January 23, 2020
Medicaid Expansion has Saved Lives
The recent rise in Americans’ death rates is a crisis for the lowest-earning men. They are dying about 15 years younger than the highest-earners due to everything from obesity to opioids. Women with the lowest earnings are living 10 years less.
But healthcare policy is doing what it’s supposed to in the states that expanded their Medicaid coverage to more low-income people under the Affordable Care Act (ACA): helping to stem the tide by making low-income people healthier.
An analysis by the Center for Poverty Research at the University of California, Davis, found that death rates have declined in the states that chose to expand Medicaid coverage. The study focused on people between ages 55 and 64 – not quite old enough to enroll in Medicare.
Medicaid has “saved lives in the states where [expansion] occurred,” UC-Davis researchers found. They estimated that 15,600 more lives would have been saved nationwide if every state had covered more of their low-income residents.
This is one of many studies that takes advantage of the ability to compare what is happening to residents’ well-being in states that expanded their Medicaid programs with the states that did not. Progress has come on many fronts.
In expansion states, rural hospitals, which are struggling nationwide, have had more success in keeping their doors open. By covering more adults, more low-income children have been brought into the program, which one study found reduces their applications for federal disability benefits as adults. And low-income residents’ precarious finances improved in states where Medicaid expansion reduced their healthcare costs. …Learn More
January 21, 2020
Denied Disability, Yet Unemployed
Most people have already left their jobs before applying for federal disability benefits. The problem for older people is that when they are denied benefits, only a small minority of them ever return to work.
Applicants to Social Security’s disability program who quit working do so for a combination of reasons. They are already finding it difficult to do their jobs, and leaving bolsters their case. However, when older people are denied benefits after the lengthy application process, it’s very challenging to return to the labor force, where ageism and outdated skills further complicate a disabled person’s job search.
A new study looked at 805 applicants – average age 59 – who cleared step 1 of Social Security’s 5-step evaluation process: they had worked long enough to be eligible for benefits under the disability program’s rules. The researchers at Mathematica were particularly interested in the applicants rejected either in steps 4 and 5.
Of the initial 805 applicants, 125 did not make it past step 2, because they failed to meet the basic requirement of having a severe impairment. In step 3, 133 applicants were granted benefits relatively quickly because they have very severe medical conditions, such as advanced cancer or congestive heart failure.
The rest moved on to steps 4 and 5. Their applications required the examiners to make a judgment as to whether the person is still capable of working in two specific situations. In step 4, Social Security denies benefits if an examiner determines someone is able to perform the same kind of work he’s done in the past. In step 5, benefits are denied if someone can do a different job that is still appropriate to his age, education, and work experience.
In total, just under half of the 805 applicants in the study did not receive disability benefits. …Learn More
December 10, 2019
Nursing Homes: Why They Cost So Much
One of retirees’ biggest fears is that they will have to go into a nursing home. This fear isn’t just psychological – it’s also financial.
Roughly half of older Americans will find themselves in a nursing home at some point, according to a 2015 estimate. These stays usually last months, but sometimes years, and the costs add up quickly for those who have to pay for them out of their own pockets.
At an average price of at least $225 per day for a semi-private room, a nursing home stay can put a big dent in retirees’ savings.
A new study in the journal Medical Care Research and Review on how much seniors pay out-of-pocket for facilities in eight states – California, Florida, Georgia, New York, Ohio, Oregon, Texas, and Vermont – found that prices across the board are rising at about two times the general inflation rate.
Some of the fastest price increases are in California and Oregon – 5 percent to 6 percent a year. There is also a large disparity between high- and low-cost states: the price tag for a typical New York nursing home is more than double the cost in Texas.
Yet little is understood about what’s behind the disparities. In this study, conducted for the Retirement Research Consortium, the researchers begin to uncover some of the things that determine whether an individual happens to live in a high-cost state.
One factor affecting the prices is the competitiveness of each nursing home market, which works in ways one would expect. When a small number of operators dominate in local markets, they can charge more. The results also suggest that prices are higher in markets where limited competition is combined with a high demand for beds.
Another important factor is who owns the nursing homes, and each state has a different mix of private and non-profit chains and smaller operators. For-profit companies own about 70 percent of U.S. nursing homes. More than half of the for-profit facilities are chains, and these chains charge the lowest prices.
The non-profit chains are the most expensive. Their prices, adjusted for staffing levels, location and other facility-level factors, are about 6.6 percent more than the for-profit chains – or about $4,160 more annually – the study found. …Learn More
November 12, 2019
From Disability to Low Retirement Income
By their early 60s, four out of five workers have chronic health problems. One in four has developed some type of physical or cognitive limitation.
If these problems force them to stop working, they can apply to Social Security for disability. But developing a disability late in a career still has long-term financial consequences. These workers not only give up their steady paychecks. Their preparations for retirement are also derailed at a critical time.
A 2018 study in the Journal of Disability and Policy Studies quantifies the financial fallout. Four groups were compared, each ranging in age from 67 to 69. One started receiving disability benefits sometime between 58 and 62. A second group went on disability between 62 and Social Security’s full retirement age, which is 66 for most boomers. The other two groups claimed their regular retirement benefits. One signed up between the earliest age allowed – 62 – and the full retirement age, and one started their benefits after the full retirement age, which yields a larger monthly check.
