Howard Gleckman: ‘We Pretend This Isn’t a Problem’

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Our guest on the podcast today is Howard Gleckman. He is the author of a book called Caring for Our Parents and an expert on the topic of aging and caregiving. Howard is also a senior fellow at the Urban Institute where he is affiliated with the Tax Policy Center and the Program on Retirement Policy. He also writes a tax and budget policy blog called TaxVox, which is available at Forbes.com. Before joining the Urban Institute, he was a senior correspondent in the Washington Bureau of Businessweek.

Background

Bio

Urban Institute

TaxVox blog

Caring For Our Parents, by Howard Gleckman

Long-Term Care and Cognitive Decline

“Is Long-Term Care a Predictable Need, or an Unexpected One?” by Howard Gleckman, Forbes.com, April 15, 2022.

“The U.S. Needs to Help Seniors and Their Families Navigate Long-Term Care,” by Howard Gleckman, Forbes.com, Oct. 11, 2022.

“The Quiet Struggles With Those Living Alone With Memory Loss,” by Howard Gleckman, Forbes.com, July 18, 2023.

“Which States Provide the Best—and Worst—Long-Term Care Services?” by Howard Gleckman, howardgleckman.com, Oct. 2, 2023.

“Why Are Care Delivery Models for People With Dementia Developing so Slowly?” by Howard Gleckman, howardgleckman.com, June 27, 2023.

“FDA Has Approved the Anti-Alzheimer’s Drug, Leqembi. What You Need to Know,” by Howard Gleckman, howardgleckman.com, July 6, 2023.

“Experts Raise Questions About the Safety of Anti-Alzheimer’s Drug Leqembi,” by Howard Gleckman, howardgleckman.com, April 25, 2023.

“Aging in Place Is all the Rage, But It’s Not Easy,” by Howard Gleckman, Forbes.com, March 21, 2022.

Cost of Care

“Medicaid Will Pay for a Common Alzheimer’s Test But It May Not Be Reliable,” by Howard Gleckman, howardgleckman.com, Jan. 9, 2024.

“Why Medicare Is Right to Negotiate Drug Prices,” by Howard Gleckman, howardgleckman.com, Aug. 30, 2023.

“The Biggest Barrier to New Anti-Alzheimer’s Drugs May Be Cost, Not Medicare Rules,” by Howard Gleckman, howardgleckman.com, June 14, 2023.

“The War Over Whether Medicare Should Pay for new Anti-Alzheimer’s Drugs,” by Howard Gleckman, howardgleckman.com, May 17, 2023.

“The U.S. Predicts Big Increases in Skilled Nursing and Long-Term Care Costs,” by Howard Gleckman, howardgleckman.com, April 14, 2023.

“Should You Enroll in a Medicare Advantage Plan?” by Howard Gleckman, howardgleckman.com, Nov. 1, 2022.

Government and Policy

“CMS’ New Transparency Rule Can Help ‘Weed Out a Few Bad Actors’ but Won’t Impact Deals Much, Other Factors at Play,” by Shelby Grebbin, skillednursingnews.com, Dec. 6, 2023.

“Forbes’ Gleckman: Biden’s PE Ownership Scrutiny Is ‘Two Beats Behind,’” by Amy Stulick, skillednursingnews.com, April 28, 2022.

“Who Really Owns Nursing Homes, and How the Feds Are About to Learn More,” by Howard Gleckman, howardgleckman.com, Nov. 27, 2023.

“Should State Long-Term Care Insurance Funds Invest in Stocks?” by Howard Gleckman, howardgleckman.com, June 22, 2023.

Caregivers

“Forget National Caregivers Month. Think About What Family Caregivers Need,” by Howard Gleckman, howardgleckman.com, Nov. 7, 2023.

“For the First Time, Traditional Medicare Will Pay to Support Family Caregivers,” by Howard Gleckman, howardgleckman.com, Aug. 23, 2023.

Other

Lotsa Helping Hands

Medicare.gov

Five-Star Quality Rating System

Transcript

(Please stay tuned for important disclosure information at the conclusion of this episode.)

Christine Benz: Hi, and welcome to The Long View. I’m Christine Benz, director of personal finance and retirement planning for Morningstar.

Amy Arnott: And I’m Amy Arnott, portfolio strategist for Morningstar Research Services.

Benz: Our guest on the podcast today is Howard Gleckman. He is the author of a book called Caring for Our Parents and an expert on the topic of aging and caregiving. Howard is also a senior fellow at the Urban Institute where he is affiliated with the Tax Policy Center and the Program on Retirement Policy. He also writes a tax and budget policy blog called TaxVox, which is available at Forbes.com. Before joining the Urban Institute, he was a senior correspondent in the Washington Bureau of Businessweek.

Howard, welcome to The Long View.

Howard Gleckman: Thank you. It’s a pleasure to be here.

Benz: We’re thrilled to have you here. This is a topic that we’ve been wanting to delve into for some time. Before we get going, there is a lot of confusion about what we mean when we say long-term care. Can you clarify?

