Long-Term Care Costs Expected to Further Increase by 5% in Next Six Months

The cost of providing long-term care services has increased faster than the rate of inflation since 2004, according to a report issued this month by the Bipartisan Policy Center, with the annual costs ranging from $19,240 for adult day health care to $105,850 for a private room in a nursing home.

Cost increases — which the report said are expected to further increase in the next six months by at least 5% — were tied to increased demand and labor shortages, amplified by the pandemic.

Long-term care spending reached $426.1 billion in 2019, representing 13% of all national spending on personal health care that year, the report said.

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The report’s solution — Congress needs to establish a caregiver tax credit for out-of-pocket long-term care costs, and standardize private long-term care insurance as part of retirement long-term care insurance (LTCI).

Bipartisan Policy Center authors also suggested Congress incentivise employers to offer LTCI and auto-enroll employees age 45 and older, while offering penalty-free withdrawal from retirement savings accounts to pay LTCI premiums and make it easier for employees to convert their life insurance to long-term care.

“As the magnitude of individuals with unmet need rises, so does the long-term cost to both Medicaid and Medicare through increased and fragmented utilization of acute care and institutional settings,” the report said. “This study was undertaken to estimate the federal costs associated with subsidizing an LTSS ‘buy-in’ to the Medicare program or alternatively, as a buy-in to Medicaid benefits.”

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The report cited a projected 34% increase in in-home health and personal care aide jobs over the course of a decade too, a finding echoed in a PHI National study earlier this month.

These jobs are growing faster than the average for all other occupations, the report said, and with a median hourly rate of pay at $13.02, finding workers for these positions will only get more difficult over time.

“For comparison, social and human service assistants– a similar occupation with similar education requirements – earn a median pay of $17.29 per hour,” the Bipartisan report said; such workers are also reimbursed through Medicare and Medicaid.

The Bipartisan Policy Center was formed by Democrat Tom Daschle and Republican Bill Frist, former Senate Majority leaders; former Secretary of Health and Human Services and Gov. Tommy Thompson (R); and Alice Rivlin (D), former vice chair of the Federal Reserve, director of the Office of Management and Budget, and director of the Congressional Budget Office.

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