saving, the advantage of homeownership is more common among those with higher incomes.

In early 1959, 62 percent of the nonfarm "spending units" headed by a person 65 and over owned their homes. Of these homes, 83 percent

were clear of mortgage debt.

Among aged spending units with liquid assets of less than $200 half lived in rented quarters or with relatives. Among aged spending units with liquid assets of $200 or more on the other hand, more than two-thirds owned their home.

Among OASI beneficiaries just about two out of three of those married and one out of three of the nonmarried studied in 1957 owned a nonfarm home. Most of these homes were mortgage free, but the equity was relatively modest: the median amount about $8,000 for couples and widows and about $6,000 for single retired workers. Nearly eight out of ten of the beneficiary couples with income of $5,000 or more, but fewer than two out of three with less than $1,200, owned their homes.

While homeownership can mean lower out-of-pocket costs, it does not mean living without significant housing costs. Data from the 1957 beneficiary survey indicate that urban couples keeping house alone in a paid-up home averaged only about 30 percent less for taxes, upkeep and utilities than the average outlay for rent, heat and other utilities by couples renting their living quarters.

Noncash Income

Many aged persons have noncash resources which enable them to enjoy better living than their money resources alone could make possible. Such "nonmoney" income, however, does not necessarily release an equivalent number of dollars for purchasing goods and services, such as health care.

According to the 1957 survey of OASI beneficiaries, four out of five couples and three out of five nonmarried beneficiaries had noncash income of one or more of the following types: an owned home or rent-free housing, food home-grown or obtained without cost, or medical care for which the beneficiary did not pay. Others received some support from the children or relatives with whom they lived.

This assumes that homeownership yields noncash income in the long run, although about one-fifth of the homeowners reported current housing expenses for the survey year that exceeded the estimated rental value of the home. Roughly every third homeowner reported noncash income from another source, usually food, because homeowners are more likely than renters to have garden space.

A fourth of all beneficiary couples and a tenth of all other aged beneficiaries raised some food. Such food makes for a better and more interesting diet, but the net saving in family food expenditures is likely to be considerably less than dollar for dollar.

Measures of Need

When it is said that the aged as a group have relatively low incomes, this implies some standard of how much they really need. Certainly for many, with the children grown and the home paid for, wants in many aspects of daily living are lessened. "Need" is admittedly a relative term: It will vary with considerations such as homeownership, the state of health, and perhaps the extent to which children and other relatives can be counted on for help in an emergency. The needs as well as the financial resources of the aged are in some measure a function of where they live. Those in cities, for example, have higher income on the average and are more likely to be drawing OASI benefits than those who spent their lives on farms or at other work only recently brought under the program. On the other hand, in large cities people are less likely to have the advantage of an owned home and home-grown food which can help make a small income go farther, and often must pay higher prices, particularly for housing.

One measure of need might be the recent Bureau of Labor Statistics budget for a retired couple, in reasonably good health, keeping house alone in a rented dwelling in one of 20 large cities. The cost in late 1959 ranges from $2,390 to $3,110 or from $2,640 to $3,370, depending on whether one adheres to a concept adopted earlier by the Social Security Administration, or applies the somewhat higher food and transportation standard conforming to that used for a city worker's family budget. Only a minority of the aged live in the circumstances to which this "modest but adequate" budget applies, however: Just over half of all persons aged 65 and over are currently married and living with a spouse; less than two-thirds live in a community classified as urban, and most elderly couples own their own homes, usually mortgage-free; and not all of them keep house by themselves.

Currently, income data from the Bureau of the Census are available only for families with an aged head and not for aged couples living alone. Such families include an average of 2.6 persons. On the basis, however, of a special Census income tabulation for 1956 for both types of families, the median income of all elderly couples living alone in urban areas might be estimated at roughly $2,600-$2,800 in 1959. Thus the cost of maintaining an elderly couple, in reasonably good health for their age and living alone in a rented dwelling in a large city--ranging from $2,390 in Houston to $3,110 in Chicago in autumn 1959--may have been beyond the reach of more than half of them. Lowering the budget to a range of $2,200 to

$2,800 to allow for the estimated amount of housing costs that many of the couples would save as homeowners would reduce the number for whom the budget standard would be more than income could provide, but this number would still be considerable. Furthermore relatively few with incomes below the budget level would have sufficient cash savings or assets readily convertible to cash to make up the deficit.