Gleckman: It’s the personal supports that people with chronic illness need to live the best possible life they can. So, it’s not healthcare. It sometimes accompanies healthcare, but it isn’t medical care. It’s personal assistance. It’s help with what they call activities of daily living, which is getting around your home, bathing, eating, that sort of thing, even things like balancing a checkbook, getting to the doctor, making sure you’ve got good nutrition—all of those issues all fit in the long-term-care bucket.

Arnott: Let’s talk about the growing need for long-term care. You’ve said that a big reason is that medical advances have outpaced our ability to provide long-term care for older adults. Can you expand on that?

Gleckman: It’s an interesting thing because people often talk about—you hear these phrases about the crisis of aging and the senior tsunami and all this stuff to make it sound like it’s a bad thing. But in fact, it’s a wonderful thing that medical technology has made it possible for people to live much longer lives in old age. It’s an interesting thing. Life expectancy has doubled in the last 120 years since 1900. It’s just remarkable. And that’s all good. The problem is that we now have, of course, because of the baby boomers, a growing aging population. They’re living much longer than they ever did. And when they get sick and they need this kind of personal support, we don’t have a system in place to help them. We’re great if you need the most sophisticated, cutting-edge healthcare technology. We’re not so good if you need somebody to help you get to the bathroom.

Benz: Can you talk about how cognitive decline fits into all of this? Because as far as I understand it, longer life expectancies lead to increased incidence of cognitive decline. Like the longer we live, the more likely we are to have cognitive decline. And cognitive decline is one of the main factors that seems to be driving the need for long-term care. So, can you talk about how that fits in here?

Gleckman: When you talk to long-term-care insurance actuaries, they will tell you that half of the claims are for people with dementia of some kind. The interesting thing to know is that dementia is very much, as you say, a disease of old age. If you put incidence of dementia on a graph, what it will look like is essentially flat until age 75 or 80. And then at 80, you get a dramatic increase in incidences of Alzheimer’s and other forms of dementia. It’s not to say people don’t get dementia at earlier ages, but it’s very rare. So, this very much is a disease of old age. And the reason there is so much more dementia now than there used to be is because people didn’t live long enough to get it. And now they are.

Arnott: Speaking of cognitive decline, there are some new Alzheimer’s drugs on the market. And we understand you’re not a doctor, but do you have an opinion about the data that we’ve seen so far on their effectiveness as well as what the costs look like?

Gleckman: This is a fascinating topic and really one of the most important issues that people are facing today. For 30 years, drug companies and academic researchers have been trying to figure out how to, if they slow the decline or maybe reverse or maybe prevent diseases like Alzheimer’s disease and other kinds of dementias, and they failed. They had no success. There were well over 100 drug trials and none of them succeeded. And in the last couple of years, there has been some limited success.

I’m going to try to not geek out and get too technical here. But the hypothesis behind Alzheimer’s disease was that people with Alzheimer’s had an excess of a protein in their brain. It was called amyloid beta. And when they did autopsies of people with Alzheimer’s disease, they opened up their brains and they saw lots of this amyloid beta. So, the theory became, if we can eliminate the amyloid beta, we can maybe address Alzheimer’s disease. Well, in the last couple of years, drug companies have now developed two drugs that have been approved by the FDA that do actually a very good job of removing the amyloid from people’s brains. So that’s great news. Unfortunately, even when you do remove most of the amyloid from their brains, it does not in any way reverse the damage that’s been done by Alzheimer’s disease. And all it does is it slows the progression of the disease and maybe not even slow it by very much. That’s still a matter of controversy. The studies are uncertain about this, and we don’t know over a long period of time what’s going to happen. So, what we have is we have a series of drugs that do a great job of removing this protein from your brain, but they don’t do such a great job of actually providing clinical benefit to people with Alzheimer’s disease.

The other thing that’s important to know is the research studies were done on people with very early stage dementia and very early stage Alzheimer’s. And we don’t really do a very good job of measuring their cognitive decline so that when you have a drug that slows the progression of disease, you really don’t know by how much because you really don’t know the baseline that well. The other issue about these drugs is they are dangerous. The drug trials have shown that a significant fraction of people who take this drug will have brain swelling and even brain bleeds. Most of those brain bleeds are trivial; they don’t really matter much. People won’t even notice them. But in a few cases, they’re severe enough that people died. And one of the big challenges of the state of the research now is we don’t really know enough to understand why it is that some people get these bleeds, and some people don’t; and why some people get the bleeds die and some people have no effects at all.

Then there’s the cost. The latest drug, which is called Leqembi, is going to cost $26,500 a year, and you have to take this drug for your whole life. Medicare has agreed to pay for it, but because it’s a Part B drug, not a Part D drug, so it’s not the kind of drug that you get at the pharmacy. It’s an infusion. So, you have to go to an infusion center and get this. You have to go twice a month. And even if you’re covered by Medicare, you have to pay a 20% copay, which means you’ll have to pay $5,200 a year out of pocket.

So, there are a lot of issues here. One of the issues that I’ve questioned is whether or not this is the best use of $26,500 a year by Medicare. Could Medicare do better by beneficiaries who have cognitive decline to provide other sorts of services, which traditionally it has not? And what could families do with that $5,200 that they’re going to be spending on a drug that may or may not help them?

Benz: Going back to long-term care and the extent to which it is covered or not covered by insurance and Medicare, can you discuss that component? Because I feel like there’s a ton of confusion on that subject as well.

