A Few Facts and Ideas Related to Informal Long-term Care

A Few Facts and Ideas Related to Informal Long-term Care Economic value of unpaid care: The economic value of care provided by family caregivers in the U.S. has been estimated at $375 billion. i In Minnesota, informal care is estimated to provide 90% of the hours of LTC and two-thirds of the dollar value of LTC. There are an estimated 500,000 informal caregivers providing 506 million hours of care a year at an estimated market value of $4.5 billion. In 1995, over 50% of Minnesotans receiving personal assistance for disabilities mentioned help from a child or child-in-law. That percentage had declined to 35% in 2005. ii Minnesota Resources: source: Across The States, Profiles Of Long-Term Care And Independent Living, Minnesota, Houser, Fox-Grage and Gibson, AARP Public Policy Institute, 2006 Profiles of care recipients: The likelihood of receiving formal or informal care decreases with income and education: ¾ of frail adults below poverty level received paid or unpaid care in 2002, compared to less than half of those with incomes 400% of poverty level. iii Nearly ½ of frail elderly with 3 or more ADL disabilities did not complete high school. iv Older adults with disabilities tend to have smaller incomes: median household income in 2001 for older adults with no disabilities totaled $39,264 compared to $18,480 among those with one or more ADL (activity of daily living) or IADL (instrumental activity of daily living) limitations, and $14,160 for those with three or more limitations. v 1

Older adults with disabilities tend to have less household wealth: median wealth for those with no disabilities was $206,000 in 2002 compared to $48,000 for those with three or more ADL limitations. And those with disabilities lose wealth over time: between 1993 and 2002, median household wealth for older adults who remained disability free increased 7% compared to the wealth of those who developed three or more ADLs by 2002, which fell by 41%. vi For those who received informal care, the care averaged 177 hours per month in 2002; the median hours was 62. vii Men receive more care on average than women of those with 3 or more ADLs who receive care, men receive 42 hours more per month of paid care and 54 hours of unpaid care. viii 67% of informal care recipients rely on a single caregiver; those with a single caregiver receive less care. ix 35% of those with 3 or more ADL limitations live alone; those who live alone receive considerably less care. x In MN in 2005, 42% of those over 75 live alone, the 4 th highest state in the U.S. xi 62.5% of frail older adults have one child living within 10 miles; one in ten have no surviving adult children. xii Profiles of caregivers: In 2004, over 34 million adults (15.6% of adult population; 15.3% in MN in 2006) provided care. xiii In 2002, 36% were daughters of daughters-in-law; 28% were spouses; 16% were sons or sons-in-law; neighbors, grandchildren and other family members each accounted for about 6%. Women account for 69% of caregivers. xiv Six in ten caregivers said they never received instructions on how to give care; 1/3 said they were not shown how to change bandages or dressings; many don t know the basics of how to feed, move, or bathe the care recipient comfortably and without danger to themselves. xv On average, informal caregivers provide 105 hours of assistance per month. Primary ADL caregivers average 201 hours/mo. Spouses who provide care to those with three or more ADLs averaged 236 hours/mo. xvi Some impacts of caregiving: Caregiving diminishes both current earnings and future social security benefits; the most substantial costs are born by are older women with fewer skills. Once caregiving ends, they are unable to recover lost earnings. xvii Caregiving increases the likelihood of future poverty. In 1999, loss of social security benefits was estimated at $25,500. xviii Women aged 55-67 who care for frail parents reduce work at least seven hours a week. This equals $6,300 in lost wages every year and $2,300 in foregone benefits. xix Caregivers spend an average of $5,531 out of pocket on care costs, which is 13% of the $43,026 median income of caregiving households. xx In order to provide caregiving, 37% quit their job or reduced hours; 38% reduced or stopped their own saving; 34% used their savings; 32% reduced basic home maintenance; 23% reduced their own health or dental care. xxi Caregivers report negative impacts on their own health: 15% said their health declined a lot; 44% said moderately; 41% said a little. 91% said that depression worsened; 69% spend less time with friends 2

and family; 51% said they take more medications and 10% admitted misusing alcohol or prescription medication. 72% said they do not go to a doctor enough. xxii Employers lost an estimated $33.6 billion in 2006 in productivity for fulltime caregivers, or $2,110 per caregiving employee. xxiii Research findings are mixed on whether public subsidies for formal care reduce informal care, but generally speaking, there is evidence that informal care reduces total Medicare expenditures, including home health expenditures, skilled nursing expenditures and acute inpatient expenditures. It is also delays or reduces nursing home use. xxiv Some influences on informal care: Three-quarters of caregivers reported that in deciding whether to give care, they felt they had no choice. xxv Adults over 70 who receive basic care from children were 60% less likely to enter a nursing home. But, caregiver stress is an important predictor of nursing home entry, as is the death of a spouse. One study of 15 developed countries (including the U.S.) estimated that the ratio of elderly men to women has a far more significant impact on the supply of informal care than either the percentage of women shifting to full-time work or the number of women entering the workforce. xxvi There already exists a shortage of as many as 52,000 paid care workers. The demand for health aids is expected to triple. HG xxvii Informal caregivers expressed desire for the following supports: availability of experts to discuss stress (63%); mobile health services (63%); various caregiving assistance and/or training (roughly ½). xxviii The Federal government, through the Family Caregiver Support Services, provided $153 million in 2008 to help provide access assistance, counseling and training and respite care. A total of 686,000 caregivers were served, including 148,000 who received counseling/training and 33,000 who received respite care. xxix Incentives and support for caregivers: Retirement security proposal: Social Security would recognize the value of informal caregiving for the most intense levels of care (need for this care would be physician certified). Caregivers could earn up to four years credit for Social Security earnings, based on the average wage or self-employment income of the caregiver for the previous three years. The average caregiver is estimated to receive an additional $528 in social security per year, for a lifetime increase of $8,448 substantially more for single caregiver, who would receive $13,632. The estimated reduction in nursing home use is projected to save Medicaid $20.8 billion annually (based on today s demographics). xxx Schmieding Center: This center in Arkansas provides training for family and paid caregivers focusing on respect and compassion. More than 700 people have trained there since it opened in 2002. Coursework up to 115 hours is offered for paraprofessionals, while families can receive training of two to four hours, as well as video instruction. xxxi Tax credits: Some states offer, and there are various proposals, for tax credits for family caregivers. New communities of informal care: 3

