People of traditional retirement age are the fastest-growing age group in California. The number of state residents age 65 or older is projected to rise by two-thirds in the coming years, from nearly 5.5 million in 2016 to almost 9.1 million in 2030. This increase is more than 20 times the modest 3 percent growth projected for residents under age 65, as shown in our new Fact Sheet, that includes county-by-county projections. The substantial growth in the number of older Californians will greatly increase the need for health care and other public services and supports that contribute to a decent quality of life as people age.
Yet, federal policy changes being pursued by the Trump Administration and by Republicans in Congress threaten to inflict serious harm on older adults, and the rapid aging of California’s population means that a growing number of state residents would be at risk.
What are some of the federal policy changes that pose a threat to older adults? The most immediate threat comes from the American Health Care Act (AHCA) of 2017, which was approved by House Republicans in early May. The AHCA would reverse the progress that California made in extending health coverage to millions of people under the framework of the Patient Protection and Affordable Care Act (ACA). The AHCA would disproportionately hurt older adults by:
- Substantially cutting support for Medicaid (Medi-Cal in California). Beginning in 2020, the AHCA would cap federal funding for Medicaid at a set amount per beneficiary, based on 2016 spending. This would dramatically shrink federal spending for Medicaid relative to what is projected under current law. In turn, reduced federal support for Medicaid would shift huge new costs to states. This is because the capped funding would not keep pace with projected cost increases. Although there would be a separate cap for seniors (people age 65 or older), per-beneficiary costs for this group are expected to increase substantially in the coming years as seniors continue to age and develop serious or chronic health problems and/or require long-term services and supports (LTSS), for which Medicaid is the primary payer. In other words, the AHCA would reduce federal support for seniors enrolled in Medicaid at a time when federal dollars will be needed the most. This means that California would be hard-pressed to adequately address the growing need for health care and LTSS as more adults reach their late 70s and beyond. While currently the majority (58 percent) of California seniors are under age 75, by 2035, the majority (53 percent) are expected to be age 75 or older. Per-beneficiary Medicaid costs for adults ages 75 to 84 are almost 50 percent higher than costs for those ages 65 to 74, and costs for adults age 85 or older are about 140 percent higher, according to estimates by AARP Public Policy Institute.
- Causing health care costs for older adults to skyrocket. The AHCA would make health coverage purchased on the individual market less affordable, particularly for older adults with low incomes who are not yet eligible for Medicare, which guarantees health coverage to people age 65 or older. For instance, the AHCA would:
- Restructure federal premium assistance, which lowers monthly health insurance payments, in a way that disadvantages people who are older and/or have lower incomes;
- Eliminate federal subsidies that reduce the cost of copays and deductibles for people with low or moderate incomes;
- Allow insurers to charge older adults five times more than what they charge younger people, unless a state sets a different limit (currently, insurers may charge older adults only three times more);
- Allow states to waive protections for people with pre-existing health conditions, which would disproportionately harm older adults, who are far more likely to have such conditions; and
- Allow states to waive the current requirement that insurers cover essential health benefits like prescription drugs, which would substantially increase out-of-pocket costs for people who need benefits and services that are excluded from their basic health plan.
The Congressional Budget Office (CBO) estimates that under the AHCA, a 64-year-old with an annual income of $26,500 would have to pay more than half of her income ($13,600) in premiums for health coverage purchased on the individual market, up from $1,700 under the ACA. In other words, this individual would incur an 800 percent increase in premium costs. Faced with dramatically higher health care costs, many people would be unable to afford health coverage. In fact, the share of people ages 50 to 64 with incomes below 200 percent of the federal poverty line who lack health insurance would more than double if the AHCA becomes law, according to CBO estimates. This is largely because premiums and out-of-pocket costs would rise. Losing access to health coverage at this stage of life, when there’s a higher risk of experiencing life-threatening and costly illnesses like cancer, diabetes, and heart disease, could have serious implications. One study, for example, found that a lack of health coverage may have contributed to more than 100,000 deaths nationwide among people ages 55 to 64 between 1992 and 2000, making “uninsurance” the third leading cause of death in this age group.
In addition to the threat that the AHCA poses for older adults, there are the deep cuts that President Trump has called for in key federal programs. The President’s proposed budget for federal fiscal year 2018 (which begins on October 1, 2017) would harm older Californians on a number of fronts. For example, the President proposes to:
- Slash critical food assistance for struggling families and individuals, by cutting the Supplemental Nutrition Assistance Program (SNAP), known as CalFresh in California, by more than one-quarter ($193 billion) over 10 years. This massive cut would largely be achieved by shifting to the states up to 25 percent of the cost of food assistance — ending the federal government’s commitment to fully cover benefit costs for this vital anti-hunger program. This shift would likely undermine California’s efforts to boost historically low CalFresh participation among older adults with low incomes. The state would have to contribute an estimated $1.8 billion annually just to maintain CalFresh food assistance at current benefit and participation levels. Enrolling additional eligible Californians would increase the state’s costs for CalFresh even more.
- Reduce assistance for people with severe disabilities, by cutting $64 billion over 10 years from Social Security Disability Insurance (SSDI) — an essential part of Social Security that provides economic security to workers who become disabled before retirement age. This cut would hit Californians in their late 50s and early 60s especially hard given that older workers are far more likely to suffer a severe disability that prevents them from working. Denying access to SSDI could mean that some disabled older adults would go into retirement in worse financial shape than they otherwise would have.
- Cut Supplemental Security Income (SSI) by about $9 billion over 10 years by creating a “family penalty” for relatives who receive SSI and live together. SSI is the federal portion of SSI/SSP grants, which help low-income seniors and people with disabilities pay for basic necessities. SSI/SSP grants are extremely modest, providing a maximum of just $1,510 per month for couples. With California’s high and rising housing costs, cuts to SSI/SSP would make it even harder for seniors with low incomes to afford rent, food, and other necessities.
- Cut other critical supports and services that benefit older Californians, such as by:
- Eliminating the Low Income Home Energy Assistance Program (LIHEAP), which provides short-term assistance with heating and cooling bills for over 200,000 California households, more than one-third (36 percent) of which include a person age 60 or older.
- Eliminating the Community Development Block Grant (CDBG), which supports a variety of local services. These include Meals on Wheels, which helps adults age 60 or older remain in their homes by providing meals and opportunities to socialize.
- Cutting federal rental housing assistance, which helps more than 450,000 California households — 43 percent of which are headed by an adult age 62 or older — afford to keep a roof over their heads.
Many older Californians already struggle to make ends meet, and these federal policy changes would make it even harder for them to get by.
— Alissa Anderson