The Position of the Elderly Within the US Economy - Research Paper Example

Due to the current economic crisis in the country, many elderly are now at risk of being plunged into the abyss of poverty Introduction At least 3.5 million American seniors aged 65 and over live below the poverty while millions more barely eke out a living above the poverty line. (Hawthorne, 2009) In 2006 9.4 percent of US seniors had below poverty line incomes of US$9, 669 as singles and US$12,186 as couples. (Hawthorne, 2009) During 2006, approximately one fourth of elderly Americans received household incomes falling “below 150 percent of the poverty line.” (Hawthorne, 2009) The income does not tell the entire story since estimate incomes do not take into account the cost of medicine and the special needs of the elderly. (Hawthorne, 2009) The extent to which human services organizations provide this measure of help for the elderly ultimately determines how much of their income is free. Human services organizations provide “services to clients to help them improve the quality of life.” (United States Department of Labor, 2007) For many years the Federal Government has attempted to assist the elderly and all others who are unable by reason of infirm health to earn an income, via Social Security. (King, 2007) In line with Social Security benefits, the Federal Government also made provision for Medicare in 1965, a mainstream health insurance program for the elderly. (King, 2007) Medicaid, “administered by states in partnership with the Federal Government” was also introduced in 1965. (King, 2007) Medicaid is also a form of health care and other related services not typically available by virtue of Medicare. (King, 2007) Despite these organizations, the elderly in the US continue to remain in economic trouble. As indicated a significant number of elderly Americans remain either below or at the poverty line. In today’s economic crisis, it is entirely unlikely that the numbers of elderly persons living in impoverished conditions will decrease. The reason for this is that the attention and budgets are largely focused on repairing the fledging economy rather than closing the gap between the rich and the poor. This paper will explore the position of the elderly within the US economy and the organizations that respond to their respective financial difficulties. By doing so, it will be possible to explore and evaluate why and how the elderly in the US are in increasing danger of being left behind in the abyss of poverty, particularly in the current economic crisis facing the nation. Social Security and the Elderly Social security reform has never taken specific aim at the elderly and may account for the current status of impoverished elderly Americans. While there is a “strong commitment at all levels of” US government to provide human services to help needy Americans from all walks of life (Eberts and Gisler, 42), statistics reveal that most of the efforts have not been productive among the elderly. Social Security is the primary method for assisting the needy in the US. (Boskin, 1) Under the current law with respect to US social security, social security is predicated on the theory that assistance is necessary for maintaining a fair quality of life for those who cannot earn incomes on account of age, death or disability. To this end, previous workers who have either reached the age of retirement or have become disabled are entitled to Social Security benefits that corresponds with how long they have worked and how much they previously earned. The spouses and children of those entitled to Social Security benefits are also eligible for Social Security. (Chapman and Ettlinger, 2005) The elderly continue to remain the largest group to receive Social Security benefits in the US. (Chapman and Ettlinger, 2005) For 65 percent of Americans over the age of 65, Social Security comprises at least half of their income. (Chapman and Ettlinger, 2005) An additional one third of this demographic rely on Social Security to provide at least 90 percent of their income. (Chapman and Ettlinger, 2005) This heavy reliance on Social Security among the elderly is virtually the same across race, gender and “state of residence.” (Chapman and Ettlinger, 2005) For Americans aged 75 and older, this reliance on social security becomes even more significant because at this age, a majority of their savings have been depleted and health care adds to daily expenses and maintaining a basic quality of life. (Chapman and Ettlinger, 2005) Moreover, the current economic crisis has even greater significance for increased poverty among the elderly having regard to the heavy reliance on social security. Chapman and Ettlinger (2005) explain that: “With the rate of savings at historically low levels, there is reason to believe that coming generations of retirees will not be in any better position.” As a result of the current economic crisis, the Social Security fund faces dire problems, indicating