Category Archives: Older People

Graham-Cassidy Legislation Threatens Affordable Coverage for Older Americans

Source: Lina Walker, Jane Sung, Claire Noel-Miller, and Olivia Dean, AARP Public Policy Institute, Fact Sheet, September 2017

The Graham-Cassidy (GC) bill, as proposed on September 13, 2017, threatens to make health care unaffordable and inaccessible for millions of older Americans. The bill eliminates two sources of financial assistance—premium tax credits and cost-sharing reductions—critical to ensuring that low- to moderate-income older adults are able to afford the coverage they need. For a 60-year-old earning $25,000 a year, premiums and out-of-pocket costs could increase by as much as $16,174 a year if they wanted to keep their current coverage. The bill may also allow states to charge older adults age 50–64 significantly higher premiums than under current law on the basis of their age by waiving federal protections that limit the practice known as age rating…..

Pension Plan Types and Financial Literacy in Later Life

Source: Yang Li, Jeffrey A Burr, Edward Alan Miller, The Gerontologist, Advance Articles, September 9, 2017
(subscription required)

From the abstract:
Background and Objectives:
The ongoing shift from defined benefit (DB) to defined contribution (DC) pension plans means that middle-aged and older adults are increasingly being called upon to manage their own fiscal security in retirement. Yet, half of older Americans are financially illiterate, lacking the knowledge and skills to manage financial resources. This study investigates whether pension plan types are associated with varying levels of financial literacy among older Americans.

Research Design and Methods:
Cross-sectional analyses of the 2010 Health and Retirement Study (HRS) (n = 1,281) using logistic and linear regression models were employed to investigate the association between different pension plans and multiple indicators of financial literacy. The potential moderating effect of gender was also examined.

Results:
Respondents with DC plans, with or without additional DB plans, were more likely to correctly answer various financial literacy questions, in comparison with respondents with DB plans only. Men with both DC and DB plans scored significantly higher on the financial literacy index than women with both types of plans, relative to respondents with DB plans only.

Discussion and Implications:
Middle-aged and older adults, who are incentivized by participation in DC plans to manage financial resources and decide where to invest pension funds, tend to self-educate to improve financial knowledge and skills, thereby resulting in greater financial literacy. This finding suggests that traditional financial education programs may not be the only means of achieving financial literacy. Further consideration should be given to providing older adults with continued, long-term exposure to financial decision-making opportunities.

Special Issue: Reforming State and Local Tax Systems

Source: Public Finance Review, Volume: 45, Number: 4, July 2017
(subscription required)

From the introduction:
State tax reform is fundamentally different than federal tax reform. States are continually modifying their taxes to meet revenue challenges and to cope with the changing structure of the national and regional economy. Most state tax reforms are modest affairs and not major rewrites of the tax codes. Reforms must consider the existing institutional structure of the state, state economic policies, and current state politics. Nonetheless, there are some common themes in reforms across the states, including an expansion of the sales tax base to include services and a broadening of the base for income taxation.

Articles include:
What Drives State Tax Reforms?
James Alm, Trey Dronyk-Trosper, Steven M. Sheffrin

State tax reform is fundamentally different than federal tax reform. States are continually modifying their taxes to meet revenue challenges and to cope with the changing structure of the national and regional economy. Most state tax reforms are modest affairs and not major rewrites of the tax codes. Reforms must consider the existing institutional structure of the state, state economic policies, and current state politics. Nonetheless, there are some common themes in reforms across the states, including an expansion of the sales tax base to include services and a broadening of the base for income taxation.


Personal Income Tax Revenue Growth and Volatility: Lessons and Insights from Utah Tax Reform

Gary C. Cornia, R. Bruce Johnson, Ray D. Nelson

In order to reduce the volatility of the personal income tax in Utah, review and reform efforts recommended a simple flat tax that disallowed all deductions or exemptions. Among the reasons for the recommended flat tax was the argument that it would result in a more stable year-over-year tax revenue stream. This was especially important for education financing. The tax system that was finally adopted retained exemptions and deductions through a tax credit. Using a series of simulations based on twenty-one years of tax returns, we establish that by retaining exemptions and deductions, tax reform efforts failed to appreciably reduce the volatility of personal income tax revenues. These simulations also show that the initially proposed flat income tax with no exemptions or deductions would have decreased volatility at the cost of reducing the growth rate. This study contributes insights, caveats, methodology, and potential alternatives for future individual income tax reforms by focusing on the growth and volatility of three different tax systems.

