Home-Based LTC Took Steep Cost Jump In 2017

Most people would prefer to receive long-term care in their own homes instead of in a care facility. But over the past year, the cost of providing that home-based care has gone up faster than the cost of care delivered in other settings, according to a widely followed cost survey by Genworth Financial.

The cost of home health aide services rose 6.17 percent to $21.50 an hour while the cost of homemaker services rose 4.75 percent to $21 an hour, the 2017 Cost of Care Survey found.

The survey found that nursing home and home-based care showed their second-highest year-over-year cost increase since the study began in 2004, and that increase was nearly three times the 1.7 percent U.S. rate of inflation.

It was no surprise that the cost of LTC rose again in the past year. LTC cost rose every year in the 14 years since Genworth began the annual survey. But the acceleration of cost increases in home care came as “a bit of a surprise,” said Gordon Saunders, senior brand marketing manager for Genworth’s U.S. life insurance division.

The cost increases are due to the impact of the cost of labor, rising minimum wage in some states, shrinking profit margins and service providers passing costs onto clients, said Jennifer Johnson, clinical director of the Genworth-owned company Carescout, which conducted the survey.

Home health care aides, who often commute, sometimes travel long distances for clients and those costs are also a factor, Johnson said.

Long-term care insurance (LTCi) helps defray the cost of long-term care with policies often paying different amounts for different services.

Other Channels See Costs Rise

Home health services typically are arranged through agencies. These services are among the variety of channels through which care is delivered to millions of recipients every year. The costs of care delivered through those other channels also rose, the survey found.

The cost of adult day health care services rose 2.94 percent to $70 per day and costs of assisted living facilities rose 3.36 percent to $123 per day..

The cost of a semi-private room nursing home care rose 4.44 percent to $235 per day and the cost for a private room nursing home care rose 5.5 percent to $267 per day.

Nursing home costs are rising due to higher labor costs and tightened Medicare rules, said Noreen Guanci, CEO and co-founder of Long Term Care Solutions, which provides care coordination services and nurse assessments for Genworth's long-term care insurance claimants.

The annual median cost of services across all delivery channels rose by an average of 4.5 percent from 2016 to 2017, the survey found.

It was the second-highest year-over-year cost increase for nursing homes and home care since the study began in 2004 and nearly three times the 1.7 percent U.S. rate of inflation, the survey found.

Costs along the spectrum of delivery channels are expected to accelerate as baby boomers age and medical expense rise, Saunders said.

Since 2004, the costs of home health care have gone up between 16 percent and 25 percent and the costs for assisted living and a private room in a nursing home has gone up by more than 50 percent, he added..

The Genworth Cost of Care survey is one of the largest of its kind covering 440 regions across the U.S. and based on data collected from more than 15,000 completed surveys.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].