Gleckman: There is so much confusion about this and it really doesn’t help the policy debate and it makes it very hard for consumers, for older adults. So let me try to explain it. Medicare, traditional Medicare, the kind of fee-for-service Medicare that about half the Medicare beneficiaries have, basically does not pay for long-term care at all, full stop. If you’re in a Medicare Advantage plan, which about half of the Medicare population is now, they are paying for some very limited kinds of supports and services. They may pay for home delivery of food, or they may pay for nonmedical transportation to the grocery store or something like that. They may pay for some other kinds of services, but the benefits are very limited. They’re limited currently to $30 or $50 a month where a long-term care normally costs hundreds of dollars a day. So, while there are some new experimental transitional services that Medicare Advantage plans provide, it’s fair to say that they don’t provide very much care. And as I say, if you’re in traditional fee-for-service Medicare, Medicare doesn’t pay for it at all.

Medicaid, which is the healthcare program for low-income people, does pay for long-term care, but you have to be very poor, and you have to be very sick. Middle-income people generally don’t qualify for Medicaid long-term supports and services. So generally, whatever care they get, they have to pay for out of pocket. That’s really the only choice they have, so they have to either save for it, or have to have long-term-care insurance, or an annuity, or have a relative or a friend who is very generous. Otherwise, they’re out of luck.

Arnott: You mentioned that Medicare does pay for some short-term services, and I think part of the confusion arises from the fact that people can receive some level of Medicare-provided care after a qualifying hospital stay, which you often hear referred to as rehab. How is that type of care different from long-term care?

Gleckman: That is, as you say, that’s rehabilitation, so it’s sometimes called post-acute care. So, you go to the hospital—let’s take a stereotypical example: You fall, and you fracture your hip. You go to the hospital, the hospital repairs the hip, and they make a decision that you’re going to have to get rehab for a couple of months to get back on your feet and be ready to go. Medicare will pay for up to 90 days, at least for some of the rehab that you need, in a nursing home. They may also pay for some rehab at home, but a limited amount of it. They may also pay for things like if you had surgery, they may pay for a visiting nurse who comes in and provides wound care—changing bandages and that sort of thing. But none of that is long-term care. That’s actually the healthcare assistance that you need after hospitalization. But it’s very different from the permanent care that you might need because you have long-term-care needs, you have a chronic condition, you have something like cognitive impairment or a heart disease or something like that. So, they’re similar—somebody comes into your home and they’re wearing scrubs, so you feel like it’s the same thing; but it isn’t. It’s very different. And the rules are quite different.

Benz: When people hear long-term care, I think they often think of nursing homes. But you’ve written that most care isn’t delivered in nursing homes these days. It’s delivered in other settings. Can you discuss where and how people do receive long-term care when you look at the data?

Gleckman: More or less, rough numbers, 12 million people currently require long-term care, sufficient long-term care that they need paid assistance. Of that, maybe 700,000, 5% or 6%, are living in nursing homes. Another 5% or 6% are living in assisted living facilities. And we can talk about those because there’s a lot of confusion about what assisted living is, but they’re living in assisted living facilities. Everybody else, 85%, 90% of people who are receiving long-term care, are getting it in their homes. It may be in the home that they raised their kids in, it may be in a senior living community, but it’s in an independent living situation, and that’s where most people get their care. So even though we focus almost obsessively on nursing homes, that really isn’t the place where most people are getting care.

Arnott: So, with such a high percentage of people receiving care in their homes, and I know that a lot of older adults have a very strong preference for aging in place—they want to be able to maintain their long-term residence and their independence. But is that always the best solution? And how can an adult child broach the topic of a different solution with their aging parents if staying at home isn’t working anymore?

Gleckman: It’s really hard. One of the things to keep in mind for children of aging parents is the need for some sense of independence, some sense of control over their lives. And when you say to somebody, we’re going to take away the car keys, we’re going to make you move to a facility, one of the things you’re doing is you’re taking away that sense of independence. And adult children need to think about this from their own perspective. How would they feel if somebody came to them and said, “You can’t do the things that you always thought you could do”? So emotionally, it’s very difficult.

As far as the question of being cared for at home, yes, everybody wants to stay home. Nobody wants to move to a facility. It’s terrifying. They think about the stereotypical nursing homes, and they get scared. But the reality is that living at home is, for many people, a challenge. Let’s talk a little bit again about cognitive impairment. Imagine that you are a widow living alone and you’re becoming forgetful. You’re wandering. You’re forgetting to turn the burners off on the stove. You can’t remember that you need to go to an appointment. It’s actually not safe for you to live at home. And you have to think about other alternatives. The other challenge is, if you are able to get paid care, it’s a very inefficient way to deliver care. Imagine somebody who is living in a suburban cul-de-sac, and they need a home-care aide. That home-care aide is going to spend maybe an hour sitting in traffic just getting from their last client to you. And that’s not a very efficient way to deliver care. And because we’re now facing a big shortage of home-care aides, that becomes costly, and it doesn’t help anybody. So that’s another reason why trying to stay at home is a challenge.

