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Federal Policy Changes Would Threaten the Well-Being of Older Californians

June 2017 | By Alissa Anderson

The underlying data for this Fact Sheet are available for download. These include county population data for four age groups: age 65 or older; ages 65 to 74; ages 75 to 84; and age 85 or older.

Older adults are one of the many groups facing significant threats to their social and economic well-being from federal policy changes that could be enacted by the Trump Administration and its allies in Congress. Such changes would have a major impact on California given that the state is home to nearly 1 in 9 of all adults age 65 or older in the US. Plus, the harm caused by federal policy changes would likely be magnified in coming years as California’s population ages, increasing the need for health care and other public services and supports that contribute to people’s well-being late in life. The number of state residents age 65 or older is projected to rise from nearly 5.5 million in 2016 to almost 9.1 million in 2030, an increase of two-thirds (66.1%) — more than 20 times the projected percentage growth in the population under age 65 (3.1%).[1] Even faster growth is anticipated among the oldest seniors — those age 75 or older — who tend to have greater health care needs and are more likely to face economic hardship.[2]

In some parts of California, growth in the older adult population is projected to far outpace growth statewide, suggesting that federal policy changes could have an outsize impact in certain regions. Specifically:

  • Adults age 65 or older are projected to make up at least one-quarter of residents in 20 counties by 2030, up from just 8 counties in 2016 (see maps 1 and 2 below). This means that the number of counties where at least 1 in 4 people is over age 64 is expected to more than double during this 14-year period. Places with the largest projected share of older adults in 2030 include counties in the Sierra Nevada, far north, northern Bay Area, and northern coastal region. Statewide, one in five people (20.6%) is projected to be age 65 or older in 2030, up from 13.6% in 2016.
  • The number of adults age 65 or older is projected to increase by at least 50% in more than half of California’s 58 counties between 2016 and 2030 (see map 3 below). In one county, Mono, the number of older Californians is expected to more than double during this period. In five counties, the older adult population is projected to increase by at least 75%, but less than 100%. These include both Inland Empire counties (Riverside and San Bernardino), two Bay Area counties (Contra Costa and Solano), and San Benito County. In another 26 counties, the number of older adults is projected to rise by at least 50% but less than 75%. These include many counties in the Central Valley and greater Sacramento region as well as all counties along the central and southern coast.

Download county population data for four age groups: age 65 or older, ages 65 to 74, ages 75 to 84, and age 85 or older.

Map 1

Map 2

Map 3

[1] Budget Center analysis of Department of Finance data. The population under age 65 is projected to increase from approximately 33.9 million in 2016 to roughly 34.9 million in 2030.

[2] Between 2016 and 2030, the number of Californians ages 75 to 84 is projected to increase by 100.0%, while the number age 85 or older is projected to rise by 70.6%. In contrast, the number of Californians ages 65 to 74 is projected to increase by 48.2%.

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On May 4, the House of Representatives narrowly approved — on a 217 to 213 vote — H.R. 1628, the American Health Care Act of 2017 (AHCA). Every Democrat and 20 Republicans voted against the bill. This legislation would reverse the progress that California and the rest of the nation have made in extending health coverage to millions of people under the framework of the Patient Protection and Affordable Care Act (ACA), which President Obama signed into law in 2010.

The AHCA would make several changes that would damage the health and economic security of millions of Americans. These include, but are not limited to, 1) phasing out the Medicaid expansion, through which California and many other states have extended health coverage to millions of low-income adults under age 65; 2) shifting huge new costs for Medicaid to the states by capping annual federal funding for the program; 3) restructuring federal premium assistance — which lowers the cost of monthly health insurance payments — in a way that disadvantages people who are older and/or have lower incomes; 4) eliminating federal subsidies that reduce the cost of copays and deductibles for people with low or moderate incomes; and 5) ending nationwide protections for people with pre-existing health conditions. At the same time, the AHCA would provide massive tax breaks for the wealthy and for drug and insurance companies.

Republicans in the House approved the AHCA even though the final version of the bill had not been analyzed by the nonpartisan Congressional Budget Office (CBO), which estimates the potential impacts of proposed legislation. Today — nearly three weeks after House Republicans approved the AHCA — the CBO released its assessment of the bill.

