Underwriting complications, low interest rates and unforgiving investors may be limiting insurers’ efforts to sell as much long-term care insurance (LTCI) as they would like — but the underlying cost of long-term care (LTC) keeps climbing.
- The national median daily rate for a private room in a nursing home has increased 3.6 percent in the past year, to $230, or $83,950 per year.
- The daily rate for a semiprivate nursing home room rose 3.5%, to $207, or $75,405 per year, and the median monthly cost of a single-occupancy assisted living facility unit increased 4.5 percent, to $3,450.
- The cost of a private or semiprivate nursing home room has been increasing about as fast as it was last year, but the assisted living facility inflation rate is much higher than it was last year. In 2012, the median assisted living facility rent was up just 1.2 percent.
Genworth based the 2013 LTC cost report on data from its CareScout unit. The unit polled 43,000 LTC providers in all 50 states, the District of Columbia and Puerto Rico.
The median cost of nursing home services in the state with the most exorbitant LTC costs, Alaska, rose to $270,845 for a semiprivate room and $255,891 for a private room. The 5-year annual growth rate for a nursing home room in Alaska has been 8 percent for a semiprivate room and 10 percent for a private room.
Even in a cheap state, Missouri, the median daily cost of a semiprivate nursing home room is $145 per day, or $52,830 per year.
Sometimes the kinds of regulatory flexibility that helps a provider of care meet consumers’ needs in a flexible, sensitive way interferes with efforts to get a bird’s eye view of what is really happening with costs.
Take one of the most popular types of LTC provider: the assisted living facility.
Just identifying assisted living facilities can be complicated, partly because there is still no uniform regulatory standard for those facilities.
About half of the assisted living facilities call themselves “assisted living facilities.
The other half use of about 70 other terms to describe themselves.
But CareScout has been conducting the surveys for Genworth for 10 consecutive years, and one trend the analysts have discovered is that the strongest trend in facility-based costs is pretty obvious. The dominant trend is that costs keep going up.
Genworth included a five-year trend analysis in the latest survey report.
The five-year compound annual growth rate in costs has been “only” 4.45 percent — but a 4.45 percent annual growth rate adds up.
“In 2008,” Genworth said, “the median annual rate for a private nursing home room was $67,525, compared with the 2013 median annual rate of $83,950. This means that Americans can expect to pay approximately $16,425 more per year today for a nursing home than they had to pay in 2008.”
The cost of care from “non-skilled” services providers has had a five-year compound annual growth rate of only 1 percent.
Genworth noted that rates have stayed low partly because of the availability of cheap, unskilled labor.
What Genworth does not say is that the unskilled labor is so cheap partly because loved ones have discovered that undocumented workers work for somewhat lower pay than people who are working legally and are much more willing to help an employer avoid a multitude of other laws, regulations and expenses by working off the books.
Congress is now debating immigration laws that could make many of the undocumented workers legal and reduce the number of workers are willing to provide home care services off the books.
Genworth is trying to get the Web-literate consumers who find its survey report to start conversations about the cost of LTC services with their loved ones by promoting a “Let’s Talk” campaign.
“It can be difficult to talk to parents, spouses or partners, children and other loved ones about what the future may hold in terms of long-term care needs,” the company says. “By talking now and taking charge, you and your loved ones can be prepared for life’s twists and turns.”
The company is also encouraging consumers to look at a report it developed in 2010 about the effects of unfunded caregiving on caregivers.