The last thing I’ll mention is it can be very lonely. Imagine, again, a situation where you’ve lived in the suburban cul-de-sac, you raised your kids, you had friends in the neighborhood, and now your friends have all moved, or they’ve died, and you’re now living in this neighborhood and your neighbors are all different. They’re young families with kids and they don’t know you and you don’t know them. And your friends who may now live 20 miles away can’t drive anymore because they’re having trouble seeing. So, it becomes a very lonely existence. And there are good reasons why, at least in some cases, people might want to think about living in some alternative setting. And like I say, it may be independent living in a senior community, it might be just moving to an apartment, but something different than aging in place. Again, most of us can do it for a while, but there comes a time when many people just can’t.

Benz: Are there any innovative solutions on the horizon for long-term care, maybe intergenerational communities that are designed to offer a more organic support system for aging adults?

Gleckman: It shouldn’t be a surprise to people that there is no silver bullet. There’s not going to be a single answer for everybody because there’s not a single housing answer for people who are younger. Some of us want to live in cities, some of us want to live in the country, some of us want to live in big apartment buildings, some of us want to live in single-family homes. And it’s the same way with older adults. We shouldn’t be surprised about that. So, yeah, there are lots of alternatives that people are exploring. There are the senior living communities. There are things called continuing-care communities where you get independent living, and assisted living, and memory care, and maybe a nursing home all on the same campus. There are active senior communities maybe built around the golf course. So, there are those traditional solutions that have been around for years and years.

But there are also multigenerational programs. There are things called cohousing, where you may get people of different generations all living in the same building. And part of what they’re buying into is the opportunity to help one another. So, you might have a situation where you have an older adult who maybe isn’t driving anymore but can help babysit some kids. And maybe the parents of those kids can in return say, we’ll go shopping for you. Can we pick something up at the grocery store? In a less formal way, there has been a rise in recent years of what they call senior villages. And these are people who are aging in place who are living in their communities, but they’ve gotten together in nonprofit organizations, where again, they agree to help one another. There may be a central office that can provide advice on where to get everything from a home-care aide to a plumber. Or maybe people who just come and visit, or again, agree to just do a little shopping or give you a ride. And these are communities where people support one another. This can happen in geographical spaces. It can happen in, say, faith communities where you can have people in a church or synagogue or a mosque who help one another out. The synagogue that I go to, we have a program called Lotsa Helping Hands where people get on a calendar and just agree to help somebody with a ride, or a friendly visit, or bringing them a meal if they need it. So, there are lots of ways that we’re looking at this. The big challenge is when you start thinking about housing alternatives that also provide some support for people who need assistance, that starts getting expensive. And what we don’t have is a system in place that pays for it.

Arnott: Just before we get any further, we wanted to clarify some of the terminology related to the various types of long-term care. How does assisted living differ from a skilled nursing facility, for example?

Gleckman: We know what a skilled nursing facility is. It’s a facility that has a federal license to provide care. And I should say that one of the interesting things about nursing homes is there are actually two different facilities in one building. There is the post-acute rehab that we were talking about before, and that’s quasi-medical care. And then there’s what they call long-stay, and those are the people who are living in a nursing home, essentially, for the rest of their lives. So, nursing homes actually provide both of those kinds of services to very different populations. It may be that some people go from rehab to long-stay, that happens frequently, but generally there are people with different needs and very different situations. But that’s what a nursing home is. A nursing home is a facility with a federal license to provide this kind of care.

Assisted living is something else again. There’s no agreed-upon definition of what it is. Every state treats it differently. Every state regulates it differently. The easiest way to explain it is, it is a place you live where you get some assistance. The amount of assistance varies from place to place. Often with assisted living, the facility is marketed in what they call tiers. So, if you go into assisted living with minimal care needs, that might be Tier 1, and you’ll pay a certain amount for that. As your care needs increase, you may go into Tier 2 or Tier 3 or Tier 4, and then the amount of assistance you receive is greater, and the amount of money you pay is higher. And just to be clear about that, you don’t actually physically move. You’re staying in the same assisted living room, but you’re getting this additional care. So, it might start with common meals. Everybody goes down to the dining room and eats together. Maybe you need help with medication management, so somebody helps remind you that it’s time to take a pill. Higher level of care—maybe you need somebody to bathe you or to transfer you from a bed to a chair. And then you may need a higher level of care, at which point they may say, we can’t keep you anymore, and you’re going to have to move to another kind of facility like a nursing home.

Benz: Sticking with the institutional long-term-care facilities, the COVID experience was devastating to people in those settings. I think you were someone who was actually writing about the toll that was taken by people in skilled nursing facilities during the COVID experience. Can you talk about what we learned from that tragedy and maybe for people who haven’t been following, talk about the loss of life?

Gleckman: It was terrible. It is hard to overstate how awful it was. The government estimates that 200,000 residents of nursing homes died in the pandemic. And that’s probably an understatement. And those are people who died from COVID. The other thing that we have learned in recent years is that it wasn’t just the virus that was killing people. It was the loneliness. People may remember there was a period of time where the government basically locked down nursing homes. They said nobody in, nobody out. And people were dying of loneliness. People were stuck in their rooms. They couldn’t leave. They couldn’t have meals with their friends. The only people they saw every day were the aides who came in basically in moon suits. They had no human contact. And we’ve seen some interesting research in recent months and recent years about the toll that that took on the residents. So, hundreds of thousands of people died.

