Who’s going to pay for eldercare?

In a recent article to the Seattle Times, entitled “Caring for Aging Parents requires government support” Nancy Jecker proposes that the government step in and assist with long term elder care in a major way.

Eldercare costs are a problem. Where you look for solutions does make a difference. Image courtesy of: marciapevey

She sees the problem with a growing elderly population and the massive costs associated with long term care. She also realizes that the current government programs don’t cover everything that the elderly need.

After seeing the need, she suggests looking to Japan for inspiration. She notes how that nation cares for their elderly members. What she doesn’t tell you is that Japan can’t afford what they do. Their budget is driven by an ever-increasing debt and their banks only have money to cover 1.9% of the assets.

Their debt level already exceeds 200% of their GDP. This nation may care for their elderly, but they are driving themselves into the poor house doing it.

When a nation can’t afford what they are doing, it doesn’t make sense to use them as a role model.

Perhaps a better place to look is Costa Rica. The medical care is half to 2/3 of what they are in the US.

Making suggestions that cut costs rather than those that increase debt make better sense to me. Retirement homes that cost $5000 a month in the US have equivalents in Costa Rica for $1000 a month.

The catch is that Medicare does not cover costs in Costa Rica. This means that care will have to be out of pocket of the individual, rather than the government raiding the pockets of other citizens.

Consider how an elderly person would fare in Costa Rica using Nancy’s numbers.

“Would these proposals suffice? At current savings rates, it would take about 45 years at the maximum $2,000 a year savings to accumulate enough to pay the $90,000 average amount required for just one year of nursing-home care. It would take 20 years to pay for a year of long-term care.”

From her figures, it would take $90,000 to cover care in the US, compared to Costa Rica where that same amount of money would get you 7.5 years of long term care WITHOUT breaking the government bank.