Tom Murphy
RedwoodAge.com
The federal poverty line covers less than half the basic expenses faced by senior citizens in California, according to a report that raises disturbing questions about the aging federal financial yardstick.
The federal standard falls short, in part, because it omits medical, housing, energy and transportation expenses, said Steven Wallace, the public health professor who wrote the report for the UCLA Center for Health Policy Research. The California study marks the second step in a national effort to develop a more accurate system.
Having a reliable financial measure is critical because the poverty line is used to determine eligibility for most public programs. A gap between the poverty line and actual household income can leave millions of seniors in a fiscal twilight zone with too little money for food, medicine or shelter, but too much to qualify for programs created to help.
Wallace, who is associate director of the center, unveiled the Elder Economic Security Standard Index, which can estimate costs much more accurately by using data from local sources.
"Knowing the true cost of living for older adults is vital if we are to ensure that elder Californians can meet basic needs and maintain their independence," said Wallace, who is also associate director of the center.
For example, the federal poverty guideline for a single elderly person is $10,210. But the average expenses of a California senior in good health is $21,011, according to the new index. The gap for a couple is even greater: $13,690 versus $30,537.
"The elder index is a fact-based and comprehensive look at expenses for elders," said Wallace. He said it can be used by lawmakers making policy decisions as well as individuals trying to plan for retirement.
The federal poverty line was developed four decades ago and relies on consumption surveys conducted in the 1950s. It is based only on the cost of the food needed to meet minimum nutritional requirements. And it fails to consider regional differences, such as the higher costs of living associated with areas such as California.
"The elder index for California takes into account the actual costs for housing, food, transportation, out-of-pocket medical expenses and other necessary spending," said Wallace.
To be sure, adopting an index that would allow millions of people to collect benefits through federal programs is a political hot potato. Even though the programs were designed to provide minimal food and shelter for the elderly, it would cost tens of billions of dollars to extend coverage to everyone who needs help. Getting that funding may be tricky considering efforts by conservative leaders to privatize Social Security and taper Medicare benefits.
A separate index, the Rappaport Retirement Index, was created recently to help boomers plan for retirement. It is meant as an alternative to the Consumer Price Index, which monitors rising costs.
18 States to Follow
California is only the second state - after Massachusetts - to develop a
regional elder index through this program, but four more are expected within the
next few months, according to Susie Smith, director of the California Elder
Economic Security Initiative, located at the Center for Community Economic
Development in Oakland. Eventually, 20 states will develop indexes, each
providing localized estimates for areas within each state.
"What the data so far is showing is that there's a huge gap between elders' income and expenses," said Smith. "What this [index] provides is an innovative way to assess what the real needs of seniors are and [a way] to address those needs as baby boomers start to retire."
While Massachusetts and California are among the most expensive states in the country, Smith said the program participants would be "very surprised" to find any states that are in line with the federal poverty line.
"What we'll see is variations," she said. "In some states, [expenses] could be 110 percent or 115 percent of the federal poverty line. But more likely than not, it's going to be closer to 150 to 200 percent, or even the 300 percent we see in California."
