Long-Term Care Costs Continue To Climb

By Arthur D. Postal
InsuranceNewsNet

WASHINGTON – When it comes to the cost of providing long-term care, there’s no place like home.

The cost of long-term care (LTC) has been relatively stable over the past five years, according to a new study by Genworth, but the best value is care provided in the home.

The annual Cost of Care Study found that the cost of providing service in the home has grown less across the board over the past five years than services provided in either an assisted living facility or in a nursing home.

In comments accompanying the study, Tom McInerney, Genworth president and CEO, said, “The cost of nursing care is rising faster than it is for home health care, and I see no reason that will change.” He added that is why most families are focusing on providing home health care for their needy loved ones.

The study found that the median annual cost nationwide for a one bedroom single occupancy assisted living facility was $43,200, based on monthly rates, while the median annual cost for a semi-private room at a nursing home was $80,300. The cost of a private room at a nursing home was $91,250 annually.

By contrast, the minimum hourly rate for homemaker services was $8, the median was $20 and the maximum $40. For home health aide services, the survey found that the minimum was $8, the median $20 and the maximum $40. For adult day care rates, the minimum was $10, the median $20 and the maximum $40, the study found.

Bob Bua, Genworth vice president and business leader of its wholly owned subsidiary, CareScout, said each individual uses home care services according their own needs, “so 10 hours of home care a week will cost much less than assisted living.”

The study found that the highest five-year annual growth rate for LTC services was for nursing home services, whose five-year growth rate was 4 percent.

However, rate growth over five years for in-home based services was less. For example, hourly rates for home health aides had a five-year annual growth rate of only 1 percent. Rates for homemaker services had a five-year annual growth rate of 2 percent and adult day care daily rates had a five-year annual growth rate of 3 percent, according to the latest study.

And, in general, the study found that, regardless of the state, the cost of home care versus an assisted living facility was about the same, but that the cost of a private room in a nursing home was about double, when compared to the other two alternatives.

Genworth researchers said that the company’s experience “shows that the majority of claims begin in home.”

“Plus, our research shows that being able to stay at home is very important for most people thinking about buying long-term care insurance,” the report said. “In other words, this gradual increase in cost for home care is good news for many consumers,” the Genworth researchers found.

Specifically, the study determined that the cost of homemaker services rose 2.63 percent over the last year, and had a 1.61 percent growth rate over the past five years. For home health aide services, the one-year increase was 1.27 percent while the five-year growth rate was 1.03 percent. For adult health care, the increase was the highest for all five services considered by Genworth actuaries, 5.94 percent over the past years, but only 2.79 percent over the past five years.

The long-term growth rates for care facilities was at least 50 percent higher over the five-year period than for services that are home-based.

For example, the cost of assisted living facilities increased 2.86 percent over those in 2015, and 2.48 percent for the five-year period. For a semi-private room in a nursing home, by contrast, the increase over 2014 was 3.77 percent and the five-year growth rate was 3.53 percent. For a private room, the increase over 2014 was 4.17 percent, while the five-year growth rate was 3.95 percent.

The study found that the cost of services was not necessarily higher in densely-populated urban states.

For example, the study found that the average nationwide cost of home health aide services was $45,760.  However, the study found that the highest median annual cost was in North Dakota, $62,142.  The similar rate in New York state, for example, was $52,624; Massachusetts had a comparable rate of $57,200; neighboring Rhode Island, $56,925, and Vermont, Maine and Connecticut in the $50,000 range. On the West Coast, Washington had a median annual rate of $54,912; Oregon, $51,480, and California, $52,624.

Minnesota had a median rate of $57,200, but Nebraska and Iowa were in the $52,000 range while Illinois media rates were $49,192. Rates in the South were lower, with rates in Louisiana the lowest in the country at $36,608, the same as in West Virginia. Rates in Kentucky, Virginia, Tennessee, North Carolina, Georgia and Florida were in the $41,000 to $43,000 range.

The same pattern emerged for homemaker services, with North Dakota the highest at $59,854 and Louisiana the lowest at $34,200. The average cost throughout the U.S. for homemaker services was $44,616.

The study found that care in assisted living facilities in metropolitan areas in the Northeast and Middle Atlantic can range as high as $94,050 in Washington, D.C., $68,940 in Delaware and $68,700 in New Jersey, $61,230 in New Hampshire, $66,900 in Connecticut, and $57,500 in Maine. These are the median annual cost of one-bedroom, single occupancy, assisted living facilities. The average cost throughout the U.S. was $43,200.

Rates for assisted living on the West Coast vary from a high of $55,500 in Washington, to $46,560 in Oregon and $45,000 in California. Rates are much lower towards the South, with a low of $34,560 in Georgia, $36,120 in Louisiana and $37,800 in Florida.

The median annual cost of a private room in a nursing home is prohibitive, ranging from $158,775 in Connecticut, $139,580 in Massachusetts, $136,437 in New York, $105,631 in Washington, $104,025 in California, in the $99,000 range in Minnesota and Michigan and $107,631 in West Virginia. Rates in Florida average $96,725. The average private room cost nationwide was $91,250. For semi-private rooms, the cost was $80,300.

InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at arthur.postal@innfeedback.com.

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