Nursing Home Cost Outpaces Inflation, Medical Care

nursing

One of the largest studies on out-of-pocket costs for nursing home care finds prices are high and rising faster than other medical care and consumer prices, according to information provided by a team of health policy researchers.

The study, published in Medical Care Research and Review, reviewed nursing home prices in eight states between 2005-2010 and uncovered out-of-pocket prices that increase significantly beyond normal inflation and inflation in medical care prices.

For example, annual out-of-pocket costs for nursing home care increased as high as 30 percent in California during the study period.

The study also finds substantial price variation across states. In 2010, at an average of $131 a day (about $47,800 annually). Texas had the least expensive out-of-pocket cost, while New York State, at $334 daily ($121,910 a year) had the most expensive.

The study also finds different prices between nursing homes after adjusting for staffing levels and geographical difference.

The for-profit chains charged the lowest prices and nonprofit chains provided the most expensive care. The price differential between for-profit chains and nonprofit chains is about $4,160 annually, or equivalent to 6.2 percent of the average price of for-profit facilities. However, there is no statistically significant difference in prices between for-profit and nonprofit independently operated homes.

The researchers also find that areas with higher market concentration of nursing homes leads to higher prices.

The researchers also find that areas with higher market concentration of nursing homes leads to higher prices. Those that are near capacity limit also charge more than nursing homes that have more rooms available.

The study aims to provide more transparency of the out-of-pocket prices of nursing home care. “Not many people have those kind of resources, and so it is important to understand how fast prices grow and how they vary,” said the study’s lead author, Sean Huang, PhD, MA, assistant professor in the Department of Health Systems Administration at the School of Nursing & Health Studies at Georgetown University Medical Center.

Typically, individuals in need of nursing home care, who do not have Medicaid, usually pay out of pocket until they run out of money. Then they are eligible for Medicaid, Huang said. Only a small fraction of nursing home residents have private insurance, such as long-term care insurance, that helps cover the costs.

This study used a unique dataset on nursing home prices from 2005-2010 across eight states. “Very few people have studied this topic, so it required building the largest dataset on nursing home prices to date,” Huang said. “This kind of information is very valuable to potential consumers of this care.” — Newswise

Study co-authors include Richard A. Hirth, PhD, from the University of Michigan,
Jane Banaszak-Holl, PhD, from Monash University in Australia, and Stephanie Yuan, BA, from Georgetown University Medical Center.
The study was partly supported by a grant from the U.S. Social Security Administration, funded as part of the Retirement Research Consortium through the University of Michigan Retirement Research Center Award RRC08098401.
The authors report having no personal financial interests related to the study.

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