Providing proper care for the elderly poses a well-known obstacle. Some seniors require constant medical supervision in facilities, while others face limitations in their abilities but prefer to stay in their own residences. For families, sourcing quality care is challenging and costly, with already overwhelmed relatives often stepping in to assist.

This issue is escalating as birth rates decline while certain segments of the population experience increased longevity, resulting in a rising proportion of older individuals. Presently in the U.S., three states have at least 20 percent of their population aged 65 and above. (Indeed, Florida is among them.) However, projections for 2050 indicate that demographic trends may show 43 states fitting that description.

In terms of age statistics, “America is evolving into Florida,” remarks MIT economist Jonathan Gruber. “This isn’t only a challenge for America; the entire globe is aging at an accelerated rate. The proportion of individuals over 65 is surging everywhere, particularly those over 85.”

In a new anthology, Gruber and various scholars examine the issue from an international viewpoint. The publication, “Long-Term Care around the World,” is released this month by the University of Chicago Press. The co-editors include Gruber, the Ford Professor of Economics and chair of MIT’s Department of Economics, and Kathleen McGarry, an economics professor at Stony Brook University.

This book investigates how 10 relatively affluent nations tackle the long-term care dilemma. In their section on the U.S., Gruber and McGarry highlight an astonishing statistic: Approximately one-third of long-term care for seniors in the U.S. comes from informal sources, such as family and friends, despite their limited time and means. Overall, long-term care constitutes 2 percent of the U.S. GDP.

“We face two core long-term care challenges in the U.S.,” notes Gruber. “Excessive informal care at home, and, connectedly, insufficient options for seniors to reside in effective care within ‘congregate housing’ [or senior communities], even if they aren’t ill enough for a nursing home.”

The essence of the issue

The requirements of the elderly are clearly evident. In the U.S., approximately 30 percent of individuals 65 and above, along with 60 percent of those 85 and older, report limitations in fundamental tasks. Everyday activities such as dressing and bathing rank among the most frequent challenges; grocery shopping and financial management are also common struggles. Furthermore, these limitations can adversely affect mental health. About 10 percent of seniors report feelings of depression, which increases to 30 percent among those encountering difficulties with three or more types of basic daily tasks.

Nonetheless, nursing homes are not as prevalent in the U.S. As a country with roughly 330 million inhabitants, of which 62 million are aged 65 and above, it is unusual for an elderly individual to reside in one.

“We often associate nursing homes with aging, but only about 1.2 million Americans live in nursing homes,” Gruber observes. “While that number is significant, it’s minor when compared to the vast number of elderly individuals in the U.S. with care needs. The majority of those who need assistance find it at home.”

Moreover, although nursing homes can be pricey, home health care is also costly. Given an average rate of $23 per hour for a home health aide in the U.S., annual expenses can accumulate to six figures even with part-time care. Consequently, many families opt to assist their elderly family members in whatever way they can.

Thus, Gruber has found that we should consider the informal expenses associated with elderly care as well. In the end, he suggests that informal assistance represents “an inefficient system where individuals care for their elderly parents at home, creating stress for the family, while the elderly do not receive adequate attention.”

Admittedly, some people purchase private long-term care insurance to mitigate these costs. However, this market can be tricky, as insurance providers worry about “adverse selection,” where individuals with a specific need for policies (that insurers cannot identify) are the ones purchasing them. As a result, premiums can appear high for limited and conditional benefits. Research from MIT economist Amy Finkelstein has demonstrated that only 18 percent of long-term care insurance policies get utilized.

“The private long-term care insurance market has not operated effectively,” Gruber states. “It essentially offers a fixed sum of money, contingent on meeting certain criteria. People often find this unexpected, leading to unmet needs and high costs. We require a public approach.”

Congregate housing as a potential remedy

Assessing long-term care globally helps reveal possible solutions. Though the U.S. does not overlook elderly care, it could certainly expand its accessible choices.

Other European countries with income levels more aligned to that of the U.S., like Germany and the Netherlands, invest greater amounts into long-term elder care. The Netherlands is at the forefront, dedicating around 4 percent of its GDP to this sector.

However, in the U.S., the primary concern is less about radically altering the amount spent on long-term elder care, but rather how those funds are allocated. The Dutch maintain a notably more comprehensive system of elder communities — the “congregate housing” for seniors who aren’t severely ill but find independence increasingly challenging.

“That’s the significant gap in the U.S. long-term care framework: what do we do with individuals who aren’t ill enough for a nursing home but likely shouldn’t remain at home?” Gruber explains. “Currently, they stay home, feel lonely, miss out on services, their children are heavily burdened, and it takes millions of people out of the workforce, particularly women. Everyone is dissatisfied, and it doesn’t contribute to GDP, hence it undermines our economy and overall well-being.”

In summary, Gruber believes further investment in elder-care communities could exemplify effective governmental expenditure that can tackle the emergent crisis in long-term care — albeit this would necessitate new federal policy in a deeply divided political climate.

Is such a development feasible? Can the U.S. increase its investment now and reap long-term financial rewards while enabling working-age individuals to devote more time to their jobs instead of serving as caregivers at home? Fostering greater awareness of the issue, Gruber contends, is a crucial initial step.

“If anything could cross political lines, it might be long-term care,” Gruber suggests. “Everyone has parents. A solution must be bipartisan. Long-term care could potentially be one of those topics where collaboration is achievable.”

Support for the research was partially provided by the National Institute on Aging.