Fact Sheet Income, Poverty, and Health Insurance Coverage of Older Americans, 2008 AARP Public Policy Institute Median household income and median family income in the United States declined significantly in 2008. 1 Those ages 45 to 54 were hardest hit. Median income of the elderly did not decline but remained the lowest of any age group. In 2008, the official poverty rate increased for all age groups except for persons age 65 or older. However, a more accurate measure of poverty was double the official rate for older Americans in 2008. Non-elderly adults were less likely to have health insurance coverage than others and experienced a decline in coverage between 2007 and 2008. Minorities had lower family incomes, higher poverty rates, and were less likely to have health insurance coverage than the majority. Median Income Fell Significantly In 2008, median household income and median family income in the United States declined significantly from 2007 levels, coinciding with the recession that started in December 2007. Household Income Real median household income fell by 3.6 percent, a statistically significant decrease, from $52,163 in 2007 to $50,303 in 2008 (table 1). 2 The only households that did not experience a decline in income were those headed by a person age 65 or Table 1 Annual Median Income of Households by Age, Selected Years 1995 to 2008 Age of Householder Median Income in 2008 Dollars 1 Change in Real Income Change in Real Income 1995 2000 2005 2007 2008 2007 to 2008 2000 to 2008 All Ages 47,803 52,697 51,092 52,163 50,303 *-3.6-4.5 15 to 24 years 29,430 34,619 31,730 33,011 32,270 *-2.2-6.8 25 to 34 years 48,680 55,604 52,254 52,976 51,400 *-3.0-7.6 35 to 44 years 60,974 66,566 64,061 64,511 62,954 *-2.4-5.4 45 to 54 years 67,418 72,790 68,847 67,992 64,349 *-5.4-11.6 55 to 64 years 53,416 56,253 57,637 59,591 57,265 *-3.9 1.8 65 years and older 26,789 28,817 28,715 29,393 29,744 1.2 3.2 1 Dollar amounts are adjusted for inflation using the CPI-U. * Statistically significant change at 90 percent confidence level. Source: U.S. Bureau of the Census Current Population Survey Report P60-236, Income, Poverty, and Health Insurance Coverage in the United States: 2008. (Washington, DC: U.S. Government Printing Office, 2009) and CPS detailed income tables at http://www.census.gov/hhes/www/income/dinctabs.html.
older. In those households, incomes were largely unchanged. Median income for older households was $29,744 in 2008 versus $29, 393 in 2007, the lowest of any age group. The subgroup hardest hit was households headed by persons age 45 to 54, whose median income decreased 5.4 percent from $67,992 in 2007 to $64,349 in 2008. After adjusting for inflation, median household income in 2008 was lower than it was in 2000 ($50,303 in 2008 and $52,697 in 2000). This was true for all age subgroups except households headed by a person age 55 or older. For example, the median household income for households headed by a person age 45 to 54 decreased 11.6 percent, from $72,790 in 2000 to $64,349 in 2008. Family Income The median income for all families in the United States fell 3.4 percent in 2008 from $63,712 in 2007 to $61,521 in 2008, a statistically significant decrease (figure 1). 3 Older families had less income than younger families. Median income was $28,914 for families headed by a person age 65 or older and $46,850 for families headed by a person under 65 (figure 2). Minority families, both younger and older, had much lower incomes. The median income was $31,200 for younger black families and $31,748 for younger Hispanic families, compared with $54,038 for younger white families. The exception was younger (under age 65) Asian families, who had the highest median income among all racial/ethnic groups in 2008 ($60,004). This income disparity between minority and majority families held among older families as well, although the difference was not as great as among younger families. Among older families, median income declined steadily with age. In 2008, the median income for families headed by a person age 65 to 69 was $39,599, almost double the $19,961 median income for families headed by a person age 85 or older (figure 3). $80,000 Figure 1 Median Income of Households, Families, and Persons in 2007 and 2008 Median Income, 2008 dollars $70,000 $60,000 $50,000 $52,163 $50,303 $63,712 $61,521 2007 2008 $40,000 $30,000 $20,000 $10,000 $27,648 $26,513 $0 Households Families Persons Data Source: AARP Public Policy Institute tabulation of the March 2008 and 2009 Current Population Survey, Annual Social and 2