Part of what we did wrong—things like this don’t happen very often, fortunately, and we have to learn from our mistakes. But one of the things we did wrong was—remember, we talked a few minutes ago about how nursing homes are two different kinds of services. One of them are the long-stay and one were the post-acute, post-hospitalization. We were taking people who had COVID, we were getting them out of the hospital because they needed the hospital beds, and they were moving them into nursing homes. So essentially what they were doing was they were saying, we’re going to take this building that is already housing the most vulnerable long-stay residents you could possibly imagine—these are people who are very sick—and we’re now going to put in the same building people recovering from COVID, who may still have it. That turned out to be a really bad idea. Some of us were warning nursing homes and states to not do this. But the states were so desperate to get people out of hospital so they could open up hospital beds that they did it anyway. And it probably accounted for at least some of the deaths.

The other thing that accounted for many of the deaths were the aides—and about 3,000 aides died from COVID during the pandemic as well. But remember one of the real challenges, especially in the early days of the pandemic, was we didn’t understand that you were most infectious before you were symptomatic. So, you had aides who didn’t know that they had COVID who were going to work, and they were spreading the disease to their vulnerable patients. And they didn’t even know they were doing it. There also were situations where you had aides who often because their pay is so low and because they’re working part-time, work multiple jobs. So, what happened in some cases was they went to work in facility A where they picked up COVID and then they went later that day to facility B where they spread it around. Again, this was nobody’s fault. They didn’t know they were doing it, but the consequence was many, many people were getting sick. So, taking an extremely infectious virus and putting it in a place where people are very vulnerable and in very close quarters, what a surprise, lots of people died.

Arnott: Really a devastating experience, as you said, in terms of both loss of life and loss of quality of life. We saw nursing facility usage decrease significantly during the pandemic. Has it recovered or are those facilities still struggling?

Gleckman: Yes, and yes. It has recovered. It’s much better than it was at the worst of it where occupancy rates were 70% and lower. Now they’re back up into the 80s. But for many facilities, they’re not good enough. So, the facilities are really challenged. The other problem that they’re having post COVID—and this was a problem before COVID, but it’s worse now—is staffing. Some nursing homes are having the problem where there actually is demand, where consumers actually want to move into their facilities. But the nursing homes don’t have the staff to provide the services that they need. So, nursing homes have had to pay more to get people to work there, and that’s raised the price.

One of the problems is with nursing homes is that most of their payment comes from the government. It either comes from Medicare, which pays for that post-acute rehab care that we were talking about, or it comes from Medicaid that pays for the long-stay. It used to be that the business model for nursing homes was they would accept lower-than-necessary payments for Medicaid for their long-stay payments because they were receiving higher payments for Medicare. And they called this cross subsidy. So, the government was paying them too much for their Medicare payments and not enough for their Medicaid payments, but it all worked out in the end.

What’s happened in recent years is the Medicare payments have gone down because more and more Medicare is being provided by those managed-care companies that are negotiating much tougher deals with the nursing homes. So, Medicare Advantage is paying nursing homes 20% less than fee-for-service Medicare does. And the states who pay for Medicaid are not increasing the Medicaid payments sufficiently to keep up with the added costs that nursing homes have, both in terms of labor costs, and PPE, and all the environmental services they need to keep the place safe. So, costs are going up, payments are not going up with them, and many nursing homes, particularly not-for-profit nursing homes, are going out of business because they just can’t make it work.

Benz: I wanted to discuss the role of incentives and profit-making in all of this in the realm of long-term care. You often hear private equity cited as the demon in this situation, a negative force in this space. Can you talk about who actually owns and operates long-term-care facilities, and also how that complexion has changed over the past few decades?

Gleckman: About 70% of nursing homes are for-profit and about 30% are not-for-profit. So, think about those two different buckets. The not-for-profits, many of them are still owned by faith-based organizations. Some of them are very small. You may have an order of sisters who own one nursing home that has 30 residents and that’s all they do. Some of them are big health systems that may have 20 or 30 or more nursing homes. And the for-profit side, this private equity thing is a canard. It never was true. It is less true than it ever was. Probably at the maximum, 10% of nursing homes were owned by private equity firms. And by private equity, just to keep the language straight, we’re talking about investment companies that get money from many different investors and put it in some package of investments for their investors. Those large private equity firms, and you think about Carlisle, and BlackRock, and people like that, never were very much in the nursing-home business and they’re in it less now than ever. Maybe 5% of nursing homes are owned by private equity.

Some nursing homes are one-offs. It’s a family business—husband and wife, and they own one nursing home or maybe two nursing homes in their community. Then there are an increasing number of chains, medium-sized chains that may own somewhere between say 10 and 30 or 40 nursing homes. Some of those are very well-run. Nobody’s got a complaint. But some of those are the really bad actors that you hear about—people who basically are abusing their residents to maximize their profits. And if there’s a problem in the for-profit world, that’s where a lot of the problem is, it’s in those medium-sized and even large chains.

