In recent years, American households have faced challenges from inflation, with prices expected to soar from 2021 to 2022. And inflation doesn't just affect trips to the grocery store or gas station. Rising home health care costs that outpace general inflation pose unique and unprecedented challenges for seniors, people with disabilities, and family caregivers. At the most recent inflation peak in June 2022, prices rose roughly 9% year over year, but have slowed significantly since then. From September 2023 to September 2024, general inflation rose just 2.4%, while home care inflation rose 8.7%.
The median cost per hour is $30 per hour in 2023or over $60,000 per year for full-time care, or home care already prohibitively expensive For many households, and often high demand. The rising cost of home care only adds to the pressure on individuals and families who need this support.
Expensive and extensive needs
About half of older people at some point in their lives, Long term service and support (LTSS) including assistance with daily tasks to support people with functional limitations and cognitive impairments. However, the reality is that most families cannot afford paid LTSS. High inflation for home care and other LTSS will only increase and accelerate the impact on those who need paid care.
Early this year, AARP Public Policy Research Institute Analysis found that the median annual cost of care for most LTSS exceeds both the assets and median household income of the elderly. In other words, the need for care is often out of reach and can be economically devastating for many households. Inequalities in both income and assets are well documented, and home health inflation will only increase the pressure on older people. black, hispanicand native American.
Most seniors live on fixed incomes, often modest incomes, and have limited budgets that can't withstand rapidly increasing costs. As a result, they may face any of a variety of scenarios. This means going without the care you need, relying on family caregivers to provide more unpaid care, or “maxing out” your assets faster by drawing from savings to pay for care. . Become eligible for Medicaid.
Inflation in home care is higher than general inflation and most major categories
The severity of the problem is illustrated by how home health care costs have skyrocketed since just before the coronavirus pandemic began, and by an amount that is even greater than general inflation. That's what it means. From January 2020 to September 2024, the home health price index increased by more than a third (35%). In other words, what you could pay for 12 hours of home care in recent years may now cost less than 8 hours. By comparison, general inflation over the same period was modest at 22%, with sectors commonly associated with high inflation in recent years, including energy (29%), food (27%), housing (25%), and healthcare. (11%).
Price increases were more recent than the 2022 inflation spike
The trend of high inflation in home health care is now more important as inflation in other categories has slowed. Overall inflation spiked in 2022, due in no small part to rising food, housing, and energy costs. Around the same time, home care inflation remained relatively low, increasing by just 4% on average from 2021 to 2022. Since then, prices for home care have only continued to rise, rising at an unprecedented rate in recent months. In each month of 2023 and so far in 2024, home care inflation has outpaced general inflation and inflation in most major categories.
The most notable example was in March 2024, when home health prices increased by more than 14% compared to March 2023. Overall inflation during the same period was close to 4%, with other major categories at the same level or below. In the first half of 2024, home health care prices increased by 11% compared to the first half of 2023. Although prices appear to have stabilized in recent months, costs remain unsustainably high for most seniors.
Consumers and family caregivers feel these price increases directly. According to Genworththe median annual cost of home care (40 hours per week) in 2023 was $68,640. Notably, Genworth estimates that home care costs increased by 10% between 2022 and 2023, which is consistent with federal inflation data. The high cost of home health care is especially difficult for seniors. strong preference To remain in the community and place of residence as long as possible.
Elderly people and their families need support to better access paid care
Just as inflation increases pressure on most household budgets, home health inflation poses a unique burden on older adults and family caregivers.
The high cost of home care makes these important services less accessible to the average senior. Acting without this support can create dangerous situations and further increase the risk of falls and other events that can threaten health and safety. At the same time, rapid price increases can quickly deplete the average elderly's household resources, reduce their ability to pay for other expenses, increase stress, and reduce their quality of life.
The rising cost of LTSS also exacerbates another challenge. Family caregivers already spend a large portion of their income on care-related costs, providing a combined 10,000 yen worth of unpaid care. Estimated $600 billion. In other words, increased LTSS costs will increase the burden on family caregivers, either by providing financial support to their caregivers, by providing additional unpaid care in the face of rising paid care costs, or both. This will put even more pressure on the.
Policies and practices can help address LTSS affordability in the long term. Labor shortages are likely to be the main cause of price increases, so increasing the supply of direct care workers would help limit further cost increases. Additionally, another safeguard against runaway cost increases is ensuring a robust market for LTSS options, such as home care services and assisted living models designed to be affordable on middle-class budgets. It is. scaling In general, day services for adults, Comprehensive care program for the elderly. Increased short-term supports that may delay long-term care, such as recovery programs such as Competenthelps you avoid high-cost services. And of course, support for family caregivers, such as paid time off, tax credits, and easily accessible respite care, can help ease the burden on this group.
Need for a solution
Current LTSS financing is arranged so that very wealthy households can pay high medical costs, while households with little or no financial means can qualify for Medicaid. This leaves most people paying for their care out of pocket, making them vulnerable to rising prices and rapid home care inflation. In the absence of large-scale public funding, making LTSS affordable and accessible to older adults and family caregivers requires creative thinking at all federal, state, and local policy levels; We need private sector solutions to ensure people have access to care. they are in need.
