PERCENT

80

CHART 6-3

PERCENT REPORTED VOTING IN 1980 AND 1982
ELECTIONS BY AGE GROUP

18-20 21-24 25-34 35-44 45-54 55-64 65-74 75+

Source: U.S. Bureau of the Census, Current Population Surveys, 1981 and 1983

The same relationships between older and younger voters held in the November 1982 midterm election, although in that election persons 65 to 74 voted at about the same rate as persons 55 to 64 (65 and 64 percent, respectively). Fifty-two percent of persons 75 and over voted in 1982, slightly lower than in the 1980 general election but still comparable to the 25 and older population as a whole. The typical decline in voting in midterm elections is more precipitous among young voters than among older voters. A higher proportion of 1982 voters than 1980 voters (37 percent versus 33 percent) were 55 years of age or older.

In both elections, among the elderly, white men were the most likely to vote, followed by white women, then black men and black women. Among the elderly who were registered to vote in 1980 but did not, 40 percent attributed the cause to illness. About 20 percent of all registered voters did not vote in 1980 because of lack of interest or lack of preference for either candidate, but the elderly mentioned these reasons only about half as often as other age groups. (This information is not available for the 1982 election.)

Chapter 7

FEDERAL OUTLAYS BENEFITING THE ELDERLY

Since 1960, the share of the Federal budget spent on programs serving the elderly has nearly doubled. In 1960, less than 15 percent of the Federal budget was spent on the elderly. In fiscal year 1985, 28 percent of the Federal budget will fund programs benefiting the elderly.

The doubling of the budget has occurred in part because of the increasing numbers of older Americans who have received improved Social Security benefits as the system has matured. More significant causes for this increase, however, are legislated improvements in income protection, health insurance, and services which were enacted in the late 1960's and early 1970's in an effort to reduce high levels of poverty among the elderly. Today, twothirds of the budget for the elderly is spent on retirement income as compared to 90 percent in 1960. Health care spending, in contrast, has become an increasingly significant fiscal burden for both the national treasury and individual senior citizens. Spending for health as a proportion of all Federal spending on the elderly has increased from 6 percent in 1960 to an estimated 30 percent in 1985 (chart 7-1 and table 7-1).

SOURCE: Executive Office of the President, Office of Management and Budget

TABLE 7-1.—FEDERAL OUTLAYS BENEFITING THE ELDERLY 1-Continued

Most estimates are based on Federal agency information, are for recipients aged 65 and over, and include the effects of proposed legislation such as COLA freeze. Some Federal programs (e.g., consumer activities, USDA extension services, national park services) have been excluded due to lack of data.

2 Rough estimates due to limited data.

3 Fiscal year 1983 and fiscal year 1988 outlays represent 13-month benefit periods. Fiscal year 1984 and fiscal year 1990 outlays reflect an 11month benefit period.

* HUD defines "elderly" beneficiaries as households with head of household age 62 and over.

5 Financing changed from loan guarantees to direct loans results in one time fiscal year 1985 outlay increase in Public Housing. 6 Reflects net disbursements for new direct loans.

7 Includes Nutrition Assistance to Puerto Rico.

8 Based on 30 percent of total program obligations.

9 Drop in unemployment rates and associated reduction in outlays causes the decrease between fiscal years 1983-1985.

10 Total Federal outlays includes items categorized as off-budget before fiscal year 1985.

Source: Office of Management and Budget.

Only excessive increases in the cost of health care threaten to further expand Federal spending on the elderly. Forecasts of the costs of pension and health care programs over the next 50 years indicate that the share of the budget devoted to pension spending will decline somewhat and remain below current levels in the future. On the other hand, without some change in the method of financing, the share of the budget devoted to health care spending will continue to rise and may eventually surpass the cost of pensions.

A. FEDERAL SPENDING FOR THE ELDERLY

MOST FEDERAL SPENDING FOR THE ELDERLY IS FOR SOCIAL SECURITY AND MEDICARE

In fiscal year 1985, $263.5 billion of Federal spending is expected to be of direct benefit to older Americans. Of every dollar spent on the elderly through the Federal budget in that year, 55 percent will go to Social Security and 26.5 percent will go to Medicare and Medicaid.

Social Security and all but a portion of Medicare are financed through dedicated taxes collected expressly and exclusively for the purpose of paying retirement and health benefits. In the last two decades alone, social insurance has helped to cut the poverty rate among the elderly in half-from 28.5 percent in 1966 to 14.1 percent in 1983. Today, social insurance benefits are credited with preventing 86 percent of the poverty that would exist if Social Security were not available, according to estimates of the Office of Management and Budget.1 Without transfer payments, OMB says, 55 percent of the elderly would be poor today.

1U.S. Congress. House. Committee on Ways and Means. Subcommittee on Oversight and Subcommittee on Public Assistance and Unemployment Compensation. Testimony by Hon. David A. Stockman. Director, Office of Management and Budget. Hearing, 98th Congress, 1st Sess. Nov. 3, 1983. Washington, U.S. Govt. Print. Off., 1983.

The Federal Government also provides pensions and insurance benefits to veterans of military service and former civilian employees. About 8 cents of every Federal dollar spent on the elderly in fiscal year 1985 will go to provide veterans benefits or retirement benefits to former military or civilian personnel or their survivors who are 65 years of age or older. About 5 cents of this amount will be spent on civilian retirement, the rest will go for military retirement and veterans benefits.

A third area of Federal involvement with the elderly is in providing means tested benefits to elderly poor who are unable, despite the existence of a universal social insurance system, to meet basic subsistence needs. About 7 cents of every dollar spent on the elderly in fiscal year 1985 is expected to be used to provide Supplemental Security Income (SSI) benefits, housing, food, energy assistance, and social services to low-income individuals.

The fourth area of Federal spending on the elderly includes programs of general benefit to the elderly such as social and nutrition services and research conducted through the National Institute on Aging. About 2 percent of the elderly's share of the Federal budget is spent on these programs.

B. COSTS TO INDIVIDUALS AND FAMILIES

INCREASED FEDERAL SPENDING FOR HEALTH CARE HAS NOT REDUCED HEALTH COSTS TO OLDER AMERICANS

While the enactment of Medicare triggered the most rapid growth in Federal spending for the elderly, it has not effectively reduced the burden of health care costs for the elderly and their families. From a program spending $7 billion in 1970, Medicare has grown to a program with $66.3 billion in Federal outlays in 1985. Over the last 12 years, Medicare outlays have increased at an average annual rate of 18 percent, more than twice the rate of inflation and one-third faster than the growth in national personal health care expenditures. Even with savings measures enacted in the 1980's, it is still projected to grow at least twice the rate of inflation through the end of the decade.

Despite this growth in annual spending, Medicare payments increasingly fail to keep pace with rising health costs. Health care expenditures not paid by Medicare have been rising steadily as a percent of elderly income. By 1981, health spending not paid by Medicare equaled 15 percent of the average per capita income of a person 65 years or older. The elderly pay nearly a third of their total health care bills out-of-pocket, a percentage that has remained constant in recent years.

Medicaid was enacted to provide matching funds to the States to finance health insurance for the poor, including supplemental insurance for the elderly poor covered under Medicare. Medicaid has also grown rapidly in the past two decades, with outlays rising from $4.9 billion in 1970 to $35.5 billion in 1983. The Federal share of the Medicaid payments going to the elderly was $6.4 billion in 1983, more than four times the amount spent on the elderly only a decade earlier. The portion of total Medicaid spending attributed to the elderly has increased from 31 percent in 1972 to 36 percent in