Where Home Care Rates Are Rising Most Sharply

As the home care industry is faced with increased labor costs and other challenges, rates are increasing faster than they are for other types of senior care services—and many potential home care clients could be in for some serious sticker shock.

Help with household tasks such as cooking and cleaning became 2.56% costlier over the past 12 months, according to latest results from the annual Cost of Care Survey done by insurer Genworth Financial (NYSE: GNF). Homemaker services is the care category posting the highest year-over-year increase for costs. For 44 hours a week, costs have reached a median price point of $3,813 per month* for these services.

Non-skilled home care aide services saw a more modest rise of 1.25%, reaching $3,861 per month for 44 hours of service. But over the past five years, both categories of in-home care have become much more expensive, with costs increasing 11.1% for homemaker services and 6.6% for health aides.

On an annualized basis, the 5-year growth rate is 1.28% for home health aide services and 2.13% for homemaker services.

However, as past surveys also have shown, care costs can vary substantially by location. Rates for a non-skilled home health aide have risen most sharply in North and South Dakota, with both states posting a 5-year growth rate of 4%, on an annualized basis. The annual cost for an aide in North Dakota now is at $63,972 for North Dakota and $53,768 for South Dakota.

A number of states are trailing the Dakotas with a 3% growth rate for the past five years, including California, Colorado, District of Columbia, Delaware, Iowa, Kansas, Nebraska, Oklahoma, and Wyoming.

On the other hand, there has been a 5-year annual growth rate of 0% in a few states: Hawaii, Louisiana, Massachusetts, Minnesota, and Nevada. And costs have gone down in North Carolina, which came in with a minus-1% rate.

Snowball effect

Looking just at the last year, facility-based care costs did not increase as markedly as home care costs. Assisted living facility costs, for example, increased only 0.78% between 2015 and 2016. And adult day health care costs went down.

“You find that home care costs are rising much faster than some of the other settings,” Deb Mitra, senior vice president of business strategy at Genworth, told Home Health Care News. “That’s probably reflective of the fact that that’s a setting in which people like to receive care. That’s also a setting where it’s becoming more scarce to find caregivers, [so] wages are going up. That’s driving up the cost of home care.”

For home care providers that are actually grappling with these cost pressures day-to-day, these findings may not come as much of a surprise. What might be more unexpected is the the huge disconnect between the reality of home care prices and what potential clients expect they’ll pay.

Nearly one-third of Americans incorrectly believe that costs will come in under $417 per month, according to a complementary Genworth study. The average American underestimates home care costs by nearly 50%, that study found.

“What they base it on is babysitters or other hired help,” Mitra told HHCN. “Most people have not experienced long-term care, so when it comes to finding a home care aide, they just have no baseline to go off.”

People’s misconceptions about pricing might only grow more acute in the coming years, as price increases are destined to continue, according to Mitra.

“What I see here is that snowball effect,” he said. “Every year it just keeps getting bigger and bigger, and it’s maybe in smaller increments, but we’ve seen a shift that the home care costs are actually increasing at a little quicker rate than what we’ve seen at the community rate or the facility pace.”

The 13th Annual Cost of Care Survey was conducted between January and February, capturing data from more than 43,000 long-term care providers in 440 regions. Surveyors completed more than 3,800 interviews with licensed home care providers.

*Editor’s Note: This story has been updated to reflect that this is the median price per month; HHCN regrets that a previous version did not specify that timeframe.

Written by Tim Mullaney with reporting by Amy Baxter