Long-term services and supports could increase from 1.3% of the U.S. gross domestic product to more than 3% by 2050, according to a recent Congressional Budget Office analysis.
In 2011, the total market for LTSS was $426 billion. An aging population will drive spending in the coming decades, but a number of variables will impact the total increase.
Medical advances and declining obesity rates could help control costs by limiting seniors’ functional impairments. However, smaller average family size could drive costs up, as there will be fewer people to provide informal care to elders, who will go into facilities. Informal care accounted for 55% of the LTSS market ($234 billion) in 2011, and institutional care accounted for 31% ($134 billion), according to the CBO report.
Currently, the high proportion of informal care is caused in large part by the often “catastrophic” costs of institutional care, the report notes. Yet “many, if not most” people are failing to prepare financially for long-term care needs, according to the analysis.
The dilemma painted by the report — an aging population potentially in need of more institutional care that it is not prepared to finance — is being addressed by a Congressional Commission on Long-Term Care that officially met for the first time on June 27, a day after the CBO released its report. Provider advocates cheered the commission’s first hearing, but the group is facing a tight deadline to prepare its recommendations to Congress.