The Biden budget has a loose definition of infrastructure. One of the biggest areas of spending is on the "care-giving economy." $665 billion alone goes toward raising the wages of essential homecare workers, and the Biden administration projects spending $775 billion over the next 10 years on caregiving. There is some legitimate need. Medicaid currently pays for most long-term care, which includes care for the elderly and mentally ill. As the population ages, there will be more demand for long-term care services and most Americans do not have private insurance. The figure below shows how much Medicaid spending increased on long-term care over the years (2017 and 2018 data excludes data from California, New York, Illinois and Virginia). If the new budget passes, we can expect the costs to increase at a higher pace.
Paying for long-term care will be a challenge for all countries with aging populations in the coming years. Rather than risk costs spiraling out of control, we need more creative solutions that share risk and costs with the private sector.
Allison Schrager is a senior fellow at the Manhattan Institute. Follow her on Twitter here.
Interested in real economic insights? Want to stay ahead of the competition? Each weekday morning, e21 delivers a short email that includes e21 exclusive commentaries and the latest market news and updates from Washington. Sign up for the e21 Morning eBrief.
Photo by William Thomas Cain/Getty Images