Private Capacity to Finance Long Term Care. EMPIRICAL RESULTS FOR THE ELDERLY

03/01/1983

The results presented in this section represent a first step in evaluating the ability of a majority of the elderly to contribute to the costs of long-term health care. Inevitably, some of the procedures described in the preceeding section must be modified to reflect the limitations of available survey data. In addition, the results presented here focus on single-person households and households consisting only of husband and wife. Over four-fifths of the elderly reside in such households. The small minority of the aged living in more complex families are included in the next section on impaired individuals.

The empirical work in this section and the next is based on two national surveys: the Survey of Income and Education (SIE) and the Survey of Consumer Expenditures (SCE). The larger and more recent (1976) SIE serves as the basis for the income estimates. The SCE provides information about expenditures on housing, food and other consumer goods. These expenditures are converted into a percentage of income in order to calculate a discretionary income figure using the SIE. The limited size of the SCE requires that the elderly be divided into fewer subgroups for analysis than would be possible if only the SIE were used. Nonetheless, these two data sets together provide a rich array of information.

The SCE estimates presented are expressed in 1976 dollars to make them commensurate with the SIE data. Median income for persons 65 and over was used to deflate the SCE income categories. No attempt has been made, however, to age the data to 1982. To do so properly would require considerable effort and expense that cannot be justified by the quality of the results. Rather, it is more appropriate to consider how the situation of the elderly has changed since 1976.

Real incomes of the elderly have grown slightly although the growth of the Consumer Price Index has been at nearly the same rate as nominal income for those 65 and over. Although the elderly may, on average, be better off now than in 1976 in terms of income, those who are in poor health may not have fared so well. The rate of growth of the price of medical care has exceeded the rates for income and for other prices. Consequently, for the elderly with high out-of-pocket medical costs, expenses are likely to have outstripped ability to pay for such care. Coverage of services from public sources has declined somewhat since 1980, particularly under Medicaid.

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