As the COVID-19 crisis unfolded, Americans became familiar with the concept of “flattening the curve.” As a society, at first we took voluntary and legal steps to increase our personal safety to avoid the need for acute care that could have overwhelmed hospitals and the healthcare system. The steps did not eliminate the crisis but for a time made it more manageable, saving lives and reducing additional economic hardship.
But far-sighted Americans have long been worried about another curve that has the potential to threaten our healthcare resources and individual, state and national financial security. That curve involves the demographic bulge of aging baby boomers where it meets the high costs of American healthcare.
As noted by Federal Reserve Chair Jerome Powell in July, 2018: “Longer term, it is widely understood that the United States is on an unsustainable fiscal path, largely due to the interaction between an aging population and a healthcare system that delivers pretty average healthcare at a cost that is much higher than that of any other advanced economy.”
While we have developed medical miracles that add years to lives, we also need to ensure that those added years can be lived joyfully and with dignity, and in a way that does not bankrupt individuals, families and society, while overwhelming our healthcare system.
One Strategy: Aging in Place. In the case of COVID, flattening the curve requires sheltering in place. In the case of aging baby boomers facing high healthcare costs, flattening the curve requires aging in place. Aging in place is the most economical, and by far the preferred housing option for the increasing number of older Americans who reap the benefits of longevity but also face the challenges posed by declining health and fixed incomes.
The Key Tactic: Updating Homes to Facilitate Aging in Place. Investing in housing updates is a commonsense means to ensure an effective platform for delivering healthcare and other support services in the home and reducing health costs to individuals, families, the healthcare system and the country. Updating the nation’s housing infrastructure will increase resiliency to meet the needs of an older population. In this sense, the most important infrastructure for the country to upgrade is the housing stock of older adults.
Demographic and Financial Realities
Policy Debates Gloss Over Costs and Needs of Older Adult Health. Though healthcare is a dominant issue in the news and in political campaigns, public debates generally ignore a key fact: the oldest old—people ages 85 or older—are the fastest growing segment of the U.S. population and use the most healthcare resources. Improving the conditions of aging can significantly reduce healthcare spending.
But our current system causes people to fear the cost of a cancer more than the diagnosis. Sixty-six and a half percent of all bankruptcies are tied to medical issues. According to a study published by Health Affairs, by 2029, 54 percent of the 14.4 million middle-income older adults ages 75 and older will not have sufficient resources to cover the costs of the housing and services they are projected to need. Those needs are growing. Sixty percent of those middle-income older adults ages 75 and older will have mobility limitations, and 20 percent will have high healthcare and functional needs.
Our Current System Does Not Cover Long Term Care. There is no national system to provide or pay for long-term care. Our existing aging programs, Social Security and Medicare, were conceived before the significant increase in longevity and won’t cover the costs that longevity creates. There is a widespread and persistent misunderstanding that Medicare covers long-term care costs. This means that for all but the poorest Americans, who are covered by Medicaid, or for the relatively few who have sufficient long-term care insurance, individuals and families pay long-term care costs out of pocket.
Home is the Preferred Option for Older Adults and a Better Option for Healthcare. Even when they need assistance, more than 80 percent of Americans prefer to remain in their homes. In fact, fewer than 10 percent of older people ever live in senior housing of any type. As longevity increases there is growing recognition that homecare delivers better clinical quality at lower cost, even for those with multiple chronic illnesses, and enables consumers to maintain their preference to remain in their homes.
Homes Can Also be the Source of Funds for Necessary Upgrades. For most Americans, their home is their single greatest investment. The highest rates of home ownership in the United States are found among adults older than age 65, at 78 percent. In addition, people older than age 55 account for half of the remodeling spending in this country, to the tune of $130 billion.
However, few Americans proactively make accessibility modifications. They need incentives to motivate them to update their homes to enable aging in place. Still, the funds are available to make the necessary improvements. People older than age 50 hold 83 percent of U.S. wealth, with $17 trillion in retirement savings. This is their own money, already earmarked for retirement. Allowing use of those funds could transform liquid assets into a capital improvement, making their home a better tool for retirement.
The Obstacles and Opportunities in Upgrading Housing to Facilitate Aging in Place
There is a growing recognition that more medical care is capable of being delivered in the home and that reducing functional limitations in the home for older adults can improve health outcomes. For example, the Johns Hopkins CAPABLE study found that “older adults with functional limitations use a vastly higher percentage of healthcare resources than those without functional limitations,” but that 79 percent of those enrolled in the experimental program were able to reduce those limitations through interventions that included various home repairs and modifications.
