Nearly half of elderly Kentuckians are economically insecure—meaning they either live in or are at risk of falling into poverty—according to a new study from the Economic Policy Institute (EPI). Yet instead of safeguarding programs that help seniors meet their basic needs, proposals to cut Medicare and Social Security threaten to push even more seniors into economic vulnerability.
To measure elder vulnerability, EPI uses 200 percent of the U.S. Census Bureau’s Supplemental Poverty Measure (SPM). The SPM improves on the flawed Federal Poverty Line by accounting for out-of-pocket health care costs which are typically high for elderly households, as well as resources seniors have available through government transfer programs. Even the supplemental measure doesn’t fully account for how much it really costs seniors to live, which is measured more accurately by Wider Opportunity for Women’s Elder Index. That index is not yet available for every state. But EPI finds that 200 percent of the SPM approximates the elder index, and so uses it as a proxy for elderly economic vulnerability.
The report shows that 48 percent of elderly Kentuckians fall below 200 percent of the SPM. For those falling between 100 and 200 percent, households may still struggle to meet basic needs and an illness, accident or some other economic shock could push them into poverty.
As EPI explains, House Budget Committee Chair Paul Ryan’s plan to limit Medicare costs by shifting to a voucher system could drive 3.5 million more elderly Americans into economic insecurity by 2022. Because the voucher’s value will be set at a rate that is likely to fall behind growth in health care costs, out-of-pocket spending will go up and seniors may seek less care. With less income and more health needs than working-age adults, the elderly already spend a larger portion of their income on medical costs.
Under President Obama’s proposal to tie Social Security cost-of-living adjustments to a more modest “chained” CPI than the one currently used, elderly Americans would see their Social Security benefits diminish in proportion to the cost of living over time. EPI estimates that the change could push 132,000 seniors into economic vulnerability. That’s a smaller impact than turning Medicare into a voucher, in part because the proposal includes protections for low-income and older beneficiaries.
But both proposals assume that immediate benefit cuts to Medicare and Social Security are needed even while forecasts show that Medicare’s financial condition is improving while Social Security has enough money to pay full benefits until 2033 and about 75 percent of benefits after that. Neither program is at risk of bankruptcy, as is often falsely claimed.
Meanwhile, Kentucky has the 17th largest percentage of economically vulnerable elderly compared to other states, and a recent report from the United Health Foundation ranks Kentucky 5th from the bottom among states in terms of senior health. State budget cuts in recent years have included programs serving seniors like Meals on Wheels, and sequestration’s looming affect on senior aid programs are adding to the challenges facing Kentucky seniors.
The precarious economic condition of many seniors should be taken into account before further cutting the supports we all count on in old age.