ElderWeb

The care needs of the elderly population are significant. As they age, people face numerous, overlapping problems related to isolation, failing health, and physical and mental limitations. The problems of the frail elderly are magnified when the elderly person lives alone, especially when they and their children are geographically separated. Elderly people with health or other physical or mental problems are often referred to as the "frail elderly" to distinguish them from those who are elderly but still healthy and independent. Many of the elderly have no one nearby who can provide assistance to them. One out of five have no living children. One-third of those with living children live more than 30 minutes away from their children. Many live alone.

Some quotes and articles which illustrate the scope of the problems:

A study by Montefiore Medical Center and the Albert Einstein College of Medicine in New York and United Hospital Fund found the "vast but vulnerable base upon which our chronic care system rests" The study estimates unpaid caregiving for ailing adults costs $200 billion per year, and notes "The estimate dwarfs actual spending for home health care ($32 billion) and nursing home care ($83 billion) and is roughly equivalent to one-fifth of the nation's total annual health care costs." (Source: National Council on Aging)

"We’ve learned that while people usually prepare for career, retirement, and the generation that follows, they do not anticipate caring for a parent. Few realize the time involved, or the lifestyle changes they will encounter in caring for a parent. Instead, people tell themselves that "I’m sure Mom and Dad have that covered. They have insurance and then there’s Medicare." Or we’ve heard, "We’ll cross that bridge when we get to it." But when adult children suddenly have to cross that bridge, they look frantically for answers and options. (Source: National Council on Aging)

"More Americans worry about paying for long-term care than paying for retirement, according to a survey of 1,000 adults. The survey, released by the National Council on the Aging (NCOA) and John Hancock Mutual Life Insurance Co., also found that seven out of 10 Americans flunked a quiz about the basic facts of long-term care. In addition, 48 percent of respondents indicated they have done little or no long-term care planning. (Source: National Council on Aging)

27% of Baby Boomers think they are covered by long term care insurance, but very few actually carry this coverage. 80% do not know how long term care is paid for and 25% say they are unwilling to consider paying for any additional insurance to cover these costs, according to a report from the American Health Care Association .

Older adults are concerned about their security but someone else is worrying about them more: their adult children, according to a study released by The National Council on the Aging and SecurityLink from Ameritech, a division of Ameritech Corporation. " (Source: National Council on Aging)

Though more dramatic than most, the incident was one of many that play themselves out every day and illustrate the need for expanded adult day care and assisted living services, aging activists say. The Associated Press highlighted the issue in a nationwide story Dec. 22, noting that demand for the "guilt-free alternatives to nursing homes is growing rapidly." (Source: National Council on Aging)

Nearly 7 million Americans provide care or manage care for a relative or friend aged 55 or older who lives at least one hour away, according to a survey cosponsored by The National Council on the Aging (NCOA) and The Pew Charitable Trusts... Long-distance care is a large and growing concern to baby boomers. The average age of the caregivers interviewed was 46, and nearly half of them were boomers. The survey indicates that approximately 3.3 million boomers are providing long-distance care. We expect that the number of long-distance caregivers will more than double over the next 15 years as the baby boomers and their parents age. (Source: National Council on Aging)

The number of persons requiring formal care (mainly nursing home care) and informal care (mainly care at home) will rise sharply even if the share of persons at each age remains unchanged. Accordingly, there will be a large increase in the numbers participating in various entitlement programs such as Social Security and Medicare. Living alone presents an additional risk, and the risk mounts when the person living alone has no children or siblings. These characteristics are more common among those 85 years and over as compared with those under age 85. At ages 65 and over only 2 percent of the population have these characteristics in combination, but at ages 85 and over perhaps 6 percent have them. The outlook for the longevity and health of the elderly is not altogether clear. There will probably be a substantial increase in life expectancy, even at the older ages, but there are also likely to be large increases in the number of persons with poor health and disabilities, including Alzheimer's disease (and in persons requiring nursing home care and home care), if only because of the massive population increases projected to occur. (Source: Aging into the 21st Century)

Federal and state governments paid 41 percent of the costs of chronic care in 1987; private insurance paid 33 percent, and individuals paid 22 percent out-of-pocket...Nursing homes are a particularly costly segment of the chronic care continuum, a primary reason most reforms in the chronic care system include methods to help people remain independent and out of institutions for as long as possible. Recent data indicate that Americans pay 33 percent of the total costs of nursing home care out-of-pocket ($23 billion). The public sector pays an even greater share: Medicaid's 52 percent represented an expense of $36 billion. (Source: Chronic Care in America, A 21st Century Challenge)