increased financial difficulties for the elderly. In the current economic climate, there is a “lack of wage growth to generate needed tax revenues” that are necessary for funding social security. (Mitchell, Meyers and Young, 5) The result is: “The burden of this unfunded liability, and the interest required to pay the debt, implies that virtually all workers today anticipate very much lower net returns from the system than did their parents and grandparents.” (Mitchell, Meyers and Young, 5) Social Security is in danger of becoming obsolete as a result of the current imbalance of payables and receivables. The long term consequences are that those workers funding Social Security today will have an increased risk of receiving even lower Social Security benefits when they become aged and unable to work. Moreover, with the slow job growth rate and the growing numbers of unemployed, today’s workers also have a greater chance of retiring with no appreciable savings and a greater reliance on social security benefits. It therefore follows that the current numbers of impoverished elderly Americans can only increase. Medicare Medicare, like Social Security is a federal government program. (John, 2005) Medicare is a human services program that is designed to provide health costs assistance to America’s aged. (John, 2005) Although part of the funding for Medicare originates from the Social Security fund, Medicare is also funded by “premiums and general revenue.” (John, 2005) Moreover, the Social Security Administration, the organization that administers social security benefits does not administer Medicare. (John, 2005) In a typical case, the elderly is eligible for Part A Medicare assistance, if and when they attain the age of 65 or older and worked for at least 10 years “in Medicare-covered employment”. (Medicare, 2008) Additionally, the applicant would have to be a US citizen or permanent resident of the US. (Medicare, 2008) However, there are exceptions to the extent that workers who were not in Medicare-covered employment may receive Medicare benefits. Those persons will have to have retired and receive benefits from either Social Security of the Railroad Retirement Board. (Medicare, 2008) Medicare is also available if the applicant is “eligible for” for social security or Railroad Retirement benefits or a spouse was engaged in Medicare-covered government employment. (Medicare, 2008) Part B Medicare coverage is only available to those who have paid premiums into Medicare, specifically for Part B coverage. (Medicare, 2008) Part A Medicare coverage provides assistance with respect to inpatient hospital care, “critical access hospitals”, “skilled nursing facilities (not custodial or long-term care),” as well as “hospice care and some home health care.” (Medicare, 2008) Part B Medicare coverage aids in covering the costs of “doctor’s services”, “outpatient care,” and other medical services that are not covered by Part A. (Medicare, 2008) As of 2009 monthly premiums for Plan B Medicare coverage was US96.40 and is higher for those who did not subscribe to Part B when they first became eligible for it. (Medicare, 2008) Medicare’s funding which is reliant upon worker’s tax contribution and premium payments places a burden on the young to fund the medical expenses of the old. (Rettenmaier and Saving, 1) History and conventional wisdom dictates that “the growth in per capita expenditures” lags behind the “growth in the young’s average earnings.” (Rettenmaier and Saving, 1) Add to this: “…the demographic changes, which include longer periods of retirement and a bulge in the number of retirees, the implied tax rates that will be necessary in the near future will double.” (Rettenmaier and Saving, 1) The current economic crisis threatens to cut off Medicare or at least substantially reduce its assistance to the elderly. Current projections estimate that the primary funding for Medicare will be entirely depleted by the year 2016. (Medicare News, 2009) The primary reasons for this projection is the rise in health care costs over the years and the lack of job growth and likewise the diminishing amounts of tax contributions and premium payments which necessarily follow for low job rates. (Medicare News, 2009) This inevitably means a decline in Medicare assistance to the elderly in the years ahead. As a result, the numbers of impoverished elderly Americans can only increase considering that the elderly American’s “limited budget” is already “stretched even further by higher expenditures on health care.” (Hawthorne, 2009) As it is: “Medical spending for those between the ages of 55 and 64 is almost twice the amount by those between the ages of 35 and 44. Health care costs have contributed to the rise in bankruptcy filings among the elderly.” (Hawthorne, 2009) Making matters worse, the government is already seeking to cut back on medical spending and aid. In light of the current economic crisis the Medicare Board of Trustees are projecting that