There are more than 44 million people in the United States currently acting as a caregiver for an elderly or disabled loved one, and they devote a significant amount of time, money, and energy to the endeavor. According to researchers over at the Rand Corp. think tank, the informal cost of elder care in the United States that caregivers pay out of their own pocket is more than $522 billion every year and over 30 billion hours of labor. The personal and opportunity costs on caregivers are unfortunately being ignored, and it is causing serious problems for caregivers across the country.
Informal Costs of Elder Care
The Rand Corp. came to this amount by calculating the cost of unpaid work that caregivers perform for their elderly loved ones in addition to the opportunity cost of caregivers, calculated as “paychecks that could be pocketed if the caregivers were working and not taking elders to the doctor, monitoring their health and helping them with daily activities.” In total, the $522 billion spent on elder care every year by caregivers is more than the entirety of federal spending on Medicare in 2013.
This study is similar to another report published by the MetLife Foundation in 2011 that estimated the average amount of lost wages and Social Security benefits for caregivers over the age of fifty years old to be around $303,880. That means that the total aggregate loss in wages and Social Security benefits across the country was almost $3 trillion. Unfortunately, caregivers are not receiving the full financial support that they need from government entities and nonprofit organizations.
Problems with the Current Structure
The financial safety net for caregivers is sadly full of holes that they must pay for out of their own pockets. The Medicare program does not cover any type of long-term care, and elderly loved ones do not qualify for Medicaid unless they fall beneath the income and asset threshold for care. Finally, some caregivers relied on their elderly loved one’s long-term care insurance coverage, but most of the companies providing those policies have either dissolved or increased their premiums to unsustainable rates.
On the legislative side, it does not look much better. Congress has yet to renew the Older Americans Act that provides the funding for elderly services like nutrition and transportation. In addition, the federal commission on long-term care has yet to come to an agreement on financing long-term care, which is a debate that started all of the way back in 2012.
Possible Solutions to the Caregiver Problem
Experts agree that there is no simple solution to the issues surrounding the informal cost of caregiving. Reforms in this area will require a combination of private insurance and public assistance from state and federal institutions. Some have suggested the creation of a social insurance system to cover the costs of any catastrophic care needs, while others suggest that employers need to do more in terms of helping employees that double as caregivers. Elder care benefits, flexible workplace schedules, and other options to help caregivers have all been suggested to help cover the gaps in the informal costs of caregiving.