THE COST OF CAREGIVING
One of the biggest concerns of elderly Americans is the high cost of medical care. There are 35 million people over the age of 65 in this country and they comprise 12.8% of the population. Despite the fact that the elderly comprise only 12.8% of the population, they consumed at least 24% of all health expenditures in 1997 in the form of Medicare and Medicaid outlays. This would suggest that health care for the elderly is costing more per year on average than for younger age groups. A 1996 survey by Medicare reveals average yearly total health care costs (service, insurance premiums and drugs) as follows: ages 65 to 69--$5,864, ages 70 to 74--$6,744, ages 75 to 79--$9,414, ages 80 to 84--$11,256, ages 85 and older--$16,465. For these older ages, the primary reason for the 3 fold increase in cost from age 65 to age 85 is the cost of caregiving. It is estimated that only about 9% of 65 to 69 year-olds are receiving help from a caregiver whereas about 50% of the age 85+ are receiving care. About half of all nursing home residents are 85+. And use of home care for the very old is also higher. Between 1998 and 1999, home health agencies made 2,350 visits for every 1,000 enrollees aged 65 to 74, compared with 12,709 per 1,000 for enrollees aged 85+. It is the high cost of long-term care that should worry older Americans more than the cost of medical services, drugs or health insurance premiums. In 1996 older Americans living in nursing homes incurred $38,906 in annual health care expenditures on average, compared with $6,360 among older persons living in the community. Nursing home accounted for 64 percent of total expenditures of the institutional population.
The need for receiving long-term care increases as a person ages. And the probability of needing care becomes very high for the very old. It should also alarm elderly Americans that the ranks of the very old are growing at astronomical rates. Those over age 85 are the fastest growing population group in the nation. From April 1, 1990 to July 1, 1998, this age group increased 34.1% by more than 1 million people as compared to the entire population which grew at a rate of 8.6%. At this rate of growth, in another 50 years, this age group would be about two-thirds as large as the current total US elderly aged 65+ of 35 million people. With a high probability of caregiving demand, this group would wipe out the current government programs design to pay formal caregivers.
Most elderly people in this country focus on providing the means to pay the high cost of medical services and drugs but tend to ignore the 6 fold times higher potential cost of long-term care. With the probability that government programs may not help them in the future, elderly Americans should shift their focus to providing the means to pay for the high cost of long-term care.
TRENDS IN CAREGIVING
In 1997, the national cost for home health
care was $32 billion while the cost of nursing homes
was $83 billion. This amounted to 10.5% of the total
$1.1 trillion in health care costs for that year. This
percent is projected to remain fairly stable through
the year 2005. If we go back and add to the formal cost
of care the estimated cost of $197 billion for informal
care, we have a whopping 24% of the national health care
budget devoted to caregiving. Currently the government
pays close to 40% of formal caregiving costs. If there
were a future decline in the amount of available informal
care accompanied by increase in demand for that care
the government would be forced to absorb a great deal
of those added costs. To put this in perspective bear
in mind that Federal funding for Medicare is expected
to run into deficit in the next few years and that state
governments are already strapped in meeting public health
care needs. In 1997, Federal outlays for Medicare, Medicaid
and other health programs were $367 billion. Adding in
$140 billion in state and local spending, total government
costs for health care in 1997 were $507 billion–about
46% of all health care cost, private and public. Payments
for formal care absorbed $51.5 billion or 10% of government
outlays already in that year. Had the government been
forced to absorb the cost of informal care as well, it
would have amounted to 35% of the budget and would have
severely hampered the quality of other health services
for 35 million Medicare recipients and millions more
of Medicaid participants. Could this happen? Is there
currently a trend away from unpaid informal care towards
paid formal care that could destroy the current public
health care system?
Demographic trends over the past 50 years suggest that not only is the ratio of informal caregivers to those needing care getting smaller, but the availability of caregivers (living within the same community or state) in some regions of the country is also becoming a problem.
The national birthrate has been declining year over year while simultaneously the total number and percent of the population over 65 has been steadily increasing. From 1950 through 1999 the annual birthrate has declined from 24.1 per 1,000 to 14.5 per 1,000. At the same time the age adjusted death rate went from 5.9 per thousand in 1980 to 4.7 per thousand in 1998. These statistics reveal that the younger population is growing more slowly while the older population is growing more rapidly. By the year 2050 the population over 65 is projected to grow from 12.8% of the total to 20.3%. Simple logic would show that the number of young caregivers is declining in proportion to a larger older generation that will inevitably need care. There is also a growing trend towards more households headed by single individuals. This will eventually reduce the number of healthy spouses available for caregiving as well.
As we learned from the section on cost of care, the need for caregiving increases with age. Compounding the challenges outlined above is the rapid growth of the very old age group which already accounts for over half of all nursing home residents and a large proportion of those needing community care. By the year 2050 this group will have grown from 4,333,000 people, today, representing 1.5% of the population to about 20,000,000 people, representing 4% of the population. Since this group has the greatest need for care, this trend will further deplete the numbers of available, future informal caregivers.
Finally, many potential caregivers have` moved away and are not able to provide care for family or friends. This is particularly a problem for farmbelt states and rural communities where young people have left for better economic opportunities in urban areas. This trend shows no signs of reversing and the resulting lack of caregivers is putting great stress on affected communities and government programs.
If no solution is found for the loss of informal caregivers, much of the burden of providing care will shift to government-funded programs since no viable private sector alternative now exists. The added strain to an already underfunded senior health program could lead to a failure of the entire system.
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