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Health Care Costs Pushed More Seniors Into Poverty in 2011

Supplemental measure includes public benefits

A poor man peers out his screen door in Maine

— Photo by Micahel A. Bukaty/AP

An alternative poverty calculation by the Census Bureau said a little more than 15 percent of Americans age 65 and over lived in poverty in 2011. The bureau’s Supplemental Poverty Measure (SPM), released Nov. 14, reported a 15.1 percent poverty rate for those 65+, a much higher rate than the bureau’s official poverty measurement of 8.7 percent for the same age group.

See also: Boomers struggling to recover from Great Recession.

Why such an increase? The supplemental measure adds the value of government anti-poverty benefits like SNAP, or food stamps, and subtracts out-of-pocket costs paid for medical and child care costs, among others. People 65+ spend much more on medical expenses than other age groups do.

Along with those 65+, the supplemental poverty measure was higher than the official poverty measure among all other age and racial groups, except children and blacks. Overall, the 2011 supplemental poverty rate among all age groups was 16.1 percent, an increase of one percentage point over the official rate of 15.1 percent.  

“These numbers only reinforce the conversations we at AARP Foundation have with struggling people age 50+ every day. Older Americans are struggling to make ends meet. Whether they are trying to put healthy food on the table, pay their latest pharmacy bill or keep up with their heating bills, it’s very difficult for millions of people 50+,” said Jo Ann Jenkins, president of AARP Foundation.

For the past decade, AARP has advocated changing how the official poverty measurement is calculated. Here is a quick comparison of the two methods:

  • The supplemental poverty measurement adds key government anti-poverty programs that increase families’ disposable income such as earned income tax credits (EITCs) and in-kind public benefit programs like SNAP/food stamps. It also subtracts expenses that lower their disposable income. Along with out-of-pocket medical costs, these expenses include income and social security payroll taxes and work-related expenses like child care and transportation.
  • The official poverty measurement, on the other hand, includes none of these benefits or costs. Leaving out-of-pocket benefits and costs out of the equation means than the number of people 65+ who live in poverty is greatly underestimated.

In November 2010 AARP released a report which found that the official measurement greatly underestimates how many people 65-plus live in poverty. The official poverty measurement not only ignores health care expenditures. but also assumes incorrectly that older people need less food – and therefore less income – to meet their basic needs. The report called the official poverty measurement “woefully out of date.“

Also of interest: Your guide to public benefits. »

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