In January 2015, Global Vision Technologies reported on the impending avalanche overhanging the long-term care industry as the baby boomer generation began to reach retirement age. At that time, we reported that by 2030 sixty-one million baby boomers aged 66 to 84, along with more than nine million of the “oldest of the old” born before 1946, will require some form of long term care services. Congressional Budget Office estimates suggest that total long-term care expenditures will increase at a rate of 2.5% per year compounding to $270 billion in 2030.
Long Term Care
Long term care includes a broad continuum of services that address the needs of people who are frail or disabled and require help with the basic activities of everyday living. Long-term care professionals generally distinguish two types of supportive care needs for the frail: assistance with instrumental activities of daily living (IADLs), such as shopping or cleaning, and assistance with physical activities of daily living (ADLs), such as eating, bathing, or moving around. The services can vary from informal care delivered by family and friends to the formal services of home care, assisted living, or nursing homes.Impending Problems
In our original report two years ago, we identified two major areas of concern:1. FINANCIAL – Without the expanded use of long term care insurance, which is prohibitively expensive, the $270 billion cost will fall squarely on the shoulders of the taxpayer. The CBO estimated that each and every 65-year-old faces costs for uncovered long term care of $44,000. Will the American economy be able to cover such a cost and will the American taxpayer be willing to pay?
2. PERSONEL – As the society ages the enormous growth in the percentage of elderly to the total population could lead to a precipitous drop in the number of workers per elderly if current working and retirement patterns do not change. In other words, even if we have the money, there may be no one available or willing to take care of all these old people. This trend could be particularly troublesome for the long-term care system because the largest growth in the over-65 population will be among the “oldest-of-the-old”.
What Do the Trends Tell Us - Two Years In?
Even though the outlook could only be considered dire two years ago, as the baby boomers have begun to retire, certain developing trends are making planners more optimistic.- Dependency Ratio –
The dependency ratio (a measurement of the percentage of the population dependent on the productive segment) will improve by 2030. The United States prospered through the 1960s with dependency ratios less favorable than will be experienced in 2030, and the burden did not overwhelm the economy. How is this possible with the baby boomer segment retiring and leaving the productive segment at such a rapid rate? Our society is simply having fewer children, and that dependent segment (children) is shrinking faster than the boomers are retiring. - Disability Rate –
Singer and Manton (1998) estimated that a relative rate of disability decline of 1.5% a year over the next few decades would maintain the current level of burden each disabled elderly places on economically active Americans. This ongoing decline in the disability rate is due to two factors; better-educated elderly become disabled less frequently and better science is preventing increases in the disability rate. If, as a result of further medical advance and social shifts, the disability rate continues to decline, the number of disabled elderly in the year 2030 would be a remarkably low 1.6 million people, or less than 3% of the elderly population. - Education –
The elderly of 2030 will be much better educated, with a college graduation rate twice that of the current generation. Studies show that a college education extends the elderly’s productive years. - Advances in Medicine –
Expected advances in medicine, through prevention, pharmaceutical, and surgical treatment, although increasing the cost of acute care, reduce the entrance rate into nursing homes and other long-term care facilities. Better pharmaceuticals for treating osteoporosis, arthritis, and rheumatism will continue to decrease the number of elderly who need assistance with IADLs and ADLs. - Alzheimer’s Treatment –
60 to 70% of nursing home residents have dementia-related symptoms – progress in treating Alzheimer’s could lead to large reductions in the number of elderly entering nursing homes.
