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Eldercare Crisis
Taking the Elderly Out of Institutions

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One tool Americans have for managing their eldercare expenses may be quietly fading away right when it is most needed. Long-term-care insurance allows Americans to pay an annual premium in exchange for coverage of eldercare expenses in nursing homes, assisted living programs, and even home care situations. But the WSJ reports this insurance is quickly becoming more and more difficult to obtain:

Fewer carriers are offering the coverage, which helps pay for future nursing-home, assisted-living and home care. Those that still do are raising premiums on new and longtime policyholders.

For example, a 55-year-old single man buying long-term-care insurance can expect to pay $1,985 a year for $164,250 in total benefits, including a 3% annual inflation-protection rider, according to the American Association for Long-Term Care Insurance, a trade group. The annual cost is up 15% from two years ago.

In 2011, William Galston argued that wider use of long-term-care insurance could be a possible solution to the eldercare crisis, but if this WSJ story is accurate, that’s looking like an increasingly remote possiblity.

Fortunately, this doesn’t mean the elderly are out of options. Another, more promising approach would be looking into creative ways to incentive and reward at-home caregivers. As an excellent long-form read in The Atlantic points out, one big obstacle towards shifting more eldercare to the home setting is that Medicare does not really reimburse for it—even though it costs less than hospitalization. One possible policy shift here would be to find ways, through tax credits or otherwise, to pay children or relatives for taking care of aging family members in their home.

Getting people out of institutions and back into homes will be a key to moderating the financial crush of baby boomer aging, especially as long-term-care insurance becomes harder to get.

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  • qet

    In this commenter’s experience, there are many elderly persons who do not wish to be cared for by their children (and vice versa). The long-term evolution in the West (or at least the USA) away from extended family residence patterns to the nuclear family pattern cannot simply and quickly be reversed by the latest government tax policy a la mode. Family structures are far more inelastic than that and their development has to do with the prevailing economic climate only indirectly and over a long period. No tax policy can simply reassemble the constituents of social life according to whatever algebra is desired at the moment. It is discouraging to see Via Meadia continually urging the belief that people individually and collectively can be steered toward whatever behavior some think tank, bureaucrat or op-ed writer thinks correct at the moment in the manner of a ship being steered by minute variations in rudder angle and propeller pitch.

  • free_agent

    You write, “Getting people out of institutions and back into homes will be a key to
    moderating the financial crush of baby boomer aging, especially as
    long-term-care insurance becomes harder to get.”

    Of course, insurance or Medicare doesn’t reduce the cost of something, it only redistributes it. It seems to me that the difficult question is more, “How do we reduce the costs (direct and indirect) of taking care of a large number of old people?”

  • tarentius

    This article was written by someone who doesn’t have a clue as to what they are talking about. As someone who has faced the problem of an elderly parent who could no longer live on their own without assistance, I must emphasize what an incredibly difficult problem this is. Tax credits for family home care givers is one of those out-of-touch Washington think tank solutions that sound good when said on one of those mind-numbing network talk programs but is totally out of touch with reality. Until such time as the still wet-nosed author of this article has had to actually deal with the problem and understands just how difficult it is, I would suggest that Via Media stay away from something they have no idea what they are talking about, never mind for which they have a solution.

  • Jane the Actuary

    And here’s what’s never been clear to me: why should home care be any cheaper? Round-the-clock nursing is expensive, and when it’s at home, there are no economies of scale from the nurse/aide caring for multiple patients at once. It’s like having a nanny vs. putting your child in a daycare center.

  • Christine Baker

    This is great information! We didn’t want my mom in a long-term nursing home since she can manage pretty well so we ordered a safeinhome system ( that lets us know if she is OK right on our phones!

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