Why Housing Plus Services

Center Post

A large and rapidly expanding population of low-income older adults faces the dual challenges of finding affordable, safe housing that can accommodate changing needs as they grow older.

A large and rapidly expanding population of low-income older adults faces the dual challenges of finding affordable, safe housing that can accommodate changing needs as they grow older.

Millions of older adult renters and homeowners face excessive housing costs and/or live in housing with serious physical problems. As they age, an increasing proportion of these older adults experience multiple chronic illnesses. In many cases, deteriorating physical and cognitive functioning impede the ability of these seniors to live independently in the community.

Individual needs translate into higher costs to Medicare and Medicaid, which are the primary health and long-term care payers in the U.S. With the rapid aging of the population over the next 20 years, these challenges are only expected to grow in the future. Consider these trends:

Demographic Trends

The older population is changing rapidly in both numbers and demographic makeup. 

  • The older adult population is exploding.
    • The 65+ population will double by 2050, far outpacing the growth of all other age groups. Older people will make up 20% of the population, up from 13% in 2010. Source.
    • The 85+ group will grow the fastest, tripling from 5.8 million to 19 million By 2050, this cohort will make up 22% of the older adult population. Source.
  • The older adult population is substantially increasing in racial and ethnic diversity.
    • Members of minority groups are projected to make up 42% of the 65+ population in 2050. This represents a 20% increase from 2010. Source.
  • Familial structures are shifting among baby boomers.
    • 1 in 3 baby boomers (age 45-63) was unmarried in 2009, compared to 22% of the same age cohort in 1980. Source.
    • Declining fertility rates will leave about 1 in 6 late-boomer women (born 1956-65) childless, compared with only about 1 in 12 pre-boomer women (born 1935-45). Source.

Implication: The prevalence of chronic conditions and frailty increases with age. Minorities are at greater risk for chronic conditions like diabetes and high blood pressure. Growth in the overall and minority older adult population will place unprecedented demands on the provision of health care and aging-related services.

Unmarried individuals tend to have fewer economic resources, poorer health and be less socially integrated than their married counterparts. Adult children sometimes assist their parents financially, but more often they help with chores and personal care when their parents become frail. Changes in familiar structures will limit many older adults informal support networks, leaving them to rely on formal assistance.

Economic Trends

A sizeable proportion of older adults are economically challenged and the number will likely grow in the future. 

  • In 2010, 9% of elders lived in poverty and 35% lived below 200% of poverty according to the official poverty measure (1-person household = $10,458; 2-person household = $13,180). Source. Poverty rates differed among sub-sections of the elderly population. For example:
    • African American and Hispanic elderly were more than twice as likely as Caucasians to be poor (18% compared to 8%).
    • Women were more likely to be poor than men (10% compared to 7%).
    • The percent of older Americans in poverty increases with age, with the oldest old most likely to be poor. Ten percent of persons aged 75 and older were considered poor, compared to 8% of persons age 65-74. 
  • Due to multiple perceived weaknesses in the official poverty measure, a supplemental poverty measure was created in 2010 to more accurately reflect poverty levels. Under the new measure, 16% of older adults lived in poverty in 2010. Source.  
  • Baby boomers are facing declining home values, rising debt and depleted savings as they approach retirement age and have little time to recoup their losses. Source. For example:
    • In 2007, households ages 55-64 had a median net worth of $266,200, including home equity, savings and 401(k)s. By 2010, the nest eggs of Americans approaching retirement had fallen to $179,400. 
    • Older workers also experienced a drop in earnings, making it harder for them to save and make up for losses to their net worth. Just over half of all families in the 55-64 group reported they saved money in 2010. 
    • Only 60% of families ages 55-64 had a retirement account that allowed them to take advantage of tax breaks for retirement savings. The median balance of these accounts was $100,000.

Implication: People living in poverty have a higher prevalence of disability and chronic illness. People with limited resources have a harder time bearing the cost of out-of-pocket medical expenses and purchasing supportive services. Ultimately, many rely on publicly-funded programs.

Health Trends

The prevalence of chronic conditions increases with age and is substantial among older adults. 

