Most middle-income seniors over the age of 75 will not be able to afford housing and healthcare come 2029, new research shows.
The often-overlooked demographic is estimated to nearly double in size to 14.4 million people in a decade, 54% of whom could not cover $60,000 for assisted-living rent and other out-of-pocket medical costs even if they sold their home and committed all their annual income, according to a new study conducted by NORC at the University of Chicago and funded by the National Investment Center for Seniors Housing & Care.
Only 19% of the middle-income segment is projected to have the financial resources to afford housing and healthcare in 2029 if they don't sell their home.
"We are hoping this study is a launchpad for discussions on the Hill, in D.C. and in the private sector," said Beth Burnham Mace, chief economist and director of outreach at the NIC. "If there isn't attention paid to it, there could be a pretty substantial crisis."
Without adequate housing or access to aid or medication, a person's health will inevitably deteriorate. Seniors will end up paying more out of pocket as visits to the emergency department become more frequent, which adds cost throughout the entire healthcare system and jeopardizes government-funded coverage.
The economic burden of chronic diseases like diabetes and heart disease is only expected to grow. Researchers modeled a conservative $5,000 in estimated out-of-pocket spending in their study, but that would increase significantly as chronic conditions multiply.
The cost to care for a diabetic, for instance, is more than double that of a healthy person's care. The total cost of diagnosed diabetes in the U.S. rose from $245 billion in 2012 to $327 billion in 2017, according to the American Diabetes Association.
The NORC study projects that by 2029, 67% of U.S. middle-income seniors will have three or more chronic conditions, 60% will have mobility limitations and 8% will have cognitive impairment. For middle-income seniors age 85 and older, the prevalence of cognitive impairment nearly doubles.
"There is a whole segment of the middle-income seniors that will end up in the emergency room if they can't afford housing and don't have the ability to secure caregivers," said Terry Fulmer, president of the John A. Hartford Foundation, which offers grants to "age-friendly" health systems. The not-for-profit helped fund the study along with AARP, the AARP Foundation and the SCAN Foundation. "Middle-income people are going to be at great risk and without options—it makes me take a deep breath," Fulmer said.
The "middle market" is becoming more racially diverse, has studied more and earns more, according to the study. Women will make up 58% of seniors 75 years or older in 2029 compared with 56% in 2014.
How to most effectively care for the rapidly aging population continues to shape the industry. The post-acute sector is consolidating as providers and payers look to best direct and deliver care after a hospital stay. Private equity investment is rising as investors aim to reduce operating costs and improve productivity. More value-based payments targeting that demographic are emerging.
These trends are driving policy discussions, many of which are focused on lower-income individuals. One includes directing HHS to explore regulatory reforms that would enable states to design benefit packages to consumers at home and in community-based settings. The Partnership for Medicaid Home-Based Care is assessing how cost savings that stem from these reforms could be used to expand access to community housing, said Dave Totaro, chief government affairs officer at Bayada Home Health Care and chair of the partnership.
As the payer of last resort, Medicaid picks up the cost of nursing-home care when seniors and those with disabilities can't afford to stay at home, he said.
"Our current payment system makes nursing homes the 'default' option for those looking for long-term care," Totaro said. However, Medicaid is starting to cover long-term services and supports in home and community-based settings, the study noted.
HHS Secretary Alex Azar proposed that Medicaid could allow hospitals and health systems to directly pay for housing, healthy food or other resources that can help keep a person healthy. But there is an often-neglected middle-income cohort that doesn't qualify for programs like Medicaid, which the study aims to highlight.
That's where public-private partnerships can step in, experts said.
The private sector can offer more basic housing products, better leverage technology, subsidize "middle-market" residents with higher-paying residents, engage unpaid caregivers and develop innovative real estate financing models, researchers said. Government can broaden the tax credits currently used for lower-income individuals, expand subsidy and voucher programs, boost Medicare coverage of non-medical services, create a Medicare benefit to cover long-term care, and extend Medicaid's coverage of home and community-based services, they proposed.
"We like to say we have increased longevity but not there is not concomitant thought about longevity in our society," Fulmer said. "Now there is real urgency."