Cost of In-Home Care Rose From Caregiver Shortage

Home-based services are increasingly getting more expensive thanks in part to ongoing labor woes, according to the latest Cost of Care Survey from insurer Genworth Financial (NYSE: GNW).

The national median cost of home health aide services shot up 6.17% to $21.50 per hour, or $4,099 per month, from 2016 to 2017—the most pronounced increase among other care settings, according to the survey. The cost of homemaker or home care services, including household tasks such as cooking and cleaning, reached a median of $21 per hour, or $3,994 per month, a 4.75% increase from last year.

Over five years, the median cost growth rate was 2.50% for home health aide services and 3.08% for homemaker services.

This year’s cost increase was particularly notable, according to Gordon Saunders, senior brand marketing manager for Genworth’s U.S. Life Insurance division. Overall, the annual median cost of long-term care services climbed an average of 4.5% from 2016 to 2017, marking the second-highest year-over-year increase for nursing homes and home care since the study began in 2004.

“We have become accustomed to seeing steady increases in the cost of long-term care services, but this year, we saw a marked acceleration in the cost of home care over previous years,” Saunders told Home Health Care News. “This is based on external factors in the marketplace related to supply and demand: increasing demand for long term care services as our population ages versus shortage of workers and rising labor costs.”

The vast majority of people prefer to receive some form of care in their homes, Saunders added, citing Genworth’s long-term care insurance claims.

By comparison, the national median cost for a one-bedroom unit in a private-pay assisted living community reached $3,750 per month, or $45,000 a year, according to the survey. That’s an increase of 3.36% from 2016 to 2017.

National median rates for semi-private room nursing home care increased 4.44% and hit $7,148 per month, and private room nursing home care reached $8,121 per month, a 5.50% increase.

Labor woes crank up costs

Though the ongoing labor crunch isn’t the only factor driving up the cost of care, it has impacted all care settings, according to Saunders.

“[U.S. Dept. of Labor] changes have resulted in minimum wage and overtime protections to more domestic service workers who enable individuals with disabilities and the elderly to continue to live independently in their homes,” Saunders said. “Also contributing to the increase in labor costs is the Affordable Care Act (ACA), which requires employers of a certain size to offer some type of health insurance, or pay a penalty.”

For nursing homes, higher labor expenses and tightening Medicare rules have resulted in shorter hospital stays and sicker patients being sent to rehab nursing homes for shorter stays, driving up costs, Genworth noted in the survey.

Room and board for assisted living communities has gone up to accommodate residents who are sick, but not sick enough to require nursing home care, according to the survey. Luxurious amenities commonly found in private pay communities also increased costs of care.

Cost confusion

It’s clear costs are rising, but many people don’t believe they’ll ultimately have to pay for senior care services.

About two-thirds of respondents in a companion survey to this year’s Cost of Care report said they “expect government programs to cover all or part of their long-term care costs.” And although there are government programs in place to aid seniors, those programs are limited, Genworth notes.

Medicare will pay for skilled home health care, but most home care and homemaker services are paid out of pocket. Medicare will also pay for limited skilled nursing care following a three-day hospital inpatient stay. Medicaid, on the other hand, has different income and functionality requirements.

“Medicaid is the single largest payor of long-term care costs because so many people can’t afford to cover the costs themselves, but what many people often don’t realize is, they have to spend down much of their assets to qualify and their options for how and where they receive care may be limited,” Saunders said. “It usually takes personal experience caring for a parent or other family member for people to realize the enormous costs associated with long term care and wake up to the fact that they themselves need to do a better job of planning ahead for how they will cover these costs.”

Written by Tim Regan

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Tim Regan
Tim is a lover of bad jokes and good beer. When he's not hunched over his work computer, Tim can usually be found hunched over his personal computer.

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