Carrie Lukas is president of Independent Women.
Inflation easedthis past year, but not for everything: In-home elder care costs surged by nearly 10 percent, which is more than three times the overall inflation rate. Brace for continued double-digit price increases without policy change.
Elder care costs are rising because demand is rising. By 2030, the number of people aged 65 and older will exceed 73 million; that’s a 30 percent increase in just one decade.
Yet instead of preparing for this reality, policymakers have constructed a system that discourages flexibility and rewards bureaucracy. The average cost of full-time, in-home assistance is nearly $80,000 a year. Residential facilities are even pricier: roughly $127,000 per year for a room in a private nursing home and around $70,000 for a room in assisted living. These costs are rising faster than wages, savings and public budgets.
Most older Americans don’t want to end up in residential facilities. A 2022 AARP survey found that 77 percent of adults aged 50 and older said they want to “age in place.” Unfortunately, government policy often stands in the way of seniors staying in their homes.
One culprit is the 2013 “Home Care Rule,” a Labor Department reinterpretation of the Fair Labor Standards Act that gutted the long-standing companionship exemption. Families who once hired live-in companions through agencies for light caregiving and daily living assistance suddenly faced overtime and wage rules. While some families employ live-in help as household employees or independent contractors, more than three quarters of home care aides are hired through agencies. While those rules may make sense for traditional employers, they don’t work for private households — instead, they make in-home elder care needlessly complex and prohibitively costly.
The Trump administration is working to rescind that rule, which is a crucial step in the right direction. It would allow families to negotiate caregiving arrangements that meet their needs without violating a tangle of labor laws.
But more can be done. Policymakers should look beyond regulatory rollback to innovation. They can start by making it easier for seniors to offer rent-free housing as partial compensation for caregiving services. Under the current interpretation of labor laws, room and board cannot be considered part of compensation if it’s offered as a condition of employment. Changing this provision to allow room and board to count as compensation would make hiring live-in assistance financially viable for middle-income seniors. This could be a win-win for caregivers and seniors alike. Millions of seniors live in homes with unused spare bedrooms and face a challenge with loneliness, which can lead to deteriorating mental and physical health. Caregivers, on the other hand, often struggle to afford housing.
Pairing seniors with live-in caregivers or companions could address both the cost and social dimensions of aging, enabling seniors to have meaningful, daily, in-person interactions. A longstanding, proven model is the State Department’s au pair program, which for decades has matched families with young foreign nationals who provide child care in exchange for room, board and a modest stipend. The program’s genius is that it allows for human exchange while being light on regulation and clear in its caretaking expectations. A similar framework, administered by the Labor Department, could be adapted for elder care. Rather than creating another visa program, the administration could enable Americans — students, retirees or others seeking housing — to earn income and free room and board while providing companionship and assistance to older adults.
While such arrangements would not replace professional caregiving, they would expand the market by introducing the sort of flexible, mutually beneficial tier of support that a healthy economy facilitates. With reasonable vetting and safeguards — including medical checks to ensure that seniors are mentally and physically capable enough to safely welcome a companion into their homes — an “American Companion Program” could relieve pressure on families, create new work and housing opportunities for workers, and help millions of seniors remain independent.
That’s the kind of innovation the caregiving sector desperately needs: Reforming elder care shouldn’t mean another trillion-dollar program; it should mean clearing the way for creative, human-scale solutions.
America’s caregiving challenge won’t be solved by more regulation or reliance on under-the-table, imported labor but by trusting markets and families to do what they do best: solve problems when government gets out of the way.
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