$80,000 Figure 2 Median Family Income by Age and Race/Ethnicity of Family Head in 2008 Median Family Income $72,000 $64,000 $56,000 $48,000 $54,038 $60,004 Under 65 65+ $46,850 $40,000 $32,000 $24,000 $30,300 $31,200 $21,237 $28,557 $31,748 $20,729 $28,914 $16,000 $8,000 $0 White Black Asian Hispanic All Figure 3 Median Family Income by Age of Family Head for Families Headed by Persons Age 65+ in 2008 $50,000 Median Family Income $45,000 $40,000 $39,599 $35,000 $30,000 $25,000 $20,000 $31,410 $25,827 $23,856 $19,961 $28,914 $15,000 $10,000 $5,000 $0 Age 65 to 69 Age 70 to 74 Age 75 to 79 Age 80 to 84 Age 85+ All Among older families, male-headed families (including men living alone) had higher incomes than female-headed families (including women living alone). For example, widows had a median income equal to only 76 percent of that of widowers (figure 4). 4 Median family income also varied by marital status for older families. Unsurprisingly, married couples had 3
Figure 4 Median Family Income by Marital Status* and Sex of Family Head for Families Headed by Persons Age 65+ in 2008 $60,000 $55,000 $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Median Family Income $47,937 $40,660 $23,981 $23,357 $22,577 $18,158 $20,516 $20,325 Married Widowed Divorced or Separated Never-married $38,005 All $22,714 * The difference between male and female headed families for the total older populations is largely driven by the fact that married couples have more income than unmarried persons and 69 percent of older married couple families are identified as headed by men. See note 4 in the text for further discussion. median incomes about twice as large as unmarried persons. Widows had the lowest median income. Poverty Rose Significantly Many more Americans lived in poverty in the United State in 2008, a year of economic recession, than in 2007. Americans in Poverty In 2008, according to the current official poverty measure, 39.8 million persons were in poverty an increase of 2.5 million from 2007. The overall poverty rate was 13.2 percent, up a statistically significant 0.8 percentage points from 2007, and 1.9 points higher than in 2000 (table 2). Table 2 Below Poverty by Age, Selected Years 1995 to 2008 of Persons Below Poverty Point Change Change Age 1995 2000 2005 2007 2008 2007 to 2008 2007 to 2008 All Ages 13.8 11.3 12.6 12.5 13.2 *0.8 *5.6% Under 18 20.8 16.2 17.6 18.0 19.0 *1.0 *5.6% 18 to 24 years 18.3 15.2 18.2 17.3 18.4 *1.1 *6.4% 25 to 34 years 12.7 10.5 12.6 12.3 13.2 * 0.9 *7.3% 35 to 44 years 9.4 8.2 9.7 9.4 10.4 *1.0 *10.6% 45 to 54 years 7.8 6.6 8.2 8.5 9.1 *0.6 *7.1% 55 to 59 years 10.3 8.6 8.1 8.0 8.8 0.8 1% 60 to 64 years 10.2 10.4 9.6 9.4 9.7 0.3 3.2% 65 years and older 10.5 9.9 10.1 9.7 9.7 0 % * Statistically significant change at 90 percent confidence level. Source: See Table 1. 4
The rise in the poverty rate between 2007 and 2008 occurred among all age subgroups except persons age 65 or older, and was statistically significant for all of the subgroups except persons age 55 to 64. Children under age 18 had the highest poverty rates of all the age groups: 19 percent in 2008, 1 percentage point higher than in 2007. Minorities were more likely to be in poverty than the majority. In 2008, nearly one-fourth of blacks and Hispanics were in poverty (24.7 percent of blacks and 23.2 percent of Hispanics), while only 8.6 percent of whites were poor (figure 5). The poverty rates of black and Hispanic children were three times those of white children. Among persons age 65 or older, almost 20 percent of blacks and Hispanics were in poverty, compared with 7.6 percent of whites. Older women experienced higher poverty rates than older men, and poverty rates differed by marital status: married persons were the least likely to be poor, and separated or divorced women the most likely (figure 6). In 2008, persons age 65+ had the lowest poverty rate (9.7 percent) of all age groups. However, as explained in the next section, the official poverty measure tends to understate poverty for older persons. Moreover, a