6-10-2026 8:46pm

Medical Divorce

Opinion | Iko Knyphausen | June 10th, 2026

Eleanor and Harold had been married fifty-three years when the neurologist used the word “Alzheimer’s.” They had done what they were told to do. Harold had worked thirty years as a mechanical engineer, paid his taxes, and kept the mortgage paid. Eleanor had raised three children and then returned to work as a school administrator. Between them, they had contributed to Medicare and Social Security for the better part of five decades. They had saved $420,000 and owned a modest house in the suburbs. They had, in the parlance of the American promise, played by the rules.

Within four years of Harold’s diagnosis, Eleanor sat across from an elder law attorney who told her, with practiced gentleness, that she should consider divorcing her husband of half a century.

Not because she wanted to. Not because their marriage had failed. But because the law had made their fidelity a financial liability.

This is the story of a system that punishes longevity, destroys marriages on paper to preserve them in practice, and is, in 2025 and 2026, being made actively worse. It is also the story of choices other countries have already made differently, and what the United States could learn from them if it decided to try.

How the Machine Works

When a spouse requires nursing home or memory care in the United States, the financial machinery of American eldercare grinds in one direction: toward ruin. Medicare, the federal program that working Americans fund throughout their careers, does not cover long-term custodial care. It will pay for short-term skilled nursing after a hospitalization, a few weeks at most, but the moment a person needs ongoing help with bathing, dressing, eating, or simply being safe, Medicare steps away. Medicaid, the program for the poor, will pay. But to qualify for Medicaid long-term care, you must first become poor.

In most states, that means spending down to $2,000 in countable assets. A nursing home semi-private room now costs a national median of $315 per day (more than $114,000 a year).1

For a married couple, Medicaid’s rules allow the “community spouse” (the one still at home) to retain roughly $162,660 (the 2026 federal figure) plus the house. The nursing home gets the rest. A couple who saved responsibly for forty years can watch that accumulation dissolve in thirty-six months.

Medical Divorce

This is where the elder law attorney enters, and where the phrase “medical divorce” acquires its grim meaning.

A Medicaid divorce is not a dissolution of love or commitment. It is a legal strategy. By divorcing, a couple can restructure asset ownership so that the healthy spouse retains more than Medicaid’s spousal protection rules would otherwise allow. The marital estate is divided; the ill spouse, now legally single, qualifies for Medicaid faster and with less financial destruction to the surviving partner. The couple may continue to see each other daily. The emotional marriage survives. Only the legal one is sacrificed, to the paperwork requirements of a system that has made lifelong partnership a handicap.

The practice is real, documented, and routinely recommended by elder law attorneys in every state. When the rational response to government policy is to undo a fifty-year marriage on paper, the policy has failed. Not the couple.

The Memory Care Spiral

Alzheimer’s disease and related dementias make the financial catastrophe worse in almost every dimension. Nearly half of all nursing home residents have some form of dementia.2 Memory care is not simply assisted living; it requires secured environments to prevent wandering, staff trained in behavioral interventions, and higher staff-to-resident ratios, typically 15 to 25 percent more expensive than standard assisted living.3

A dedicated memory care community, the typical first placement for Alzheimer’s patients, runs a national median of $7,645 per month.4 As the disease progresses and medical needs intensify, most patients transfer to a skilled nursing facility at $9,000 to $10,600 per month.5 An average disease course of five to eight years can cost a family well over $1 million across both settings. The aggregate cost of memory care across the United States was projected at $781 billion in 2025, with an additional $247 billion in unpaid labor provided by family members.6 That last figure deserves a pause: a quarter of a trillion dollars in unpaid care annually, provided mostly by spouses and adult daughters, propping up a system the federal government has declined to fund adequately.

The Social Contract, Broken

Americans are told, from their first paycheck, that they are investing in a social safety net. Medicare payroll taxes are withheld automatically: 1.45 percent from the employee and 1.45 percent from the employer, for every dollar earned, every year of a working life. Social Security takes another 6.2 percent from each side. For a middle-income couple working thirty to forty years, cumulative contributions easily reach $400,000 to $680,000 in nominal terms.7

The implicit bargain, reinforced by every political speech about “earned benefits,” is that in old age, when the body fails and the mind dims, that system will be there. It is not there. Not for long-term care.

