Medicare Gaps and Widow Poverty

Several categories of medical expenditures are not covered by Medicare, including prescription drugs, most nursing home stays, and extended hospital visits. Out-of-pocket costs for these items can be substantial, and what’s more, they are likely to be concentrated at the end of life. At the same time, it is well documented that poverty is 3-4 times more common among widows than among similarly aged married women. This study examines the potential link between these two phenomena, asking the question: to what extent do out-of-pocket health care costs of a dying spouse affect the financial position of the survivor? We find that out-of-pocket medical spending increases substantially just prior to death, and that these expenditures are large relative to income for a large share of elderly couples. Simulations investigate the extent to which expansions in insurance coverage to include nursing home care or prescription drug coverage could improve the financial well-being of the surviving spouse.

Transfer Behavior within the Family: Results from the Asset and Health Dynamics Survey

If an individual falls on hard times, can he rely on his family for financial support? In view of proposed reductions in public assistance programs, it is important to understand the mechanisms through which families provide support for their members. In this paper we provide evidence that intra-family transfers are compensatory, directed disproportionally to less well-off members. These results hold both for the incidence of transfers and for the amounts. Within a given year, adult children in the lowest income category are 6 percentage points more likely to receive a financial transfer from their parents, and on average they receive over $300 more than siblings in the highest income category. The data used in this study, the new Asset and Health Dynamics Survey (AHEAD), contain information on all children in the family. Thus we are able to estimate models which control for unobserved differences across families. Our results are robust to these specifications. Additionally, we do not find evidence that parents provide financial assistance to their children in exchange for caregiving.

The Economic Status of Elderly Divorced Women

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Understanding Participation in SSI

Working Paper: 2015-319The Supplemental Security Income program (SSI) provides a guaranteed income for the elderly. As such it can serve to mitigate any deleterious effects of reductions in Social Security benefits that might result from any Social Security reform. However, participation in SSI among qualified individuals has proven to be low. We show that this low participation rate, just over 50%, observed at the program’s inception has continued to today with little if any change. We also find that transfers from children are far larger among eligible non-participants suggesting that family assistance may offset the need for public assistance.Social Security Administrationhttp://deepblue.lib.umich.edu/bitstream/2027.42/111040/1/wp319.pdfDescription of wp319.pdf : Working pape

Liquidity Constraints, the Extended Family, and Consumption

This study examines whether the extended family influences consumption. Extending prior tests on food consumption to total consumption, little to no evidence is found in support of altruism among related households and or that fluctuations in dynastic income affects one’s own consumption. However, the effect of transitory fluctuations in own income on consumption are contingent on own wealth and the wealth of the extended family, with estimates of the marginal propensity to consume roughly three times higher for individuals whose own and extended family wealth is low versus individuals whose own and extended family wealth is high.Social Security Administrationhttp://deepblue.lib.umich.edu/bitstream/2027.42/111883/1/wp320.pdfDescription of wp320.pdf : Working pape

Race/Ethnic Differences in Spatial Distance Between Adult Children and Their Mothers

ObjectiveThis brief study examines race/ethnic differences in geographic distance to mothers among adults in the United States.BackgroundRace/ethnic differences in rates of adult children living with their mothers in the United States are well documented, but spatial distances beyond shared housing are not.MethodSpatial distances between residential locations of adults aged 25 years and older and their biological mothers are estimated using the 2013 Panel Study of Income Dynamics for Hispanics, Blacks, and Whites. Multinomial logistic regression models and nonlinear decomposition techniques are used to assess the role of demographic factors, socioeconomic status, and health of the child and mother in accounting for race/ethnic differences in adult child–mother proximity.ResultsBlacks are more likely than Whites to live with their mother and more likely to live within 30 miles but not coresident, whereas Whites are more likely to live more than 500 miles away. Geographic proximity to the mother is distinct for Hispanics with nearly one third having their mother outside the United States. Demographic, socioeconomic, and health factors account for the fact that Blacks are about twice as likely as Whites to live with their mother but do not fully account for large White–Black differences in proximity outside the household. The most important factor accounting for White–Black differences is marital status for coresidence, but education for proximity in the United States beyond coresidence.ConclusionNew national estimates illustrate the complexity of race/ethnic differences in proximity to mothers that are not reflected in studies of coresidence.Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/154396/1/jomf12614_am.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/154396/2/jomf12614.pd

Social Security, Economic Growth, and the Rise in Independence of Elderly Widows in the 20th Century

The share of elderly widows living alone rose from 18 percent in 1940 to 62 percent in 1990, while the share living with adult children declined from 59 percent to 20 percent. This study analyzes the causes of this change and finds that income growth, in particular increased Social Security benefits, was the single most important factor causing the change in living arrangements accounting for nearly two-thirds of the rise in the share of elderly widows living alone. Changes in benefits from the mean-tested OAA/SSI programs had a lesser impact on the decision to live alone but were a significant factor in explaining changes in the living arrangements of the poorest widows. Furthermore, contrary to recent work, we find no evidence that the effect of income on living arrangements became stronger over the period; income had a substantial positive effect on the propensity to live alone as early as the 1940s and 1950s. Finally, the substantial changes observed in the composition of the population with respect to age, race, immigrant status, schooling, and completed fertility explain a relatively small share of the changes in living arrangements.