Local exchange trade systems. This idea has not been applied to LTC; instead it has been invented and refined to help impoverished communities with high rates of unemployment and thus unutilized labor capacity. A secondary currency (that can not be counterfeited) is created and backed by a bank, facilitating the exchange of goods and services (which is difficult in a simple barter system where participants have to know one another personally) and creating value for services that might otherwise go unrecognized (e.g., transportation to doctors office, cooking, grocery shopping) spurring the supply of services. Social Trade Organiser, a research and development team in the Netherlands, has developed and implemented a series of methods that can be applied in the community depending upon the appropriate level of sophistication. For example, the Controlled Currency system is a highly social and community-building model of mutual exchange. All participants are given basic credits that can be used to exchange goods and services. The credits are cashable in the national currency. xxxii Innovative housing and service models. These models deploy supports such as assistive technologies and service-enriched housing, are aimed at both cost savings and increased independence. For example, a hospital in Pennsylvania built a complex of 18 accessible apartments. Analysis of costs showed that over the first year, residents required 61 percent less public financing to live. However, the hospital depended upon alternative funding to build the apartments and equip them with assistive technologies, because despite the medical savings they create, the apartments are considered housing and therefore not eligible for Medicaid reimbursement. Legacy Corps. This program offers service opportunities and financial incentives for low-in come disadvantaged senior volunteers age 50 and older to provide in-home respite service to underserved, disadvantaged homebound elders and their caregivers. Funded by the University of Maryland Center on Aging, Legacy Corps partners with over 20 local non-profits and senior housing communities in Palm Beach County. A budget of $200,000 provided 30,000 hours volunteer time. Naturally Occurring Retirement Communties: NORCs bring services to where seniors live, rather than making them move to get help. They are created within geographic locations where many seniors live. The Federal government was supporting up to 40 of the 80 NORCs around the country, but money is drying up. xxxiii Virtual Retirement Communities: In these neighborhood-based organizations, members pay an annual fee to access a range of home-based services such as transportation, meals, social and wellness programs, home maintenance and repair, and technology assistance. There are two Twin Cities communities, both modeled after communities piloted on the east coast-- River Bluffs Village, operated by DARTS, a service agency in Dakota County for seniors and their families, and Mill City Commons in downtown Minneapolis. Since most virtual retirement communities are rather new, one unanswered question is whether they can succeed outside of upscale communities and whether memberships alone can sustain the operations without outside donations or grants. Cooperative living arrangements: Housing is arranged around communal facilities and mutual support. Some developments are all seniors; some are mixed-ages. The question is how they will fare when the seniors becomes more elderly and in need of more intense services. xxxiv i AARP Public Policy Institute. Providing More Long-term Support and Services at Home: Why It s Critical for Health Reform, Fact Sheet, June 2009 ii Minnesota Department of Human Services, Aging Initiative. Status of Long-Term Care in Minnesota 2005, A Report to the Minnesota Legislature, June 2006 iii Johnson and Wiener. A Profile of Frail Older Americans and Their Caregivers, Occasional Paper Number 8, The Retirement Project, Urban Institute, February 2006 iv Profile of Frail Older Americans v Ibid vi 4

vii viii ix x xi Fox-Grage, Gibson and Houser. Across The States, Profiles Of Long-Term Care And Independent Living, Minnesota, AARP Public Policy Institute, 2006 xii xiii xiv Profile of Frail Older Americans xv Howard Gleckman., St. Martin s Press, New York, New York, 2009. xvi xvii White-Means and Rubin. Retirement Security for Family Elder Caregivers with Labor Force Employment, National Academy of Social Insurance, January 2009 xviii xix xx Evercare and the National Alliance for Caregiving. Family Caregivers- What They Spend, What They Sacrifice, November 2007 xxi xxii National Alliance of Caregiving. Caregivers in Decline, September 2006 xxiii MetLife Mature Markets Institute and the National Alliance for Caregiving. The MetLife Caregiving Cost Study: Productivity Losses to U.S. Business, July 2006 xxiv Van Houtven, Courtney. and Norton, Edward. "Does Informal Caregiving Reduce Medicare Expenditures?" Paper presented at the annual meeting of the Economics of Population Health: Inaugural Conference of the American Society of Health Economists, Madison, WI, Jun 04, 2006 xxv Caregivers in Decline. xxvi Byung-Kwang Yoo, Bhattacharya, McDonald, and Garbe. Impacts of Informal Caregiver Availability on Long-term Care Expenditures in OECD Countries, Health Research and Education Trust, 2004 xxvii xxviii Caregivers in Decline xxix Adminstration on Aging website, http://www.aoa.gov/aoaroot/aoa_programs/hcltc/caregiver/index.aspx xxx Retirement Security for Family Elder Caregivers xxxi xxxii Arkel, Vink and Rama, Methods for Successful Complementary Currencies, unpublished paper xxxiii xxxiv 5