Worker Shortages, Dementia Prevalence Driving Rising Cost for In-Home Care

A shortage of skilled workers, higher minimum wages, confusing regulations and a greater incidence of Alzheimer’s disease and dementia are all causing the cost of in-home care to rise, though not as fast as those in other long-term care sectors.

Between 2017 and 2018, the annual median cost for a home health aide increased 2.33% to about $50,336, according to the most recent Cost of Care Survey from Richmond, Virginia-based insurer Genworth Financial (NYSE: GNW). The per-year median cost for homemaker services also saw a slight increase, rising 0.24% to $48,048.

Broken down on a monthly basis, median costs for home health and homemaker services in 2018 each checked in at a little more than $4,000.


Long-term care support services outpaced the U.S. inflation rate over the past year. Over the past 15 years, all care settings have seen noticeable increases in costs.

The survey — the 15th overall — is based on more than 15,000 surveys of nursing homes, assisted living facilities, adult day health facilities and home care providers. The survey collects information from more than 440 Metropolitical statistical areas, as defined by the Office of Management and Budget.

Of the care settings that Genworth reviewed, adult day care services had the lowest annual median cost of care in 2018 at $18,720. The highest was the per-year cost for a private room in a nursing home at $100,375.


“The year-over-year cost of any kind of long-term care is rising quickly, with no sign of slowing down,” Gordon Saunders, senior brand marketing manager at Genworth, said in a statement. “Increasingly, people and their loved ones are finding that the cost of long-term care services is staggering and often they are unaware of it in advance.”

Saunders also manages the Cost of Care Survey.

Graphics included in the 2018 Genworth Cost of Care Survey

While facility costs have climbed, the annual cost of in-home care had remained steady until recent years. Since 2004, costs for home aides and homemaker services have increased 19% and 26%, respectively.

Several factors are driving up costs, according to the Genworth study. For example, a shortage of skilled workers means demand for long-term care services is far outpacing supply. Higher minimum wages — whether through statewide policy efforts or wage pressure from competing industries — has also led to higher costs.

In this respect, home care providers are competing not just with each other for talent, but other large employers. Earlier in October, online retail giant Amazon (Nasdaq: AMZN) increased its minimum wage to $15 an hour for all full-time, part-time, temporary and seasonal employees. A home care provider paying less than that may find itself battling Amazon for workers who value their paychecks more than their vocations.

“As the costs of labor and facilities rise, finding affordable care options becomes much harder for caregivers and families nationwide,” Jennifer Johnson, clinical director of CareScout, the organization that conducts the Cost of Care Survey, said in a statement. “Most people prefer to receive care in their homes, which poses the unique challenge of finding enough caregivers to meet those needs.”

Another factor driving up cost is the increasing prevalence of Alzheimer’s disease and dementia, a trend that’s prompting home-based care agencies to design and launch specialized care programs that often come with a higher price tag.

About 5.7 million Americans are living with Alzheimer’s disease, according to Alzheimer’s Association statistics. By 2050, that number is projected to rise to nearly 14 million individuals.

Home health aides are most expensive in Hawaii, Minnesota and Washington, and least expensive in Louisiana, Alabama and Mississippi, the Genworth survey found.

Written by Robert Holly

Companies featured in this article: