We've heard for years now how the aging population is increasingly straining public programs for seniors like social Security and medicare here in the US. Around the world, political fights and protests have broken out in response to this urgent question, how do you pay to care for so many retired people? At the same time, the US Census Bureau tells us that just seven years from now, people over sixty five will outnumber those under eighteen. It's even got a name
in the public policy world. They call it the twenty thirty problem. And while Washington drags its feed over what to do, some companies are seeing opportunity. Bloomberg reporter Priya onon rights in BusinessWeek about a tech startup called Papa that's looking to fill some of the void. It provides household services to seniors so they can stay independent.
Loneliness is a huge issue in this country, especially among the elderly, and the company he has said that this is also a companionship option.
Someone can request to.
Have a pal come to their house just to chat even but.
The company is learning just how difficult that can be, and later in the show, health economist Jonathan Skinner he'll tell us what it will take to meet the needs of all those retiring baby boomers.
A society can only hope to have this many people surviving to be eighty five or ninety and ninety five and living rewarding lives as retirees. The problem comes when they require assistance, and for many people who are older, their needs aren't being met by the current insurance programs.
I'm Wescasova today on the Big Take the hard realities of the aging economy. You've written a story about this company called Papa Ink, which you describe as a family on demand task rabbit for seniors. Can you tell us more about this company what they do.
Papa is a startup that is essentially a gig economy version of home assistance. They sometimes describe themselves as family on demand, so customers, seniors or family members of them can hire contractors from Papa's network to come to their home, hang out and chat, do household chores, take them to doctor's appointments, essentially anything that doesn't involve some of the more traditional and intimate work done by nurses, such as bathing people helping them use the bathroom, and they call
the customers in this case Papa's and the contractors are called pals, hence the name the company PAPA.
Part of the idea here is to enable older people to stay more independents stay in their homes for longer, since, as we know, eldercare in America is a pretty complicated thing.
That's right, and loneliness is a huge issue in this country, especially among the elderly. The Surgeon General has talked about this before, and the company has said that this is also a companionship option. Someone can request to have a
pal come to their house just to chat. Even Andrew Parker, the CEO of PAPA, who declined to sit for an interview for our story, often says that he started the company after hiring a college student to help entertain his grandfather and that it was an AHA kind of moment for him.
And so how is this paid for?
PAPA contracts with Medicare Advantage and Medicaid health plans as well as a number of large employer based health plans. The papas who actually using the surface often don't have to pay anything and they can use it for a certain number of hours per year through their health insurance plan.
So the business model is a little bit different from Uber and lyft in that case where you're not necessarily as a user paying per ride per food delivery, you instead have a certain number of hours per year through your health insurance plan.
And how does PAPA make money.
Papa makes money by contracting with these health insurance plans, some of which receive government subsidy because they're Medicare advantage in Medicaid.
So you mentioned at the beginning that this is a startup, and they have gotten some pretty big investment in the company.
That's right.
Papa has raised hundreds of millions from large investors, including soft Bank and Tiger Global, Alexis o'hannian, who is the co founder of Reddit but better known as the husband of Serena Williams. And the company was last valued by investors at one point four billion in twenty and twenty one. During the pandemic, when I think a lot of people in this country, the idea of helping people be less lonely became prominent in everyone's mind.
Who are the people who are providing the service, the ones that they call the pals who go to older people's homes and help them out.
They're independent contractors.
And Papa actually has a couple of bullet points on their website that they list for who is eligible to sign up to become a PAL if you're twenty one or older, have US work authorization, can communicate in English,
and can pass a background check. But it's gigwork, so the training is not very extensive, though the company says it does offer an array of optional training options that it sends to pals over email and other methods, and makes available in the app if someone wishes to go through and learn more about how to be a better pal to the person they're visiting at home.
So there's no special training required to become a PAL. It's sort of like being an instantcart delivery person in the sense that almost anyone can sign up.
Federal requirements stipulate that if you're a Medicare eligible home health aid, you need to complete at least seventy five hours of classroom supervision and practical training. But popas service is stripped down. It doesn't offer the clinical elements of homecare, so it's not subject to that seventy five hour rule. It's required training for pals is a short video that
stresses the importance of avoiding physical contact with clients. The company told us that they've added more voluntary training over the past year, and that they send pals emails containing an average of six links with additional optional training content, along with a quarterly newsletter that includes a link to safety related materials.
These are supplementary and.
So beyond that, is there any sort of vetting process of people who sign up to go to people's homes.
The company says it performs background checks and that it also requires pals to acknowledge patient privacy rules, But they also say that the average person does not require training to support their grandparents, parents, or elderly neighbors.
How's it working out? You talked to quite a few people who use the service. What do they say about it?