Where each of the four groups falls in a ranking of retirement incomes is easy to predict: the earlier a worker starts disability benefits, the less income he’ll have. Healthy retirees, on the other hand, enjoy big rewards from continuing to work, saving in a 401(k), accruing pension credits, and delaying Social Security.
Household income for the last group to retire was $76,000 per year at ages 67 to 69, with Social Security providing only about a third of it, according to researchers at Mathematica who conducted the study for the Disability Research Consortium. Households that claimed a retirement benefit between 62 and the full retirement age had $48,000 in income, with 45 percent supplied by Social Security.
The retirees who had been on disability were far worse off in their late 60s. If they started receiving the benefits between 62 and their full retirement age, they had only $36,000 in household income in their late 60s – not even half the income of the late retirees. Social Security retirement benefits were the largest source of income, supplying two-thirds of it. …Learn More
October 10, 2019
What’s Driving the Longevity Gap
The decline in U.S. life expectancy is unlike anything we’ve seen
Bombshell headlines like this popped up in major news outlets last November after the government reported that life expectancy in 2017 fell for the third year in a row.
This is a troubling break from the steady improvements in lifespans since 1900, which were powered by a combination of medical breakthroughs and healthcare policy. Early in the 20th century, antibiotics dramatically increased infant lifespans. Later, new treatments like statins and stents, as well as expanded access to healthcare through Medicare and Medicaid, increased life expectancy across the age range.
But there’s another story behind this story: life expectancy very much depends on where one falls on the economic ladder.
Between 1979 and 2011 – prior to the very recent fall in longevity – the increase in lifespans was much larger for more educated, higher-earning Americans than the gains for people with less education and lower incomes, according to a study by the Center for Retirement Research (CRR).
Smoking is an important factor in this socioeconomic divide. The decline in smoking and cardiovascular disease greatly contributed to rising longevity in the latter half of the 20th century. But while all Americans are smoking less today, those in lower socioeconomic groups still smoke much more. Today, one in four of them is a smoker, compared with just one smoker for every 10 people who attended college, the CRR found.
Looking ahead, education will remain a clear dividing line, and life expectancy will continue to depend crucially on the future prevalence and impact of smoking, as well as obesity, CRR predicted. …Learn More
September 17, 2019
Readers Debate Retirement Issues
It’s always interesting to see which Squared Away blogs get the strongest reaction from our readers. The June blog, “Husbands Ignore Future Widows’ Needs,” was one of them.
Some readers felt that the results of the study described in the article don’t match up with their experiences. The researchers determined that husbands often are not sensitive to the fact that if they sign up for Social Security in their early 60s, they could be locking in a smaller survivor benefit one day for their widows.
“The elderly couples with whom I do retirement planning are typically very conscious of each other’s needs,” said a critic named Jerry.
But financial planner Kathleen Rehl has the opposite experience when working with couples. “Most couples hadn’t previously known their options and ramifications of those choices,” she said. “Such an important planning concept.”
The blog was based on a study conducted for the Retirement and Disability Research Consortium – consortium studies by researchers around the country are featured regularly on Squared Away.
Here are other 2019 articles about the consortium’s research on various retirement and labor market issues that readers weighed in on: …Learn More
September 3, 2019
Second Careers Late in Life Extend Work
Moving into a new job late in life involves some big tradeoffs.
What do older people look for when considering a change? Work that they enjoy, fewer hours, more flexibility, and less stress. What could they be giving up? Pensions, employer health insurance, some pay, and even prestige.
Faced with such consequential tradeoffs, many older people who move into second careers are making “strategic decisions to trade earnings for flexibility,” concluded a review of past studies examining the prevalence and nature of late-life career changes.
The authors, who conducted the study for the University of Michigan’s Retirement and Disability Research Center, define a second career as a substantial change in an older worker’s full-time occupation or industry. They also stress that second careers involve retraining and a substantial time commitment – a minimum of five years.
The advantage of second careers is that they provide a way for people in their late 40s, 50s, or early 60s who might be facing burnout or who have physically taxing jobs to extend their careers by finding more satisfying or enjoyable work.
Here’s what the authors learned from the patchwork of research examining late-life job changes:
People who are highly motivated are more likely to voluntarily leave one job to pursue more education or a position in a completely different field, one study found. But older workers who are under pressure to leave an employer tend to make less dramatic changes.
One seminal study, by the Urban Institute, that followed people over time estimated that 27 percent of full-time workers in their early 50s at some point moved into a new occupation – say from a lawyer to a university lecturer. However, the research review concluded that second careers are more common than that, because the Urban Institute did not consider another way people transition to a new career: making a big change within an occupation – say from a critical care to neonatal nurse. “Unretiring” is also an avenue for moving into a second career.
What is clear from the existing studies is that older workers’ job changes may involve financial sacrifices, mainly in the form of lower pay or a significant loss of employer health insurance. But they generally get something in return: more flexibility. …Learn More