The other thing to keep in mind is that often there’s a difference between nursing-home owners and nursing-home operators. The other big owners of nursing homes are real estate investment trusts. And what they do is they may own hundreds of nursing homes and then they lease the nursing homes to an operator, and those operators often are those chains. The operator has to pay a lease payment every month to the REIT, to the real estate investment trust, and then pay its expenses and then make a profit. And that’s where a lot of the controversy is as well. And it becomes a very challenging situation when consumers don’t actually know who owns a nursing home, or for that matter, who operates a nursing home. So, like a lot of real estate, these facilities are run by limited partnerships and the limited partnerships may be owned by another limited partnership that’s owned by another limited partnership. And getting to the bottom of who all that is is very difficult. The federal government just in the last few months has issued new regulations, which is going to require public disclosure of who the ultimate owners of these facilities are.

And one reason why this is very important for consumers is imagine that you have an owner of, let’s say, 20 nursing homes in three states. And let’s say that owner has 10 of those nursing homes that are real problems that have been cited by the government for poor care, poor quality, that sort of thing. And now let’s say that that nursing-home chain buys a facility in your neighborhood. It would be good for you as a consumer to be able to look and see what that operator’s historical record is. Has it been cited, has it had problems? Right now, you can’t do that. All you know is the XYZ limited partnership bought up the nursing home down the street. You have no idea who they are. You don’t know what their track record is. With these new government regulations, it may soon be possible for consumers to know who actually owns it and what their track record is. And that will be very helpful.

Arnott: So, with this really fragmented landscape in terms of different types of ownership, different operators, different incentive structures, and it sounds like limited transparency in a lot of cases, how should consumers go about trying to find a facility? Are third-party ratings helpful? Or are there other things that people should be looking at to locate facilities that are higher-quality and more patient-centric?

Gleckman: So, this is really hard. The government has something called Nursing Home Compare, and you can go on their website—it’s sometimes called the Five-Star system—and you go on the government website, Medicare.gov, and they have ratings. You can see stars—one through five, and it gives you some sense of the facilities. The problem with the rating system is what it really is rating is not quality; it’s rating safety. So, it’s rating things like falls and infections, and that sort of thing. And that’s useful information. That’s good to know, but it’s not sufficient. You really need to know more than that. You could go online, and you’ll find some of the websites that purport to provide this information. It’s important to know that many of those websites are pay-to-play, that they are getting money from facilities to make referrals. So, that’s probably not a great place to go.

There are other more independent resources. I’m on the board of a community-based organization in Maryland that has what they call an Information Referral Service. We provide independent information and referrals to people about facilities. If you can afford them, there are care managers who are paid professionals who are independent, who will provide you with the information you need and will refer you to good facilities in the community.

But nothing really substitutes for going into a facility and looking around and talking to people. What I often recommend to people is ignore the lobby. There is a phrase in both the nursing home and senior living in general called buying the lobby. And what happens is you walk into one of these places and you see the flowers and you see the beautiful dark wood and the nice furniture and all the rest of it. And that’s all there so that the adult children of the prospective resident don’t feel guilty about putting mom in the facility. But that doesn’t tell you much. What you really need to know is what’s happening behind the lobby, what’s happening in the rooms. So, what I recommend to people is tell the marketing people, we want to walk around, we want to talk to residents, we want to talk to staff. You get a good sense of a facility by talking to the staff people. Looking around, is the staff hanging around behind the nurses’ station complaining to each other or are they actually on the floor talking to the residents? Did they know the residents’ names? Did the residents know their names? When they walk down a hall, did they stop and say hello to Mrs. Smith and Mr. Jones or did they just walk down the hall and say, I just got to get to my next job, I don’t care. So, I think all those things are the sorts of information that you really need to make a decision.

The other thing I suggest to adult children all the time is assuming that your parents are cognitively able to do it, get them involved in the decision-making process. The last thing you want to do is come home and say, “Hey mom, we’re going to move you into this facility.” Again, how would you react if somebody did that to you? Instead, what you might want to do is say to mom, “Look, I think we’re getting to the point where you can’t really take care of yourself at home. Let’s together go look at some places and you tell me which one you like.” And do that. Let mom talk to the residents, and what a lot of places will do is they’ll let her have lunch or have dinner at the facility and let her make the choice to the degree that that’s possible.

Benz: Paid long-term care is egregiously expensive, whether delivered in some sort of an institutional setting or at home. It seems to be getting more expensive. Is that largely a function of just a caregiver shortage that we have here in the U.S.?

Gleckman: Yeah, a lot of it is labor costs. It’s labor costs, it’s regulatory costs, and it’s real estate. Again, post-COVID, one of the things that the facilities have to do is they have to do a lot of internal redesign so that they can make sure that something like COVID doesn’t happen again. So, they have to change their HVAC, their air conditioning and heating systems, to make sure that the airflow is good so it’s not spreading viruses around. A lot of facilities still have double rooms or even quads where two or four people may be sharing a room together. Again, in an environment where there’s disease, that’s not a very good situation. And remember, this isn’t just about COVID. COVID is still out there, not nearly as severe as it was, but we have flu, we have RSV that we’ve been talking about. There are diseases—norovirus, which is an intestinal disease, which often runs rampant through nursing facilities. So, there are a lot of reasons why you have to improve the environmental situation to prevent these kinds of viruses from spreading. So, that’s expensive. But the main thing is labor costs. Labor cost has just gone out of sight and not just hourly pay but benefits. And it’s very expensive. It was already too expensive and now it’s even more expensive.

