Federal poverty line grossly underestimates the needs of California's seniors says new UCLA report

February 26, 2008

If you are elderly and live in California, how poor do you have to be to become eligible for public assistance?

Too poor, says a new report issued by the UCLA Center for Health Policy Research (CHPR). The new Elder Economic Security Standard Index (Elder Index) for California, to be released tomorrow, shows that the Federal Poverty Line (FPL), used to determine income eligibility for most public programs, covers less than half of the basic costs experienced by adults age 65 and older in the state.

The FPL is also used to allocate state and federal resources to local communities, and is an important index. In 2007, the federal poverty guideline for a single, elderly person (age 65 and older) was an annual income of $10,210, and for an older couple, $13,690. But according to the report's calculations, broken down by each California county, a basic annual cost of living for a retired older adult, in good health and living in rental housing, averages $21,011, reaching a high of $27,550 in San Mateo County. For an older couple the average is $30,537, reaching a high of $37,263, again in San Mateo County.

"Knowing the true cost of living for older adults is vital if we are to ensure that elder Californians can meet basic needs and maintain their independence," said Steven P. Wallace, a professor in the UCLA School of Public Health, associate director of the CHPR, and lead author of the report. "The Elder Index is a new way to assess income adequacy for older adults that is designed to replace the Federal Poverty Line in policy and practice."

"The Elder Index is a fact-based and comprehensive look at expenses elders. It provides an accurate tool for legislators to evaluate existing and future policy decisions, direct service providers to assess their communities' needs and secure necessary funding, advocates to better express their priorities, and individuals to plan for retirement," explains Susie Smith, Director of the California Elder Economic Security Initiative (Cal-EESI). Located at the Insight Center for Community Economic Development, Cal-EESI is using the Elder Index as part of a statewide project to raise awareness and promote policy and programs that assure income adequacy for all older Californians.

The FPL, the official federal measure of poverty, is an outdated one, said Wallace. Developed four decades ago and using consumption surveys from the 1950s, the federal measure is based solely on the cost of the basic food budget needed to meet minimum nutritional requirements. Not only does FPL fail to account for the costs of housing and transportation, noted Wallace, but it does not include medical costs, which can be particularly debilitating for the elderly. It also fails to account for the higher costs of living in California. The Elder Index, in contrast, provides a calculation of a basic cost of living for retired adults age 65 and older for every California county.

"The Elder Index for California takes into account the actual costs for housing, food, transportation, out-of-pocket medical expenses and other necessary spending," said Wallace.

The UCLA Center for Health Policy Research based its calculations using widely accepted and credible national and state data sources such as the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD). Geographically relevant data was used for each county in California, reflecting local market rates for items such as housing, food, and health care.

The policy brief will be presented at a legislative hearing in Sacramento on February 27, and was made possible by grants from several California foundations and aging agencies to the Insight Center for Community Economic Development and the UCLA Center for Health Policy Research. L. Cricel Molina, MPH, a graduate student researcher at the CHPR, was a co-author of the brief.
A county-by-county listing of the cost of living is in the full report, which can be found starting tomorrow at www.healthpolicy.ucla.edu/elder_index08feb.html.

The UCLA Center for Health Policy Research is one of the nation's leading health policy research centers and the premier source of health policy information for California. Established in 1994, the UCLA Center for Health Policy Research is based in the School of Public Health and affiliated with the School of Public Affairs.

University of California - Los Angeles

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