the only remedy for saving the Medicare plan is to increase income taxes from 2.9 percent or to reduce Medicare benefits by 51 percent or “some combination of the two.” (Social Security and Medicare Crisis, 2008) Regardless of what route is adapted, the economic status of the elderly is doomed for further poverty. The reality is, reduced medical assistance by virtue of Medicare means greater expenditure for a group of persons who suffer greater health issues than any other group. An increase in tax contributions means a decline in savings which are important for retirement. Therefore, regardless of what route is taken, the elderly remains caught in the risk of increased poverty. Medicaid Medicaid is provided for under Title XIX of the Social Security Act and is a joint funding venture between Federal and State governments.(Centers for Medicare and Medicaid Services) Medicaid makes provision for health care assistance to individuals and families with low income and limited resources. However, the poor are not automatically covered by Medicaid and statistics reveal that approximately 60 percent of impoverished Americans do not qualify for Medicaid. As a result of the large number of poor elderly Americans the greatest source of assistance from Medicaid is nursing home support. (Ramirex de Arellano and Wolfe 1-143) In order to qualify for Medicaid, the applicant must in addition to have no health insurance coverage and low income, fall under specific categories of eligibility. Those categories include age, pregnancy, disability, blindness, resources and income so that most uninsured, poor elderly should qualify for Medicaid if they are US citizens or have immigrant status. (Centers for Medicare and Medicaid Services) Complicating matters for the elderly however, is the implementation of the Deficit Reduction Act 2005 which makes it more difficult for the poor elderly to obtain Medicaid. Under the Deficit Reduction Act 2005 all applicants are required to produce formal proof of citizenship or immigration status. (Deficit Reduction Act 2005) Additionally, the 2005 Act introduced a “look back period” of five years. (Deficit Reduction Act 2005) As a consequence any gifts made to or by applicants over a preceding five year period will be offset against Medicaid coverage on a dollar by dollar basis. (Deficit Reduction Act 2005) In most cases, the elderly are trapped in a scenario where they do not have the funds to realize the offset. Like Medicare, funding for Medicaid is an ongoing problem. In a typical case, the state funds Medicaid and the Federal Government will match that fund by providing 50 percent. (Centers for Medicare and Medicaid Services) As a result of the economic crisis states are experiencing difficulties with funding for Medicaid.(National Governors Association, June 2007) This can only mean that the Deficit Reduction Act 2005 will only be applied more rigorously with the result that more and more seniors will be left with minimal or no medical assistance. How Social Security, Medicare and Medicaid Fail the Poor Elderly As novel as Social Security, Medicare and Medicaid concepts are with respect to social security reform and providing human services to the poor and needy, it is plagued by funding issues and payables. These difficulties have become even more significant in times of great economic shortcomings. To start with budgets have never taken into account inflation adjustments and payables continue to be measured in terms of individual contributions. This is particularly so with respect to Medicare and Social Security. Complicating matters for the elderly, economist predicted and quite accurately that a large number of elderly Americans originating from the baby boomers would materialize in 2006. (Hawthorne, 2009) In other words a large number of persons were expected to reach the age of 60 in 2006. However, the current economic crisis, the ongoing rise in health care, government cut backs on health care assistance would contribute to the elderly putting off retirement so that future social security and Medicare benefits would be reduced. Health care, a major source of problems for the elderly will continue to absorb their savings so that poverty becomes even more likely. As it is, health care costs are rising and budgets for providing health care to the elderly continue to be cut in response to the economic crisis. Moreover, “health care costs have contributed to the rise in bankruptcy filings among the elderly.” (Hawthorne, 2009) Aside from difficulties paying for and receiving adequate health care assistance from government funded human services, the elderly are also struggling with utility bills. According to Hawthorne (2009): “Older consumers with the lowest incomes struggle the most to pay their utility bills – 35 percent of older households have incomes of less than US$20,000 and experience the greatest energy burden, or percentage of income spent on energy costs.” Food is another difficulty and