America has a huge shortage of healthcare workers and caregivers, so for many people, Papa is a lifesaver. Manuela Lopez is a seventy two year old retiree in Grand Rapids, Michigan, who I spoke with, and she also called Papa a life saver. She's a diabetic and amputee and she uses PAPA for help getting to the supermarket and to doctor's appointments. And she said she can't just walk out the door by herself, and papa's service has been a game changer,
and so for many people looking for help. You know, they might need some help around the house, they might need support to be able to get to the doctor, but they don't necessarily need help going to the bathroom or taking a shower. PAPA is there to support this huge shortage of healthcare workers and caregivers in America.
I spoke with a number of folks who.
Said that PAPA was a solution they relied upon for their family members when they didn't know where else to go for support and being a caregiver, you know, if you're supporting a parent yourself, having another caregiver available is tremendously helpful to many people.
And yet Pria you also found that the company is facing some pretty big challenges in matching up people with the customers.
That's right.
We reviewed more than one thousand confidential complaints logged by PAPA over the last four years and found dozens of allegations of sexual harassment and assault, as well as an allegation of unlawful imprisonment. These were complaints filed by both the company's workers and members with the company.
Now.
The company says that less than one percent of its complaints are safety related, and they also added that they, and I'm going to quote directly, we know any failure in protecting the safety of our members and pals is unacceptable. And they said that whenever you're connecting people, there's a chance something can go wrong, and they're committed to doing everything they can to try to ensure that never happens again.
And peer, what are some examples of some of the things that both the customers and the service providers encounter.
Pals of filed complaints alleging that clients have tried to kiss or fondle them, or that their residences were covered in feces or infested with cockroaches, are in one case, home to an alligator. Other times it's the pals who have been accused of stealing or harassing their clients or getting naked in their home. The more than thousand complaints we reviewed were from records that we obtained, but there's
also a court case going on In Minnesota. Middle aged man was sent to a seventy year old woman's house earlier this year. He arrived the woman gets around using a walker or power chair. He helped her get to a couple of stores, and then when they returned to her home, he allegedly raped her and there's a criminal complaint against him. PAPA is featured throughout the criminal complaint, though it's not named in the case as a defendant.
The company said in a statement that it's CEO, Andrew Parker, has had several conversations with a member and offered her all the help and support they can, and that the CEO and the woman who is a victim in this case have become, they said, quite important in each other's lives.
Papa also said it removed the contractor from its platform and that's conducting an internal review of its trust and safety practices after this devastating incident, and it also said that it has added a two person manual review of his background check data to its screening process because its system did not flag a prior conviction that this man had for domestic assault before being sent to this woman's home.
And the person accused in the case, Martin Jermaine Blue Senior, has said the encounter was consensual and denied the state's charges of criminal sexual conduct, kidnapping, and assault with a dangerous weapon. He's being held on a two hundred thousand dollars bound pending trial. A lawyer for Blue didn't respond to requests for comment for The BusinessWeek's story.
Prea.
Since PAPA is covered by insurance companies and covered by Medicare, what do they have to say about the things you're reporting?
The Centers for Medicare and Medicaid Services said the agency has been reviewing complaints and grievances that allegedly involve Papa's service, and they said that most complaints revolve around customer service, but they're also aware of the allegations we described in our story and serious concerns, and that they continue to
monitor complaints against PAPA. And they also added that if a Medicare advantage plan were contracted with a partner that they think isn't up to par with CMS standards, they have meaningful ways to discourage a plan from using a service.
And what about the investors who have put a lot of money behind this company.
We reached out to a number of investors for this story, including SoftBank, Tiger Global, Lexis Ohanian, and they all declined to comment.
So where do you think it goes from here? What happens to Papa?
I'm interested in seeing whether health Plans re up contracts with PAPA for next year. It'll also be interesting to see what families think about this, I think, I mean, I would like to hear from families that have hired PAPA for their relatives. I spoke with a number of families for the story, but I'm interested in hearing from more about what they make of the precautions that the company takes and whether they feel those are sufficient.
Priya, thanks for coming on the show.
Thanks for having me.
After the break. What the economics of aging tells us about how to care for seniors. So now we've heard about some of the challenges of helping seniors age gracefully, and you can be sure many other companies will be stepping up to figure out how to provide services to older people. But that still leaves the big question, what about the social programs intended to care for older Americans? As we know, there is not a lot of political appetite in Washington to tell the truth about the coming
costs of senior care. So will people ultimately have to pay more or will they receive less? I put that question to Jonathan Skinner. He's a research professor in economics at Dartmouth, and he leads several projects funded by the National Institute on Aging.