On a nationwide basis, the CBO estimates that if the AHCA were signed into law:

  • By 2026, an additional 23 million people would be uninsured compared to current law. This includes 14 million fewer Medicaid enrollees by 2026, a reduction of 17 percent relative to the number expected to be enrolled under current law. The CBO notes that the increase in the number of uninsured “would be disproportionately larger among older people with lower income — particularly people between 50 and 64 years old with income of less than 200 percent of the federal poverty level.”
  • Federal spending for Medicaid would be reduced by $834 billion over the 2017-2026 period compared to what the CBO projects under current law.
  • Less healthy people in states that fully opt out of certain health care regulations would face particularly difficult challenges in purchasing health coverage on the individual (or “nongroup”) market. About one-sixth of the US population lives in states that would obtain waivers — as allowed by the AHCA — to 1) narrow the scope of benefits that must be covered by health insurance and 2) let insurers charge premiums based on an individual’s health status if they fail to maintain continuous coverage. (The CBO does not indicate which states it presumes would fall into this category.) As a result of these changes, the CBO anticipates that “people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under current law, if they could purchase it at all — despite the additional funding that would be available under H.R. 1628 to help reduce premiums.” Consequently, the nongroup markets in these states “would become unstable for people with higher-than-average expected health care costs,” according to the CBO.

The CBO does not assess the potential impacts of the AHCA on individual states. However, state-level research from other organizations shows that the House-passed bill would:

  • Shift nearly $6 billion in Medicaid costs from the federal government to California in 2020, rising to an annual cost-shift of $24.3 billion by 2027, according to the state Department of Health Care Services.

     