Medicare was never designed to cover custodial long-term care. This was a deliberate political choice made in 1965 and never revisited with the seriousness the demographic reality now demands. By 2030, all Baby Boomers will be 65 or older; by that point one in five Americans will be at retirement age, according to Census Bureau projections.8 Roughly 70 percent of U.S. adults will need some form of long-term care in their lifetimes.9

The government’s recent policy moves compound rather than address the gap. In December 2025, the Centers for Medicare & Medicaid Services issued an Interim Final Rule rescinding the Biden administration’s 2024 minimum staffing standards for long-term care facilities. That rule was the first federal floor in American history for nursing care, requiring at least 3.48 hours of nursing per resident per day and a registered nurse on site around the clock. The stated reason was concern for rural and tribal facilities with workforce shortages; no replacement standard was offered.10 Seven months earlier, the One Big Beautiful Bill Act (signed July 4, 2025) cut nearly $930 billion from Medicaid over ten years. Medicaid funds care for approximately 62 percent of nursing home residents nationwide.11

The government simultaneously abandoned quality standards and cut the primary funding source. The people absorbing the consequences are elderly, often cognitively impaired, and unable to advocate loudly for themselves.

The Private Equity Layer

Compounding the staffing and funding crises is an ownership crisis most families never anticipate. Researchers estimate that private equity firms now own between 5 and 13 percent of American nursing homes. Most counts exceed 1,500 facilities, though opacity in ownership structures makes a precise figure difficult to establish.12 The PE playbook in long-term care is by now well-documented: acquire facilities, sell the underlying real estate to a separate trust, lease it back at rates that burden the operating entity with debt, cut staff to improve margins, and exit before the consequences fully materialize.

A 2025 AARP analysis of Florida nursing homes found that after private equity acquisition, the share of facilities rated one star by CMS (the lowest quality category) more than doubled, from 10 percent to 21 percent, while five-star facilities were halved, dropping from 28 percent to 14 percent. Direct care staffing fell 13 percent per resident, costing patients 33 fewer minutes of care per day.13 A peer-reviewed systematic review published in Health Policy in 2025, examining twelve studies from 2000 to 2024, found PE ownership consistently linked to higher rates of deficiencies, increased hospitalizations, and higher mortality.14

For context: 73 percent of American nursing homes are already for-profit. Private equity ownership represents the more extractive end of that spectrum, not a separate category.15

Why Does It Cost This Much?

The natural question, confronting a $10,000 monthly bill for a shared room and institutional meals, is why. You can rent an apartment for $1,000 a month. What accounts for the other $9,000?

The legitimate costs are real. A skilled nursing facility must maintain licensed nursing coverage around the clock: registered nurses, licensed practical nurses, and certified nursing assistants, regardless of how many residents are on a given floor that night. Add dietary staff, housekeeping, laundry, activities coordinators, social workers, and administrators, and labor typically consumes 60 to 70 percent of operating costs. Liability insurance in the long-term care sector is substantial. Regulatory compliance has a price. None of this is invented.

But labor costs and regulatory burden do not fully explain the number. The rest of the explanation is less flattering to the system.

Medicaid reimbursement rates, set by individual states, are in most cases below the actual cost of care. A facility may spend $280 a day to care for a Medicaid resident and receive $220 in reimbursement. The industry has spent decades arguing this structural deficit is unsustainable, and on that narrow point it is largely correct. What it mentions less often is how the gap gets closed: by charging private-pay patients $300 to $400 a day. The family writing the $10,000 monthly check is not simply paying for their loved one’s care. They are subsidizing, at a premium, the underfunded Medicaid beds down the hall.

