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Public Policy & Aging E-Newsletter
Volume 2, Number 5, September 2008

This bimonthly e-newsletter highlights key developments and viewpoints in the field of aging policy from a wide variety of sources, including articles and reports circulating in the media, academy, think tanks, private sector, government and nonprofit organizations.

The goal of this email publication is to reach teachers, students, and citizens interested in aging-related issues, especially those who may not have sufficient access to policy information disseminated both in Washington and around the country.

I. WHAT’S HAPPENING IN WASHINGTON?

A. What Should Our Next President Do About Health Care Costs?: With the presidential election approaching, the candidates have put forward some of their ideas for reforming the health care system. A National Journal article compares Barack Obama and John McCain's ideas on improving the health care system. In addition, an article published in the New England Journal of Medicine compares the two candidates' plans for health care reform. Also, the AARP Public Policy Institute recently hosted an AARP Solutions Forum at which advisors to Obama and McCain outlined the candidates' proposals to address rising health care costs. A summary of these proposals is available here.

B. Parties Release Platforms: Both parties released their platforms this month. To compare the candidates' positions on issues, see the Democratic Party's platform and the Republican Party's platform.

C. Congress Acts to Relieve Volunteers' Driving Costs: In response to volunteers' concerns about rising fuel prices, Congress is considering legislation that would relieve the fuel costs of those who use their automobiles for charitable purposes. Pending bills in the House (H.R. 6675) and the Senate (S. 3246) would increase the tax deduction (or tax-free reimbursement rate) for volunteers from 14 cents a mile to between 27 and 58.5 cents a mile, the current rates for medical and business transportation respectively. Additionally, these bills would allow the Internal Revenue Service to-independently of congress-adjust this mileage rate continually based on inflation. A second bill (S. 3429) under the Giving Incentives to Volunteers Everywhere (GIVE) Act, would reset the charitable mileage deduction to 70 percent of the corporate deduction. As a result, when the IRS makes future adjustments to the business rate, the charity rate would receive a proportional adjustment as well.

II. WHAT’S HAPPENING AROUND THE COUNTRY?

A. A Balancing Act-State Long-Term Care Reform: This research paper from the AARP Public Policy Institute examines the extent to which states use Medicaid long-term care (LTC) funding for home- and community-based services (HCBS) as opposed to institutional services. The accompanying state-by-state profiles reveal that only four states spend more than 50 percent of their Medicaid LTC funding for HCBS, while the remainder of the states spend the majority of Medicaid LTC funding on institutional services.

B. State Chart Book on Wages for Personal and Home Care Aides, 1999-2006: This chart book tracks the wages received by personal and home care aides (PHCAs) in each state and the nation from 1999 to 2006. Key findings include: between 1999 and 2006, inflation-adjusted wages for PHCAs declined by 4%; In 2006, state real median wages ranged enormously, from $5.41 in Texas to $11.38 in Alaska; In 29 states, average hourly wages for PHCAs were below 200% of the Federal Poverty Line wage (for individuals in one-person households working full time), which would qualify these households for many state and federal assistance programs.

C. Interactive U.S. Map Identifies States' Health Care Strategies: The Center for Health Care Strategies (CHCS), a nonprofit health policy resource center, created an interactive U.S. map that provides state-by-state information on initiatives to improve health care quality, efficiency, accessibility, and policy. Click on a state to view how its agencies, health plans, and other organizations within the state are participating in CHCS initiatives to improve health care policy and practice. Plus, download related case studies, publications and technical tools.

III. THIS ISSUE'S MAJOR POLICY STORY: RETIREMENT PREPAREDNESS

Once upon a time, I thought that analyses of retirement savings and pre-retirement options referred to "them," not "us." Now researchers are "'Talkin' 'Bout My Generation," as the report by the McKinsey Global Institute puts it. By dint of our numbers, assets, and consumption habits Baby Boomers will have a major impact on the U.S. economy. Promoting healthful aging and satisfying our desires for amenities at home and on the road will change the marketplace. But as the studies in this section indicate, many members of my cohort have not done sufficient homework before making choices about when and how to transition out of the work force. Taking early retirement might not be as feasible for Boomers as it was for our parents. Some of us who attain advanced ages may outlive our resources. There is considerable fluidity, however: articles in this section offer practical steps for Boomers to consider as they plan for retirement.

- Andy Achenbaum

A. Retirement Vulnerability of New Retirees-The Likelihood of Outliving Their Assets: A recent report from Ernst & Young analyzes the likelihood that middle-income Americans will outlive their financial assets in retirement. It combines data on household retirement saving with data on external risks that could affect retirement income, such as longevity, volatile investment returns, and high inflation, to provide an informed prediction about the financial vulnerability of retirees. Additionally, the authors have created fact sheets exploring retirement vulnerability of new retirees in each state. The state-by-state reports can be accessed here.

B. Talkin' 'Bout My Generation-The Economic Impact of Aging U.S. Baby Boomers: A report from the McKinsey Global Institute calculates the economic impact of the aging of the Baby Boom generation. Specifically, the report studies the saving habits of the Baby Boom generation, their expected spending habits in retirement, and the overall impact these factors will have on the U.S. economy. The report concludes with proposals to ensure that this impact will be positive.

