child drawing with chalk

Medicaid for Children Pays Off Later

Medicaid health insurance, which covers a third of the nation’s children, has a payoff down the line: fewer adults on disability.

A well-known benefit of Medicaid is that low-income children covered under the insurance program turn into healthier adults. But a recent study found that these health improvements translate to another positive outcome for adults: fewer applications to Social Security’s Disability Insurance (SSDI) program, which provides monthly cash benefits to people who are not healthy enough to work.

The study, conducted by researchers at Middlebury College and Vanderbilt University, used U.S. Census data to follow 63,000 individuals between ages 25 and 64 who were exposed to Medicaid for various lengths of time during childhood, depending on when they were born and when their state first implemented the program, which Congress passed in 1965.

First, the study confirmed the health benefits of Medicaid coverage for children: the adults in the study could more easily pass a few basic tests of health and physical stamina, such as lifting 10 pounds, standing for an hour, and walking up 10 stairs.

And better health did, indeed, reduce their applications for SSDI – and ultimately, the number of adults receiving disability benefits. In fact, the longer they would have been insured under Medicaid as children, the less likely they were to apply for disability, said the study, which was for NBER’s Retirement and Disability Research Center.

This is a clear example of how early intervention can reduce government spending down the road. …Learn More

People in their Prime are Working Less

Line graph showing labor force participation since 1990The decline in Americans’ labor force activity started around the year 2000 and accelerated after the 2008-2009 recession. Labor force participation is now at its lowest level since the 1970s.

The main reason for the drop is our aging population. But the news in a systematic review of current research in this area is a more troubling trend that’s also driving it: people in their prime working years – ages 25 through 54 – are falling out of the labor force.

Prime-age men are the most active members of the labor force. Yet in 2017, only 89.1 percent of them were either working or seeking a job, down from 91.5 percent in 2000, according to the review by University of Southern California economists.

Prime-age women’s labor force activity also fell, to 75.2 percent in 2017 from about 77 percent in 2000. This decline ends decades in which women were streaming into the nation’s workplaces at an increasing rate. One possible reason for the leveling off is the scarcity of family-friendly policies, including more generous childcare assistance.

The forces pushing and pulling various groups in and out of the labor force make it difficult to pin down the primary reasons for the overall drop in participation. The decline among prime-age men and women may be tied to opioid addiction, alcoholism, and suicide. Other studies point to the surge in incarcerations of black men.

And while technological advances like robots and growing trade with China have increased the need for many highly skilled workers, they have reduced the demand for less-educated, lower-paid people, including U.S. factory workers, in their peak working years. The resulting fall in their wages has also made work less attractive to them. …Learn More

Photo of Chapter 7 form

1 of 3 in Bankruptcy Have College Debt

One thing bankruptcy won’t fix is college debt, which – in contrast to credit cards – can’t usually be discharged by the courts.

One in three low-income people who have filed for bankruptcy protection from their creditors have student loans and face this predicament, according to LendEdu, a financial website.

The debt relief they can get from the courts is very limited, because the aggregate value of their non-dischargeable college loans is almost equal in value to all of their other debts combined, including credit cards, medical bills, and car loans.

Under these circumstances, a bankruptcy filing “does not sound like a financial restart,” said Mike Brown, a LendEdu blogger.

Although LendEdu analyzed data for low-income bankruptcy filers, the court’s inflexibility around student loans affects a wider swath of college-educated bankruptcy filers.

In the past, individuals were permitted to use bankruptcy to reduce their college loans. But in 1998, Congress eliminated that option unless borrowers could show they were under “undue hardship,” a legal standard that is notoriously difficult to satisfy.

While the legal requirement hasn’t changed since 1998, paying for college has become far more onerous. Americans today owe nearly $1.6 trillion in student debt, which ranks second only to outstanding mortgages. …Learn More

Expect Widows’ Poverty to Keep Falling

Line chart showing poverty rates for widows and married womenThe poverty rate for widows has gone down over the past 20 years. This trend will probably continue for the foreseeable future.

Women face the risk of slipping into poverty when a husband’s death triggers a drop in retirement income from Social Security and a pension (if he had one). But beginning in the 1970s and 1980s, women moved into the nation’s workplaces at an unprecedented pace.

