Elder Care: The Private Sector Responds When Government, Insurance Companies and Employers Are No Where to be Found

The nursing home industry is one of the most regulated industries in the country. It’s also an industry dominated by government as a payer. One of every two residents is on Medicaid and many of the private patients are future Medicaid enrollees. It’s also an industry rife with quality problems – which are revealed almost any time anyone does a study of the issue. [link]

Outside of nursing homes, however, custodial care for the elderly is largely a private affair – with very little government and very little third-party payment of any sort. And it is here that we find a bustling, teeming, innovative sector, involving millions of people.

The most visible response to the problem is the growing market for assisting living communities. This highly entrepreneurial development offers seniors a progression of services – ranging from normal condominium living to nursing home care. Basically, seniors check in for the rest of their lives. As their health deteriorates, the services they receive change accordingly.

This is the high end of the market, however. (Average cost = $3,031 a month, according to the MetLife Mature Market Institute.) In some ways, there is even more innovation occurring at the low end.

One in five adults – roughly 44 million Americans – is providing unpaid care to another adult, according to the National Alliance for Caregiving. If we assume an average of 5 hours per week and attach (conservatively) a value of $10 per hour to these services, the private sector is providing more than $114 billion of care every year – a number that will surely grow as the baby boomers retire. Note this is a number in excess of what Barack Obama thinks universal care would cost.

[As an aside, let us imagine that government were providing these services in response to political demands that are surely right around the corner. The hourly wage would at least double (to $20) and the demanded services would more than double – leaving us with a taxpayer burden in excess of $400 billion. All that for services that are now provided without any taxpayer expense and almost certainly at a higher level of quality.]

According to a survey by AARP, 9 of 10 people would rather stay in their current home rather than live in formal retirement housing – which most cannot afford anyway. How can that be done?

One way is a “service corps,” which utilizes the concept of a time bank. Basically people volunteer hours of service while they are healthy. These services include cooking, grocery shopping, taking another person to the doctor, taking notes on the doctor’s instructions, help with pharmaceuticals, etc. Each hour of help is an hour “banked,” against which the caregiver can draw when fortunes are reversed and the need goes in the other direction. [link]

Another idea is the naturally occurring retirement community, or NORC. There are about 2,000 communities across the country where senior citizens live in large numbers. To help them stay put, associations evolve – charging, say, $500 or $600 a year. In return, the senior gets rides, help with grocery shopping, help with computers and DVD players, meal preparation, etc.

For low-income people (say, residents of public housing), local governments are paying for some of these services – providing transportation vouchers, for example, on the theory that this is a cheaper way of meeting needs than other taxpayer funded alternatives. [link]

People who need assisted living are also turning to medical tourism. There are 1.2 million retired Americans and Canadians living in Mexico, and assisted living can cost as little as $1,100 per month. The Cielito Lindo project (north of Mexico City), for example, charges an average of $1,500 per month up to a maximum of $3,000 for Alzheimer care requiring specialized services around the clock.

Print