expense facing the elderly who live below or at the poverty line. (Hawthorne, 2009) Food stamps are available to qualified Americans. According to Hawthorne (2009) elderly participation in food stamps is quite low and this is primarily due to procedures for applying and receiving foods stamps. In many cases the elderly are not in a physical or mental state to seek out and provide the necessary documentation for achieving food stamps. (Hawthorne, 2009) Conclusion No one doubts that Social Security benefits have reduced the number of impoverished elderly in the US. The difficulty however, is that the numbers of impoverished elderly Americans continue to outnumber that of the general population. In light of the economic crisis, budget cuts, retirement age delays and increasing health care costs have only contributed to the impoverished status of America’s elderly. The government’s focus on bailout programs and intermittent stimulus payoffs does not assist the elderly poor in any appreciable manner. Perhaps the only real solution for the government at this stage is to set aside funds for social security administration and adjust those payments to the elderly in such a way that inflation is accounted for. The government should also take a similar approach to Medicaid and Medicare ensuring that a larger number of elderly are eligible for such care. Reducing health care funding puts the government in a precarious situation because it only affects the quality of health care, regardless of the quantity. It therefore follows that the government should place a realistic ceiling on costs of health care and encourage responsible corporate citizenship. In other words, the government should encourage private health care facilities by virtue of tax benefits to offer discounted health services to the indigenous elderly. There is very little that can be done with respect to encouraging the elderly to process applications for food stamps. However, private and public human services such as the Social Security and Medicare Boards of Trustees should consider dispatching assistance to the elderly who qualify for food stamps. Certainly these persons come to the boards’ attention in the course of collecting Medicaid, Medicare and Social Security benefits. In the final analysis, once particular attention is placed on the elderly poor there are ways to reduce and prevent the escalating numbers of impoverished elderly Americans. The economic crisis will only grow worse if the elderly are forced to continue working as a result of insufficient health and financial benefits. The longer the elderly remain on the work force, the more difficult it becomes to create jobs for the younger generation. Works Cited Boskin, M. “Social Security and Retirement Decisions.” Economic Inquiry, Vol. 15(1), 2007, 1-25. Centers for Medicare and Medicaid Services (n.d.) http://www.cms.hhs.gov/MedicaidGenInfo/03_TechnicalSummary.asp#TopOfPage Retrieved June 10, 2009. Chapman, J. and Ettlinger, M. “Social Security and the Income of the Elderly.” Economic Policy Institute, EPI Issue Brief # 206, 4 April, 2005. Deficit Reduction Act 2005. Eberts, M. and Gisler, M. Careers for Good Samaritans and Other Humanitarian Types. McGraw-Hill Professional, 1998. Hawthorne, A. “Elderly Poverty: The Challenge Before Us.” The Arizona Republic, Mar, 7, 2009. http://www.tcaainc.com/index.php?option=com_content&view=article&id=74:elderly-poverty-the-challenge-before-us&catid=8:events Retrieved June 10, 2009. John, D. “How Today’s Social Security Works.” The Heritage Foundation, March, 2, 2005. http://www.heritage.org/research/socialsecurity/bg1827.cfm Retrieved June 10, 2009. King, E. “Are Today’s Seniors Destined to be Poor?” National Senior Citizens Law Center. December,2007.http://communities.justicetalking.org/blogs/day16/archive/2007/01/31/are-seniors-destined-to-be-poor.aspx Retrieved June 10, 2009. Medicare. Sept. 17, 2008. http://www.medicare.gov/MedicareEligibility/Home.asp?dest=NAV|Home|GeneralEnrollment#TabTop Retrieved June 10, 2009. Medicare News. Jan 19, 2009. http://seniorjournal.com/NEWS/Medicare/2009/20090119-EconomicCrisis.htm Retrieved June10, 2009. Mitchell, O.; Meyers, R. and Young, H. Prospects for Social Security Reform. University of Pennsylvania Press, 1999. National Governors Association. “The Fiscal Survey of the States.” June, 2007, http://www.nasbo.org/Publications/PDFs/Fiscal%20Survey%20of%20the%20States%20June%202007.pdf Retrieved June 10, 2009. Ramirez de Arellano, A. and Wolfe, S. “Unsettling Scores: A Ranking of State Medicaid Programs.” Public Citizen Health Research Group, Public Citizen Press. April, 2007, 1-143. Rettenmaier, A. and Saving, T. Medicare Reform: Issues and Reform. University of Chicago Press, 1999. Social Security and Medicare Crisis. 2008. http://www.dailykos.com/story/2008/8/19/72258/6158/998/568524 Retrieved June 10, 2009. United States Department of Labor. Dec. 2007. http://www.bls.gov/oco/ocos059.htm Retrieved June 10, 2009. Read More