GAO noted that: (1) spending for long-term care for the elderly totaled almost $91 billion in 1995, the most recent year for which expenditures from all sources were available; (2) almost 40 percent of these dollars were paid for by the elderly and their families and almost 60 percent by Medicaid and Medicare; (3) these amounts, however, do not include many hidden costs of long-term care, since an estimated two-thirds of the disabled elderly living in the community rely exclusively on their families and other unpaid sources for their care. (Source: General Accounting Office)

Statistics from Profile of Older Americans 1998:

The older population-persons 65 years or older-numbered 34.1 million in 1997. They represented 12.7% of the U.S. population, about one in every eight Americans

The older population itself is getting older. In 1997 the 65-74 age group (18.5 million) was eight times larger than in 1900, but the 75-84 group (11.7million) was 16 times larger and the 85+ group (3.9 million) was 31 times larger

Almost half of all older women in 1997 were widows (46%)

About 31% (9.9 million) of all noninstitutionalized older persons in 1997 lived alone

While a small number (1.4 million) and percentage (4%) of the 65+ population lived in nursing homes in 1995, the percentage increased dramatically with age, ranging from 1% for persons 65-74 years to 5% for persons 75-84 years and 15% for persons 85+

In 1994-95 more than half of the older population (52.5%) reported having at least one disability. One-third had a severe disability (ies). The percentages with disabilities increase sharply with age (Figure 6). Over 4.4 million (14%) had difficulty in carrying out activities of daily living (ADLs) and 6.5 million (21%) reported difficulties with instrumental activities of daily living (IADLs). [ADLs include bathing, dressing, eating, and getting around the house. IADLs include preparing meals, shopping, managing money, using the telephone, doing housework, and taking medication].

Older people accounted for 40% of all hospital stays and 49% of all days of care in hospitals in 1995. The average length of a hospital stay was 7.1 days for older people, compared to only 5.4days for people under 65. The average length of stay for older people has decreased 5.0 days since 1964. Older persons averaged more contacts with doctors in 1995 than did persons under 65 (11.1 contacts vs. 5 contacts).

How has the source of payment for home health care services changed over the years? I've collected statistics which show the increasing role of Medicaid and Medicare, which now cover about 55% of the cost, and the resulting decline in the portion paid from other private sources from 1960 to 1997. The percentage paid by insurance is creeping up, but is still only 11%. About 22% of the cost is still paid out-of-pocket!

Aggregate Home Health Expenditures
(Millions of Dollars)

Source: Health Care Financing Administration, Office of the Actuary: National Health Statistics Group

See the supporting data at http://www.hcfa.gov/stats/nhe-oact/nhe.htm

To do a quick search of documents on the web sites of the Administration on Aging, Centers for Medicare and Medicaid, National Institutes of Health, Federal Register or others, enter a search term into the box of the site you wish to search, then press "GO" to jump to that site and retrieve results. The link to the "Advanced Search" for each site takes you to that organization's on-site search form, where you will find more search options and links to tips on how to most effectively search that particular database. Scroll down this page for a brief paragraph describing the kind of information you can find in each database.

Administration on Aging

Administration on Aging (AOA) - The Administration on Aging administers key programs at the Federal level mandated under the Older Americans Act, and works with regional, state, and area agencies to plan, coordinate, and develop community-level systems of services. The site has thousands of documents related to international, national, and state aging issues and programs, particularly information and referral programs and programs focused on home and community-based care.

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Centers for Medicare and Medicaid

Centers for Medicare and Medicaid (formerly called the Health Care Financing Administration) - administers the Medicare and Medicaid programs and the site includes thousands of pages of statistics, data files, and documents about utilization, cost, and quality of care in those programs.

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Medicare.gov

Medicare.gov - consumer site with information on Medicare, nursing home guides and survey results, prescription drug cost and plan selection information, and information on Medicare Advantage and medigap plans.

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National Institutes of Health

National Institutes of Health (NIH) - NIH is the federal government's medical research organization, supporting research projects nationwide for diseases like cancer, Alzheimer's, diabetes, arthritis, heart ailments and AIDS. NIH includes 18 separate health institutes, the National Center for Complementary and Alternative Medicine and the National Library of Medicine. The site is a source of consumer and professional information on specific diseases and conditions, research, and clinical trials.

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Centers For Disease Control

Centers for Disease Control and Prevention (CDC) - The CDC is the lead agency responsible for protecting the health of the American public, and the web site has extensive statistical health data, like detailed health statistics, life expectancy calculations, and tabulations of the National Nursing Home Survey and the National Home Health Care Survey.