Studies like this have led to enhancing Medicaid waiver programs subsidizing such improvements throughout the states, and to the 2019 Senate Special Committee on Aging Report on Falls Prevention. A significant indicator of the importance of home updates, in 2020, for the first time, CMS decided to allow structural modifications to the home as a supplemental Medicare Advantage benefit. This has significant cost implications. A before and after comparison of the amount of care provided revealed that home modifications reduced hours of care by 42 percent per week.
As researchers at the Joint Center for Housing Studies at Harvard University (JCHS) wrote, “The costs of providing long-term care in the home are generally much less than in institutions. The Senate, in its deliberations on the Patient Protection and Affordable Care Act, noted that the costs to Medicaid of supporting three older adults with home and community- based services are roughly the same as those for nursing home care for one individual.”
Tech Upgrades Enable Innovations in Care. Technological trends will vastly improve the ability to monitor, diagnose and treat people in their homes. The advent of faster wireless systems, such as Wi-Fi 6 and 5G wireless, inexpensive cameras, sensors and higher resolution video will enable innovative care delivery models. As we have seen in the current crisis, telehealth provides significant opportunities to support home care at the same time it reduces cost and transportation and logistical headaches. Even once the pandemic is under control, now that Medicare has begun to pay benefits for telehealth, it will remain an important, if not key, element in supporting the delivery of care to the home. This is another strong indicator that aging in place is on the way.
As JCHS wrote, “New technology is also enabling older adults to remain safely in their homes. Sensors are available to provide alerts in the case of falls, tools and robotics provide support for those with difficulty performing ADLs, and automated systems monitor activities in the home. Medical consultations via video-conferencing also help to support those living independently. For instance, the Health Buddy program at the Michael F. Blakely VA Medical Center in Houston uses technology to manage patients’ care in their homes, helping to reduce hospitalizations.”
Traditional Upgrades Also Necessary. To take advantage of the good news, we need to stimulate a broad upgrading of older adults’ homes, likely involving the technology noted above. But such changes also involve more traditional upgrades. According to JCHS, “By 2035, 17 million households will include a person for whom stairs, traditional bathrooms, and narrow doors pose challenges...Yet only 3.5% of US housing offer [accessibility features].”.
This presents a host of practical questions: How can long-term care needs for older adults be met if they can’t get in and out of their front door for medical appointments or social activities, or they can’t shower and use the bathroom without fear of falling? As we have seen the rapid approval and deployment of telehealth and other high-tech monitoring during the pandemic, we also see that the basic safety of the physical environment is a foundation for aging in place.
Economic Case Is Compelling. The benefits of home updates are compelling. For example, hospitalization for an average fall costs $30,000. Falls are a leading cause of disability and death. Avoiding one fall equals the outlay for 100 grab bars at $300 each. Similarly, avoiding one month in a nursing home is equivalent to spending $10,000 on home updates. Upgrades can generally do much more.
The United States should adopt public policies and industry incentives that encourage home preparedness and self-sufficiency to optimize use of personal and taxpayer resources. Updating homes will make aging in place easier and less expensive. Financial incentives will motivate people to update the “age-friendly way” whenever they remodel, regardless of health or age, starting new trends in remodeling. State and local programs to encourage home updates (subsidies, property or other tax incentives) also can help stem people trickling down into Medicaid. Further, aging in place presents opportunities for business growth and innovation.
For states, we recommend lending programs that provide incentives and the means for upgrades. For example, the Maryland Department of Housing and Community Development offers a program that provides 0 percent interest deferred loans for a term of 30 years, or grants to finance accessibility improvements. These improvements may include, among others, the installation of grab bars and railings, widening of doorways and installation of ramps. The maximum loan amount will be up to 110 percent of the value of the property, taking into account any superior mortgages. The loans are to be repaid upon sale, transfer or refinance of the property, with all closing costs will be included in the loan. The state can finance such an initiative through direct appropriations or through specially structure bonds, with the repayment of the loans providing funds to repay the bonds over time.
For states and the federal government, we recommend penalty-free and tax-free withdrawal from retirement savings to use 401K, IRA, TSP and other workplace pensions and retirement savings accounts to update homes. Reduced health costs, along with increased productivity and innovation in business sectors serving older Americans, will more than balance the cost of incentives. Caps based on percentage of savings used, or lifetime caps, may also merit consideration.
For the federal government, we recommend that Congress consider expanding the use of the earned income tax credit to provide another source of funding for aging in place upgrades.
And we recommend normalizing incentives across the aging population that occupies individually and privately owned condos, single family homes and rowhouses. If home updates are limited to those who are very ill or living with significant disability, we will miss the opportunity for far-reaching falls prevention benefits and supporting-self-sufficiency, self-reliance and well-being for our older population.