large portion of older persons have incomes just barely above the poverty level. This is especially true of the oldest persons. Although 11.5 percent of persons age 80 or older were poor, 19.6 percent had income below 125 percent of the poverty threshold and 45.4 percent had income below 200 percent of the poverty threshold (figure 7). Experimental Poverty Rate: A More Accurate Measure The current official poverty measure developed in the early 1960s is outdated. It does not provide adequate information about poverty in the United States. Poverty in the United States is measured by comparing a family s income to a Figure 5 below Poverty by Race and Age Group in 2008 5 45.0 4 Total Under 18 18 to 64 65+ 35.0 3 25.0 2 15.0 1 13.2 19.0 11.7 9.7 8.6 10.9 8.4 7.6 24.7 34.6 20.5 2 12.2 15.4 11.1 12.0 23.2 30.6 19.3 19.3 5.0 All White Black Asian Hispanic 5
Figure 6 Age 65 and Older below Poverty by Sex and Marital Status in 2008 3 27.0 24.0 21.0 18.0 15.0 12.0 9.0 6.0 6.7 11.9 Men 4.9 5.6 Women 15.4 10.2 11.3 20.6 16.8 18.1 3.0 All Married Widowed Divorced/Separated Never-married Figure 7 Poor, Near Poor, and Low-Income by Age Group in 2008 6 54.0 48.0 42.0 36.0 3 24.0 18.0 12.0 6.0 15.5 Family Income between 125% and 200% of the Poverty Thresholds Family Income between 100% and 125% of the Poverty Thresholds Family Income below 100% of the Poverty Threshold 15.2 6.1 5.3 19.0 18.4 Under 18 13.8 4.4 13.4 12.4 3.6 2.9 10.4 9.3 3.0 10.8 3.2 10.6 9.1 8.8 9.7 15.5 4.3 7.5 18.3 6.4 22.9 6.6 25.8 8.1 9.7 10.8 11.5 18 to 24 25 to 34 35 to 44 45 to 54 55 to 59 60 to 64 65 to 69 70 to 74 75 to 79 80+ threshold level. The official poverty threshold is based on food consumption patterns of 1955 and does not reflect current needs or living standards. The poverty threshold further incorrectly assumes that older Americans require less income to meet basic needs than do others. The measure of income evaluated against 6
the threshold does not reflect tax liabilities, out-of-pocket spending on health care, and other important nondiscretionary costs, nor does it account for important forms of public assistance. Researchers and policymakers broadly agree that the current official poverty measure should be revised to address these shortcomings. 5 This consensus is largely reflected in the recommendations of the National Academy of Sciences (NAS) Panel on Poverty and Family Assistance. 6 The Census Bureau has produced a series of alternative or experimental poverty rates based on these NAS recommendations each year since 1995. In 2008, the estimate of the experimental poverty rate for the total population was 15.8 percent, 2.6 percentage points higher than the official poverty rate (figure 8). 7 The experimental poverty rate for the older population was the highest among three age groups. In 2008, the experimental poverty rate for the older population was 18.7 percent, almost double the official rate of 9.7 percent. This large difference between the official and the experimental poverty rates for older persons is due primarily to the subtraction of medical out-ofpocket expenses from income. 8 For children under age 18, the experimental poverty rate was 17.9 percent, 1.1 percentage points lower than the current official rate. The experimental poverty rate for persons age 18 to 64 was 14.3 percent, 2.6 percentage points higher than the current official poverty rate. Among the older population, minorities had higher experimental poverty rates than the majority. According to the experimental poverty measure, 31.5 percent of older Hispanics lived in poverty in 2008, 12.2 percentage points higher than the official poverty rate. For older Asians, the experimental poverty rate was 28.7 percent, 16.5 percentage points higher than the official poverty rate. For older whites, the experimental Figure 8 Estimates of Official and Experimental Poverty Rates by Age Group in 2008 3 27.0 24.0 Official Experimental 21.0 18.0 15.0 12.0 9.0 13.2 15.8 19.0 17.9 11.7 14.3 9.7 18.7 6.0 3.0 All Age under 18 Age 18 to 64 Age 65+ Data Source: Census Bureau, Alternative Poverty Estimates Based on National Academy of Sciences Recommendations, by Geographic and Inflationary Adjustments: 2007 and 2008. Accessed at web site: http://www. census.gov/hhes/www/povmeas/tables.html 7
