The Rising Cost of Care for North Carolina Seniors

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senior careMrs. Charlotte Swift is a fictitious person living in a quiet Durham neighborhood in the small home that she and her husband purchased in 1954.  Her husband passed away about 10 years ago and, at 82 years old, she is now living in the home alone, struggling to keep up with necessary maintenance.  Mrs. Swift has a number of chronic health conditions requiring regular medical care, including glaucoma which prevents her from being able to drive a car.  One of Mrs. Swift’s three children lives in a nearby town and visits regularly, but working full-time makes it difficult for her to transport her mother to doctor’s appointments and provide the needed daily support.  The family is considering skilled nursing care but is concerned about the costs associated with such programs.

Across North Carolina, an increasing number of elderly individuals and their families find themselves facing similar challenges.  In the next 20 years, North Carolina’s population of adults age 65 and over is expected to increase at a rate of 59%, from approximately 1.9 million to more than 3.1 million individuals, according to the NC Office of State Budget and Management.  The aging of the baby boom generation, along with an increasing number of retirees migrating to North Carolina, forecasts this segment of the population as the fastest growing age group statewide.  As our population ages, the need for a variety of skilled nursing care options, particularly affordable ones, will also grow.

This rapid growth in the elderly population poses a particular challenge in light of the rising costs of skilled nursing care.  Genworth Financial, a Fortune 500 insurance company, conducts an annual “Cost of Care” survey of elder care facilities and services across the country.  In North Carolina, the 2013 median annual cost of care in an assisted living facility was $34,800, while the median annual cost of a private room in a nursing home was $77,471. In comparison, median household income for the population over age 65 was below $32,000 in 2010.

Further compounding the affordability issue is the significant annual increase in costs associated with skilled care facilities, particularly in the Durham-Chapel Hill Metropolitan Statistical Area (MSA).  Based on previous Cost of Care surveys, the North Carolina five-year annual compound growth rate for assisted living care was 5%, while nursing home costs increased 4% annually.  The Durham-Chapel Hill MSA saw annual costs grow 13% for assisted care and 6% for nursing home care – the highest annual growth rates in the state. Using statewide rates of 5% and 4% respectively, a senior in an assisted living facility will pay over $92,000 a year by 2033, while a private nursing home bed will cost over $205,000 annually.

The impact of the increasing elderly population and rising costs of care has been felt not only by seniors and their families, but also by government agencies that provide resources to support older populations.  According to the University of North Carolina’s Institute on Aging, the state of North Carolina spends a disproportionate amount of Medicaid funds on the elderly.  In 2008, this population represented 13.1% of the total Medicaid recipients, but accounted for 21.3%, or $2 billion, of total Medicaid expenditures. This disproportionate spending is a nationwide trend.  In 2004, per capita healthcare spending from public sources for individuals over 65 was $9,909, compared to only $1,395 for individuals age 19-64.

Improving access to quality care for the elderly offers the potential for significant savings, as well.  The Commonwealth Fund, a private foundation focused on improving access, quality and efficiency in the healthcare system, compares state level performance on a variety of health indicators each year.  Their research indicates that North Carolina could save over $60 million by reducing hospital readmissions among people with Medicare and over $145 million by reducing preventable hospitalization among people with Medicare. A key component of improving outcomes in both of these categories is access to quality skilled nursing care.

In the coming decades, the rising cost of skilled nursing care will pose a significant challenge to an increasing number of elderly individuals and their families.  Like Mrs. Swift, these seniors will have an increasing need for regular medical care and additional support, such as transportation and social interaction.  At the same time, the costs of such support, particularly skilled nursing care, will be increasingly prohibitive.  Though it may seem counterintuitive, improving access to quality nursing care may reduce healthcare costs by limiting the number of expensive hospital stays for seniors.

The question, then, for Mrs. Swift and thousands of other seniors, is one of available options.  What are the programs available to provide quality, yet affordable, care for seniors?  How can seniors and their families access these programs?  And, what can communities do if such programs do not already exist?  These questions will be addressed in a series of posts examining innovative, community-based elder care models in North Carolina and across the United States.

Michelle Audette-Bauman is a second year graduate student in the Department of City and Regional Planning

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