Study calls for action on creating more housing for middle-income seniors
Arecently-released report sends a stark warning to federal and state policymakers and to the private senior housing sector. The report forewarns that, in the coming years, a large number of middle-income seniors who need assisted living with supportive services, will be priced out of this level of care.
Senior housing in the United States is paid out of pocket by seniors with sufficient assets. A relatively small percentage of Americans have long-term care insurance policies to defray the costs. For seniors with the lowest incomes, Medicaid covers housing only in the skilled nursing setting, but increasingly also covers long-term services and supports in home and community-based settings. Programs such as low-income housing tax credits have helped finance housing for economically-disadvantaged seniors.
The researchers call on the government and the senior housing sector to step up and to assist the projected 14.4 million middle-income people over age 75, many with multiple chronic conditions, who won’t be able to afford pricey senior housing.
According to this first-of-its-kind study that appears in the April 24, 2019 edition of Health Affairs, 54% of middle-income older Americans will not be able to meet yearly costs of $60,000 for assisted living rent and other out-of-pocket medical costs a decade from now, even if they generated equity by selling their home and committing all of their annual financial resources. The figure skyrockets, to 81 percent, if middle-income seniors in 2019 were to keep the assets they built in their home but commit the reset of their annual financial resources to cover costs associated with seniors housing and care.
Accompanying the senior housing study are two perspective pieces in Health Affairs on how society can adapt to aging and supporting aging in communities.
The study, “The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources For Housing And Health Care,” was conducted by researchers at NORC at the University of Chicago, with funding provided by the National Investment Center for Seniors Housing & Care (NIC), with additional support from AARP, the AARP Foundation, the John
A. Hartford Foundation, and The SCAN Foundation.
Learning about the needs of the emerging ‘middle market’
“We still have a lot to learn about what the emerging ‘middle market’ wants from housing and personal care, but we know they don’t want to be forced to spend down into poverty, and we know that America cannot currently meet their needs,” said Bob Kramer, NIC’s founder and strategic adviser, in a April 24, 2019, statement. “The future requires developing affordable housing and care options for middle-income seniors. This is a wake-up call to policymakers, real estate operators and investors.”
The report notes that significant financial challenges are expected to coincide with many middle-income seniors seeking seniors housing and care properties due to deteriorating health and other factors, such as whether a family member can serve as a caregiver. The study projects that by 2029, 60% of U.S. middle-income seniors over age 75 will have mobility limitations (8.7 million people), 67% will have three or more chronic conditions (9.6 million people), and 8% will have cognitive impairment (1.2 million people). For middle-income seniors age 85 and older, the prevalence of cognitive impairment nearly doubles.
The researchers say that this ‘middle market’ for seniors housing and care in 2029 will be more racially diverse, have higher educational attainment and income, and smaller families to recruit as unpaid caregivers than today’s seniors. Over the next 10 years, growth in the number of women will out-pace men, with women comprising 58% of seniors 75 years old or older in 2029, compared to 56% in 2014, they say.
Bringing the public and private sector together
“In only a decade, the number of middle-income seniors will double, and most will not have the savings needed to meet their housing and personal care needs,” said Caroline Pearson, senior vice president at NORC at the University of Chicago and one of the study’s lead authors.
“Policymakers and the seniors housing community have a tremendous opportunity to develop solutions that benefit millions of middle-income people for years to come,” says Pearson.
Researchers say there is an opportunity for policymakers and the senior housing and care sector to create an entirely new housing and care market for an emerging cohort of middle-income seniors not eligible for Medicaid and not able to pay for housing out of pocket in 2029.
The study’s analysis suggests that creating a new ‘middle market’ for senior housing and care services will require innovations from the public and private sectors. Researchers say the private sectors can offer more basic housing products, better leverage technology, subsidize ‘middle-market’ residents with higher-paying residents, more robustly engage unpaid caregivers and develop innovative real estate financing models, among other options. As to the public sector, the researchers call on government to create incentives to build a robust new market for middle-income seniors by offering tax incentives targeted to the ‘middle market,’ expanding subsidy and voucher programs, expanding Medicare coverage of non-medical services and supports, creating a Medicare benefit to cover long-term care, and broadening Medicaid’s coverage of home and community-based services.
“This research sets the stage for needed discussions about how the nation will care for seniors who don’t qualify for Medicaid but won’t be able to afford senior housing,” said Brian Jurutka, NIC’s president and chief executive officer. “This discussion needs to include investors, care providers, policymakers and developers working together to create a viable middle market for seniors housing and care,” he says.
Adds, Lisa Marsh Ryerson, president of AARP’s Foundation, “All seniors want to live in affordable, safe and supportive housing, and more than 19 million older adults are unable to do so. We must act now to implement innovative solutions – including robust aging-in-community efforts – to accommodate what is sure to be an increasing demand for housing that meets the needs of older adults.”
Is Rhode Island prepared to meet the senior housing needs of the state’s middle-income seniors in 2029? If not, the state’s federal delegation, lawmakers, state policymakers and the senior housing industry must begin to chip away at this looming housing policy issue.
To view the study, go to healthaffairs.org/doi/full/10.1377/hlthaff.2018.05233. Herb Weiss, LRI’12, is a Pawtucket writer covering aging, health care and medical issues. To purchase “Taking Charge: Collected Stories on Aging Boldly,” a collection of 79 of his weekly commentaries, go to herbweiss.com.