Reducing Property Taxes on Homeowners: An Analysis Using Computable General Equilibrium and Microsimulation Models
Andrew Feltenstein, Mark Rider, David L. Sjoquist, John V. Winters

We consider a proposal that reduces by half the taxes on homesteaded properties and replaces the lost revenue by increasing the base and rate of the state sales tax. We develop a computable general equilibrium (CGE) model and a microsimulation model (MSM) to analyze the economic and welfare effects of such a proposal if adopted in Georgia. The results from the CGE model suggest that the proposed reforms have a substantial negative effect in percentage terms on Georgia’s economy. The MSM suggests that such a policy has no effect on the distribution of consumption by income class but increases the percentage of owner-occupied housing relative to rental housing by 20 percent in the aggregate.

Does Perception of Gas Tax Paid Influence Support for Funding Highway Improvements?
Ronald C. Fisher, Robert W. Wassmer

The issue for this research is whether perception of the rate and amount of fuel taxes paid by an individual influences his or her support for funding highway improvements from any source of revenue. A survey of likely California and Michigan voters demonstrates that they often overestimate the rate of their state’s gasoline excise tax and the subsequent amount they are likely to pay for this tax in a month. Regression analyses show that voter misperceptions concerning the magnitude of state fuel taxes affect their views regarding an increase in funding to support highway investment proposals. A reasonable policy implication is that the adoption of proposals to generate additional funds for highway investment is more likely if accompanied by a campaign identifying the existing rate of the state’s gasoline excise tax and the relatively small amount of this tax paid by the state’s typical driver.

State Export Promotion and Firm-level Employment
Andrew J. Cassey, Spencer Cohen

Most US states have export promotion programs, but it is unknown if these programs create long-term employment, which is often the policy’s stated goal. We merge administrative export promotion and employment data from Washington State to test the effect of firm-level export promotion on firm-level employment using the differences-in-differences estimator. We believe we are the first to have US state data at this level of detail. We find firm participation in an export assistance program increases firm-level employment fleetingly, but not in subsequent periods. Thus, we do not find a statistically significant impact to long-term employment from program participation.

Protecting the Vulnerable or Ripe for Reform? State Income Tax Breaks for the Elderly—Then and Now
Ben Brewer, Karen Smith Conway, Jonathan C. Rork

State governments have a long history of providing income tax relief to their elderly constituents. Our research investigates the current distributional and revenue effects of these tax breaks, as well as the economic status of the elderly, and explores how these measures have changed since 1990. Using data from the 1990 Integrated Public Use Microdata Series and the 2013 American Community Survey, combined with the TAXSIM calculator, we calculate current state income tax liabilities and revenues and simulate the effects of removing all age-related tax breaks. Our analyses reveal that the economic well-being of the elderly has grown substantially relative to the nonelderly and that state tax breaks primarily benefit the middle- and upper-income elderly. Revenue costs of these tax breaks have also grown substantially, and their modest and mixed effects on income equality, measured by changes in the Gini, cast doubt on equity as a justification.

Our Aging, Caring Nation: Why a U.S. Paid Leave Plan Must Provide More Than Time to Care for New Children

Source: National Partnership for Women & Families, Issue Brief, June 2017

From the press release:
The nation’s aging population, increases in demand for family members to care for loved ones, and gender gaps in labor force participation are powerful forces aligning to make time for family care and serious personal medical issues essential components of any national paid family and medical leave plan. These are some of the findings of a new report released today, following the inclusion of a very limited paid parental leave proposal in the Trump administration’s FY 2018 budget proposal, and one week after a bipartisan group of scholars came together for the first time ever to announce core paid leave principles.

The report, Our Aging, Caring Nation: Why a U.S. Paid Leave Plan Must Provide More Than Time to Care for New Children, was prepared by the National Partnership for Women & Families. The group analyzed research on the health, financial and economic effects of paid leave policies, along with demographic and labor force data from all 50 states and the District of Columbia. The analysis highlights the significant deficiencies of public policy proposals for paid leave that exclude certain types of care, and specific states in which providing for family care and serious personal medical needs would be especially important.

State Revenues and the Aging Population

Source: Katherine Barrett and Richard Greene, PA Times, June 13, 2017

…. Not only are older people likely to need more services, especially health care; they also are inclined to bring in smaller amounts of revenue dollars, largely because their earned incomes tend to decline. Equally important, many states have tax laws that do not fully cover income from Social Security or pensions. This issue is growing in significance as the makeup of the population shifts. The number of U.S. residents over 65 is anticipated to grow by one-third over the next 15 years, according to the Census Bureau….

