Can paying for caregiver vacations save money?

As the baby boomers age, the responsibility for the care of many of these individuals will fall to their children.  For the elderly who have trouble running errands, dressing themselves, or even bathing themselves, having a family member as a caregiver can significantly improve the elderly’s quality of life.

Many of these caregivers get burnt out, however.  Taking care of a loved one day after day can be taxing.  Not only can the physical and mental strain wear on the caregiver, one cannot ignore the financial impact of directing one’s life to care for an elderly relative.  In fact, a study by Brenda Spillman, Sharon Long, and the Urban Institute (2007) found that higher levels caregiver stress increase the probability that the caregiver will decide to place their elderly relative into a nursing home.

In an attempt to save money by decreasing the rate at which elderly are admitted into nursing homes, the government established the National Family Caregiver Support Program (NFCSP) in 2000.  The NFCSP “provides grants to States and Territories, based on their share of the population aged 70 and over, to fund a range of supports that assist family and informal caregivers to care for their loved ones at home for as long as possible.”

The program offers 5 broad types of services.

  • information to caregivers about available services,
  • assistance to caregivers in gaining access to the services,
  • individual counseling, organization of support groups, and caregiver training,
  • respite care, and
  • supplemental services.

The respite care is especially critical.  Not only does the caregiver receive an often-needed break from their responsibilities, but the government can save money.  The respite care may convince the caregiver to provide assistance to their elderly relative for a longer time period and thus avoid an expensive nursing home stay.  Providing services rather than cash grants helps to prevent the moral hazard problem, since only individuals who are actually caring for a relative will be able to use these services.  A cash grant, on the other hand, would cause some individuals to claim they are providing caregiver services just to claim the cash grant.  Of course, the usefulness of the program depends on the generosity of these benefits and the degree to which they affect the caregiver’s decision to continue to provide care compared to sending their relative to a nursing home.

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