poverty rate was 16.2 percent, 8.6 percentage points higher than the official poverty rate (figure 9). Health Insurance Coverage Falls For Non-elderly Adults The portion of Americans without health insurance coverage was 15.4 percent in 2008, an increase of 0.1 percentage point over 2007, not a statistically significant rise (table 3). Non-elderly adults, minorities, and the poor were less likely to have health insurance coverage. Americans without Health Insurance Coverage Younger adults were the least likely to have health insurance coverage, and the rate of non elderly adults with health insurance coverage steadily increases with age. In 2008, 28.6 percent of persons age 18 to 24 and 26.5 percent of persons age 25 to 34 were without any health insurance coverage. By comparison, 19.4 of persons age 35 to 44 and 14.4 percent of persons age 45 to 64 were without health insurance. Health insurance coverage rates declined for non-elderly adults between 2007 and 2008 due to the deteriorating economy and job loss. The coverage decline was statistically significant for adults age 25 to 64. The percentage of persons younger than age 18 without health insurance coverage was 9.9 percent in 2008, the lowest level since 1995 and a statistically significant decrease of 1.1 percentage point from 2007. This decrease reflects an expansion in the number of children covered by the State Children s Health Insurance Program. Fewer than 2 percent of persons age 65 or older were without health insurance, due to the reach of Medicare. The fraction of elderly persons without health insurance in 2008 (1.7 percent) was virtually unchanged from 2007, but was 1.0 percentage point higher than in 2000. 4 Figure 9 Estimates of Official and Experimental Poverty Rates for Persons Age 65 and Older by Race/Ethnicity in 2008 36.0 32.0 28.0 24.0 2 16.0 12.0 8.0 9.7 Official 18.7 Experimental 2 16.2 7.6 28.8 12.2 28.7 19.3 31.5 4.0 All Age 65+ White Black Asian Hispanic Data Source: AARP Public Policy Institute estimates based on the Census Bureau s 2009 Current Population Survey Annual Social and Economic Supplement Poverty Research file. 8
Table 3 Without Health Insurance Coverage by Age, Selected Years 1995 to 2008 of Persons Without Health Insurance Coverage by Age Point Change 1 Change Age 1995 2000 2005 2007 2008 2007 to 2008 2007 to 2008 All Ages 15.4 14.2 15.9 15.3 15.4 0.1 0.7% Under age 18 13.8 11.9 11.2 11.0 9.9 *-1.1 *-1% 18 to 24 years 28.2 27.6 30.6 28.1 28.6 0.4 1.8% 25 to 34 years 22.9 21.9 26.4 25.7 26.5 *0.8 *3.1% 35 to 44 years 16.6 15.5 18.8 18.3 19.4 *1.1 *6.0% 45 to 64 years 13.3 12.8 14.6 14.0 14.4 *0.5 *2.9% 65 years and older 0.9 0.7 1.3 1.9 1.7-0.2-10.5% 1 Figures of percentage point change 2007 to 2008 may not be equal to the difference between figures for 2007 and 2008 because of rounding. * Statistically significant change at 90 percent confidence level. Source: See Table 1. Minorities were less likely than the majority to be covered by health insurance. In 2008, Nearly one-third of Hispanics (30.7 percent) were without health insurance coverage (figure 10). Almost one in five blacks (19 percent) were without health insurance coverage. About 11 percent of whites were without health insurance coverage. Persons in poverty were less likely to be covered by health insurance. In 2008, 30.3 percent of poor people were without any health insurance coverage, compared with 13.1 percent of non-poor persons. About one-third of Asians (32.4 percent) who were in poverty were not covered 5 45.0 4 Figure 10 without Health Insurance Coverage by Race/Ethnicity and Poverty Status in 2008 Total Population Not in Poverty in Poverty 39.0 35.0 3 25.0 2 15.0 1 15.4 13.1 30.3 10.8 9.2 27.6 19.0 16.9 25.4 17.6 15.7 32.4 30.7 28.1 5.0 All White Black Asian Hispanic 9
