ECONOMIC IMPACTS OF PROGRAMS TO SUPPORT CAREGIVERS: FINAL REPORT

02/10/2020

As the nation ages and more individuals live longer with chronic illness and disabilities, the need for long-term services and supports (LTSS) will rise. Roughly 9.8 million Americans ages 65 and older living in settings other than nursing homes need care and help with personal activities, with 2.7 million requiring assistance with at least three basic activities of daily living, such as bathing, dressing, or eating. Ninety-five percent of older adults with LTSS needs living in a community setting received help and care from unpaid caregivers. These caregiving activities clearly benefit the economy. Older adults with LTSS needs are more likely to enter nursing facilities, for example, if they do not receive family care than if they receive unpaid help from caregivers. Government programs, such as Medicaid, would have to cover some of the costs of additional paid LTSS, using state and federal funds.

Although family caregivers are not generally paid for their services, spending time helping family and friends with LTSS needs may be costly. Some caregivers may have to reduce their work hours when they provide care, switch to part-time work, or temporarily drop out of the labor force. Government programs to support family caregivers could potentially limit some deleterious effects of caregiving. Programs that provide caregivers with training, counseling, information, and respite care or that provide care recipients with some paid help could relieve family caregivers, help them provide care more effectively, and perhaps enable them to increase their paid work hours. Support programs that enable caregivers to work more could in turn raise government tax revenue, partly offsetting part program costs.

However, our results show that relatively few caregivers provide intensive care, although these intensive caregivers are most likely to experience significant caregiver burdens and conflict between employment and care responsibilities. We conclude that the macroeconomic benefits of caregiver supports on employment and subsequent economic feedback (through tax revenue) would likely be quite limited. Nearly one-third of family caregivers, and nearly one-half of family caregivers who provide intensive care without help from others, are ages 65 and older, and thus unlikely to work if they did not serve as family caregivers. The available empirical evidence suggests that relatively few younger caregivers would increase their labor supply much if they did not provide care. We found that the increase in earnings and tax revenue that might result from caregiver support programs would fall far short of the cost of providing those services.

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