In a recent report picked up by multiple news outlets, it has been estimated that the median cost for a single private room at a nursing home in the United States is a whopping $91,250 per year, after the median cost was last year tabbed at $87,600 per year. The cost was apparently calculated based on data from the nursing home industry. Genworth Financial, which deals in financial planning for long term care and life insurance, issued the report, which revealed a 4% annual increase in cost for the previous five years. The report focused on data from 15,000 nursing homes and assisted living facilities across the United States. While costs naturally are different among different regions and states, with one state having a median cost of just over $60,000, and another exceeding $280,000, the unmistakable trend is that costs overall are rising and rising.
The Looming Problem Worsens
The immense rising costs of nursing home care will only serve to complicate matters as more and more individuals enter their golden years and the demand for care increases substantially. This challenge is further compounded by facilities that grossly understaff in order to cut costs and increase profits, leading to negligence, possible abuse, and an overall low quality of care for residents. This can inevitably lead to higher costing consequences like further illness, injury or death. And as some state governments, including Illinois, seeks to slash budgets and reduce deficits, public benefits bear a substantial brunt. In Illinois, for example, Governor Rauner has proposed a budget that will decrease Medicaid, which adversely affects funding for nursing homes, as well as cuts to home services which also affects those who would receive such services in lieu of nursing homes. Nothing is set in stone and the legislative negotiations will continue on that budget, but this is an example of the cutting of budgets in spite of rising costs.
There rising costs also have the potential to cripple many nursing home residents and their families financially, because Medicare and Medicaid may only cover certain portions of the bill. For example, Medicaid will only kick in when there is a certain level of the resident’s assets remaining. Unless they have affordable private insurance, residents and patients will end up paying nursing home bills out of their own savings and pockets until there is only so little left that they must invoke their Medicaid eligibility. And Medicaid is obviously already stretched as it is.
There is the alternative avenue of long-term care insurance policies, which were important to people decades ago in planning ahead. But the challenge there is that eligibility cannot be assumed. And for those with long-standing policies, those policies may not be adapting to present day cost increases such that payouts are not enough to cover full care.
We recently blogged about how long-term insurance providers are simply ceasing to provide new policies, or are scaling down their business in some way because insuring the growing population of elderly Americans is becoming too expensive, and not profitable enough to continue doing so. Thus costs are increasing, private policies are not so readily available or affordable anymore, and availability and extent of government policies are uncertain. Assisted living care, which may not require round-the-clock attention like at a nursing home, is a less expensive alternative, though it may not work for everyone.
This is an important piece of news because of the growing elderly population, the uncertainty of insurance and cost coverage for nursing home care, and the need for better quality of care at facilities. With government programs stretched, it is also important given that some facilities overbill for insufficient or non-existent care, and rob those taxpayer funds that could go toward others.
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