Cost of Nursing Facility Care Out of Reach for Most Older Adults
The cost of nursing facility care is out of reach for many middle-income families, which can lead to dependence on Medicaid for long-term care, according to the AARP’s Across the States 2018 report.
The report offers a profile of long-term services and supports (LTSS) in the U.S., using a range of data sources. For the nursing facilities section, the sources included analyses of data from the Centers for Medicare & Medicaid Services (CMS) and other sources, academic research, and research from AARP itself.
From 2011 to 2016, the number of nursing facility residents fell 4%, according to the AARP report, with occupancy hitting about 81% of 1.7 million beds nationwide on a typical day in 2016.
The findings roughly track with more recent estimates from the National Investment Center for Seniors Housing and Care (NIC), which found that occupancy in skilled nursing fell to 81.6% in the first quarter of 2018.
On a state-by-state basis, Wisconsin saw the most significant reduction in nursing facility residents, with a drop of 15%. Tennessee followed with a 14% drop, then Georgia with a 13% decline, then Minnesota with a 12% decline, followed by Connecticut, which saw a drop of 10% in this particular demographic area.
The report also found that 62% of nursing facility residents depend on Medicaid because many of them spent their life savings on paying for care. In fact, the median income of older households is $42,113, while the median annual cost of a private room in a nursing facility in 2017 came in at $97,455. For a shared room at a nursing facility, the cost was $87,600 in 2017.
“This high cost of care can all too often cause people to exhaust their savings and rely on Medicaid, the largest public payer for LTSS,” the report said. “Although the cost of care varies greatly across the states, LTSS—especially nursing facility care—is unaffordable for most middle-income families. For the cost of one year of nursing facility care, a person could pay for three years of home care or five years of adult day services.”
Of current nursing facility residents, just 14% had Medicare as a primary payer; 25% of residents pay for nursing facility care either out of pocket or through private long-term care insurance.
The majority of Medicaid spending, at 55%, went to nursing facilities in 2016, but there was a great deal of variation at the state level, AARP noted. While the percentage of Medicaid LTSS spending going to home and community-based services for older people and adults with physical disabilities increased in 40 states from 2011 to 2016, the majority of Medicaid LTSS spending went toward older people and adults with physical disabilities in 2016 mainly because of high nursing facility spending. In fact, 78% of Medicaid institutional spending went to nursing facilities.
Written by Maggie Flynn