American families need help. And not because of the widely assumed crisis of values in the home (as opposed to home values), the devolution of social norms or the flight from family we hear so much about these days.
Quite the opposite.
No, by one critical measure, family ties are remarkably strong: Caregiving.
More than 44 million caregivers devote enormous amounts of time and money to helping their aging, frail elders. Probably more than you’d imagine.
True Cost of Family Care
Researchers at Rand Corp., the Santa Monica, Calif. think tank, totted up the cost of “informal” eldercare (unpaid work) using data from the American Time Use Survey.
They also calculated the “opportunity cost” of caregiving — paychecks that could be pocketed if the caregivers were working and not taking elders to the doctor, monitoring their health and helping them with daily activities. Taken altogether, the scholars estimate Americans spend over 30 billion hours a year providing informal elder care at an annual cost of $522 billion.
Let’s put that figure in context. It’s more than all federal spending on Medicare in 2013, which was $492 billion (minus income from premiums and offsetting receipts), according to the Henry J. Kaiser Family Foundation.
Here’s another way of putting the caregiving number in perspective. The cost of replacing informal care with skilled nursing professionals would be $642 billion. Unskilled labor paid a minimum wage would total $221 billion.
The Rand study echoes a 2011 MetLife Foundation report whose researchers estimated that the average amount of lost wages, pension and Social Security benefits for caregivers 50 and over was about $303,880.
That’s a hefty number on its own. But the total aggregate loss in wages, pension and Social Security is a stunning number: almost $3 trillion. (Keep these figures in mind the next time you hear a financial planner complain about boomers not saving enough for retirement.)
The ethical and family returns to caregiving are huge. But the personal financial costs are also substantial, growing and — sad to say — ignored.
Howard Gleckman, author of Caring for Our Parents, rightly calls caregivers members of a “silent society,” people who belong to “one of the least exclusive clubs in America.”
The situation is unsustainable. Caregivers and their families need financial support.
To be sure, there are many wonderful support programs around the country, typically a partnership, perhaps with a government agency, nonprofits and foundation money.
The Frayed Safety Net
Still, the broader safety net is full of gaping holes.
• Medicare doesn’t pay for most long-term care bills.
• Medicaid is the main government safety net, but essentially you have to run out of money to qualify for this means-tested program.
• The private long-term care insurance market once held promise, but it’s shrinking fast. Several brand-name insurers have left the field and the remaining players are raising prices and reducing benefits; prudent reactions to a money-losing business, which has the effect of further shrinking the pool of potential policyholders.
What about Washington D.C.? Legislative paralysis rules (no surprise).
Policymakers haven’t even managed to renew the Older Americans Act, a half-century-old legislation that helps funds a wide array of elderly services, including nutrition and transportation services.
And, as Next Avenue has written, [http://tinyurl.com/potrlmq] the report from the recent bipartisan federal commission on long-term care — a bizarre creation from the fiscal cliff negotiations of 2012 — couldn’t come to agreement on financing long-term care.
What’s Needed Soon
There are no easy answers. The current system is broken. The status quo will deteriorate without action, further draining family finances.
Any reform initiatives will require a stronger private insurance foundation and, at the same time, the creation of a social insurance system to share the costs of catastrophic care situations.
Employers have a role to play, too, by embracing eldercare benefits and flexible workplace policies. The Society of Actuaries in its Land This Plane report calls for a “systematic overhaul” of long-term care financing and does a good job framing the problem and developing the outline for any solution.
The issue of assisting aging parents and relatives isn’t a conservative or a liberal one.
We’re living longer and seniors comprise a larger share of the population, something well worth celebrating. But at some point, most of us will be dealing with elderly parents and relatives. The question isn’t whether reform will come —it will. The only real question is how fast or how slow will change come.
Fast is better.