An important but difficult task is adapting the budget-for-two to represent the needs of one elderly person. While there is no generally accepted procedure, there is likely to be agreement that the least suitable estimate is a simple division by two. For housing, the cost for a single individual is probably little less than for two. If keeping house is impractical, as may be true for an elderly man living alone, the budget will have to allow for eating most meals out and sending out the laundry.

The Bureau of Labor Statistics has developed a scale based on the relation between food expenditures and income throughout the entire range of income which suggests that one person 65 or over would need 59 percent as much income as an elderly couple living at the same standard. Further study will most likely show that when incomes are low and consumption is already close to the marginal level, this ratio is too low. However, even the 59 percent ratio brings estimated costs for an elderly individual considerably above average means. On this basis, a "modest but adequate" standard for an elderly person living alone would take from $1,410 to $1,835 in the 20 cities studied. The median income for individuals aged 65 or over living alone (or with nonrelatives) in cities was $1,140 in 1959.

MEDICAL CARE EXPENDITURES

Although opinions differ as to the standard against which to measure resources of the aged, it is generally agreed that their lowerthan-average income is accompanied by higher-than-average medical care needs. It is well-known also that the aged, like other predominantly low-income groups, are likely to find the financing of their medical needs a heavy burden. Sometimes they forego necessary medical care entirely or defer it much longer than is desirable. In other instances they get the care they need, but must rely on others to help pay for it.

Total Medical Care Expenditures Per Capita

Personal expenditures.--According to a study conducted for the Health Information Foundation, per capita gross private medical care expenditures by (or for) persons aged 65 and over are at least twice as large as those by (or for) persons under 65 (table 6). This leaves out the heavy costs for terminal illness of persons who had lived alone, and

the cost of care in nursing homes, mental or tuberculosis hospitals and other institutions (much of which is publicly financed) which are particularly important for the aged, and also the value of care provided at no charge to those individuals who cannot pay.

Table 6.--Private expenditures for medical care per person, by age, 1957-58

SOURCE: Odin Anderson, et al., Family Expenditure Patterns for Persoral Health Services, Health Information Foundation Research Series 14 (1960).

If allowance were made for the amounts spent by private individuals for medical care of the aged in nursing homes and other institutions, and for medical expenses incurred in their last illness by the aged living alone, the private medical care expenditures for persons 65 and over would probably have averaged $187 instead of $177 in 1957-58.

Public and private expenditures.--Aggregate annual public expenditures in the fiscal year 1958 for medical care for the aged are estimated at about $650 million exclusive of care in tuberculosis and mental hospitals, and at about $940 million inclusive of such care. Philanthropic expenditures for medical care for the aged are estimated at $150 million. The total medical care expenditures for persons 65 and over in 1957-58 would therefore have been about $240 per capita, omitting care in tuberculosis and mental hospitals, or $260 including such institutional care for aged persons. At present prices the per capita average for all care probably exceeds $290, or a total of almost $5 billion.

total.

Hospital care is estimated to account for about two-fifths of the

Wide variation in expenditures.--The erratic incidence of illness is one of the factors that aggravates the medical burden. Average medical cost figures conceal wide variations in expenditures and give no indication of the very heavy burden that may come to the individual whose illness requires hospitalization. A hospital stay usually means total medical bills for the year are relatively high. No one can foresee whether or just when he will have to enter a hospital, which makes individual budgeting unsuitable as a means for meeting the cost of hospitalization.

Hospital Stays and Medical Bills

The impact of hospitalization on aged persons is well illustrated by data from the 1957 survey of OASI beneficiaries. They are presented for married couples and for other aged beneficiaries separately, rather than for individuals as in the case of disability and utilization data, because for married persons medical costs should be related to the resources of the couple.

At least one member in every fifth aged couple entitled to benefits spent some time in a hospital during the year, according to the 1957 survey of beneficiaries. For half the couples with a hospitalized illness (excluding those reporting free service or other unknown costs), the total medical bills incurred amounted to over $700, more than the cost of a modest food budget for the year, compared with $150 for couples with neither member hospitalized (table 7).

Table 7.--Percentage distribution of aged OASI beneficiaries, hospitalized and not hospitalized by amount of medical costs incurred during year, 1957

1/ Includes persons who received care in nursing homes or chronic care institutions as well as in short-stay general hospitals, because their medical-cost experience tends to be similar.

2/ In most cases, includes some "free" care, i.e., no bills rendered to anyone, or vendor paid directly by public assistance or other agency.

SOURCE: 1957 Survey of OASI Beneficiaries.

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