Long-Term Care Demand to Double Despite Workforce Constraints

March 12, 2020 - Supply and demand for long-term care are moving in opposite directions, according to a report from the American Action Forum.

The number of Americans needing long-term care is slated to nearly double by 2030, reaching 24 million individuals, projected Tara O’Neill Hayes, director of human welfare policy at the American Action Forum. The American Action Forum is a  center-right 501(c)(3) think tank based in Washington, DC.*

An aging population and the increasing prevalence of chronic conditions will drive up demand for long-term care services, including assistance with the activities of daily life. But the supply of caregivers will not be enough to meet the need, Hayes stressed.

“The LTC crisis faced by the United States is significant and rapidly worsening,” she wrote in the report. “Millions of people—from those needing care to their families and employers—will experience hardship, and the burden on taxpayers will only rise. Yet most are unprepared. The reality of the ballooning costs of LTC calls for a sober evaluation of the facts and clear-eyed financial planning and policy formulation.”

The cost of long-term care reached about $849 billion in 2018, according to data cited by the American Action Forum. But the organization estimated that those costs will more than double and may reach as high as $2.5 trillion by 2030 in light of increased demand.

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Many individuals are opting to receive care from unpaid caregivers rather than face the costs of professional long-term care services, Hayes explained.

“Unpaid caregivers, typically a family member, provide an estimated 80 percent of care to individuals still living at home,” she wrote in the report. “AARP estimated in 2014 that 43.5 million people had served as an unpaid caregiver at some point in the year.”

This type of unpaid long-term care is unsustainable. The report stated that the population aged 64 and younger will only increase by 12 percent during the period. Meanwhile, the number of individuals aged 45 to 64 for each person aged 80 or older will fall to three by 2050, down from the current ratio of seven to one.

Without the billions of hours of unpaid care given each year, spending would be much higher. Hayes projected that the value of unpaid care provided to tens of millions of individuals in 2018 was between $471 billion and $1.1 trillion.

Those figures are likely to reach between $880.9 billion and $2.1 trillion by 2030, Hayes added.

READ MORE: Paying LTCHs Like Skilled Nursing Would Save $4.6B, Analysis Finds

Public payers pay for the majority of long-term care services, with Medicaid being the largest financiers of the benefits, the report found. Medicare’s coverage of the services is more limited, only covering certain types of care in certain circumstances, while less than one percent of employers pay for long-term care.

“The fact that non-medical care is primarily financed through our health insurance programs reflects the country’s long-standing failure to address the need for such care,” Hayes stated in the report.

“The one time Congress passed a law to establish a public LTC insurance option—the CLASS Act included in the Affordable Care Act in 2010—it ultimately had to be repealed due to an inability to find any option to make the program fiscally sustainable and affordable to potential buyers,” she continued. “Thus, to date, the following options are the few choices available to finance LTC besides paying wholly out-of-pocket.”

The problem of paying for long-term care will only get worse in the face of workforce problems, Hayes stressed.

Currently, the long-term care workforce comprises licensed professionals and unlicensed direct care workers in nursing homes, assisted-living facilities, in-home private care, and other residential and community-based care settings. These facilities pay an average of $12.18 an hour as of May 2018, Hayes reported.

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Turnover in this sector is estimated to be between 4 and 66 percent. Research shows that one in four nursing assistants and one in five home health aides are actively seeking another job, while one in two workers leave home health jobs within 12 months.

“One study has calculated that maintaining the current ratio of paid long-term care personnel to those over 85 would require the long-term care workforce to grow by 2 percent per year from now until 2050, and ultimately adding more than four million new long-term care personnel,” Hayes wrote.

This instability in the long-term care workforce is creating many problems, including access challenges, patient safety and quality of care issues, higher provider costs, and excessive workloads for nurses and other staff.

The problems have already been observed at the VA where demand for care is increasing by 14 percent, according to a recent Government Accountability Office (GAO) report. The federal watchdog found that the VA faces a number of key challenges meeting that demand, including workforce shortages, geographic alignment of care, and difficulty meeting veterans’ needs for specialty care.  

CORRECTION 03/12/2020: Article has been corrected to reflect that the American Action Forum is a center-right 501(c)(3) think tank.