This is the spend-down trap made visible. You pay full private-pay rates, often for years, until your savings are gone. At that point you qualify for Medicaid, your reimbursement rate drops, and you become, in the facility’s ledger, a loss. The system is designed to extract maximum payment from families while they have resources, then absorb them at below-cost rates once they do not. It is not a market. It is a one-way valve.

Private equity ownership amplifies the extraction. When a firm acquires a facility and sells the real estate to a related trust, the operating entity must now pay rent to its own former self. That obligation, typically several hundred thousand dollars a month for a mid-sized facility, sits on top of every other operating cost and must be recovered somewhere. It comes out of staffing ratios, dietary budgets, and maintenance schedules. The $10,000 monthly bill does not purchase more care when a meaningful fraction of it is servicing debt and property obligations engineered by the ownership structure.

The international comparison is instructive. Dutch nursing home care costs roughly $8,000 per month, with the government subsidizing residents to varying degrees; most families pay a fraction of that directly.16 Dutch wages are in fact lower than American ones in nominal terms, which accounts for some of the cost difference. But labor costs alone do not close the gap. American private-pay rates run $10,000 to $12,000 a month, not mainly because of those higher wages, but partly because a significant fraction of the bill is not care at all: it is the Medicaid cross-subsidy, the private equity rent extraction, and the administrative overhead of a fragmented multi-payer system. The Dutch deliver comparable quality for less per resident even accounting for the wage differential. Single-payer long-term care is cheaper in part because it does not carry the overhead of not being single-payer.

The $10,000 monthly bill is not the cost of care. It is the cost of care plus the cost of a broken financing system, plus the cost of profit extraction, plus the tab for decades of public underfunding. The family writing the check bears all of it. The industry profits from most of it. And the government, which designed the conditions that make it possible, pays for none of it until the family is broke.

What Other Countries Do

The United States spent 1.3 percent of GDP on long-term care in 2021. The OECD average was 1.8 percent. The Netherlands spent 4.4 percent.17 This is also the country that spends nearly twice the per-capita average of peer nations on total healthcare ($14,775 versus $7,860) and yet sits in the only major category in which it spends less than comparable countries per person: long-term care.18

The contrast with peer nations reveals political choice rather than fiscal necessity.

Germany introduced mandatory long-term care insurance (Pflegeversicherung) in 1995. Every working German contributes to a dedicated fund, currently approximately 3.4 percent of gross income split between employer and employee. Coverage is universal and not means-tested. There is no spend-down requirement analogous to Medicaid’s $2,000 asset floor. Families are not required to impoverish themselves to obtain care for a spouse. Germany spent 1.5 percent of GDP on long-term care in 2017, more than the U.S., with universal coverage and no medical divorce equivalent.19

Japan adopted a similar model in 2000. Japan’s Long-Term Care Insurance covers all residents over 65, funded through payroll contributions and general tax revenue. Independent comparative health policy assessments rate it as generous by world standards.20 Only 7.7 percent of long-term care costs fall to individuals out of pocket; compulsory premiums and public funding cover the remainder. In the United States, the majority of long-term care costs ultimately fall to individuals and families.21

The Netherlands provides the most comprehensive coverage in the OECD: over 90 percent of costs covered publicly, no means-testing for institutional care, built on the principle that aging is a social risk to be shared collectively, not a private liability to be managed individually.22

The argument that the United States cannot afford such a system collapses when held against its own spending data. The money is not absent. The political will is.

The Counterarguments, and Why They Fall Short

The objections to a publicly funded long-term care system deserve acknowledgment. Critics point to fiscal sustainability: any American program now would serve an immediate, large aging population, requiring significant premiums or general revenue from the outset. The failure of the CLASS Act, a voluntary national LTC insurance program included in the Affordable Care Act and abandoned by the Obama administration in 2011 (formally repealed in 2012 after being deemed actuarially unsound), is often cited as evidence that the federal government cannot design such a program competently.23 Moral hazard concerns also arise: if long-term care is publicly funded, will people underinvest in their own planning?

