Americans face financial ruin as elder care costs soar

"People are exposed to the possibility of depleting almost all their wealth."

Richard Johnson

Director of the retirement policy program at the Urban Institute

Margaret Newcomb, 69, a retired French teacher in Seattle, is desperately trying to protect her retirement savings by caring for her 82-year-old husband, who has severe dementia, at home. She used to fear his disease-induced paranoia, but now he's so frail and confused that he wanders away with no idea of how to find his way home. He gets lost so often that she attached a tag to his shoelace with her phone number.

Feylyn Lewis, 35, sacrificed a promising career as a research director in England to return home to Nashville, Tennessee, after her mother had a debilitating stroke. The family ran up $15,000 in medical and credit card debt while she took on the role of caretaker.

Sheila Littleton, 30, brought her grandfather with dementia to her home in Houston, then spent months trying to place him in a nursing home with Medicaid coverage. She eventually abandoned him at a psychiatric hospital to force the system to act.

"That was terrible," she said. "I had to do it."

Millions of families are facing such daunting life choices – and potential financial ruin – as the escalating costs of in-home care, assisted living facilities and nursing homes devour the savings and incomes of older Americans and their relatives.

"People are exposed to the possibility of depleting almost all their wealth," said Richard Johnson, director of the retirement policy program at the Urban Institute.

The United States has no coherent system of long-term care. A minuscule portion of families buy long-term care insurance in the private market – participation has shriveled over years of giant rate hikes by insurers that had underestimated how much care people would actually use. Labor shortages have left families searching for workers to care for their elders at home. And the cost of a spot in an assisted living facility has soared to an unaffordable level for most middle-class Americans. They have to run out of money to qualify for nursing home care paid for by the government.

The prospect of dying broke looms as an imminent threat for the boomer generation, which looked hopefully toward a comfortable retirement on 401(k)s and pensions. Roughly 10,000 of them will turn 65 every day until 2030, expecting to live into their 80s and 90s as the cost of long-term care explodes, outpacing inflation and reaching a half-trillion dollars a year, according to federal researchers.

The challenges will only grow. By 2050, the population of Americans 65 and older is projected to increase by more than 50%, to 86 million, according to census estimates. The number of people 85 or older will nearly triple to 19million.

To examine the crisis in long-term care, The New York Times and KFF Health News interviewed families across the nation, examined companies that provide care and analyzed data from the federally funded Health and Retirement Study, the most authoritative national survey of older people about their long-term care needs and financial resources.

About 8million people 65 and older reported that they had dementia or difficulty with basic daily tasks.

Most relied on spouses, children, grandchildren or friends.

Nearly 3million had no assistance at all, according to an analysis of the survey data.

Government policy decisions

The United States devotes a smaller share of its gross domestic product to long-term care than do most other wealthy countries, including Britain, France, Canada, Germany, Sweden and Japan, according to the Organization for Economic Cooperation and Development.

"We just don't value elders the way that other countries and other cultures do," said Rachel Werner, executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania. "We don't have a financing and insurance system for long-term care," she said. "There isn't the political will to spend that much money."

Despite medical advances that have added years to the average life span and allowed people to survive decades more after cancer, heart disease or strokes, federal long-term elder care has not fundamentally changed in the decades since President Lyndon Johnson signed Medicare and Medicaid into law in 1965.

Medicare, the federal health insurance program for Americans ages 65 and older, covers the costs of medical care, but generally pays for a home aide or nursing home stay only for a limited time during recovery from surgery or a fall, or for short-term rehabilitation.

Medicaid, the federal-state program, covers long-term care, usually in a nursing home, but only for the poor. Middle-class people must exhaust their assets to qualify, selling much of their property and emptying their bank accounts. If they go into a nursing home, they are permitted to keep only a pittance of their retirement income: $50 or less a month in a majority of states. Spouses can hold onto only a modest amount of income and assets, often leaving children and grandchildren to shoulder some of the financial burden.

At a skilled nursing home, a long-term resident's care can easily cost more than $100,000 a year without Medicaid. Nine in 10 people said it would be impossible or very difficult to pay that much, according to a KFF poll conducted during the pandemic.

