The costs of providing services and supports for people with intellectual and developmental disabilities are significant, whether living with family, their own homes, or other alternative living arrangements. Others (Heller, Caldwell, & Factor, 2007) have presented information on the general social trends and changes in service patterns. In this article, we focus on the financial aspects of caregiving; we hope that the information will be used by advocates to educate policymakers and journalists. The need for publicly funded services and supports for people with intellectual and developmental disabilities and their families is explained. The financial costs—compared with generally understood major life costs—are significant and beyond the means of most families.
Most individuals with a disability live at home and are provided supports by their families. Some require supports their entire lives. Less than 20% of the U.S. population with intellectual and developmental disabilities lives in out-of-home placement (Stancliffe & Lakin, 2004). Public funding for family care is on the rise. In 1994, approximately 23.8% of the total recipients of Medicaid Home and Community Based Waiver Services, the primary public financing vehicle for supports and services for people with intellectual disabilities, lived with family members. By 2005, that number had increased to more than 45% (Lakin et al., 2006).
The Costs of Caregiving
Families expect to expend resources on their children, whether their child does or does not have a disability. The U.S. Department of Agriculture (Leno, 2006) calculated that raising a child without disabilities from birth to Age 17 averages at least $190,000 in 2005 dollars, with expenses broken down as follows: housing, food, transportation, clothing, health-related expenses, childcare–education, and miscellaneous.
The basic expense categories are the same for an individual with a disability versus one without. The amount of money required for some expense categories tends to be more for some individuals with a disability compared with an individual without a disability (Stancliffe & Lakin, 2004).
Additional expense categories for persons with disabilities include respite care, specialized or adaptive equipment, environmental modifications, and therapeutic services. Opportunity costs such as foregone earnings can also be disproportionate to families with a child with a disability (because of caregiving duties) and may impact family finances. Baldwin (1985) estimated overall daily living expenses for families with a child with a disability to be 8% to 20% greater than their counterparts without a disability. Hewitt, Larson, and Lakin (2000) estimated that the average out-of-pocket family costs for special services and health care for an individual with disabilities add an additional $16,058 to the average home care costs per year, not accounting for opportunity costs such as foregone earnings. Fujiura, Roccoforte, and Braddock (1994) estimated that out-of-pocket spending by families caring for an adult family member with intellectual or a related developmental disability adds at least $6,300 in additional expenditures a year. Regardless of which amount is used, the annual costs significantly impact family budgets.
The Unaffordability of Caregiving
When do the costs of in-home family care become unaffordable, beyond the financial resources available to a family? We provide a framework for understanding this question, using three different measures of affordability: (a) the researchers' index, (b) the housing affordability index, and (c) typical expenses for most families compared with the cost of caring for a family member with a disability.
Health care researchers (Hong & Kim, 2000; Stum et al., 1998) have developed a ratio determining whether out-of-pocket expenditures will be considered financially catastrophic for a family: a direct ratio of out-of-pocket expenditures to a family's gross income. Expenditures for medical care become financially catastrophic when they endanger the family's ability to maintain its customary standard of living. We are not equating disability with illness, but we maintain the financial principles are the same. For this index, researchers typically choose some level between 10% and 20 % as the catastrophic threshold, or a ratio of .10 to .20 to gross income (Stum et al., 1998).
The Housing Affordability Index (HAI)
The HAI, from the National Association of Realtors (http://www.realtor.org), assesses whether homes are affordable (Baker, 2002). This index is the ratio of median household income to the required income to qualify (known as qualifying income) for a loan on a median-priced, existing single family home. When this ratio—mortgage payment to family income—is low, the affordability index is high, meaning housing is relatively affordable. An index value of 100 is used as the reference value, meaning that a typical home buyer would be able to afford a median priced home. A lower value indicates the family does not have the income for a median-priced home.
