The “original” poverty metric has been used since the 1960s. But some argue that it’s an archaic measuring stick, since health care costs and — consequently — out-of-pocket spending on medical services have exploded in the ensuing decades. That means that, despite access to relatively generous health coverage through Medicare (another 1960s-era program), seniors have been forced to pay an increasing share of their retirement income on hospital and drug bills over the last 50 years. And seniors who suffer from costly, chronic medical conditions such as cancer and Alzheimer’s are especially burdened by those escalating costs.
Since the new measure takes these contemporary expenses into account, it paints a more accurate picture of the American poverty landscape. And as a state-level analysis of the numbers by the Kaiser Family Foundation highlights, things don’t look very good:
The share of seniors living in poverty is higher in every state under the supplemental measure than under the official measure, and at least twice as high in 12 states: California, Colorado, Connecticut, Hawaii, Massachusetts, Maryland, Minnesota, New Hampshire, New Jersey, Nevada, Wisconsin, and Wyoming.
The share of seniors living in poverty under the supplemental measure is especially high in some areas. Based on the supplemental measure, about one in four seniors (26%) are living in poverty in DC and roughly one in five seniors are living in poverty in six states: California (20%); Hawaii, Louisiana, and Nevada (19%), and Georgia and New York (18%).
One possible reason that senior poverty rates in the aforementioned states are so high when taking medical expenses into account is that hospitals in those regions may charge more money for drugs and medical services — certainly a possibility considering that U.S. medical prices are essentially arbitrary. Another potential explanation is that these states have more seniors who are less likely to be eligible for Medicare due to immigration or citizenship status, and a higher number of poor seniors with chronic medical conditions.
But the key takeaway from the numbers is that, despite many seniors’ access to generous public health entitlements, they still can’t afford the associated costs of their medical care. And that means that efforts to reduce the federal deficit through cuts to health care programs amounts to putting more fiscal strain on a vulnerable population that can’t even afford treatments under the status quo.
Yet, the congressional GOP — and some Democrats — has vehemently encouraged such cuts. For instance, Republicans insisted on raising the Medicare eligibility age from 65 to 67 during budget negotiations in February, even though such a move would only net $5.7 billion in federal savings while shifting double that amount in costs onto seniors.
Similarly, plans to increase cost-sharing in Medicare and hiking seniors’ premiums would also be devastating given the new poverty data — especially considering that even wealthier Americans are worried about paying for their health care after retirement and that one in four seniors already go bankrupt over their medical bills.
The only efficient way to cut health entitlement spending without crushing vulnerable Americans under the weight of their medical care is to lower the actual cost of health care itself — and there is some evidence to suggest that a combination of Obamacare and systemic changes within the health care sector is already doing exactly that. But during a time when sequestration is already putting the squeeze on elderly Americans, cutting Medicare benefits or shifting costs onto seniors would be a cruel and counterproductive way to cut spending.