"You basically want people to destitute themselves and then you take everything else that they have," said Gay Glenn, whose mother lived in a nursing home in Kansas until she died in October at 96.

Her mother, Betty Mae Glenn, had to spend down her savings, paying the home more than $10,000 a month until she qualified for Medicaid. Glenn, 61, relocated from Chicago to Topeka, Kansas, moving into one of her mother's two rental properties and overseeing her care and finances.

Under the state Medicaid program's byzantine rules, she had to pay rent to her mother, and that income went toward her mother's care. Glenn sold the family's house just before her mother's death in October. Her lawyer told her the estate had to pay Medicaid back about $20,000 from the proceeds.

A play she wrote about her relationship with her mother, titled "If You See Panic in My Eyes," was read this year at a theater festival.

Private companies' prices

have skyrocketed

The boomer generation is jogging and cycling into retirement, equipped with hip and knee replacements that have slowed their aging. And they are loath to enter the institutional setting of a nursing home.

But they face major expenses for the in-between years, between good health and around-the-clock care.

That has led them to assisted living centers run by for-profit companies and private equity funds that enjoy robust profits in a growing market. Some 850,000 people age 65 or older now live in these facilities that are largely ineligible for federal funds. Some provide only basics like help getting dressed and taking medication; others offer luxury amenities like gourmet meals and spas.

The bills can be staggering. Half the nation's assisted living facilities cost at least $54,000 a year, according to Genworth, a long-term care insurer. That rises substantially in many metropolitan areas. Specialized settings, like locked memory care units for those with dementia, can cost twice as much.

Home care is costly, too. Agencies charge about $27 an hour for a home health aide, according to Genworth. Hiring someone for six or seven hours a day can add up to $60,000 a year.

The slow, expensive decline

of someone with dementia

As Americans live longer, the number who develop dementia has soared to between 5million and 7million Americans, with their ranks projected to grow to nearly 12million by 2040.

In Seattle, Margaret and Tim Newcomb sleep on separate floors of their two-story cottage, with Margaret ever mindful that her husband can hallucinate and become aggressive.

His anger has diminished, but early on, she resorted to calling the police when he acted erratically.

"He was hating me and angry, and I didn't feel safe," she said.

She considered memory care units, but the least expensive option cost around $8,000 a month. The couple's monthly income, with his pension from the utility company and their combined Social Security, is $6,000. Placing her husband in such a place would have gutted the $500,000 they had saved.

"I'll let go of everything if I have to, but it's a very unfair system," she said. "If you didn't see ahead or didn't have the right type of job that provides for you, it's tough luck."

Margaret said she's reconciled to caring for him as long as she can.

"When I see him sitting out on the porch and appreciating the sun coming on his face, it's really sweet," she said.

The financial threat posed by dementia also weighs heavily on adult children.

Claudia Morrell, 64, of Parkville, Maryland, estimated her mother, Regine Hayes, spent more than $1million during the eight years she needed residential care for dementia. That was possible only because her mother had two pensions plus savings and Social Security.

Morrell paid legal fees required as her mother's guardian, as well as $6,000 on a special bed so her mother wouldn't fall and on private aides after Hayes suffered repeated small strokes. Her mother died last December at 87.

"I will never have those kinds of resources," said Morrell, an education consultant. "My children will never have those kinds of resources. We didn't inherit enough or aren't going to earn enough to have the quality of care she got."

Women bear the burden of care

For seven years, Annie Reid abandoned her life in Colorado to sleep in her childhood bedroom in Maryland, caring for her mother, Frances Sampogna, who had dementia. "No one else in my family was able to do this," she said.

After Sampogna died in September 2022, her daughter returned to Colorado and started a furniture redesign business, a craft she taught herself in her mother's basement. Reid, 61, recently had her knee replaced. Her insurance didn't cover doctors in Maryland.

"It's amazing how much time went by," she said. "I'm so grateful to be back in my life again."

Studies are calculating the toll of caregiving on children, especially women. The median lost wages for women providing intensive care for their mothers is $24,500 over two years, according to a study led by Norma Coe, an associate professor at the University of Pennsylvania.

Lewis, the research director, is also tending to her 87-year-old grandfather, ill with prostate cancer and kidney disease.

