A Third of Americans Rely on the Unregulated ‘Gray Market’ for Senior Care

Nearly a third of Americans who pay for senior care hire workers that aren’t tied to a regulated agency, a new study from RAND Corporation suggests. Instead, these individuals hire or use workers from the “gray market,” or the unregulated market of under-the-table labor.

For professional home-based care agencies, the findings suggest there’s a huge, untapped market for their services, but only if they can tailor costs to middle-income individuals.

Generally, families use the gray market for a variety of reasons, some of which are still unclear. But often, it’s because they don’t qualify for Medicaid and cannot afford private-pay services.


“They don’t really have a good care solution to be able to provide affordable, high-quality care to their loved one,” Regina Shih, the study’s lead author and a senior policy researcher at RAND, told Home Health Care News. “They’re kind of stuck in the middle with no other choice. And the gray market might be filling that need to be able to find affordable, good quality care.”

The Santa Monica, California-based RAND Corporation is a nonprofit research organization.

RAND’s Esther Friedman and Emily Chen also helped author the study, as did the National Alliance for Caregiving’s Grace Whiting. Support for the study was provided by The National Institute of Minority Health and Health Disparities.


To further understand the gray market in long-term care, RAND surveyed 1,037 U.S. adults in 2017. Respondents were asked whether they had sought care for a senior, and, if they had, whether the caregiver hired was employed.

The study defined gray-market caregivers as paid providers who were unrelated to the recipient. Gray-market caregivers did not work for a regulated agency, and they were potentially unscreened and untrained as well.

Among respondents, 28% had arranged aging-related long-term care for themselves or a loved one. Of those, 31% hired a gray-market provider.

“The gray market’s prevalence is alarming because we just don’t have a solid infrastructure in this country for affordable, home-based care,” Shih said. “The demand for home-based care is only going to increase with time.”

The US. is “in a crisis right now,” she explained. Beyond Medicaid, there just isn’t a cost-effective option for people looking to age in place.

“We’re kind of in this position where people aren’t able to find good, quality care,” Shih said.

Individuals who used gray-market caregivers were less likely to be employed themselves and more likely to use unpaid care for family members. Members of rural populations were almost 5 times more likely to arrange dementia care for a senior than urbanites were.

RAND’s researchers acknowledged that seniors with dementia who lived in rural areas may have more difficulty accessing home- and community-based services, even if they were willing and able to pay for them.

“I do think that the gaps in access to paid caregiving in rural areas is a serious issue in this nation,” Shih said. “Part of the problem is, a lot of home health agencies cannot find workers for their positions in rural areas. And it’s this cyclical issue of not being able to find workers, then people who need care not being able to find the care.”

The need for caregivers in the U.S. is already overwhelming for some home-based care agencies, and the issue is expected to exacerbate over the next decade. The need for home health aides and personal care aides is expected to grow by 36% from 2019 to 2029, according to RAND.

Other examinations of the workforce shortage have found the problem to be even worse. A recent report from PHI found that about 4.5 million home care jobs will need to be filled by the decade’s end.

A potential solution to the problem is for home-based care agencies to find out who these home care workers are that are working in gray markets, especially in rural areas. They then could employ them, making sure they are trained and receiving benefits for their work.

Using caregivers who are not employed by regulated agencies does not completely nullify the issues with care gaps. The gray market could potentially put seniors in a vulnerable position, as they are being cared for by individuals who are likely not properly trained or screened for the job.

Agencies also generally perform criminal background checks, verify training and maintain clinical records. In the gray market, those details are usually unknown.

The gray market, especially in home-based care, is full of unknowns. But it’s not inherently a bad thing, Shih said..

“It should not be framed as a problem. I mean, this is a clearly robust market,” she said. “ It could be that the care and the quality of care is actually on par with the regulated market. But I think that there’s also an opportunity to train gray-market providers because they’re not necessarily connected to best practices that are offered through the regulated market, or through agencies that do monitor quality of care.”

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