  • In 2010, 45% of persons age 65+ were diagnosed with 2 or more chronic conditions, compared to 21% of adults aged 45-64. Source.
  • The percentage of persons age 65+ with 2 or more chronic conditions increased between 2000 and 2010 from 37% to 45%. Source.
  • Certain demographic groups are more vulnerable to chronic illnesses.
    • In 2010, 52% of blacks aged 65+ had 2 or more chronic conditions, compared to 45% of Whites aged 65+. Source.
    • Half (51%) of older adults living below the poverty level had 2 or more chronic conditions, compare to 39% of older adults living at 400% of the poverty level. Source.
  • On the whole, the conditions that are most common among older age groups tend to require more care and are more disabling than the conditions that are more common for younger age groups. Source.
  • People with chronic diseases often have difficulty with basic tasks such as lifting objects or walking up stairs and daily life activities like bathing and dressing. They have significantly higher rates of hospital and emergency room visits. Source.

Implication: The resource implications for addressing multiple chronic conditions are immense. Increased spending on chronic diseases among Medicare beneficiaries is a key factor driving the overall growth in Medicare spending. Individuals with multiple chronic conditions are also challenged by out-of-pocket costs of their care. Source.

Mental Health Trends

A substantial number of older adults suffer from mental health and substance abuse conditions. 

  • Up to 8 million older adults, or 20% of the current senior population, suffer from some form of mental health or substance abuse condition. Depressive disorders and dementia-related behavioral and psychiatric symptoms are the most prevalent. Source.

Implication: Mental health and substance abuse conditions in older people are associated with a wide range of negative effects, including emotional distress, functional disability, reduced physical health, increased mortality, suicide, high rates of hospitalization and nursing home placement, and high costs. Source.

Housing Affordability Trends

A large number of older households experience housing cost burdens. But federal housing subsidy programs are only meeting a fraction of the need. 

  • Older adult households are more likely than their younger counterparts to spend more than 30% of their income on housing. Source.
  • Almost half of the poorest 65+ population (those with income below 50% of the area median) pays 50% or more of their income for housing. Source.
  • Approximately 90% of Section 202 Supporting Housing for the Elderly properties maintain a waiting list. On average, 50 applicants are waiting for a unit to become available. In some cases, waiting lists are so long they are closed to new applications. Source.
  • The funding level for the Section 202 program has been declining over the past several years, resulting in the production of fewer and fewer new units. The proposed FY2013 budget eliminated funding for construction of new Section 202 properties.

Implication: As the volume of lower-income seniors is expanding, the availability of affordable housing options is not keeping pace. Spending a substantial portion of income on housing costs limits the money available for medications, other health-related expenses and supportive services.

Health and Long-Term Service and Support Trends

Multiple federal and state policy initiatives are searching for better ways to deliver health and long-term care services that result in improved outcomes and reduced costs. 

  • Expansion of home and community-based services - Many states are seeking to rebalance their long-term care systems to provide seniors and adults with disabilities greater access to services and resources that can help them remain in their homes and communities and avoid premature or unnecessary institutionalization.
  • Improved coordination and integration of health and long-term care services and supports - Payment and delivery system reform efforts in the Affordable Care Act and other initiatives are attempting to drive better management of health conditions, coordination within and across care systems, and prevention of unnecessary use of hospitals and higher levels of care.
  • Increased focus on dual eligibles - As the biggest users of health and long-term care services, initiatives are focusing on enhancing access to necessary services and supports and supporting individuals to better manage their conditions and coordinate their care needs.

Implication: New partners, methods of partnering and loci of service delivery are needed.

Affordable Housing Plus Services: A Promising Solution

Affordable housing properties linked with health and supportive services may provide an option for meeting the varied needs of lower-income seniors while also helping address multiple public policy priorities. 

Housing Plus Services models:

  • Build on the existing infrastructure of housing, health and community service networks.
  • Provide a potential concentration of high-risk/high-cost individuals. Many of these individuals are dually eligible for Medicare and Medicaid.
  • Offer economies of scale. This can increase delivery efficiencies for providers and affordability for seniors.
  • Provide easy access to services for residents. This access may encourage greater utilization and follow-through.
  • Offer a more regular staff presence with residents. Onsite staff members can help build: 
    • Knowledge of resident needs, abilities and resources.
    • A sense of trust among residents, which encourages better use of services.
    • Early recognition of potential issues before they become costly crises.
  • Help preserve seniors’ autonomy and independence, which helps residents meet the challenging goal to age in place.