The Landscape of Elder Care in the United States: Part 1—Where Older Americans Live and Why It Matters
By Kelli Marquardt, Aryan Safi, and Anthony Lo Sasso
In the first installment of a three-part research series, economists from the Federal Reserve Bank of Chicago analyze the macroeconomic impacts of the United States’ shifting demographic landscape, driven primarily by the aging Baby Boomer generation. Currently, just over 2% of Americans are age 85 or older, but that demographic share is projected by the U.S. Census Bureau to roughly double by 2040. As this age structure pivots, the broader economy faces predictable macro-level headwinds, including a pronounced slowdown in labor force growth that could depress overall productivity and output. Additionally, household consumption patterns will inevitably shift away from durable goods toward essential services like medical care, health utilities, and publicly financed long-term care programs, placing intense fiscal pressure on Social Security, Medicare, and Medicaid.
Using a decade of national survey data, the authors track a notable multi-year transition toward “aging in place.” Between 2011 and 2021, the proportion of Americans age 72 and older residing in traditional community settings rose from 88% to 92.7%. Concurrently, residency rates fell from 7.6% to 5.3% in assisted living facilities and from 4.4% to 1.9% in nursing homes. While independent community living remains dominant for older adults in their seventies, residential arrangements begin to sharply diverge past age 80 as health shocks, physical limitations, or a lack of personal resources necessitate high-intensity, medically supervised, or institutional care settings.
The report highlights that these residential transitions are highly unequal and vary significantly across gender, race, and geographic lines. Women are consistently more likely than men to live in institutional facilities, largely because they have longer life expectancies and frequently outlive spousal caregivers, a primary source of informal home support. Furthermore, non-Hispanic white older adults utilize assisted living facilities at higher rates, whereas non-Hispanic Black older adults are more likely to reside in nursing homes. Geographically, institutionalization rates are heavily concentrated in the Midwest and Northeast, creating asymmetric regional pressures that directly influence local real estate markets, public finance stability, and healthcare workforce requirements.
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The Landscape of Elder Care in the United States: Part 2—The Cost and Quality of Care
By Kelli Marquardt, Aryan Safi, and Anthony Lo Sasso
In the second part of their series on the economic realities of aging, economists from the Federal Reserve Bank of Chicago analyze the stark cost disparities and geographic variations associated with long-term care settings. Relying on data from Genworth’s 2024 Cost of Care Survey, the report documents that the national median monthly cost for nursing home care is $9,825, followed by $5,900 for assisted living, and $3,752 for in-home care (modeled on a moderate 28 hours of care per week). These steep price differentials directly reflect the operational and service intensity of each setting, moving from hourly non-clinical support in private residences to continuous, medically supervised multi-disciplinary care and continuous supervision within institutional nursing facilities.
To properly assess affordability, the authors adjust state-level median pricing against relative household incomes, revealing immense geographical dispersion across the United States. Even after factoring in localized purchasing power, nursing home care exhibits the most extreme financial variation, ranging from an income-adjusted monthly midpoint of roughly $6,377 in Texas to a staggering $26,321 in Alaska. Remote and island topographies like Alaska and Hawaii face the highest overall facility-based pricing due to severe labor shortages and geographic isolation, while broader regional cost variations across the continental U.S. are heavily shaped by localized labor markets, state certificate-of-need laws, and disparate state Medicaid reimbursement policies.
The final phase of the analysis bridges these pricing metrics with care quality indicators to assist families and policymakers in evaluating the overall economic “value” of regional care. Because Medicaid serves as the primary payer for a vast portion of institutional long-term services, nursing home operators are uniquely exposed to state fiscal structures, which heavily dictate a facility’s underlying budget for staff retention and safety compliance. The Chicago Fed’s localized mapping demonstrates that regions with higher state-income-adjusted costs do not automatically correlate with superior outcomes, underscoring structural imbalances in the elder care market where localized regulatory constraints and provider concentration can drive up consumer prices without yielding a corresponding increase in clinical quality or resident safety.