We propose an affordability index for families providing support to a member with a disability, created on the basis of the HAI. It demonstrates whether the cost of caregiving is affordable for the average family. Assume monthly out-of-pocket spending for the care of a family member with a disability at $525 (Fujiura et al., 1994), with the mean U.S. household income at $39,155 (U.S. Census, 2005). To calculate the qualifying income, the current researcher's index of .10 is used (Stum et al., 1998). Therefore, for $525 monthly expenditures, use $525 × 10 (10% of maximum) × 12 months/year = $63,000 (qualifying income). To calculate the disability affordability index (DAI), divide the household income ($39,155) by the qualifying income ($63,000), and multiply by 100 which equals 62 for this example. This value would indicate that, for this example, the average family has only 62% of the income required to care for a family member with a disability. If 10% is used as the level of out-of-pocket expenses to determine the catastrophic threshold for a family, caregiving is not affordable for the average family with a member with a disability. Based on this result, one could make the assumption that this in turn would affect the ability of the family to pay for other typical expenses such as housing, other children, retirement, and college.
Cost comparisons can also be used to determine the magnitude of caregiving. Cost comparisons assess caretaking affordability by comparing costs associated with taking care of an individual with a disability with the median yearly costs of typical expenses for an individual without a disability. Leno (2006) estimated that the annual cost of raising a typical child is approximately $10,600. Fujiura et al. (1994) estimated the extra nonreimbursed spending to be $6,300 per year to care for a family member with an intellectual disability or a related developmental disability. Considering the costs of a child from birth to 17 years, this is a total additional family expense of $107,100, over 60% more per year than the cost of a typical child just for the first 17 years. Individuals with a developmental disability may need care for 60 years or more, as the life span of people with developmental disabilities increases with better health care (Heller, Caldwell, & Factor, 2007).
Comparison with expenses generally understood by a majority of Americans helps put this in perspective. American society attaches importance to the affordability of a college education (Hill, 2008). The median cost for 4 years at Ohio State University (home state of one of the authors) at 2008 prices, including tuition, room, and board, will cost a family approximately $68,000 (for in-state tuition; The Ohio State University, 2008), or only 7% of the cost of caring for a child with a disability from birth to Age 60.
In the same state, Ohio, the median yearly homeowner costs are approximately $11,556. The median gross yearly house rental is estimated to be almost $6,100. Over a 17-year period, this cost would equal $103,700, slightly less than the cost of raising a child with a disability to Age 17. Housing costs accounted for 72% of U.S. families' debt in 1998 (Barnes & Young, 2003). A rule of thumb, increasingly being questioned (Hill, 2008), is that housing costs should not exceed 30%–35% of gross income (Greninger, Hampton, Kitt, & Achacoso, 1996). Both of these costs, for education and housing, can be less costly than the additional family expense of caregiving. Yet the typical family usually spends years planning, budgeting, saving, and sometimes borrowing for the costs of higher education and housing. The cost for education may be for 4 years, and the cost of housing may be for 15 or 30 years. Again, individuals with disabilities are living longer than ever before; therefore, caring for someone with a disability will sometimes affect a family's finances for 60 or more years.
As parents age and are less able to care for their child with a disability, individuals will need community support, both paid and unpaid. There are wide variations among states and their willingness to provide the needed supports. For example, in 2004, the Maryland Developmental Disabilities Administration funded 22,000 persons with developmental disabilities in a comprehensive array of home and community-based supports. This same state has a waiting list of nearly 11,000 for similar services (The Arc of Maryland, 2007).
Although research pertaining to the fiscal impacts of caring for a family member with a disability is complicated, it is clear that having a family member with a disability has an adverse effect on a family's finances. Parents' concerns to do the best for their children will usually override financial considerations, which places parents in a particularly vulnerable situation during a child's illness (Callery, 1997) or lifelong disability.
The collection and development of information related to the affordability of caregiving have shown clearly that there is a need to improve public policy to adequately address the financial costs of family caregiving. As a nation, we lack a coherent family policy (Bogenschneider, 2000). For families raising a child with an intellectual or developmental disability, the interaction between the family and both federal and state public policy is crucial. The level of available public support, varying widely by state, is an important factor contributing to the burden of family caregiving. Based on the recent literature and the findings presented here, a widespread nationwide implementation of family support programs is needed (Feinberg, Wolkowitz, & Goldstein, 2006). Direct, indirect, and hidden costs of family caregiving have to be considered when public policies are developed. Left unchecked, the cost of caregiving will force more and more American families into significant debt.
Tracy N. Davenport, PhD Candidate (firstname.lastname@example.org), Research Assistant, and Steven M. Eidelman, MSW, MBA, Robert Edelsohn Chair of Developmental Disabilities, and Professor, College of Human Services, Education and Public Policy, University of Delaware, 312 Alison Hall W., Newark, DE 19716