    • These massive annual cost-shifts would result from several AHCA provisions. These include 1) the substantial reduction in the federal government’s share of costs for people who sign up for coverage through the Medicaid expansion; and 2) the proposal to cap federal funding for the entire Medicaid program — through a “per capita cap” or a block grant — at a level that would fail to keep pace with anticipated Medicaid spending growth, resulting in federal funding cuts that would grow every year.
    • California’s state budget would not be able to absorb these sizeable annual cost-shifts. As a result, state policymakers would face the very real prospect of having to repeal the Medi-Cal expansion. Such an action would eliminate the only viable source of health coverage for nearly 4 million nonelderly adults, who live in every Congressional district in the state (see table below). Moreover, Medi-Cal coverage and benefits would be put at risk for the nearly 10 million additional Californians — including children, people with disabilities, and adults age 65 or older — who qualify for Medi-Cal through other eligibility pathways (i.e., not through the expansion).
  •  
  • Disproportionately harm women, according to the Center on Budget and Policy Priorities (CBPP). Women and girls comprise more than half of Medi-Cal enrollees (54 percent as of December 2016), and women “are much more likely to use Medicaid’s long-term services and supports as they age,” the CBPP notes. Medi-Cal also plays a significant role in women’s health by financing roughly half of all births in California (50.4 percent as recently as 2011). Federal cuts to Medicaid could require California to scale back the state’s investment in these and other critical services for women. In addition, family-planning services would be threatened because the AHCA would prevent states — including California — “from reimbursing Planned Parenthood for its preventive health and family planning services” for people enrolled in Medicaid, according to the CBPP.
  • Hurt military veterans, according to Families USA. Medicaid is a critical source of health coverage for veterans, who are “at a higher risk than most for unique and sometimes serious or complicated health care issues as a result of their service.” Nationwide, more than 1.7 million veterans (nearly 1 in 10) were enrolled in Medicaid in 2015, with roughly 183,000 of these former servicemen and -women receiving services through California’s Medi-Cal program. (A California-specific estimate is not available.) For some veterans, Medicaid supplements the health coverage that they receive through the federal Department of Veterans Affairs; for others, Medicaid “is their only source of coverage,” Families USA notes. By cutting and capping federal Medicaid funding, the AHCA would threaten access to health coverage for tens of thousands of veterans in California.
  • Increase total health costs by an average of $2,800 in 2020 for people who buy coverage through Covered California, the state’s health insurance marketplace, according to the CBPP. This increase “would be larger for people who have lower incomes, are older, or live in high cost counties,” with average increases projected to exceed $4,000 in 32 counties. This analysis does not account for “additional premium increases and benefit reductions” that could occur under the AHCA proposal to end nationwide protections for people with pre-existing health conditions.
Number of Adults Enrolled in Medi-Cal Due to the
Expansion of the Program as Allowed by the
Federal Patient Protection and Affordable Care Act (ACA)
*Updated as of February 2017.
Note: Data exclude 67,110 Medi-Cal enrollees who had addresses that could not be coded to specific congressional districts.
Source: Department of Health Care Services
Congressional
District		 Representative Party Expansion Enrollees,
October 2016*
1 LaMalfa, Doug R 69,181
2 Huffman, Jared D 62,679
3 Garamendi, John D 61,765
4 McClintock, Tom R 44,486
5 Thompson, Mike D 55,931
6 Matsui, Doris O. D 78,376
7 Bera, Ami D 55,658
8 Cook, Paul R 81,201
9 McNerney, Jerry D 76,139
10 Denham, Jeff R 77,822
11 DeSaulnier, Mark D 52,303
12 Pelosi, Nancy D 67,507
13 Lee, Barbara D 75,685
14 Speier, Jackie D 54,092
15 Swalwell, Eric D 44,768
16 Costa, Jim D 101,106
17 Khanna, Ro D 44,527
18 Eshoo, Anna G. D 34,569
19 Lofgren, Zoe D 74,367
20 Panetta, Jimmy D 65,022
21 Valadao, David R 93,600
22 Nunes, Devin R 73,624
23 McCarthy, Kevin R 66,484
24 Carbajal, Salud D 53,134
25 Knight, Steve R 63,067
26 Brownley, Julia D 57,414
27 Chu, Judy D 74,873
28 Schiff, Adam D 90,122
29 Cárdenas, Tony D 100,398
30 Sherman, Brad D 70,467
31 Aguilar, Pete D 82,223
32 Napolitano, Grace D 86,643
33 Lieu, Ted D 34,498
34 Vacant — 115,306
35 Torres, Norma D 87,226
36 Ruiz, Raul D 75,981
37 Bass, Karen D 98,485
38 Sánchez, Linda D 63,061
39 Royce, Ed R 54,800
40 Roybal-Allard, Lucille D 90,716
41 Takano, Mark D 77,855
42 Calvert, Ken R 53,283
43 Waters, Maxine D 88,496
44 Barragán, Nanette D 97,286
45 Walters, Mimi R 38,097
46 Correa, J. Louis D 84,859
47 Lowenthal, Alan D 75,946
48 Rohrabacher, Dana R 55,746
49 Issa, Darrell R 39,735
50 Hunter, Duncan D. R 54,675
51 Vargas, Juan D 90,616
52 Peters, Scott D 37,064
53 Davis, Susan D 59,101
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Endnotes are available in the PDF version of this Fact Sheet.

Federal dollars support a wide array of public services and systems that touch the lives of all Californians — from Social Security and health care to highway construction and public schools. A large share, but less than a majority, of this federal funding flows through California’s state budget. The Governor’s proposed state budget for 2017-18 — the fiscal year that begins this coming July 1 — includes $105.0 billion in federal funds. This is more than one-third (36.9%) of the total state budget, which also includes nearly $180 billion in state funds for the 2017-18 fiscal year.

More than 7 in 10 federal dollars that flow through California’s state budget — a projected $78.1 billion in 2017-18 — support health and human services (HHS) for children, seniors, and many other Californians. Most of these federal dollars, roughly $67 billion, go to Medi-Cal (California’s Medicaid program), which provides health care services to more than 13 million Californians with low incomes. The second-largest share of federal funding for HHS programs — $7.5 billion — goes to the state Department of Social Services. These funds support child welfare services, foster care, the CalWORKs welfare-to-work program, and other services that assist low-income and vulnerable Californians.