C. MetLife Retirement Income IQ Study-A Survey of Pre-Retiree Knowledge of Financial Retirement Issues: The MetLife Mature Market Institute just released results from a nationally representative survey to measure the financial knowledge of pre-retirees. The study compares responses from a 2003 survey to responses from the 2008 survey. Key findings include: pre-retirees in 2008 are significantly more aware than their 2003 counterparts that increasing longevity creates the greatest financial retirement risk, but many still incorrectly estimate life expectancy when planning for retirement; and those who performed best on the knowledge test were those who reported actively planning for retirement.

D. Do Households Have a Good Sense of Their Retirement Preparedness?: A new issue brief examines whether households have a good sense of their financial retirement preparedness. Using the National Retirement Risk Index (NRRI), this brief answers two questions: what percentage of households will be at risk of being unable to maintain their standard of living in retirement? And do households have a good sense of their own retirement preparedness? In other words, do households "at risk" know that they are "at risk?" The final section of this brief includes health care costs in the analysis.

E. U.S. Social Security Administration's Retirement Calculator: The SSA now offers a Retirement Calculator that estimates retirement income based on your actual Social Security earnings record. To use this tool, you must have earned enough Social Security credits to qualify for benefits, but must not currently be receiving your own Social Security or Medicare benefits.

IV. WORTH NOTING

A. Rethinking Retirement-The Generations Share Their Views in Schwab's National Survey: Charles Schwab and Age Wave launched a cross-generational study that examines thoughts on retirement from almost 4,000 individuals in the four current generations of adults: the Silent Generation (ages 63 to 83), the Baby Boomers (ages 44 to 62), Generation X (ages 32 to 43), and Generation Y (ages 21 to 31). Key questions include: What are Americans' dreams for retirement? How do they define a successful retirement? What kind of help do Americans need and want from their employers, educators, industry and others? And do the generations differ wildly or is there common ground? Their results are presented here.

B. n4a Senior Housing Locator: The National Association of Area Agencies on Aging's new website includes a nationwide Senior Housing Locator. This tool allows users to search a database of more than 60,000 senior housing listings throughout all parts of the country.

C. State-by-State Driving Laws for the Elderly: Click here to access a user-friendly state-by-state menu of standard driver's license renewal laws, including specific rules for older drivers, compiled by Caring.com.

V. WHAT'S HAPPENING ABROAD?

A. Quality in and Equality of Access to Healthcare Services-HealthQUEST: This report features results from a study on the quality of health care and the equality of access to health care services throughout the European Union. The study identifies barriers to accessing health care in the EU, especially for people at risk of social exclusion, and proposes policy initiatives for Member States to reduce these barriers. This report follows-up on the EU Member States' 2006 agreement to include in their common values universal accessibility to adequate healthcare and long-term care.

B. U.S. Social Security Administration Office of Policy International Update: This monthly publication covers recent developments in foreign public and private pensions. The subjects of the reports in this issue include Finland, Argentina, Philippines, and Latin America/Caribbean.

C. Carers to Get Protection at Work Following Landmark European Court of Justice Case: This article describes a ground-breaking law emerging in the United Kingdom to legally protect caregivers from discrimination. After a case in which an employee claimed she was discriminated against by her employer because she had a disabled child, the European Court of Justice ruled that laws which protect disabled people against discrimination extend to protect their informal caregivers. Although currently the ruling applies only to parents of disabled children, caregiver advocates are pushing for an expansion of the law to cover all caregivers of ill or disabled family members and friends.

VI. PERSPECTIVES ON POLICY: ROB HUDSON, EDITOR, PP&AR

A number of reports cited in this edition of our policy e-newsletter suggest the need for a revised meaning of the voguish term "productive aging." This term, and its cousin "successful aging," have come to connote the contributions that a rising generation of seniors can, should, and will make to American life. Older people are not simply consumers of the nation's largesse but are now among those producing both economic and social goods that will benefit the nation as a whole. However, data reported here (AARP; McKinsey) and elsewhere (Center for Retirement Research at Boston College; Employee Benefit Research Institute) are making it increasingly clear that this new cohort of older people had better be productive, now for their own good as well as the country's. The decline of defined benefit retirement plans, the falling returns of defined contribution retirement plans, high levels of home equity borrowing coupled with declines in the underlying home equity, and increasingly levels of other forms of debt are turning millions of retirement dreams into nightmares or at least into sleepless nights. As the risks associated with retirement are increasingly shifted from government and employers toward individual citizens and employees, fifty-somethings are facing a productivity wake-up call. While it is widely held that these older adults will work longer, findings such as those reported through the links here make it clear that added work years are likely to be both a matter of obligation and choice. In turn, this form of productivity will be both a function of economic necessity and civic engagement.

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Newsletter Editors: Sarah Frey and Greg O'Neill, National Academy on an Aging Society; Andy Achenbaum, University of Houston.

The Public Policy and Aging E-Newsletter is supported in part by a grant from the AARP Office of Academic Affairs.