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General Accounting Office Reports

General Accounting Office (GAO) - The GAO Reports databases contain reports on audits, surveys, investigations, and evaluations of Federal programs conducted by the General Accounting Office (GAO) from fiscal year 1995 through the present. Reports include analysis of long term care insurance, assisted living issues, and social security reform alternatives.

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Congressional Reports

Congressional Reports - The Congressional Reports databases contain House, Senate, and executive reports from the 104th Congress (1995-96) through the present, including reports on the cost of proposed bills and legislation. The quick search form searches only the current session's reports, but you can search prior years by using the advanced search.

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Congressional Bills

Congressional Bills - This database includes the full text, status, sponsors and other information for all versions of bills from the 103rd (1993-1994) session to the present. The quick search form above searches only the most recent session, but you can use the advanced search option to search other sessions.

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Congressional Record

Congressional Record - The Congressional Record is the official record of the proceedings and debates of the United States Congress. The online database contains Congressional Record volumes from 140 (1994) to the present. The quick search form searches only the current year's Congressional Record, but you can search prior years by using the advanced search.

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Federal Register

Federal Register - The Federal Register is the official daily publication for Rules, Proposed Rules, and Notices of Federal agencies and organizations, as well as Executive Orders and other Presidential Documents. The quick search form searches only the current year's Federal Register, but you can search prior years by using the advanced search.

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Federal Budget

Federal Budget - The Federal Budget database includes detailed Federal Budget and Economic Outlook information. The quick search form searches only the current year's Federal Budget, but you can search prior years by using the advanced search.

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Older Americans Move Less, Migrate South and West

The Census Bureau released its survey measuring geographic mobility from March 1998 to March 1999. The data show distinct differences in mobility patterns by age. Few older people move at all, and even fewer move any great distance. Of those that do, the most dramatic migration is right around age 65, when many move from the Northeast and Midwest to the South, and a smaller migration for those at older ages, who are migrating mostly to the West.

>> More Information

We can't plan adequately for eldercare needs without knowing the costs, so we need to quantify those costs. In searching for statistical information on the costs of aging, I was not able to find everything I was looking for, but I did find a number of interesting statistics which cast some light on what people over age 65 might expect to pay for housing and care-related expenses as they age.

Average life expectancy has increased by about 15 years since the Social Security program was implemented in the 1930s. If the eligibility age for Social Security and Medicare had increased along with the average life expectancy, it would have risen from age 65 to age 80 by this time. If people were retiring at that later age, the funding problems for the Social Security and Medicare programs would be eliminated, but our lives and expectations would be far different!

Life expectancy changes once one reaches age 65, since not everyone will reach that age. If one lives to age 65, they can now expect to live 16-19 more years. By 2050, when the baby boom generation retires, average remaining life expectancy at age 65 is expected to be over 20 years. That 20 year period is what we need to plan to fund.

The population over age 65 are very disproportionate users of healthcare. Although they represent 12% of the total population, they account for 36% of total national healthcare expenditures, 36% of hospital stays (admissions), and nearly 50% of all days in the hospital!

People over age 65 have far higher medical expenses than those under age 65, and the projections are that their costs will rise at a far faster rate than healthcare costs for younger people. By 2005, non-institutionalized people over age 65 may average over $14,000 per year of healthcare expenses, over four times the cost of those under age 65. Because these statistics are for the community-based population, this figure does not include the cost of long term care.

The average cost of medical expenditures for the community-based population over age 65 is primarily for hospital costs, but physician, home health, and prescription medicines also represent significant expenditures. Of particular interest is the projected $1,000 of annual cost for prescription medicines, a cost which is not covered by the standard fee-for-service Medicare program.

Looking at the source of payments for these healthcare costs provides some insight into the need for insurance. Only about half of these costs are covered by Medicare, a fact which many people are unaware of. The remaining half of per capita expected costs, about $7,000 a year in 2005, must be paid for out-of-pocket, or by Medicaid or private insurance.

The out-of-pocket expenditures of all Medicare beneficiaries highlight the gaps in the Medicare program. Although hospital costs made up the largest part of the incurred costs, they are a very small part of the out-of-pocket expenses of the average Medicare beneficiary since hospital care is well covered by Medicare. The biggest out-of-pocket expenses are for long term care, pharmacy, and dental expenses, most of which are not covered by Medicare, and for physician services not covered by Medicare. Some of this out-of-pocket expense is in the form of patient deductibles and co-insurance for covered care, and some for uncovered services.

