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One of health care's highest flyers, it's set to eclipse nursing home occupancy. The catch: Only private-paying seniors need apply.
Seven years ago, after brain surgery and a fall in her home, June Rader moved into the Hallmark retirement building on Chicago's lakefront at her daughter's insistence. The 84-year-old former newspaper columnist lived there independently until last year, when she broke her wrist in another fall. Now Rader hires help from Hallmark when she wants to bathe. take a walk, or visit her doctor. "It kills me-I used to be such a walker," she says. "But I'm grateful for the help."
Rader is on the front lines of a revolution in long-term care-one that's leaving policymakers and many health care organizations behind. The elderly and disabled increasingly shun nursing homes, instead seeking the homey settings and greater autonomy of assisted living. But the comforts of home don't come cheap. Most seniors opting for assisted living pay out of their own pockets-making their living situations only as stable as their bank accounts. "When you run out of money, they throw you out," says Robert Mains, a stock analyst with Advest in Albany, N.Y. "It's as simple as that."
As states encourage people to enter these relatively cheaper settings, nursing home occupancy is declining. Some experts even predict that assisted living will eclipse nursing facilities within 10 years. Hospitals, which own a big stake in nursing homes, are waking up to the challenge. "The nursing home of the future is assisted living," says Charlene Boyd, administrator of Providence Mount St. Vincent, a hospital-owned assisted-living and nursing home complex in Seattle.
The changing face of long-term care means lawmakers must wrestle with politically painful changes to accommodate the shift-no easy feat when they're already struggling to curb Medicare and Medicaid costs. There's little public funding to help seniors pay for assisted living, and few rules ensure that such facilities meet residents' needs. The policy choices include a costly expansion of Medicare and Medicaid, stronger incentives for people to pay out of pocket or buy insurance, or a hybrid approach. Lawmakers must also decide whether to trust the market to care for frail seniors or to enact tougher protections that could stunt innovation.
Today, 1.6 million Americans...