I don't think we're ready, and I think that the impact of baby boomers is going to become strongest in the next ten or fifteen years. The good thing is that as people age currently that they're often in better health. That is, people who are sixty five or seventy are typically more active. Some of them are even working, they are traveling. Whereas the problem comes when people turn eighty five or ninety and they really do require a lot of help.
And this question of people living longer. A couple generations ago, we wouldn't be talking about so many people living to be eighty five, let alone ninety five. What's involved in that, in trying to take care of that many people.
Well, I view this as great news.
A society can only hope to have this many people surviving to be eighty five or ninety and ninety five and living rewarding lives as retirees. The problem comes when they require assistance, and for many people who are older, their needs aren't being met by the current insurance programs. Medicare, for example, does not cover many things that older people will need to require.
So Ashley, let's talk about the details of that. Because medicare social Security, these programs that are specifically in place for retired people, for older people, they were made for another time. Can you talk about what the assumptions were when these programs were put in place versus what the needs are today.
That's a great question and it requires I could spend a few hours talking about that, but let me start with each one.
In turn.
Social Security certainly is flexible. It's a wonderful annuity, meaning that it pays an amount until you die, so you don't have to worry about running out of Social Security for an individual. It also has a unique characteristic in that it adjusts for inflation, so as inflation goes up, you get more.
So it's a great system.
The problem is that it is very sensitive to baby booms and baby busts, and so it's scheduled to start running out of money in a decade or so. The good news there is that I think that's fixable in the sense that what we'll see is maybe a reduced cost of living adjustments for people with higher incomes, maybe slightly higher taxes. So I think that there are a variety of ways that it could be fixed, assuming that Congress bites the bullet and goes and does it.
Medicare is more difficult.
It was designed in nineteen sixty six to basically take care of people who need hospital care and need to see a doctor. It at the time didn't take into account drugs, which it does now, which is great with the prescription drug party, but it still is very limited in the sense that it'll only cover a nursing home if it's for rehabilitation purposes. It'll only cover home healthcare if it's rehabilitation. That is, it has sort of a natural ending. The alternative is Medicaid.
Which is for people who are either very sick or.
Are poor, and that generally doesn't pay as well, so you can't always get into as nice a nursing home. The problem are the people who are in between. You know, they're taking care of their spouse. They realize that they they're getting older too. They can't really take care of the spouse the way they'd liked. They go to their doctor to ask for help, and there's really nothing to cover except for out of pocket payments for a private nurse.
And for many many Americans, that's just not feasible, and so that's what I worry about, is that people are trying to age in place. They don't want to go to a nursing home, they don't want to give up their independence, but they need help and it's not there.
And I guess another big challenge facing Medicaid in particular is that at the time it was started, the assumptions of how long people were going to live were much shorter, and so when they did the calculations of what the program were going to cost, they weren't taking into account lots and lots of people living into their nineties.
That's exactly right, I think again, it's good news that lots of people are living into their nineties, but both higher health care costs and more people being covered it means that, you know, in some way cases, people can be receiving Medicare for as long as they paid in.
If they live to a ripe old age.
So that's definitely a problem, a more intractable problem than Social Security for the federal government because there's no sort of simple fix for Medicare, and that's.
Something that we talked about quite a lot. You know, you can make those adjustments as you describe them to social Security. Maybe some people who have more will get a little bit less. You can eke out some more years out of the system. But where does the money come for expanding medicare as It will absolutely certainly have to happen.
That is a really tough question.
Where will more money come from Medicare? I mean, they are trying to increase the Part B premiums that's what you pay when you retire, and they're trying to increase those, but there's limits on how much they can spend.
I personally think.
That there are a lot of ways to save and expenditures. I think there's a fair amount of waste in the Medicare program, but I don't see it being politically popular. In order to really change the system, you're going to have to make a lot of people unhappy. There's an old sort of saying that we try to remind ourselves of when whatever we get involved with policy, is that when we talk about cutting Medicare costs, each dollar of cost is somebody else's revenue, and they don't like having
their revenue cut because it's their livelihood. And so it becomes very difficult to make changes in the policy world.
And just recently, we all saw this drama in Washington over whether to raise the debt ceiling narrowly escaped a disaster yet again. But these sorts of programs what to spend government money on, we're front end center. What does that sort of political argument over who gets what mean for this aging population and all the money that it's going to need to support it.
It makes me worried not so much about the current generation, but about the people who expect to get medicare fifteen years from now, because what's going on now is that everybody's made a promise we're not going to touch Medicare, we're not going to touch Social Security, but instead we'll just keep expanding the debt and we'll basically fund this stuff using deficit spending implicitly, and at some point that's not going to work so well, and at that point
there will be or there could be, some serious cutbacks in terms of what's offered to different people. What worries me is that politicians will come up with the idea of just cutting reimbursement rates as a way to shave the amount that Medicare spends. And that's a pretty inefficient way to cut back on spending because you end up basically with care where the doctors just can't really afford to provide that kind of care.