Most people who have Medicare insurance will need supplemental insurance to cover some of the significant co-insurance and deductibles left by Medicare. This insurance could be provided by a private commercial Medigap policy. Medigap policies were standardized by the federal government into 10 policies, called Plan A through Plan J, so that beneficiaries could more easily compare policies from one insurer to another.

Even with this standardization, premiums vary considerably. In this example, taken from data posted by the Illinois Department of Insurance on their Web site, the cost of Medigap policies in the Chicago area varies from $440/year to $5,600/year, depending on the plan, the insurance carrier, and the age at which it is purchased!

Older people will generally elect Medicare Part B coverage, which requires a premium paid to the federal government. That premium is currently about $45/month. This provides coverage for physician and other charges.

The Part B premium is also required if a beneficiary elects a Medicare HMO as an alternative to standard Medicare. A Medigap policy would not be needed for a beneficiary who elects a Medicare HMO, and the HMO premiums are generally less than Medigap premiums, but there are trade-offs for that lower premium, since the Medicare HMO controls which providers and what services the beneficiary can use. There have also been problems when Medicare HMOs have dropped out of the program, requiring the beneficiaries to find alternatives.

Older people may also want to purchase long term care insurance. The premiums for long term care insurance vary widely based on the age at which it is purchased, the sex of the beneficiary, the amount of coverage elected, the waiting period, and a host of other options.

Just to provide a simple example of the potential gross cost of insurance premiums which would accumulate over the 20 years of retirement, this chart shows that gross, non-inflated, insurance premium costs could be $50,000 to over $100,000 over that time, a significant expense many people fail to plan for.

Assisted living is a fairly new level of care. It is appropriate for people who are not able to manage for themselves at home, but who don't require 24 hour a day nursing care or daily therapy. This is a type of care which is highly desirable to consumers, but it cannot be funded by Medicare, and there are few places in the country which are licensed to take Medicaid payments. Consequently, the money for this type of service often has to come from private long term care insurance or out-of-pocket.

Independent living is the lowest level of care. People in independent living are still able to take care of themselves and remain independent, but benefit from socialization, transportation, a dining room, or housekeeping services. On average, people in these types of facilities are about 75. At younger ages, most people would not see the benefit to moving out of the family home.

People don't generally move into assisted living facilities until a later date, and they average 83 years old and stay about two years. Nursing home residents average age 85 and stay there an average of 1-2 years.

One common reason for the need for either assisted living or nursing home care is dementia, most commonly Alzheimers. About 1/3 of assisted living residents and about 1/2 of nursing home residents have dementia problems. Dementia is difficult to handle in a person's home unless a full-time caregiver is available, which is not always the case. Even when a caregiver is available, they may not be able to manage a patient with aggression, nighttime wandering, or other common manifestations as Alzheimers progresses.

Another reason why a person may need to move to assisted living or a nursing home is that they require assistance with the activities of daily living (ADLs). These include needs for assistance in dressing, bathing, eating, toileting, or moving around. When people require help with multiple ADLs, it may be difficult or impossible to provide that help in the person's home. Over 50% of people over age 85 require assistance with ADLs.

Interestingly, only a small percentage of the population over age 65 is institutionalized. Even at age 85 and over, 85% are still living in some non-institutional setting.

One sign of the changing ways we provide care to older people is the decline in the average length of stay in a nursing home. That has dropped from 34 months in 1985 to 28 months in 1995, a six-month reduction!

It's important to understand the real likelihood of the need for nursing home care, and the length of time it might be needed, in order to plan and purchase appropriate levels of insurance. Generally, about 40% of people who spend time in nursing homes stay for less than one year, 30% stay 1-2 years, and 30% stay over 2 years.

These numbers will probably change as patterns of use of long term care changes. Assisted living facilities are drawing many people who would have been in a nursing home in the past, and as they become more widely available and affordable, the use of assisted living will probably impact these statistics.

Costs vary widely from region to region, but these are some statistics which compare the costs of different types of healthcare.

Costs also vary widely depending on the level of services provided in different long term care settings.

Just to get some idea of the gross dollars at stake, this chart shows the non-inflated, accumulated cost of spending different amounts of time in assisted living and nursing home facilities, including potential entrance fees (which may or may not be required, and which also vary widely in amount.) As you can see, the potential cost is several hundred thousand dollars.

The potential costs are significant, easily accumulating to a hundred thousand dollars or more. Yet most people are unaware of these costs and do not plan for them. Appropriate planning can have a real impact on actual costs, by doing things like selecting the right insurance for the right situation, and understanding all the alternatives available in order to choose the most cost-effective solutions to problems.