The Cost of Assisted Living: A Report from Seniorly

Over the years I have written many articles about the cost of healthcare and in particular, the cost of senior living and senior healthcare. As the population ages, the demand for senior living and care expands.

Per the U.S. Census Bureau, the U.S. population age 65 and over grew nearly five times faster than the total population over the 100 years from 1920 to 2020, according to the 2020 Census. https://www.census.gov/library/stories/2023/05/2020-census-united-states-older-population-grew.html

The older population reached 55.8 million or 16.8% of the population of the United States in 2020.  In 2020, 1 in 6 people in the U.S. were 65 or older. In 1920, the ratio was less than 1 in 20. As I wrote earlier in the month, this trend has profound impacts for the U.S. economy and the healthcare/senior living systems. https://wp.me/ptUlY-15I

 

Today the demand for service enriched housing options such as Assisted Living has never been stronger.  The challenge, however, is product affordability. Demand is rapidly outpacing supply as decades high capital costs and tighter capital access (bank lending conditions) have constrained new development significantly. As demand meets and exceeds supply, prices increase. 

Other economic factors have raised Assisted Living pricing.  Labor scarcity by amount and type have pushed wage and other compensation costs higher.  Commodity costs due to inflation across food and supplies and even energy, have pressured prices/rents.

In terms of payment, Assisted Living costs are predominantly borne by the resident.  Medicaid, may in some very limited circumstances, provide some supports.  These supports however, are conditional, typically focused on the disabled population segments more at-risk of premature institutionalization. Even then, the Medicaid HCBS services favor home care services vs. Assisted Living.  More information is here from a December post on this subject: https://rhislop3.com/2023/12/07/medicaid-hcbs-and-eligibility-updates/

A study on Assisted Living prices and costs was recently produced by Seniorly. Seniorly is a website resource for seniors and/or significant others/families, looking for resources on senior living from information to sources and locations. According to Seniorly and their findings (the data is available here https://www.seniorly.com/resource-center/senior-living-guides/the-most-and-least-expensive-states-for-assisted-living ),

• New Hampshire is the most expensive state. A spot in an assisted living community costs $8,248 per month on average, which is nearly double the national average of $4,401. Plus, it’s only one of 6 states where assisted living costs more per month on average than in-home care.
• Assisted living is getting more expensive. Between 2021 and 2023, average costs rose in 30 states, with the biggest increases seen in Wyoming (53%), West Virginia (46%) and New Hampshire (46%).
• In-home care is more affordable than assisted living. Median costs for home health aides are cheaper than assisted living communities in all but six states. The biggest price differences are New Hampshire, where assisted living costs $1,674 more per month than in-home care, and on the other end of the spectrum, Minnesota, where in-home care costs $3,861 more than assisted living, on average.

While it is generally true that in-home care via an agency is cheaper (ADL services provided by Home Health Aides/CNAs), access to or availability of services is more challenging.  Agency staffing for in-home care is less efficient than care delivered in congregate settings meaning, it takes more staff in a home health/care model to service seniors than it does in a site-based setting.  The inefficiency is the travel time it takes to service clients, spread out in distances measuring typically, miles.

In early December, I wrote a post about affordability of care and services, particularly senior living (Assisted Living).  That post is here: https://rhislop3.com/2023/12/08/friday-feature-affordability-of-senior-living-and-services/

What we know about seniors, costs of care, and their resources is that the majority are poorly economically situated (resources) to pay for their care. In 2019, 11.5 million older adults (72%) couldn’t qualify for public assistance and likely will be unable to pay for their care needs on their own.

In 2033, a NIC/University of Chicago study noted that, those older adults will have less than $65,000 in income and annuitized assets, the average amount needed to pay for private assisted living and medical care. Even if those older adults sold their homes, 6.1 million (39%) still would have insufficient resources to pay those annual costs, according to the analysis.

The 2019 study had found that 54% of the 14.4 million middle-income older adults in 2029 would lack the financial resources to pay for senior housing and care.