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The Value of Family Caregiving–And Why It Matters

By Howard Gleckman, Caring For Our Parents

A new study released today by AARP estimates the economic value of family caregiving was $450 billion in 2009. In other words, if those family members were paid for the personal assistance they provided their loved ones, it would have cost $450 billion.

That is twice the cost of paid assistance by home health aides, nursing facilities and the like. It is almost four times what Medicaid–the single biggest payer of long-term services–spent on this assistance in ’09.

You might ask why this is such a big deal. After all, these 42 million family caregivers are helping their loved ones. Isn’t that what they should be doing? And the answer is, yes, it is.

But the AARP estimate, which is a substantial increase from its 2007 estimate of $375 billion, only describes the value of unpaid family caregiving. It does not figure in the real costs to those family members. Family caregivers spend $5,000 out of pocket each year to help provide this assistance, and long-distance caregivers spend even more–an estimated $8,000.

But as I wrote in a recent blog, the true financial cost may be lost current and future income that results from the time caregivers take from thier jobs. Not only do they earn less now, but reduced hours today means less in retirement as the result of lower Social Securty benefits and smaller contributions to 401(k)s. On average, those caregivers give up an average of almost $300,000 in current and future income to care for their parents. And that is just the financial cost. There is also the emotional and physical price caregivers pay–including higher rates of depression and more injuries.

And all of this matters for another reason: It helps explain why some state Medicaid programs are so reluctant to expand their home and community-based programs. In a phenomenon with the distasteful name of the woodwork effect, states fear that if Medicaid is too generous, many of those families that provide uncompensated care might instead enroll their loved ones in the federal/state safety net program. In effect, some of that $450 billion that AARP identified would be shifted to Medicaid.

While it is hard to measure, we know that some families will make huge sacrifices to keep their loved ones at home and out of a nursing facility. If home care benefits are more generous, these Medicaid officials fear, families will be more willing to enroll their loved ones in the program, putting even greater pressure on a system that is already financially strapped.

This theory is controversial, but I have talked to Medicaid directors who believe it is true. While the AARP estimates of the value of family caregiving are high( older estimates suggest the cost may be only half as much), there is no disputing the message of the AARP study: Family caregivers are the bedrock of our long-term care care system and without those of us who are caring for our parents, our already stressed system would crumble.


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