In sum, the number and strength of relationships that provide informal care for our elderly are declining, and show every indication of continuing to fall. That means more loneliness and lower quality of life for our older generations, who will likely have to seek costly institutional care outside of the home and away from their loved ones.
All the while, Americans’ birthrates continue to fall. So as our senior population grows and lives longer, there will be fewer friends and relatives to provide care and financial support.
This combination of trends has implications for taxpayers, as it’s likely to squeeze federal and state budgets.
Current projections of spending on Medicare and Medicaid do not take into account social capital as a factor in formulating healthcare costs. As the JEC has also recently found, both the Centers for Medicare and Medicaid Services and the Congressional Budget Office implicitly assume that the mix of informal and formal care that today’s older Americans receive will stay the same over time. As a result, these projections could well-underestimate federal spending on long-term care.