Experts say the rising costs and demand for home healthcare services will make it less affordable for many older adults to pay for the services long term.
Richard Johnson, a senior fellow in the Income and Benefits Policy Center at the Urban Institute in Washington, D.C., said there are strong indicators the current methods for financing long-term care are leading to a crisis in the coming years that will make such services unaffordable for those most in need.
"We're already facing a crisis in terms of how to pay for long-term services and supports," Johnson said. "It's creating a real quandary for states."
An estimated 69% of Americans will require long-term care services at some point in their lives for an average of about three years, according to HHS.
Long-term home healthcare services are not traditionally paid for by private medical insurance. That often forces individuals to either pay out-of-pocket for the support, receive care from an unpaid family caregiver, or purchase separate long-term care insurance.
Approximately 13% of adults pay for their care out-of-pocket, which will become more difficult to sustain due to the financial burden, according to a new study Johnson co-authored that was published Monday in Health Affairs.
Patients can't qualify for Medicaid until their assets reach a certain threshold. Nearly three-quarters of older adults could pay for home care for at least two years before they spent down all of their assets to the point where they would qualify for Medicaid.
Medicaid is the single largest payer, covering 43% of long-term care costs nationally. Paid home care often involves substantial out-of-pocket expenses. The median hourly rate for home care services in 2018 was $22 an hour, according to the analysis.
But for those with significant long-term support and services, their median amount of wealth would only allow for long-term home care for about 16 months at an average cost of $1,170 for 90 hours of home care a month. Single adults with significant long-term service needs, such as those living with severe disabilities and co-morbidities, had an average total of $4,900 and married couples held median household wealth of $18,600 compared with the median of $24,800 for all single adults age 65 and older and $108,700 for married couples.
"That means that many are going to have to rely on unpaid family caregivers, which creates burdens on those caregivers, go without care, or go into a nursing home," Johnson said.
Many individuals end up using Medicaid to pay for their long-term home healthcare services. The program paid more than $63 billion in home health and personal care services in fiscal 2017, according to the Kaiser Family Foundation.
But the level of home healthcare coverage offered under Medicaid varies by state and the demand is high, which has led to long waiting lists. In 2017, more than 707,000 people in 40 states were on the waiting list to receive Medicaid home health and community-based care, an 8% increase over 2016, according to the Kaiser Family Foundation.
In the past retirement advisers have recommended individuals purchase separate long-term care insurance plans. But only 1 in 10 older adults have such coverage as the market for private long-term care insurance has been steadily shrinking, with the number of policies sold falling by 83% between 2002 and 2014, according to the Urban Institute.
Johnson said the growing elderly population coupled with rising shortages within the home healthcare workforce means higher demands for long-term home healthcare services that will be unmet.
What to do about the impending crisis has led to debates among policymakers over whether the financing of long-term care should be a public right like Social Security or a private responsibility. While efforts by the federal government to come up with a solution have stalled, there are signs of progress among states.
In May, Washington became the first state in the country to establish a program that will help individuals offset the costs of long-term care beginning in 2025.