Making up for lost income seems daunting. But Lewis is regaining hope: She was promoted to assistant dean for student affairs at Vanderbilt School of Nursing and was recently married. She and her husband plan to stay with her mother until they can save enough to move into a larger place.

Government solutions are elusive

Efforts by lawmakers in Congress and government officials to ease the financial burden on individuals, perhaps by creating a national long-term care system, have repeatedly collapsed.

The CLASS Act, part of the Affordable Care Act of 2010, was supposed to give people the option of paying into a long-term insurance program. It was repealed two years later amid compelling evidence that it would never be economically viable.

Two years ago, a proposal called the WISH Act outlined a long-term care trust fund, but it never gained traction.

On the home care front, workers are scarce. The labor shortages are largely attributed to low wages for difficult work. In the Medicaid program, demand has clearly outstripped supply, according to a recent analysis. While the number of home aides in the Medicaid program has increased to 1.4million in 2019 from 840,000 in 2008, the number of aides per 100 people who qualify for home or community care has declined nearly 12%.

This has led to a flurry of attempts to improve wages and working conditions for home health aides. But a $150billion proposal in the Build Back Better Act for in-home and community-based services under Medicaid was axed to lower the price tag of the final legislation.

Democrats have argued that the federal government needs to take a much stronger hand in subsidizing care. "This is an issue that's coming to the front door of members of Congress," said Sen. Bob Casey, D-Pa., chair of the Senate Special Committee on Aging. "The federal government has got to do its part, which it hasn't."

But leading Republicans in Congress say the federal government cannot be expected to step in more than it already does. Americans need to save for when they will inevitably need care, said Indiana Sen. Mike Braun, the ranking Republican on the aging committee.

"So often people just think it's just going to work out," he said. "Too many people get to the point where they're 65 and then say, 'I don't have that much there.'"

In April, President Joe Biden signed an executive order calling for changes to government programs that would improve conditions for workers and encourage initiatives that would relieve some of the burdens on families providing care.

Turning to Medicaid,

a shredded safety net

The only true safety net for many Americans is Medicaid, which represents, by far, the largest single source of funding for long-term care. More than 4 in 5 middle-class people 65 or older who need long-term care for five years or more will eventually enroll, according to an analysis by the Urban Institute.

But gaps in Medicaid coverage leave many people without care. Under federal law, the program is obliged to offer nursing home care in every state. In-home care, which is not guaranteed, is provided under state waivers, and the number of participants is limited. Many states have long waiting lists, and it can be extremely difficult to find aides willing to work at the low Medicaid rate.

Qualifying for a slot in a nursing home paid by Medicaid can also be formidable, with many families spending thousands of dollars on lawyers and consultants to navigate state rules. Homes may be sold or couples may contemplate divorce to become eligible.

And recipients and their spouses may still have to contribute significant sums. After Stan Markowitz, a former history professor in Baltimore with Parkinson's disease, and his wife, Dottye Burt, 78, exhausted their savings on his two-year stay in an assisted living facility, he qualified for Medicaid and moved into a nursing home.

He was required to contribute $2,700 a month, which ate up 45% of the couple's retirement income. Burt rented a modest apartment, all she could afford on what was left.

Markowitz died in September at age 86, easing the financial pressure. "I won't be having to pay the nursing home," she said.

Even finding a place willing to take someone can be a struggle. Harold Murray, Sheila Littleton's grandfather, could no longer live safely in rural North Carolina because his worsening dementia led him to wander. She brought him to Houston in November 2020, then spent months trying to enroll him in the state's Medicaid program so he could be in a locked unit at a nursing home. She felt she was getting the runaround. Nursing home after nursing home told her there were no beds, or quibbled over when and how he would be eligible. In desperation, she left him at a psychiatric hospital so it would find him a spot.

"I had to refuse to take him back home," she said. "They had no choice but to place him."

He was finally approved for coverage in early 2022, at age 83.

A few months later, he died.

Contributing: Kirsten Noyes and Albert Sun of The New York Times; Holly K. Hacker of KFF Health News; JoNel Aleccia, formerly of KFF Health News.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF – an independent source of health policy research, polling and journalism.

"People are exposed to the possibility of depleting almost all their wealth."

Richard Johnson

Director of the retirement policy program at the Urban Institute