This is the fourth article in a six-part series on long-term care.
In the opening article of this long-term care series, I cited some of the scary statistics often encountered in discussions of this topic. Insurance companies, along with various other interest groups, seem to use these data to suggest that many folks are destined to end their years in a nursing home. When statements from the National Long-Term Care Brokers and the Chicago Tribune state that "The number of persons in nursing homes is expected to increase by over 60% in the next 30 years," where "The average length of stay ... is 2.4 years," what else are we supposed to think? Yet, as we will see shortly, perhaps all is not as it seems when these claims are examined in detail.
Let's look first at the claim that nursing home populations will increase and even double by 2030. To me, this is a scare statistic of the worst kind. True? Almost certainly. Surprising? Hardly. In fact, a doubling of nursing home residents should shock no one. According to the Census Bureau, the 65 and older population is also projected to double by 2030. What, then, is so special about any increase in nursing home residents during the same period? Absolutely nothing! In fact, a parallel increase in nursing home stays should be expected as the elderly population increases. Only someone unaware of the growing elderly population would think otherwise.
Another bothersome statistic I still see far too often is the "fact" that two out of five persons who reach age 65 will require nursing home care. That tortured statement arises from a 1991 New England Journal of Medicine article, "Lifetime Use of Nursing Home Care," written by P. Kemper and C. Murtaugh. Kemper and Murtaugh reported the results of a study of some 16,000 people who had died in 1986. The study focused on the use of nursing homes by these decedents at any point in their lives, not just after age 65, to determine the duration of such stays. Using age at death, the study reported those stays in a series of tables. The study revealed that 37% of those age 65 or older at death had spent some time in a nursing home during their lives. (Note: There's your two out of five.) Using that data, the authors then projected nursing home use for those who reached age 65 in 1990 as shown in this table:
Projected Use for Persons Who Reached Age 65 in 1990
| Total Use | % of Men | % of Women | % of Total |
|---|---|---|---|
| Any use | 33 | 52 | 43 |
| >= 3 mos | 22 | 41 | 32 |
| >= 1 yr | 14 | 31 | 24 |
| >= 5 yr | 4 | 13 | 9 |
Why are these data interesting to me? Consider this: Using that table, we can say that 75% of all nursing home stays will be for less than a year. Further, two out of every three men will not see the inside of a nursing home during their lives, but one of every two women will. One out of seven males will spend a year or more in an institution compared to one out of three females. And only one in 25 men will spend more than five years there versus one in eight women. We derive those odds by dividing "1" by the percentage shown in the table above. That gives us the number to insert for "X" in the statement "one out of X."
Now that we have some odds regarding the likelihood of a nursing home stay, we should also consider a few other points. The National Nursing Home Survey (NNHS) noted that in 1995 (the latest such study available), 82% of nursing home admissions occurred when the resident was aged 75 or older. It went on to say that at those ages, the average stay is 28 months, and seven out of 10 residents are female. Further, we know that the vast majority of female residents have no living spouse.
What about long-term care provided in other settings, such as at home or in assisted-living communities? In a 2004 report on long-term care, the AARP Public Policy Institute notes that one out of five people aged 65 and older has self-care or mobility limitations, while one out of nine has cognitive/mental limitations. Further, in a 2003 study on disabilities, the Institute states that between 1984 and 1999 the rates of chronic disability in the over-65 population declined dramatically. Still, these declines occurred primarily in what are known as Instrumental Activities of Daily Living (IADLs) because the rate of those needing help in two or more ADLs remained constant. The report states that by one estimate, "The lifetime probability of a 65-year-old becoming disabled in at least two activities of daily living or of being cognitively impaired is 44% for men and 72% for women." The same report notes that fewer than 4.2% of the over-65 population resides in a nursing home at any one time.
What does it all mean?
Wow! All those data are enough to make my head spin. Still, I try to apply that information to my situation this way. Both Mrs. Pixy and I may need help with ADLs or IADLs at some point. But if anyone needs nursing home care coverage in the Pixy family, it's most likely Mrs. Pixy. Aside from my mother's disaster, no one else in either of our families has ever used or required a nursing home. Also, while my stepmother and father had problems with some ADLs and IADLs, both were able to stay at home until they died. Therefore, the odds of my needing either nursing home or lengthy home care seem small.
As for my wife, the same pretty much applies to her. Still, based on the numbers cited above, of the two of us, she will be the one most likely to need care in a nursing home. However, she's most likely to need it after age 75 and as a widow. Accordingly, she will probably have no "at-home" spouse to worry about and, thus, can consume her remaining assets to pay for such care without guilt, save for some concern over leaving less to our kids. Personally, I believe leaving a large legacy to my offspring would be nice, but should those assets be needed for the care of my spouse, then their inheritance will take a distant back seat.
As I've said repeatedly in this series, each of us must muddle through this issue individually. This column gives you another way to look at the situation. The trick is to evaluate your family situation based on the available data and then make a decision for yourself. I hope I've made that task a little easier.
Next: A look at other long-term care alternatives.
Dave Braze is a retired financial planner who answers questions on the Rule Your Retirement Q&A discussion board. For a free 30-day trial to Rule Your Retirement , click here. The Motley Fool is investors writing for investors .