The remaining federal funds that flow through the state budget — a projected $26.9 billion in 2017-18 — support a broad range of public services and systems. This includes $7.5 billion for K-12 education; $6.8 billion for labor and workforce development programs, primarily for unemployment insurance benefits for jobless Californians; $5.2 billion for higher education (the California State University and the University of California); $5.0 billion for transportation, primarily to improve state and local transportation infrastructure; and $2.5 billion for additional public services and systems, including environmental protection, the state court system, and state corrections.

The outcome of the November 2016 national election portends major cuts to federal funding for key public services. For example, Republicans have vowed to repeal the Affordable Care Act (ACA), which would include rolling back the recent expansion of Medicaid coverage to low-income parents and childless adults. This change alone would reduce annual federal funding for Medi-Cal by more than $17 billion. Other services are also at risk, including some that are funded with federal dollars that flow directly to Californians outside of the state budget — such as federal food assistance provided through the state’s CalFresh program and federal Supplemental Security Income (SSI) payments for low-income seniors and people with disabilities. Republicans are likely to succeed in scaling back federal support in a number of policy areas. If so, state policymakers will face difficult choices about how to fill the resulting funding gaps in order to prevent the erosion of public services and systems that promote economic security and opportunity for millions of Californians.

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Supplemental Security Income/State Supplementary Payment (SSI/SSP) grants are a critical source of basic income for well over 1 million low-income people with disabilities and adults age 65 or older in California. Grants are funded with both federal (SSI) and state (SSP) dollars. Currently, the maximum monthly grant for an individual is roughly $896, which consists of an SSI grant of $735 and an SSP grant of $160.72. In order to help close budget shortfalls during the Great Recession, state policymakers made deep cuts to the SSP portion of the grant, reducing it from $233 per month in early 2009 to $156.40 per month by mid-2011. With an improving fiscal outlook, policymakers recently provided a state cost-of-living adjustment to the SSP portion, effective January 2017. However, this modest increase — $4.32 per month for individuals — represents only a small step toward restoring the SSP portion to its pre-recession value. Because state cuts largely remain in place, the full SSI/SSP grant continues to lose ground to housing costs, which have risen throughout much of California in recent years. For example, in every county, the “Fair Market Rent” (FMR) for a studio apartment exceeds 50% of the maximum SSI/SSP grant for an individual. People are at greater risk of becoming homeless when housing costs account for more than half of household income.

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California’s K-12 education spending per student has increased significantly since 2012-13, but continues to trail the nation as a whole. While not reflective of how much it actually costs to provide California’s students a high-quality education, rankings of state K-12 education spending are often used to assess California’s public investment in its schools.[1]  According to the most recent available information, 

  • In 2015-16, California ranked 41st among all states in spending per K-12 student after adjusting for differences in the cost of living in each state (see table below).[2]  California schools spent $10,291 per K-12 student in 2015-16, which is about $1,900 less than the $12,252 per student spent by the nation as a whole.[3]  California’s spending per student in 2015-16 was about $2,000 higher than it had been in 2012-13, at which point California ranked 50th in the nation.
  • California ranked 37th among all states in K-12 spending as a share of the state economy in 2015-16. California’s K-12 school spending in 2015-16 was 3.29% of state personal income — a measure that reflects the size of the state’s economy — compared to 3.78% in the nation as a whole. In 2012-13, California’s K-12 school spending equaled 3.18% of state personal income — compared to 3.93% in the nation as a whole — and ranked 46th among all states. Gauging school spending as a share of the personal income received by the state’s residents can be useful because it takes into account differences in states’ wealth and thus in their capacity to support K-12 schools.
  • California ranked last in the nation in the number of K-12 students per teacher in 2015-16. California’s student-to-teacher ratio in 2015-16 was greater than 22-to-1, more than 40% higher than the national ratio of 15.4 students per teacher. California had also ranked last in the nation in the number of K-12 students per teacher in 2012-13, with a ratio greater than 24-to-1.
  • California ranks last or close to last in the nation in the number of students per staff. In 2012-13 (the most recent year for which data are available), California’s student-to-librarian ratio was more than 7,800-to-1 (ranking 51st), its student-to-guidance-counselor ratio was 790-to-1 (51st), and its student-to-administrator ratio was 315-to-1 (48th).

