, called naturally occurring retirement communities (NORCs), and to affordable housing buildings that cater to older low-income and disabled residents.”

Unfortunately, in addition to the anticipated Medicaid cuts, the Trump administration has already shut down the Administration for Community Living that provides these services. They say that they will distribute its functions to other agencies, but a lot of those in the senior and disability advocacy communities are skeptical.