These are legitimate challenges, not dismissible objections. But they point toward program design, not program impossibility. The CLASS Act failed because it was voluntary, meaning only higher-risk individuals enrolled, the adverse selection death spiral that afflicts all voluntary insurance. The private long-term care insurance market has experienced the same failure: over 100 insurers offered LTC policies in 2000; fewer than a dozen remain today, having severely mispriced claims risk and raised premiums dramatically.24 Both failures confirm the same thing: long-term care is not insurable on a voluntary basis. It requires mandatory participation to pool risk across the full population, exactly the design that Germany, Japan, and the Netherlands have successfully implemented.

Washington State’s WA Cares Fund, which began collecting a 0.58 percent payroll tax in July 2023, is the first American proof-of-concept at scale: a mandatory public fund providing a lifetime benefit of up to $36,500 for qualifying care needs, beginning July 2026.25 The benefit is modest ($36,500 covers roughly three to four months of nursing home care at current rates), but the mechanism is real, the participation is broad, and the administrative infrastructure now exists. A ballot initiative to make participation optional failed in November 2024. It is a floor, not a ceiling, and it demonstrates that a mandatory payroll-funded approach is politically achievable at the state level.

What Could Be Done

The path forward does not require wholesale invention. The architecture already exists in three functioning models from peer democracies, a cautionary case study in what not to repeat (the CLASS Act), and a live American pilot (WA Cares). The essential features of a workable system are well understood: mandatory participation, payroll financing with progressive adjustments, universal eligibility regardless of assets, and benefits structured around assessed care need rather than financial ruin.

A federal program modeled on Germany’s would cost, in rough order of magnitude, an additional 0.5 to 1.0 percentage point of GDP, achievable through a dedicated payroll contribution of approximately 1 to 2 percent. That is less than the annual premium increase many families already absorb on their private health insurance. It would eliminate the Medicaid spend-down trap, make medical divorce unnecessary, provide a funding floor for nursing home quality, and bring the United States into alignment with what the rest of the developed world considers a basic feature of civilized governance.

A near-term concrete step: Congress should commission a bipartisan long-term care financing study, with an explicit mandate to model a mandatory public insurance program alongside incremental Medicaid reforms, and report within eighteen months. Washington State’s WA Cares experience should be formally evaluated as a federal design template.

Conclusion

Eleanor did not think, when she married Harold in 1971, that the terms of their marriage included a clause requiring her to divorce him in order to survive his death. She should not have had to. The attorney’s advice was not cruel; it was correct. The cruelty belongs to the system that made it necessary.

America has spent sixty years building a healthcare apparatus of extraordinary technical sophistication, consuming a larger share of national income than any other country, and has chosen not to cover the one category of care that virtually every older American will eventually need. Germany decided otherwise in 1995. Japan in 2000. Washington State in 2019.

The question is not whether a different system is possible. It plainly is. The question is whether the country will decide, before the full demographic wave breaks, that the people who built it are worth caring for.

