Sharing the Financial Responsibility of Caring for Parents

Abstract

THE EXPERIENCES OF THE “M” FAMILY DESCRIBED BY Ritchie et al in this issue of JAMA are the topic of conversations among many baby boomers coping with aging parents who can no longer manage to live on their own. Although assisted living facilities or continuing care retirement communities are attractive options for individuals who recognize that they are slowing down, such options are paid for out of pocket; those who cannot afford them can either receive unpaid help from family or friends, pay for in-home care of which only a portion may be covered by insurance, or enter a nursing home and spend down to Medicaid—at great cost to the government and taxpayers. Encouraging aging adults to remain in their homes or live with their families would seem desirable from an individual and societal perspective. However, as Ritchie et al explain, the emotional, physical, social, and financial costs of caring for older parents can be high. Many of these costs occur whether the aging parents move in with the adult children or the children supervise care provided elsewhere. The financial costs in particular can be staggering, adding to the emotional stresses of both the parent and the adult child. However, only a small share of elders have high costs. In the United States, for example, 69% of those who live to age 65 years are estimated to need some type of long-term care assistance before they die. Most use only informal, but often substantial, care provided by their relatives and friends. However, while average lifetime long-term care expenditures (excluding informal care) of the individuals who live to age 65 years are projected to be $47 000 (in 2005 dollars), 16% of these individuals will have more than $100 000 (in 2005 dollars) of lifetime expenditures. These individuals receiving high-cost care are especially likely to be in nursing homes for more than 2 years; the average annual cost of nursing home care in 2006 was $72 000. Medicaid pays for more than 40% of all longterm expenditures, but individuals pay for 22% directly, in many cases exhausting their savings and then qualifying for Medicaid. In England, roughly 10% of people at age 65 years are estimated to have lifetime care expenditures of more than £100 000 (equivalent to about $160 000 in July 2011). The wide variation in need for long-term care assistance and the skewed distribution of expenditures (with only a small share of people paying very high costs) show why the financial risk is small but nontrivial. A private insurance market might be expected to thrive in such a situation. Yet it does not—in the United States or any of the other industrialized countries. The primary explanation is that there is great uncertainty surrounding who exactly will need expensive assistance and what those costs will be 20 or 30 years from now. The US Community Living Assistance Services and Supports (CLASS) plan, a voluntary, publicly administered insurance program established by the Affordable Care Act of 2010, was expected to help address this issue, but it appears unlikely to survive US efforts to reduce the budget deficit. With more baby boomers becoming aware of the needs and potentially high costs of family elder care, how to care for the 19% of Americans who by 2030 will be 65 years old and older could be a major focus of the national health care debate. Other industrialized countries have been having such debates for the past 2 decades—in part because higher shares of their population were already aged 64 years or older. For instance, in 2010, more than 20% of the individuals in Japan, Germany, and Italy were aged 65 years and older, as were more than 15% in Sweden, England, Spain, France, and the Netherlands—in the United States that proportion was 13%. These countries are wrestling with the same issues as families in the United States—how to provide quality care to elderly individuals who need assistance with activities of daily living (ADLs) while not impoverishing them and their families. Many countries address the risk of costly longterm care with a social insurance program or a program funded through general revenues to pay for care assistance. The Scandinavian countries rely on taxes raised at the national and local levels; the Netherlands, Germany, and Japan have social insurance programs with mandatory participation. Although the Scandinavian countries have had long-term care assistance programs in place since the 1960s (Sweden since the late 1940s), the programs in the Netherlands, Germany, Spain, and other countries have been implemented only since 1994.