Elder Care Is a Looming Crisis. Hawaii Is Facing It Head-On

Source: Christina Cauterucci, Slate, Better Life Lab blog, June 5, 2017

…. If Gov. David Ige signs this legislation, people who work at least 30 hours a week outside the home and serve their kupuna as primary caregivers will be eligible for up to $70 a day in help from trained home aides. The Kupuna Caregiver Assistance Program would help a family caregiver continue to work outside the home, get some necessary breaks in caregiving work, and give her the money to pay a fair wage to the care workers she hires. It’s an important step toward meeting the needs of a fast-aging population and the family members who are expected—but too often financially unequipped—to shoulder the burden…..
Related:
Hawaii Long-Term Health-Care Bill Serves as National Model
Source: Rachel M. Cohen, American Prospect, January 12, 2016

Hawaii legislators are tackling the nation’s elder care crisis head-on with a bill that would offer universal long term care to the state’s senior citizens.

(Un) Ready for Retirement

Source: Anna Petrini, State Legislatures Magazine, June 2017

States face a costly future if their citizens fail to save enough for retirement.

Most Americans are not saving enough for retirement. The problem is especially severe among small-business employees, low-income workers and communities of color. On the brink of a national retirement security crisis, state lawmakers are stepping into the breach with a spectrum of innovative solutions.

Retirement planning experts have traditionally used the analogy of a three-legged stool to describe the common sources of retirement income: Social Security, employer-provided pensions and individual savings. But the stool has grown wobbly for many workers, particularly in the private sector. For one, fewer employers offer traditional pensions, which puts the onus on workers to save more themselves. Another issue is changing demographics—people are simply living longer and need to save more money as a result. A third concern: Just how secure is Social Security?

As state officials stare down the prospect of mounting costs if their citizens retire into poverty, they’re looking carefully at how to boost retirement savings. Should they create and facilitate new retirement savings programs for private sector workers or encourage participation in existing plans?….

Home and community-based service and other senior service use: Prevalence and characteristics in a national sample

Source: Amanda Sonnega, Kristen Robinson, Home Health Care Services Quarterly, Latest Articles, Published online: 07 Dec 2016
(subscription required)

From the abstract:
We report on the use of home and community-based services (HCBS) and other senior services and factors affecting utilization of both among Americans over age 60 in the Health and Retirement Study (HRS). Those using HCBS were more likely to be older, single, Black, lower income, receiving Medicaid, and in worse health. Past use of less traditional senior services, such as exercise classes and help with tax preparation, were found to be associated with current use of HCBS. These findings suggest use of less traditional senior services may serve as a “gateway” to HCBS that can help keep older adults living in the community.

Senior Tax Breaks on the Move—but Are Seniors Actually Moving?

Source: Karen Smith Conway, University of New Hampshire, Carsey School of Public Policy, National Issue Brief #120, Spring 2017

From the press release:
Existing state income tax breaks for the elderly result in non-trivial reductions in state revenue and offer little relief to the most vulnerable elderly, according to new research released by the Carsey School of Public Policy at the University of New Hampshire.

The research also found that these tax breaks are unlikely to pay for themselves because they are not attracting significant numbers of retirees into the state or discouraging existing residents from leaving. In addition, proposed additional tax benefits would benefit high-income elderly households. Existing breaks primarily benefit middle and high income elderly households.

“If state policy makers really want to help the poorest elderly households they should consider extending the refundable earned income tax credit to those over age 65 or enacting some other kind of refundable low-income tax credit so that the household could actually receive a payment from the government,” said Karen Smith Conway, professor of economics and a fellow at the Carsey School.

Conway also noted that the lost tax revenue must be paid for in some way, presumably through cuts to spending — spending that could help the needy elderly or improve economic growth – or through increases in other taxes and fees.
Related:
Summary

Baby boomers in the United States: Factors associated with working longer and delaying retirement

Source: Xiuwen Sue Dong, Xuanwen Wang, Knut Ringen and Rosemary Sokas, American Journal of Industrial Medicine, Volume 60, Issue 4, April 2017
(subscription required)

From the abstract:
Objectives: This study estimated the self-reported probability of working full-time past age 62 (P62) or age 65 (P65) among four cohorts of Americans born between 1931 and 1959.

Methods: Data from the Health and Retirement Study (HRS) were analyzed. Respondents in four age cohorts were selected for comparison. Multivariable linear regression models were used to assess cohort differences in P62 and P65 while adjusting for covariates.

Results: P62 and P65 increased among boomers despite worsened self-rated health compared to the two preceding cohorts, with 37% and 80% increases among mid-boomers in construction trades. Cohort differences in P62 and P65 remained after controlling for covariates. Changes in pensions, income inequity, and education were significantly associated with work expectations, but SSA policy was not.

Conclusions: Baby boomers expect to work longer than their predecessors. Efforts to improve work quality and availability for older workers are urgently needed, particularly in physically demanding occupations.