In 2012-13, the gap between California’s spending per K-12 student and the nation as a whole grew to its widest point in at least 40 years. California voters approved Proposition 30 in November 2012, which increased state revenues and provided a significant boost to K-12 school spending.[4]  However, the latest figures illustrate that a sizable gap between California spending per K-12 student and the US remains. Accounting for differences in states’ costs of living, California would have needed to spend an additional $13.5 billion in 2015-16 to equal spending per K-12 student in the nation as a whole, an increase of 19.1%.

Substantially increasing California’s K-12 education spending almost certainly depends on the state raising additional revenue. Prop. 55, approved by voters in November 2016, extended Prop. 30’s personal income tax rates for very high-income Californians through 2030 (they had been scheduled to expire at the end of 2018), but did not extend Prop. 30’s quarter-cent increase in the state sales tax rate, which expired at the end of 2016. As a result, the Prop. 55 tax rate extensions will not affect state support for K-12 schools until 2018-19 and are unlikely to increase the level of state revenue compared to the boost that Prop. 30 provided.

Endnotes

[1] All state rankings and related comparisons in this fact sheet include the District of Columbia. For a discussion of why the amount that California is reported to spend per K-12 student, as well as its ranking relative to other states, varies depending on the source of this information and how it is interpreted, see Jonathan Kaplan, Key Considerations When Comparing California K-12 School Spending to Other States (California Budget & Policy Center: August 2015).

[2] Without adjusting for differences in states’ costs of living, California ranked 28th in the nation.

[3] California’s K-12 spending per student reflects a Budget Center analysis that adjusts spending figures for variations in states’ costs of living. This adjustment uses a “comparable wage index” developed by Dr. Lori Taylor at Texas A&M University and William Fowler, Jr. at the National Center for Education Statistics, and subsequently updated by Dr. Taylor. This index is a commonly used method of adjusting K-12 spending for differences in states’ costs of living. For example, see Education Week, Quality Counts 2017: Building on ESSA’s K-12 Foundation (December 2016).

[4] Proposition 30 raised the state sales tax rate through 2016 and the personal income tax rates on high-income taxpayers through 2018.

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As the 115th Congress convenes this month, the US economy is in its seventh year of recovery from the Great Recession. Yet many communities in California have not shared in the nation’s recent economic gains. Statewide, nearly 6 million people, including almost 2 million children, are living in families with incomes below the US Census Bureau’s official poverty line, which is about $19,000 in annual income for a family of three.

Poverty affects communities in every one of California’s 53 congressional districts, but there are stark differences in the level of economic hardship across districts. The latest Census figures show that the official 2015 poverty rate ranged from a low of 6.8% in District 17 (D-Khanna) in the San Jose area to a high of 30.8% in District 16 (D-Costa) in the San Joaquin Valley. Also, poverty has increased in nearly every district since 2000, and the largest increases are concentrated in inland, suburban communities, reflecting a broader national trend. These findings highlight the urgent need for the new Congress to prioritize policies that give all people the opportunity to thrive and move up the economic ladder.

The latest Census data (see Maps below) show that:

  • Three congressional districts are extremely distressed, with more than one-quarter of all residents living in poverty. These districts — 16 (D-Costa), 21 (R-Valadao), and 34 (D-Becerra) — include communities in the San Joaquin Valley and in Los Angeles.
  • In eight districts, between one-fifth and one-quarter of all residents live in poverty. These districts — 6 (D-Matsui), 8 (R-Cook), 29 (D-Cárdenas), 36 (D-Ruiz), 40 (D-Roybal-Allard), 43 (D-Waters), 44 (D-Barragán), and 51 (D-Vargas) — include communities along the US-Mexico border as well as in Los Angeles, the Inland Empire, the San Fernando Valley, and the Sacramento region.
  • Only 10 districts have fewer than 1 in 10 residents living in poverty. These districts — 4 (R-McClintock), 14 (D-Speier), 15 (D-Swalwell), 17 (D-Khanna), 18 (D-Eshoo), 19 (D-Lofgren), 33 (D-Lieu), 39 (R-Royce), 49 (R-Issa), 52 (D-Peters) — largely include communities in the Bay Area and along the southern California coast.

