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Sequestration and Senior Citizens: How Will Budget Cuts Affect the Elderly?

March 1, 2013
Personal Finance
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What is sequestration?

On March 1st our government plans to cut about $85 billion in across-the-board spending for a wide variety of goods and services that many of us consider essential. These mandatory cuts are known as budget sequestration. Even if Congress and the President somehow agree on how to avert sequestration, the agreement they reach instead is still very likely to include painful cuts for some of the neediest elements of our society.

Among other things, these exercises give us a picture of which of our neighbors will suffer the most when push comes to shove – whether the sequester goes forward or not.

First of all, Social Security and Medicaid will not be affected by the sequester itself. But as Certified Financial PlannerMitchell E. Kauffman points out, “Medicare will face a 2% reduction in Medicare payments to providers. This could result in doctors turning down Medicare patients.”

Senior savings are really losses

Many point out that denying funding to senior programs doesn’t save any money in the long run. The Leadership Council of Aging Organizations (LCAO), a coalition of senior-focused non-profits, says: “Any ‘savings’ from the sequester would pale in comparison to the added costs resulting from premature nursing home placement for seniors who can no longer stay in their homes and communities because of reduced federal funding.”

Mark Zilberman, Geriatric Care Manager at NorthStar Care and Guidance in New York City, is particularly concerned about the effect of cuts in the popular “Meals-on-Wheels” program, which the LCAO estimates will result in 17 million fewer meals being delivered seniors and shut-ins. This is about more than food, he says: “Often the Meals-on-Wheels worker is the only person who sees a senior citizen on a regular basis, making them an important part of the person’s safety net. They’re trained to take action when they notice anything amiss.”

Zilberman is also concerned about the effects upon seniors losing rides to medical appointments, grocery shopping, and other needs. The LACO estimates that there will be 1.9 fewer such rides if sequester cuts go into effect.

Here are a few more estimates that the LCAO has arrived at to illustrate the possible effects of the sequester:

  • 1.5 million fewer people receiving personal care services such as in-home help with bathing and dressing.
  • 290,000 senior households losing their heat due to a $285 million cut in the Low-Income Home Energy Assistance Program.
  • 6,400 fewer low-income older adults hired and paid because of cuts to the Senior Community Service Employment Program.

Spreading the pain

Seniors aren’t the only ones who will suffer. As LCAO says, “Such cuts would also place greater financial strains on family caregivers and drive higher medical costs due to elders’ poorer nutrition and health, increased falls, and other avoidable crises. There will be indirect economic harms from the sequester as well: fewer meals served means smaller purchases from local farmers, grocers and food vendors, fewer in-home service hours restricts the senior’s life and the worker’s pay, and stranded-at-home seniors spend fewer dollars in their community.”

Shaking consumer confidence

If you’re still working, you can only hope that yours won’t be one of the jobs that will be lost. As Certfied Financial Planner Tony Drake points out, “The massive job losses associated with the sequester may not hit many seniors directly. However, I fully expect consumer confidence to be shaken. That means prices on everyday items will inevitably go up. “The bottom line is, we all should have safety nets built into our budgets.  If these past few years have taught us anything, it is that we all need to be planning so that no matter what the economy is doing, we can stay afloat.”


Congress image via Shutterstock