Women now make up nearly half of the labor force and are more educated, which means better jobs – and better odds of having their own employer retirement plan.  As a result, they have become increasingly financially independent.

This trend of greater independence is now showing up among older women. Widows between ages 65 and 85 put in 10 more years of work than their mother’s generation, which has helped push down the poverty rate from 20 percent in 1994 to 13 percent in 2014, according to the Center for Retirement Research. …Learn More

Health Plan Deductibles Triple in 10 Years

The evidence continues to pile up: workers are having a very hard time affording their high-deductible health plans, which have gone from rare to covering nearly a third of U.S. workers.

Between 2008 and 2018, the deductibles in employer health plans more than tripled – growing much faster than earnings. Workers’ full insurance coverage doesn’t kick in until they pay the deductibles, which now exceed $3,000 for individuals and $5,000 for families in the highest-deductible plans. Add to that a 50 percent hike in premiums during that time.

Some 156 million people get health insurance through work, and they’re largely grateful to have it. They blame rising medical costs on insurers and pharmaceutical companies – and not their employers and healthcare providers – a new Kaiser Family Foundation survey said.

One in four said medical bills or copayments for drugs and doctor visits are severely straining their budgets, and the Commonwealth Fund, another healthcare researcher, estimates that the typical worker spent about 12 percent of his income on deductibles and premiums in 2017, compared with 8 percent in 2008 – the figure is closer to 15 percent in Louisiana and Mississippi.

The solution is often to forgo or postpone care. And the higher an employee’s deductible – no surprise – “the more likely they are to experience problems affording care or putting off care due to cost,” Kaiser said. Inadequate medical care is especially dangerous for people with chronic conditions. …Learn More

Social, Economic Inequities Grow with Age

Retirement, as portrayed in TV commercials, is the time to indulge a passion, whether tennis, enjoying more time with a spouse, frequent socializing, or civic engagement.

Boston University sociologist Deborah Carr isn’t buying this idealized picture of aging.

Golden Years book jacket“This gilded existence is not within the grasp of all older adults,” she argues in “Golden Years? Social Inequality in Later Life.” “For those on the lower rungs of the ladder,” she writes, retirement is “marked by daily struggle, physical health challenges and economic scarcity.”

Her book, which mines multidisciplinary research on aging, reaches the distressing conclusion that economic inequality not only exists but that it becomes more pronounced as people age and become vulnerable. And this problem will grow and affect more people as the population gets older.

Poverty has actually declined among retirees since the 1960s. But by every measure – health, money, social and family relationships, mental well-being – seniors who have a lower socioeconomic status are at a big disadvantage. They have more financial problems, which creates stress, and they are more isolated and die younger.

Throughout the book, Carr documents the myriad ways the disparities, which begin at birth, reinforce each other as people grow up and grow old.

“Advantage begets further advantage, and disadvantage begets further disadvantage,” Carr concludes. For the less fortunate, “old age can be the worst of times,” she said. …Learn More

Medical Costs Slam a Minority of Seniors

As retirees’ health declines, their medical costs go up. These costs include both everyday healthcare expenses and long-term care costs.

The everyday expenses that Medicare does not cover – Part B and Part D premiums, copayments, eyeglasses, and dental care – consume about 20 percent of the incomes of households ages 75 and over. While not exactly good news, 20 percent is “perhaps manageable” for most, concluded researchers at the Center for Retirement Research in a summary of various studies in this area.

The real problem comes for the unlucky minority – about 5 percent of seniors – who spend more than half of their income out of their own pockets for healthcare.

Turning to long-term care, these services are less frequently required but can be very costly. For example, while many nursing home stays are relatively short, a lengthy stay is a potentially crippling expense. One common trigger for a long-term stay is dementia.

The retirees facing the greatest financial risk from health care expenses tend to be those who earned enough to buy a house and put money away in their employer’s retirement plan. They have more to lose if their wealth is eaten up by exorbitant medical costs. The poor, in contrast, are covered by Medicaid, which often pays for Medicare premiums and long-term care. …Learn More

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