In addition, a recent Brookings Institution analysis shows that nearly every California congressional district was more economically distressed in recent years than in 2000, due largely to the impact of the Great Recession. The communities that have been hit the hardest tend to be those in inland, suburban areas (see Table below). Specifically:

  • Poverty rates rose in 45 of California’s 53 congressional districts between 2000 and 2010-14. For example, the poverty rate increased by more than 4.0 percentage points between 2000 and 2010-14 in four districts: 5 (D-Thompson), 7 (D-Bera), 8 (R-Cook), and 41 (D-Takano), which include communities in the Inland Empire, the eastern Sierra, the Bay Area, and the Sacramento vicinity. In contrast, poverty rates declined in just two districts, while there was no statistically significant change in the remaining six districts.
  • Growth in the number of people living in poverty far outpaced overall population gains in most districts. For example:
  • Between 2000 and 2010-14, the number of people facing severe economic hardship more than doubled, rising by 112%, in District 42 (R-Calvert), which includes suburban communities in Riverside County. Although District 42 experienced the greatest population gains in California during this period (the number of district residents rose by about three-quarters), the increase in the number of residents living in poverty still far exceeded the growth in the overall population.
  • In District 7 (D-Bera), which includes suburban communities east and south of Sacramento, the number of residents facing severe economic hardship increased by about 84% between 2000 and 2010-14, far outpacing the 25% increase in the district’s total population.
  • Three other districts saw the number of economically distressed residents rise by more than 70% between 2000 and 2010-14, far exceeding overall population growth. These districts — 8 (R-Cook), 25 (R-Knight), and 45 (R-Walters) — include communities in the Inland Empire and Death Valley region, northern Los Angeles County, and Orange County. The vast majority of people living in poverty in these districts reside in suburban areas.

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The Supplemental Nutrition Assistance Program (SNAP) — known as CalFresh in California — is the cornerstone of the federal government’s effort to reduce hunger and help struggling families put food on the table. An estimated 4.3 million individuals on average will receive CalFresh food assistance each month during the 2016-17 fiscal year, which began this past July 1. Of the 10 counties with the highest shares of residents participating in CalFresh, five are in the San Joaquin Valley: Tulare (25.5% of residents receive CalFresh), Fresno (21.8%), Merced (20.5%), Madera (18.5%), and Kern (18.3%). (See Map below.) In addition to helping households afford food, SNAP benefits also boost local economies, with every $1 in benefits producing as much as $1.79 in economic activity. During 2016-17, an estimated $7.1 billion in SNAP benefits will flow from the federal government directly to California households, potentially creating $12.7 billion in economic activity throughout the state. (See Table below.)

SNAP lifts families out of poverty and has been shown to improve children’s health and well being. Yet at the federal level, Republicans have proposed severe cuts to SNAP in each of the last six years. If President-elect Trump and the Republican-led Congress follow through on cutting annual federal funding for SNAP, many families would be plunged into poverty, and children could be deprived of the nutrition necessary to stay healthy and reach their full potential.

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Supplemental Security Income (SSI) provides federally funded cash assistance to help low-income seniors and people with disabilities pay for housing, food, and other necessities. The maximum monthly SSI grant for most recipients in California is currently $735 per month — less than 75% of the federal poverty line for an individual. Also, California funds a State Supplementary Payment (SSP), which provides up to an additional $160.72 per month for most recipients. Yet, the combined maximum SSI/SSP grant for an individual — $895.72 per month — is still equal to only about 90% of the poverty line. Total funding for SSI/SSP will reach nearly $10 billion in 2016-17, with the federal government providing $7.2 billion and the state, $2.5 billion. Of the 10 California counties with the highest shares of residents enrolled in SSI/SSP, most — including the top three of Del Norte (7.3%), Lake (6.0%), and Siskiyou (5.9%) — are in rural areas. The efforts of Republican leaders in Washington to scale back federal support for the safety net could include reductions to SSI. Any such cuts would be a further blow to SSI/SSP recipients who already struggle with California’s high cost of living.

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