Almost 30% of Long-Term Care is Financed Out-of-Pocket, Report Finds

/PRNewswire/ -- A new analysis by Avalere Health found that nearly 30% of long-term care costs are paid out-of-pocket -- a full 10% higher than amounts reported in widely used previous estimates. These previous analyses do not include spending on assisted living, a key component of long-term care.

This analysis, which was funded by the California-based SCAN Foundation, found that individuals and their families contributed an estimated $64 billion of their own funds out-of-pocket towards long-term care services in 2006. In addition, families and communities played a central role in the nation's long-term care system by providing unpaid care valued at $350 billion. Private health and long-term care insurance played a much smaller role, contributing a little over $16 billion.

To finance these contributions, most seniors and their families rely on home equity, income from adult children, or retirement savings. All of these asset classes have lost considerable value over the past year, resulting in diminishing funding capacity in the face of a rapidly growing long-term care population. Avalere noted that the long-term care need among individuals 85 and older is nearly four times as high (36 percent) as the need in the age 65 to 84 population (10 percent). The proportion of those over age 85 is expected to be nearly one-fifth of the elderly population by 2050.

"As we enter serious health reform discussions, we must recognize the extent to which the system is held together by private financing and family contributions," said Anne Tumlinson, lead researcher of the analysis. "Reform efforts will need to take a comprehensive look at how care is currently financed and incorporate creative ways to support the growing needs of senior care."

"Long-Term Care --- an Essential Element of Healthcare Reform," was authored by Anne Tumlinson and Christine Aguiar, both of Avalere Health. The SCAN Foundation provided funding for the research. Avalere maintained editorial control and the conclusions expressed in its research are solely those of the authors.

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