Caring well for the elderly is a familiar challenge. Some elderly people need close medical attention in facilities; others struggle with reduced capabilities while not wanting to leave their homes. For families, finding good care is hard and expensive, and already-burdened family members often pick up the slack.The problem is expanding as birthrates drop while some segments of the population live longer, meaning that a growing portion of the population is elderly. In the U.S., there are currently three states currently where at least 20 percent of the population is 65 and older. (Yes, Florida is one.) But by 2050, demographic trends suggest, there will be 43 states with that profile.In age terms, “America is becoming Florida,” quips MIT economist Jonathan Gruber. “And it’s not just America. The whole world is aging rapidly. The share of the population over 65 is growing rapidly everywhere, and within that, the share of the elderly that are over 85 is growing rapidly.”In a new edited volume, Gruber and several other scholars explore the subject from a global perspective. The book, “Long-Term Care around the World,” is published this month by the University of Chicago Press. The co-editors are Gruber, the Ford Professor of Economics and chair of the Department of Economics at MIT; and Kathleen McGarry, a professor of economics at Stony Brook University.The book looks at 10 relatively wealthy countries and how they approach the problem of long-term care. In their chapter about the U.S., Gruber and McGarry emphasize a remarkable fact: About one-third of long-term care for the elderly in the U.S. is informal, provided by family and friends, despite limited time and resources. Overall, long-term care is 2 percent of U.S. GDP.“We have two fundamental long-term care problems in the U.S.,” Gruber says. “Too much informal care at home, and, relatedly, not enough options for elders to live with effective care in ‘congregate housing’ [or elder communities], even if they’re not sick enough for a nursing facility.”The nature of the problemThe needs of the elderly sit in plain sight. In the U.S., about 30 percent of people 65 and over, and 60 percent of people 85 and over report limitations in basic activities. Getting dressed and taking baths are among the most common daily problems; shopping for groceries and managing money are also widely reported issues. Additionally, these limitations have mental health implications. About 10 percent of the elderly report depression, rising to 30 percent among those who struggle with three or more types of basic daily tasks.Even so, the U.S. is not actually heavily dotted with nursing homes. In a country of about 330 million people, with 62 million being 65 and over, it’s unusual for an elderly person to be in one.“We all think of nursing homes as where you go when you’re old, but there are only about 1.2 million people in nursing homes in America,” Gruber observes. “Which is a lot, but tiny compared to the share of people who are elderly in the U.S. and who have needs. Most people who have needs get them met at home.”And while nursing homes can be costly, home care is too. Given an average U.S. salary of $23 per hour for a home health care aide, annual costs can reach six figures even with half-time care. As a result, many families simply help their elderly relatives as best they can.Therefore, Gruber has found, we must account for the informal costs of elder care, too. Ultimately, Gruber says, informal help represents “an inefficient system of people taking care of their elderly parents at home, which is a stress on the family, and the elders don’t get enough care.”To be sure, some people buy private long-term care insurance to defray these costs. But this is a tricky market, where insurers are concerned about “adverse selection,” people buying policies with a distinct need for them (beyond what insurers can detect). Rates therefore can seem high, and for limited, conditional benefits. Research by MIT economist Amy Finkelstein has shown that only 18 percent of long-term insurance policies are used.“Private long-term care insurance is a market that just hasn’t worked well,” Gruber says. “It’s basically a fixed amount of money, should you meet certain conditions. And people are surprised by that, and it doesn’t meet their needs, and it’s expensive. We need a public solution.”Congregate housing, a possible solutionLooking at long-term care internationally helps identify what those solutions might be. The U.S. does not neglect elder care, but could clearly broaden its affordable options.“On the one hand, what jumped out at me is how normal the U.S. is,” Gruber says. “We’re in the middle of the pack in terms of the share of GDP we spend on long-term care.” However, some European countries that spend a similar share and also rely heavily on informal elder care, including Italy and Spain, have notably lower levels of GDP per capita.Some other European countries with income levels closer to the U.S., including Germany and the Netherlands, do spend more on long-term elder care. The Netherlands tops the list by devoting about 4 percent of its GDP to this area.However, in the U.S., the issue is not so much drastically changing how much it spends on long-term elder care, but how it spends. The Dutch have a relatively more extensive system of elder communities — the “congregate housing” for the elderly who are not desperately unwell, but simply find self-reliance increasingly hard.“That’s the huge missing hole in the U.S. long-term care system, what do we do with people who aren’t sick enough for a nursing home, but probably shouldn’t be at home,” Gruber says. “Right now they stay at home, they’re lonely, they’re not getting services, their kids are super-stressed out, and they’re pulling millions of people out of the labor force, especially women. Everyone is unhappy about it, and they’re not growing GDP, so it’s hurting our economy and our well-being.”Overall, then, Gruber thinks further investment in elder-care communities would be an example of effective government spending that can address the brewing crisis in long-term care — although it would require new federal legislation in a highly polarized political environment.Could that happen? Could the U.S. invest more now and realize long-term financial benefits, while allowing working-age employees to spend more time at their jobs rather than acting as home caregivers? Making people more aware of the issue, Gruber thinks, is a necessary starting point.“If anything might be bipartisan, it could be long-term care,” Gruber says. “Everybody has parents. A solution has to be bipartisan. Long-term care may be one of those areas where it’s possible.”Support for the research was provided, in part, by the National Institute on Aging.
