Nursing home care in the United States now costs a median of $9,825 per month at the national level, nearly triple the $3,752 monthly cost of in-home care, according to a new report from the Federal Reserve Bank of Chicago published this month. The analysis, part two of a three-part series on elder care economics, reveals striking state-by-state variation in both the cost and quality of elder care as the nation enters what the authors call "a new demographic era driven by population aging." Assisted living falls in the middle at $5,900 per month, reflecting its intermediate level of service intensity between hourly in-home assistance and round-the-clock nursing facility care.
Geographic differences in elder care costs are dramatic, especially for nursing homes. Even after adjusting for state income levels, monthly nursing home costs range from just over $6,000 in Texas to more than $26,000 in Alaska, with a national mean of $11,177. Hawaii and Alaska consistently show the highest facility-based care prices, which the report attributes to "rural or island topography and access and labor shortages." Alaska is such an outlier that excluding it drops the national mean for adjusted nursing home costs to $10,875. In-home care also varies substantially, from $3,029 monthly in Maryland (after income adjustment) to $5,344 in South Dakota, which has the nation's most expensive in-home care despite ranking among the lowest for facility-based options. States in northern New England, Appalachia, parts of the Mountain West, and the noncontiguous states face the highest income-adjusted costs overall, while the middle of the country enjoys relatively lower prices. The cost differences within states can be just as revealing: most Seventh Federal Reserve District states—Iowa, Illinois, Indiana, Wisconsin, and Michigan—have notably expensive in-home care relative to their facility-based care costs, a pattern the report links to lower immigrant populations and lower population density.
The report finds that price alone doesn't tell the full story about elder care value. Using Centers for Medicare & Medicaid Services Five-Star Quality Rating System data covering over 14,000 Medicare-certified nursing facilities, the authors constructed a "nursing home value index" that divides quality ratings by price. "Index values greater than 1 indicate that the state quality-to-price ratio is higher than the nationwide quality-to-price ratio," the authors write. Indiana and Wisconsin emerge as high-value states with above-average nursing home quality at below-average prices, while Illinois offers below-average quality at below-average cost. At the regional level, the West has the highest quality ratings and the South the lowest, with the exception of health inspection scores, which remain similar across regions. States with greater nursing home capacity—measured by beds and workers per population age 80 and older—tend to have lower relative prices, but the report also finds these capacity measures "are also associated with lower quality of nursing home care," revealing a troubling trade-off.
The cost gaps stem from complex, interacting forces that vary by region and care type. According to the Chicago Fed researchers, the central U.S. states benefit from "a more favorable balance of elder care demand and direct-care worker supply," with younger age structures, lower elderly dependency ratios, and relatively lower wages for both in-home care workers and nursing facility staff compared with coastal states. Because elder care is "highly labor-intensive, with wages making up the majority of operating costs," these wage differences flow directly into consumer prices. Medicaid reimbursement rates also play a major role, particularly for nursing homes where Medicaid is the primary payer, and the report notes substantial state-level variation in both payment rates and facility costs. Other contributing factors include certificate-of-need laws that regulate facility expansion, state minimum wage levels, immigrant share of the elder care workforce, and climate-related operating costs—all of which align regionally. The relative expense of in-home care in less-dense states reflects the travel-intensive nature of the work, where providers drive to one client at a time and "may price that travel into their rates," whereas facility-based care concentrates residents in a single location and avoids those costs.
Several states defy simple cost-equals-quality assumptions, illustrating why the value framework matters. Hawaii, Delaware, and Michigan all fall in the highest-cost quartile, yet their nursing home value index readings sit near the national average because their above-average quality ratings "substantially offset their high prices," the report explains. The reverse holds true for Georgia and Louisiana, which have lower costs but value index readings near the national average as their below-average quality ratings cancel out the benefit of lower prices. States with higher nursing home occupancy face higher prices but show no detectable relationship with quality, while the share of adults reporting poor health has no relationship with price and a negative correlation with quality—associations the authors emphasize are not causal but rather "joint outcomes of supply, demand, utilization, and access that operate together in each state's elder care market." As the population continues to age, the authors conclude that the nation will face "growing pressure to ensure that elder care is both affordable and high quality across all settings and geographies," with the next installment of the series examining how nursing home market concentration shapes local price and quality outcomes.