Notes & Sources

CareScout/Genworth Cost of Care Survey 2025. Semi-private room national median: $315/day ($114,975/yr). carescout.com/cost-of-care.
Association of Health Care Journalists / U.S. News analysis (Dec. 2025): “Nearly half [of nursing home residents] have dementia.” healthjournalism.org.
Assisted Living Magazine (2025): memory care costs 15–25% above standard assisted living. assistedlivingmagazine.com.
U.S. News & World Report, How Much Does Memory Care Cost? (2026). National median for a standalone memory care community: $7,645/month. health.usnews.com.
Genworth/CareScout Cost of Care Survey 2025: skilled nursing facility national median $9,277/month (semi-private) to $10,646/month (private room). carescout.com/cost-of-care.
SeniorLiving.org (2026), citing University of Southern California study: total U.S. memory care projected at $781B in 2025; $247B in informal unpaid care. seniorliving.org/memory-care/costs/.
Urban Institute / Tax Policy Center (2023 update): a single average-wage male retiring at 65 in 2020 paid ~$470,000 in lifetime Social Security and Medicare taxes; a dual-income average couple ~$680,000 (nominal). Note: these are contributions, not a one-to-one entitlement claim; beneficiaries on average receive more than they pay in. taxpolicycenter.org.
U.S. Census Bureau projection, cited in GovFacts.org: “By 2030, all Baby Boomers will be 65 or older, with one in five Americans at retirement age.” govfacts.org.
SingleCare, Long-Term Care Statistics 2026, citing DHHS data. singlecare.com.
HHS/CMS Interim Final Rule, Dec. 3, 2025 (effective Feb. 2, 2026): rescinded 2024 minimum staffing standards including 3.48 HPRD floor and 24/7 RN requirement. Duane Morris LLP: duanemorris.com. Official HHS: hhs.gov.
One Big Beautiful Bill Act (H.R. 1, Pub. L. 119-21), signed July 4, 2025. Medicaid funds ~62% of nursing home residents; bill cuts healthcare and food assistance by over $1T. aarp.org/advocacy/one-big-beautiful-bill-nursing-homes/.
Private Equity Stakeholder Project (2025): PE firms own approximately 5–13% of nursing homes (range reflects opacity in ownership structures; GAO 2022 estimate: ~5%; more recent analyses: 11–13%). healthcare-brew.com, Sept. 2025.
AARP Florida, Change of Ownership and Quality in Florida Nursing Homes (2025), via Center for Medicare Advocacy: 1-star facilities 10%→21%; 5-star 28%→14%; staffing −13%, −33 min/day. medicareadvocacy.org.
Orewa et al., Health Policy (Nov. 2025, Vol. 161): PRISMA-guided systematic review, 12 studies 2000–2024. PE ownership linked to higher deficiencies, hospitalizations, mortality. pubmed.ncbi.nlm.nih.gov/40729865/.
KFF analysis (Dec. 2025): 73% of U.S. nursing homes are for-profit, 20% nonprofit, 7% government-owned. skillednursingnews.com.
Medicaid reimbursement underfunding documented in multiple state and federal analyses. Cross-subsidy dynamic described in Health Affairs (2019) and Center for Medicare Advocacy resources. The Netherlands cost figure (~$8,000/month, ~€7,400) via CAREPATH.care, citing Dutch government subsidy structure: carepath.care/article/28/.
A-Mark Foundation, citing OECD 2021 data: U.S. 1.3% of GDP; OECD average 1.8%; Netherlands 4.4%. amarkfoundation.org.
Peterson-KFF Health System Tracker 2024: U.S. health spending $14,775/capita; peer-country average $7,860. KFF Health Policy 101 (2025): U.S. spends less than comparable countries per person on long-term care. healthsystemtracker.org.
National Academy of Social Insurance (2021): Germany’s Pflegeversicherung, 1995, near-universal, not means-tested, employer/employee payroll split. Germany LTC spending 1.5% of GDP (2017). nasi.org.
Japan Health Policy NOW: Kaigo Hoken, enacted 2000; “generous in both its coverage and benefits” by world standards. japanhpn.org/en/section-3-2/.
Canon Institute for Global Studies (2025): Japan LTC financing: 46.2% compulsory premiums, 46.1% public, 7.7% out-of-pocket. U.S.: majority out-of-pocket. cigs.canon.
KFF Health News, What Long-Term Care Looks Like Around the World (2023): Netherlands covers >90% of LTC costs publicly; no means-testing for institutional care. kffhealthnews.org.
The CLASS Act (ACA, 2010): voluntary public LTC insurance; suspended 2011 by the Obama administration, formally repealed 2012 (American Taxpayer Relief Act). Failed due to adverse selection in voluntary enrollment. American Prospect: prospect.org, Oct. 2020.
American Prospect (2020): private LTC insurance market from >100 carriers (2000) to <12 today, driven by systematic underpricing of claims risk. prospect.org.
WA Cares Fund (Washington State, 2019): mandatory 0.58% payroll tax effective July 1, 2023; $36,500 lifetime benefit beginning July 2026. Ballot initiative I-2124 (opt-out) failed November 2024. washingtonstatestandard.com.