Assisted living more affordable than skilled nursing and…gasoline?

There’s no shortage of data proving that the cost of long-term care continues to rise, but that doesn’t stop it from coming. John Hancock Financial released results of their 2011 Long Term Care Cost of Care Survey, which confirms prior research indicating that assisted living costs about half as much annually as private nursing homes (on average). Assisted living care costs rise slower than inflation

To come up with this data, researchers consulted more than 11,000 skilled nursing, assisted living and home health care providers nationwide. Whether you choose a semi-private or a private room in a nursing home, the costs are substantially more than assisted living. Assisted living costs average $3,270 per month, or $39,240 annually. A private room in a skilled nursing facility (nursing homes are subject to daily rates, rather than monthly) $235 per day, or $85,775 per year. Opting for a semi-private room will save you about $10,000; Semi-private nursing home rooms average $207 per day, or $75,555 annually.

Of course, many skilled nursing residents have depleted their financial resources, enabling them to qualify for Medicaid. In this case, the nursing facility is making less money, but these residents aren’t paying out-of-pocket. Medicaid per Diem rates for skilled nursing care are facility-based; even the way the rate is calculated is state-specific, and the resulting fees vary so widely that giving an average wouldn’t paint an accurate picture. Medicaid rates are, however, less than both private pay and Medicare per Diem rates. From what we found, an approximate estimate is about 60 to 70 percent of Medicare rates for the same facility.

States struggling to balance budgets are facing likely Medicaid cuts; some skilled nursing providers say they won’t be able to meet patients’ needs if this happens. There’s already talk of some facilities closing their doors. Coincidentally, this has caused another recent regulatory ruckus as some skilled nursing providers have attempted to evict Medicaid-eligible residents to take private-pay patients in their place. This improves the facility’s bottom line but does little to ensure quality care for the nation’s indigent elderly. We discussed this dilemma in a recent post.

The good news among all this? The rate of inflation is outpacing the rate of long-term care cost increases. In other words, the price of gasoline and food is rising more quickly than the cost of long-term care. Inflation has averaged 4.1 percent for the past nine years, while long-term care has risen about 3.4 percent each year. Somehow, we doubt that will be much comfort to most of the country.

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