The costs for long-term care spiked again, especially for home health aides – but home-based care is still vastly less expensive than nursing home care, according to the "Genworth 2017 Cost of Care Survey," based on data collected from more than 15,000 completed surveys by long-term care providers nationwide.
The annual median cost of long-term care services increased an average of 4.5 percent from 2016 to 2017, the second-highest year-over-year increase for nursing homes and home care since the study began in 2004 and nearly three times the 1.7 percent U.S. rate of inflation, according to the survey, conducted by Carescout on behalf of Genworth Financial Inc.
The rate of increase is highest for home health aides: home health aide services, up 6.17 percent to $21.50/hour; homemaker services, up 4.75 percent to $21/hour; and adult day health care services, up 2.94 percent to $70/day.
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The cost of home-based care has been rising the past several years due to an increase in labor costs, caused by a shortage of caregivers, increases in minimum wages in some states and new health insurance and overtime requirements on the part of some providers, says Noreen Guanci, chief executive and co-founder of Long Term Solutions, which provides care coordination services and nurse assessments for Genworth long-term care insurance claimants.
Nursing home services remain the most costly long-term care service, though the year-over-year rate of increase is lower than home-based care: assisted living facilities, up 3.36 percent to $123/day or $3,750/month; semi-private room nursing home care, up 4.44 percent to $235/day or $7,148/month; and private room nursing home care, up 5.5 percent to $267/day or $8,121/month.
Nursing home costs are increasing due to a combination of higher labor costs and tightened Medicare rules, which have resulted in shortened hospital stays and sicker patients being sent to rehab nursing homes for shorter stays, where costs have risen to cover those chronic medical conditions, Guanci says.
Labor costs also figure into the rising cost of assisted living facilities, she says. Room and board also has increased to accommodate residents who are sicker, but not sick enough to require nursing home care, and the "luxurious accommodations" that private payers demand.
"The purpose of the study is to raise awareness about the cost of aging and help start the conversation about planning for long-term care," says David O'Leary, president and CEO of Genworth's U.S. Life Division. "We know that most people prefer to begin receiving long-term care in their homes and the good news is that home care is still more affordable than nursing home care."
In a companion consumer sentiment survey, two-thirds of respondents say they expect government programs to cover all or part of their long-term care costs. However, Medicaid, the largest payor of long-term care costs, has strict income and functionality requirements, according to the report.As for Medicare, that government program will pay for limited nursing home care following a three-day hospital stay, but only if the patient has been formally admitted to a Medicare-certified nursing facility as an in-patient. Medicare also does not pay for home care, if skilled nursing care is not needed.
"Our population is aging, living longer, and not prepared," O'Leary says. "At Genworth we are focused on this issue every day and know first-hand how aging impacts families," he says. "Our hope is that people will take the first step by checking out our Cost of Care website or app to start the conversation about planning for their own long-term care needs."
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Katie Kuehner-Hebert
Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.
