Providing financial security for aging individuals and their families today is a sizable and increasing challenge. Senior population growth is accelerating, care needs for seniors and family member caregivers are growing, and the cost of long-term care is expensive and rising.
Spiraling insurer losses for long-term care insurance (LTCI) over the years has pushed premiums for the cover out of reach for most families. In addition, few insurers currently offer it. Currently, in the U.S., only about seven million out of the roughly 75 million people above age 60 have long-term care coverage. Yet the need remains, creating huge market potential for a better solution.
Meanwhile, caregivers, typically family members (and generally women) are often overwhelmed as they try to balance their work and family responsibilities while taking loved ones for medical visits and managing their affairs. Since 70% of U.S. adults ages 50 to 64 also report being diagnosed with more than two impairments, caregivers with elderly parents likely have their own age-related health issues.
When employees are tired, stressed, and distracted by caring for aging loved ones, it impacts their health, wellbeing, and workplace. The AARP estimates that approximately 41 million family caregivers provide about 34 billion hours of unpaid care annually, which equates to an economic value of $470 billion.[1]
This challenge will continue to intensify. People in many countries are not replenishing their populations via childbirth, leaving fewer people to care for an ever-growing and longer-living senior cohort. In the U.S. in 1940, for example, there were 42 workers per retiree. Today, that number has dropped to 2.8, and is expected to fall to 2.0 in 2050.
Also consider that the fertility rate is now 1.7 children per woman, below the 2.1 required for population replenishment without immigration. Meanwhile, 25% of the U.S. population is age 65 or older. And with an estimated 10,000 people per day currently passing the age 65 threshold, the group’s growth is not expected to slow for a while.[2]
American life expectancy has also increased substantially over the past 50 years. By 2030, when the youngest baby boomers in the U.S. reach age 65, about 71 million Americans will have achieved retirement age, according to the U.S. Census Bureau.[2]
The current and growing size of the potential market, the obvious need, and other contributing factors clearly demonstrate the vast market potential for a better solution to support and protect aging populations and their caregivers.
Seniors are increasingly making it clear they want to age at home. A 2021 AARP survey found that 77% of people over age 50 wish to age in place.[3]
However, existing insurance products do not provide the holistic cover that will support seniors and their care networks through the logistical complexities and vagaries of aging. In addition, cohesive societal support for aging in place is lacking, especially for seniors who are still able to contribute to their communities. A patchwork of public and private services already exists in various markets that may individually address certain practical physical aspects of senior care, such as meal delivery, shopping services, and public transportation.
However, additional support services are vital to address more challenging needs, including programs to help slow cognitive decline or provide support should decline progress. Too often, seniors can find themselves in nursing homes sooner than needed, contributing to the increasing long-term care crisis.
Given these circumstances, the need is clear for a more cohesive and comprehensive approach – a Healthy Aging 2.0 – to support senior health needs in ways that either eliminate the need for a long-term care facility or delay it until absolutely necessary.
Such a concept would offer a comprehensive combination of digital eldercare services and re-invented insurance products designed especially for the needs of modern seniors and their families.
Two significant triggers generally lead to moving a senior to a long-term care facility. One is a decline in the senior’s cognitive capabilities. Another is that caregiver(s) can no longer provide sufficient care at home for the senior’s needs.
Any healthy aging program should start by serving seniors suffering from dementia or Alzheimer’s disease due to the significant need. An estimated six million Americans have been diagnosed with dementia and another six million are undiagnosed. Nearly half of all caregivers (48%) who assist older adults do so for someone with Alzheimer’s or other types of dementia. That equates to about 11 million U.S. families with family members serving as unpaid caregivers for Alzheimer’s or other dementia patients.