by any health insurance. The rate was more than double the percentage of nonpoor Asians who were without health insurance (15.7 percent). Coverage by Type of Health Insurance The majority of persons under age 65 with health insurance were covered by employment-based policies. Almost all persons age 65 or older were covered by Medicare. 9 In 2008, 61.1 percent of persons under age 65 with health insurance were covered by employment-based policies and only 6.3 percent directly purchased health insurance. Almost 13 percent of persons under age 65 with health insurance were covered by Medicaid, and 4.4 percent were covered by other government health care plans (figure 11). Among the older population, 93.4 percent with health insurance were covered by Medicare. More than onethird of older persons (35 percent) with health insurance were covered by employment-based policies and 26.7 percent of older persons directly purchased health insurance. Medicaid recipients totaled 8.1 percent of older persons, and 7.4 percent of older persons received military health care benefits. 1 This report is based on Income, Poverty, and Health Insurance Coverage in the United States: 2008, published by the U.S. Bureau of the Census in 2009, and on tabulations of the March 2009 Current Population Survey, Annual Social and 2 All money amounts in this report are inflation adjusted and expressed in 2008 dollars. 3 This Fact Sheet is based on a U.S. Census Bureau publication of the same name. The Census publication emphasizes household income. Census also collects information on the income of individuals and families. In part because family income is the basis of the official poverty measure in the United States, we also provide an analysis of family income in this Fact Sheet. The Census Bureau defines a household as all of the people who occupy a housing unit as their usual place of residence; it defines a family as a group of two or more people who reside together and who are related by birth, marriage, or adoption. Figure 11 with Health Insurance Coverage by Type of Health Insurance* and Age in 2008 10 9 93.4 8 7 6 5 4 3 35.0 61.1 26.7 Age 65+ Under Age 65 2 1 Employment Based 6.3 2.9 12.9 8.1 7.4 Direct Purchase Medicare Medicaid Military Health Care 3.3 3.3 4.4 Other Government * Individuals may be covered by more than one type of health insurance. 10
4 Median income of married couples and all families reported by sex of family head should be interpreted with caution. Census generally defines the householder or the reference person (whom we call the head of the family) as the person (or one of the people) in whose name the home is owned or rented. If a married couple owns or rents the home jointly, either the husband or the wife may be identified as the family or household head. The difference in income between male- and female-headed families for the total population is largely driven by the fact that married couples have more income than unmarried persons, and 69 percent of older married couples assigned a man as the reference person. In fact, many decisions by married persons are presumably made jointly (which is one reason why the family income concept is pertinent), and the choice of who is head of the family may be arbitrary. 5 Rebecca M. Blank, How To Improve Poverty Measurement in the United States, Journal of Policy Analysis and Management 27, no. 2 (2008): 233-54. Patricia Ruggles, Drawing the Line (Washington, DC: The Urban Institute Press, 1990). 6 Constance F. Citro and Robert T. Michael, eds., Measuring Poverty: A New Approach (Washington, DC: National Academy Press, 1995). 7 The Census Bureau produces four alternative measures. We use the measure based on the most recent Consumer Expenditure Survey data, adjusted for geographic differences in the cost of living, and deducting medical out-of-pocket spending as an expense out of income. This measure (known as MSI-GA-CE) most closely resembles the NAS panel s recommendations. See http://www.census.gov/hhes/www/povmeas/ povmeas.html. The Census Bureau has announced plans to develop a new measure, the Supplemental Poverty measure, beginning in 2011. See Observations from the Interagency Technical Working Group on Developing a Supplemental Poverty Measure, accessed at the Web site above. 8 For further discussion of why the experimental poverty rate for older persons is higher than the official rate, see Poverty Using Official and Experimental Measures by Ke Bin Wu, Issue Brief IB-66 (Washington, DC: AARP Public Policy Institute, 2004), especially table 5 and the discussion on page 11. 9 Individuals may be covered by more than one type of insurance. Fact Sheet 196, July, 2010 Written by Ke Bin Wu AARP Public Policy Institute, 601 E Street, NW, Washington, DC 20049 www.aarp.org/ppi 202-434-3910, ppi@aarp.org 2010, AARP. Reprinting with permission only. 11 Fact Sheet