Arnott: So, with those rising costs, what are some of the key ways that people can pay for long-term care? You’ve got self-funding for wealthier individuals, Medicaid on the other end of the spectrum, long-term-care insurance. Are there any other options?

Gleckman: I wish there were. There’s savings, right? Often, when I talk to consumer groups, somebody will stand up and say, well, I don’t need long-term-care insurance. I can save for this. And the answer is, yes, you can, but you probably won’t. Americans are terrible savers. You think about it. You ought to start saving for this or if you want to buy insurance, buying insurance for this when you’re in your 30s or 40s. But when you’re in your 30s or 40s, you’ve got all these other things to think about. You’re thinking about a mortgage. You’re thinking about saving for college for the kids. You’re thinking about buying a new car, paying for health insurance. You’ve got all these other expenses. And imagining your costs at 80 is kind of too far down the road. So, we don’t think about it as much as we should.

But to throw out one more statistic, more than half of all Americans over age 65 will need some level of significant long-term care before they die. So, you can sit down at the dinner table and look at the person next to you, and one of you is going to need this care. But you don’t know which one. And that’s the huge challenge here. Most people will get away with not needing very much long-term-care costs. But there’s going to be a fraction of people who are going to need a quarter of a million dollars or more in long-term care. And where they’re going to get it? Most people don’t have that kind of savings. So, where do you go? And the answer is, nowhere. So, if you don’t want to put yourself in a situation where you have no options, if you want to have choices in your old age, you need to think about saving, you need to think about something like long-term-care insurance.

And there are a couple of versions now. The old stand-alone long-term-care insurance policy is almost defunct. Maybe they’re selling 50,000 policies a year now in the entire country. People just don’t want them. And they don’t want them for an odd reason. They don’t like insurance. So, they don’t like the idea of, I’m going to have to pay premiums over the years and not get any benefit. And you think about that and say, so you actually aspire to have to live in a nursing home for a long time so you can get your benefits? But that’s how people think.

The other thing I don’t like about long-term-care insurance policies is the premiums are increasing year over year. They’ve become very, very expensive. And what people fear is that they’re going to get to the point where they can’t afford to continue to pay the premiums and they had paid all these premiums over the years and they’re not going to be able to get a benefit. So, they’re out of fashion. The companies don’t want to sell them because the risk is too high, and consumers don’t want to buy them. There are what they call combo products or hybrid products that can buy long-term-care insurance with annuities or with life insurance policies. Those are a little more popular. But they really benefit only upper-, middle-income people. If you’re a middle-income person and then you can, say, buy $100,000 annuity with a combo product, maybe it will provide $600, $700 a month in benefits, and that’s just not enough. Not even close to enough. So, it’s a challenge to find the kind of product that people need. The other issue that comes up a lot is home equity. There have been efforts over the years to try to figure out some kind of product where you can tap your home equity and use that to pay for long-term care. But nobody has really come up with something that’s satisfactory where the fees aren’t so high that people don’t want to do it.

Benz: I wanted to ask about the role of interest rates in this. Thinking about the insurance products, it seemed like that had been one thing that had been a real headwind for insurance companies that interest rates were so low. They’d taken these premiums. They can earn hardly anything on the person’s money. Can you talk about whether rising interest rates on safe investments maybe help the long-term-care insurance market be a little more financially healthy?

Gleckman: Yes. So, to back up a little bit, what you said is exactly right. State regulators essentially said to long-term-care insurance companies, we will only allow you to invest in super safe bonds. We won’t allow you to invest in mixed portfolios that include some equities and other kinds of investments. And when you stop and think about that, you can understand on one hand why you want to do it, because you’ve got people who are paying these premiums. They’re not going to get the benefit for 30 or 40 years, and you want to be sure that the portfolio is there to pay their benefits when they need it. On the other hand, who would put together a portfolio of investments that are not going to pay off for 30 or 40 years and only have bonds in them? That doesn’t make any sense, but that’s what the law required.

So, as you say, if you’re an insurance company and you’re buying new bonds, those bonds are paying higher interest rates, and that’s good, and over the long period of time, you’ll be able to get a bigger return. The problem is that a lot of these insurance companies were stuck holding these very low-yielding bonds, which are now worth nothing because of the rise in interest rates. So, in some ways, it’s a little better for them, but in some ways, it’s much worse. So, the rise in interest rates isn’t helping them very much.

The biggest problem is the risk. The actuaries use this phrase they call tail risk, and it’s become a huge challenge for the long-term-care industry. Remember when we talked before about the fact that half of the population is going to need some care? The actuaries can figure that out pretty well. What they can’t figure out is how long people are going to need the care for. Cognitive impairment is one of those things. It’s hugely challenging to figure out how it’s going to progress. What’s happened is you had a population of claimants, of people who have long-term-care benefits, who are living much longer than the long-term-care industry ever thought they would. To pay those claims has cost the industry much more than it ever expected.

