As the U. S. population ages, communities are searching for solutions to the increasingly difficult problem of meeting their elderly citizens' needs for transitional housing and care. Transitional housing is necessary because while many elderly, typically those 85 years or older, are no longer able or willing to live alone, they do not yet require full-time hospital care or the full-time intensive services provided by nursing homes. In most cases they merely require assistance with daily activities, such as bathing, dressing, and eating. Traditionally, the only option for these people has been nursing home placement.
In 1992, the Massachusetts Housing Financing Authority (MHFA) sought to provide these elderly citizens with a choice. After New England's real estate market collapse of the late 1980s, developers of assisted living communities were finding it difficult to secure loans from conventional lenders. The MHFA sought to fill this void by creating Elder CHOICE, a loan program that offers long-term mortgage financing (raised through the sale of tax-exempt bonds and offered at below-market-rates) to private developers of assisted-living facilities. MHFA's ability to issue tax-exempt debt on behalf of these developments enhances their financial feasibility, making assisted living more accessible to a broader range of income groups. To this end, a condition of the financing requires at least 20 percent of the units in each development be reserved for low-income households.
The Heritage in Cleveland Circle, for example, was one of the first developments to be built with MHFA funding. It is a complex designed to feel like a home, with meticulous attention to detail. While individual rooms are small, there are attractively furnished common areas to encourage interaction. Further, the development rents space to local nursery schools, and encourages interaction between elderly and youth. Market rent residents pay $2,100 per month, while low-income residents pay approximately $450 per month (subsidized by Medicaid).
The assisted-living developments save the State money. Preliminary studies suggest that the annual state cost for assisted-living facilities is $2,000 less per unit than in a nursing home. Another measure indicates that assisted living costs $33.60 per day compared to $125 per day in a nursing home: 50 percent of which is generally covered by Medicaid.
The primary innovation of the program is that it synthesizes health care and housing finance strategies to create feasible projects serving low-income elders while creating a positive track record for the emerging industry of assisted living. Since its inception, the program has created a total of 205 units, 41 of which are provided for low-income residents. The Massachusetts' Division of Medical Assistance estimates that Elder CHOICE will save about $5,000 per year for every low-income elder residing in an assisted-living facility rather than in a nursing home.
Elder care is a problem that will grow as the population ages and medical breakthroughs expand the average lifespan. In Massachusetts alone, officials estimate that the State will need up to 10,000 assisted-living units over the next five years. With Elder CHOICE, they have a program in place to allow local developers to meet this growing need.