What the recession will mean for long-term care

The current economic downturn isn’t going to change the needs of seniors for help with the activities of daily living. However, it could have a big effect on how and where that help is provided – at home, in an assisted living facility, or in a nursing home. And it could affect who provides the care – family members or hired staff.

Here are a few likely trends:

  • Most nursing home care – and increasingly, care provided by hired staff in seniors’ homes – is covered by Medicaid. This is a joint state-federal health care program for people who qualify under its complicated rules. Even before the current recession, Medicaid was growing and straining the ability of states to pay the cost. With the downturn, states are likely to restrict eligibility for benefits.
  • At the same time, with money becoming scarcer for just about everyone, families may be more reluctant to pay for nursing home, assisted living or home care. More people may start to look after senior family members themselves – especially because, with higher unemployment, more people will be available to care for family members at home.
  • We’re likely to see bankruptcies of nursing homes and assisted living facilities, if they can’t fill their beds because people are caring for seniors at home and if Medicaid and Medicare reimbursement rates are reduced and are no longer sufficient to cover their expenses. These facility shutdowns will be very disruptive to residents as well as to their families.
  • On the other hand, for families that can afford long-term care, it might become more affordable. That’s because more people being cared for by family members at home will mean less demand for these services. In fact, according to the 2008 MetLife Market Survey of Nursing Home & Assisted Living Costs, over the past year the cost of semi-private rooms in nursing homes increased just 1.1 percent, and the cost of private rooms didn’t change at all. That’s a big change from past years in which the increase in the cost of long-term care substantially exceeded the inflation rate.
  • Another reason long-term care may become more affordable is that it will be easier for facilities to hire staff. With alternative jobs less plentiful, the supply of qualified care providers should grow.
  • Even prior to the recession, many new alternatives to nursing home care were being developed, including assisted living, new home-care models, and community partnership programs. These are likely to increase. As a result, people who are concerned about providing care for a senior should do research about all the alternatives available.
  • Planning ahead will be even more important, whether purchasing long-term care insurance, protecting assets to qualify for Medicaid, or simply making one’s wishes known ahead of time.
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