That’s resulted in two problems. One of them is that the premiums have gone up, but the bigger problem is that most insurance companies have gotten out of the business. Fifteen years ago, there were 100 companies that were selling long-term-care insurance, and now there’s barely a dozen, because that risk was just untenable. Particularly for insurance companies that were publicly held, the shareholders basically said to them, you’ve got to be kidding. Just get out of this business and a lot of them have.

Arnott: We’d also like to talk a bit about the caregiving dimension. This is something that impacts millions of families in trying to care for elderly parents or other relatives. Much of the long-term care delivered in the U.S. today is by unpaid caregivers who are often family members and, in a lot of cases, adult daughters. Can you discuss the toll that takes on caregivers’ lives both physically, emotionally, and financially?

Gleckman: Sure. About 80% of care is provided by family members, and most of that is provided by family caregivers without any paid help. So essentially, it is a spouse or an adult child who is taking care of their parent alone. I did it, and I should say in the support of my gender that actually about 40% of long-term care is provided by men. That number seems to be increasing a little bit. Men tend to do different kinds of work—sons tend to do different kinds of work than daughters. But we’re not completely irresponsible in this situation.

But you’re right. The stereotypical family caregiver is a 50-something woman who is caring for a mother. That is, as you say, difficult in three dimensions. It physically is very difficult. Imagine somebody without training who’s got to do things like physically picking up mom and moving her without dropping her. It can result in back injuries. Emotionally, it’s extremely difficult. You try to balance a job and watching your parent decline and dealing with ongoing medical crises. It takes a huge toll. I can tell you that when I did this after my dad died, I felt terrible. One of the first things I did after my dad died was, I went to my own doctor and told him how sick I felt. And he explained what was going on, and he was right. It all went away. But it took a lot out of me.

Then there’s the financial cost. The financial cost is partially the money you pay out of pocket for the care for your parent. But for that stereotypical daughter, it is lost lifetime income. Very often, that daughter will have to go part-time at her work or maybe even quit her job to care for her parent. And if you’re a 50-something woman who has to try to get back in the workforce after mom died, you are almost certainly never going to get a job as good as the one you left. There was one study that was done some years ago that estimated that the lost lifetime income of a woman who leaves her job to care for a parent is $300,000. That means lost wages, lost Social Security benefits because you have those quarters you’re not paying into, a lower 401(k) because you have that period of time where you weren’t contributing. So, it’s a huge burden.

I will say that when I did it, it was the hardest thing I ever did in my life, but it was also incredibly rewarding. I had an opportunity to care for my parents who cared for me, so that was great. But it was not easy.

Benz: You are already very focused on long-term care and caregiving and aging before you cared for your parents, it sounds like. So, can you talk about how your thinking changed on this whole space through that hands-on experience of seeing through care for your parents, and it sounds like your in-laws as well?

Gleckman: It’s an interesting thing. I had a conversation recently with another friend who also went through this situation. She is a long-term-care expert. She knows as much about this as anybody in the United States, and she had to care for her dad. And she said, I had no idea. I sort of knew in a theoretical way what it was like, but then I saw it day to day. I saw how the system was failing my dad and failing my mother and failing me. And I had the same experience. You look at the system when you’re dealing with it day to day, and you say to yourself, this is just nuts. This is not only not helping the person who needs the care and their family members, it’s making it harder trying to communicate with the health professionals who don’t know anything about long-term care. Trying to get the long-term-care people to coordinate what they’re doing with one another and with the healthcare people is a huge challenge. Trying to deal with medication and getting that right is a huge challenge. Most states don’t have any kind of family leave. So, the inability to just take some time off and try to get some of this stuff under control makes it needlessly difficult. And then, of course, you have the emergencies, the never-ending unpredictable phone calls that you’re getting—something went wrong, an aide didn’t show up, you got to get mom to the doc, they got the wrong medications. It happens all the time, and it just wears you down. And we don’t have a system in place that makes it at least a little bit easier for people to say nothing of actually taking care of people. We’re so far short of that, I don’t even know how to say it.

We pretend this isn’t a problem. It’s a funny thing. In the United States, we provide enormous amounts of services to parents of young children. There’s public school, there’s preschool, there’s all these kinds of services. But when it comes to older adults and finding ways to care for them, we feel that, well, that’s kind of your problem. And the government just doesn’t play any role. And society doesn’t play much of a role. I hate to say it, but it is a kind of ageism. It’s this kind of sense of, well, you get old, you get sick, you die. That’s kind of the way it’s supposed to be, and there’s nothing that could be done about it. But the reality is, we could make this a lot better for people. And yes, you’re going to get sick and you’re going to get old and you’re going to die, but you can do it well and you can do it poorly. And sad to say the United States does it as poorly as any developed country in the world.

Benz: Well, Howard, this has been such an illuminating conversation. We so appreciate you spending time with us today and sharing your insights.

Gleckman: Well, it’s my pleasure. I’m sorry if it’s too depressing.

Benz: It’s a tough topic.

Gleckman: It is. It’s an important story, and I’m glad you all are telling it.

Arnott: Yeah, thank you so much for taking the time to talk to us.

Gleckman: Sure.

Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Christine_Benz.

Ptak: And @Syouth1, which is S-Y-O-U-T-H and the number 1.

Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.

Finally, we’d love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.

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