Early detection of cognitive impairment can make a tremendous difference in quality of life and long-term care costs. The average cost of care for a person with cognitive impairment is more than 50% higher than caring for someone with other aging-related risks. Addressing Alzheimer’s disease sooner can save as much as 27% in overall care expenses, according to primary findings from new neurocognitive assessment tools. By focusing on early detection and potential remediation to empower senior citizens and their caregivers, more broad-ranging eldercare cover can enhance the quality of life for seniors while quelling insurer losses.
To assure maximum reach, a solution would first need to be made available to employers and carriers, both of whom are highly likely to have existing customers requiring such support. For employers, eldercare could be offered as a specialized group benefit with the eventual intent of portability and availability in the individual insurance marketplace. For carriers, the plan would support their legacy business by making services available on demand to improve customer and business outcomes, increase health spans, and streamline the claims experience.
Presenting eldercare as an employee benefit could offer a plethora of advantages. First, it could attract new workers and encourage employee retention. According to a recent survey published by the U.S. Chamber of Commerce, 33% of women said they were not returning to the workforce since layoffs early in the COVID-19 pandemic because they needed to care for family members.[4]
Eldercare cover, at its best, should reinforce the morale-boosting message that the employer offering the benefit cares about its employees and their circumstances. The offering, if correctly structured, could also support employee health and wellness by reducing the stress of meeting the needs of their loved ones. Encouraging employee wellness and productivity while reducing absences is critical for employers, especially in a tight labor market. If providing eldercare can produce results similar to other specialized benefit programs, it could help employers realize up to 10 times the return on investment.
Centralizing access to the program via an online platform would also play an integral role. Such a portal could connect the user (caregiver) with a case manager who could launch a needs assessment and then route the individual to the relevant available services.
Since early detection of compromised cognition is critical for controlling future outcomes, the coverage should facilitate access to cognitive tests to jumpstart preventive measures as early as appropriate. Interventions could include supporting engagement in cognitive-building games, assuring greater opportunities for social interaction, providing delivery services with healthy meals, and offering other activities to prevent or slow compromises in cognition. Regarding cognitive impairment, caregivers are ideally suited to undertake the assessment with efficient and cost-effective digital tools being under development by forward-looking health tech companies.
Besides offering a list of trusted vendors for housecleaning and meal delivery, the portal could also deploy state-of-the-art artificial intelligence and monitoring to detect seniors’ mobility, medication compliance, and biometric information.
Transitioning from home to senior facilities is a delicate time for seniors and their caregivers. Despite putting all the effort possible into slowing cognitive decline, some seniors will outlive their intellectual functioning. In addition to counseling and other resources to encourage well-informed choices, the plan could provide services during the difficult move from home to a care facility. Specialized real estate agents, for instance, can ease the experience by arranging reliable contractors for repairs, cleaning, and moving services.
The data-driven engine behind this new approach would do more than improve the lives of seniors and their caregivers. Comprising analytical tools fueled by continuous new data sources, including healthcare records, monitoring devices, and other data entered through the portal, the engine could run the information through prescriptive and predictive models to glean insights and facilitate program improvement.
The solution could leverage new technologies and methods alongside time-tested clinical best practices in case management. The continuous feedback loop of data could also help identify optimal intervention points at various stages of cognitive decline or locate cost-efficient measures.
Additionally, by supplying underwriting and pricing models with accurate real-time claims experience data and well-established traditional risk variables such as age, gender, and diagnosis, insurers could respond more quickly to changes that could impact rates. The models could also alter reinsurance needs for long-term care insurers.
Although long-term care insurance faces enormous challenges, taking a more holistic approach to eldercare can address many concerns. Delivering cover for care that is proactive, preventative, and responsive will help seniors age in place, support their caregivers, improve on-the-job productivity, and provide financial security while simultaneously reducing long-term care costs.
[1] “Valuing the Invaluable: 2019 Update”, AARP Public Policy Institute, November 14, 2019
[4] Understanding America’s Labor Shortage, U.S. Chamber of Commerce, August 2022.
A version of this article appeared in Digital Insurance.