Well, another statistic that speaks directly to what you're saying is that millennials now have surpassed baby boomers as the largest living adult population. So this problem is only going to get worse. As you say down the line, like the thing we're looking at with the baby boomers is just kind of a preview of what's to come.
I think that's right.
I think we have a stocked refrigerator and we've got a bunch of people pulling stuff out of the refrigerator.
But when the next.
Group comes along, it's going to be like, huh, wait a minute, they borrowed all this money. Now what are we going to do? And that's what I worry about.
Just to throw another wrinkle into this, how did the pandemic shape the landscape for care for seniors?
First of all, it was a disaster for people who are in nursing homes. Some research we did suggest that it wasn't simple COVID nineteen that caused excess mortality among say, for example, people with dementia, but it was being shut up, closed off being stuck in your room. That is, we found even places there were very few COVID cases that mortality was higher, particularly among people in nursing homes.
Sort of.
The sad thing is that now projections for Social Security and Medicare have improved somewhat because so many people died who were elderly. That is unfortunate, But I think that the pandemic has also changed a lot of patterns in how care is provided. It's increasingly expensive to hire a competent person to work in a nursing home.
It's hard work in.
The longer term as there are more and more older people that need to be taken care of. I think that the cost structure of caregiving is going to go up in ways that will surprise people. And I think it may also change people's views about going into nursing homes.
That may cause some people to think twice given what they observed, and perhaps cause them to remain in their own home and try to have more independent living because they saw what happened to their friends who were locked down in a nursing home for like nine months.
When we come back, some possible solutions before the US hits a senior care crisis. You know, we're talking about the various government policy fixes institutions like nursing homes, but is part of the problem just the way people live now. It used to be that your parents would move in with you, your grandparents would move in with you, and
you would care for them when they're aging. And now, with our much more mobile population and families often living far apart, has that changed the way older people are just cared for.
Yes, But I think that change has started quite a bit earlier. I think that the greater degree of migration started really with baby boomers as children, so they were moving around all over the country. They weren't exactly shall we say, inviting their parents to come and live with them. So I think some of that transition has occurred, and there is much more emphasis on extended care facilities, on places where there are a lot of older people living but still doing kind of active things.
Like adult communities and places where you have independent living but then can transition to greater levels of care as you needed.
Exactly, you started at one place and then you kind of moved to the next place, and then you moved to the nursing home. So it's much more integrated and your friends can come and visit you. There is people who can't afford to buy in. If you happen to have bought a house, you're in pretty good shape because you can probably sell your house for a profit And baby boomers made a lot of money on their houses and they could afford the don payment to move into
these facilities. But for people who rented all their life or never you know, maybe they lost their house in a divorce or something, they're stuck. And so I definitely worry about inequality for people who are aging, because once you've reached a certain age, you can't do much to.
Undo any past financial mistakes.
What are your thoughts about non medical companion services that have grown up in the last decade that helps seniors with household tasks and groceries. Is this is service that is really important? Do you think that we're going to start to see more and more of this.
I think yes.
I think there's an increasing recognition that people and remained independent if they get a little bit of help, if they get help with laundry or shopping or things like that. I certainly think if they ever come up with autonomous cars driving cars, that would be a huge boon to the elderly population, just because driving is a huge problem
for people who are seeking to remain independent. But the downside for millennials is that the longer people stay in their house, the more difficult it is going to be for the next generation to buy their own house.
So what is the solution here. We have an enormous number of people, we have a certain lack of will in Washington to address it. Something's going to give eventually. As someone who's studied this for a long time, where do you see it heading?
I think nothing will happen until there's a crisis. And my concern is that the crisis will occur when there's an economic downturn and interest rates are up and the debt burden becomes nearly intolerable. Everything's fine now because basically the government's credit cards don't have a limit, and you can keep going and keep going and keep going. But at some point things don't work out well.
Jonathan Skinner, thanks so much for talking with me today. Thank you thanks for listening to us here at the Big Take. It's a daily podcast from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit the iHeartRadio, app, Apple podcasts, or wherever you listen, and we'd love to hear from you. Email us with questions or comments to Big Take at Bloomberg dot net. The supervising producer of The Big Take is Vicky Bergolina. Our senior producer and the producer of
this episode is Catherine Fink. Phil de Garcia is our engineer. Original music by Leo Sidrin. I'm wes Kasova. We'll be back tomorrow with another Big Take.
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