Why home care costs too much – Paul Osterman

MIT Sloan Prof. Paul Osterman

MIT Sloan Prof. Paul Osterman

From the Wall Street Journal

As baby boomers age into long-term care facilities, Medicaid costs will go through the roof. Americans already spend – counting both public and private money – more than $310 billion a year on long-term support services, excluding medical care, for the elderly and the disabled. Medicaid accounts for about 50% of that, according to a 2015 report from the Kaiser Commission on Medicaid and the Uninsured. Other public programs cover an additional 20%.

Yet in another decade or so these figures may look small. In 2015 around 14 million Americans needed long-term care. That number is expected to hit 22 million by 2030. There’s an urgent need to find ways of providing good long-term care at a lower cost. One fix would be to deregulate important aspects of home care.

There are two million home health aides in the U.S. They spend more time with the elderly and disabled than anyone else, and their skills are essential to their clients’ quality of life. Yet these aides are poorly trained, and their national median wage is only a smidgen more than $10 an hour.

The reason? State regulations – in particular, Nurse Practice Acts – require registered nurses to perform even routine home-care tasks like administering eyedrops. That duty might not require a nursing degree, but defenders of the current system say aides lack the proper training. “What if they put in the cat’s eyedrops instead?’ a healthcare consultant asked me. In another conversation, the CEO of a managed-care insurance company wrote off home-care aides as “minimum wage people.”

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