Having to choose between paying for medicine, food, or rent each month is the new normal for millions of older adults. The pandemic, its economic fallout, and soaring inflation are pushing far too many middle-income older Americans into financial crisis — especially people of color who are already at an economic disadvantage as they age.
The Inflation Reduction Act of 2022 offers a ray of hope. The legislation caps out-of-pocket costs for beneficiaries at $2,000, which will help roughly a million older adults save about $1,000 each year. It also makes health care more affordable for 10 million people by extending the enhanced Affordable Care Act marketplace subsidies through 2025, saving the average enrollee about $700 per year on premiums. That’s no small change for those who struggling to keep their heads above water.
Health care costs are a key driver of economic insecurity among older adults, especially those with chronic conditions. About 27 percent of people age 65 or older have diabetes, for example, and the cost of diabetes care nationally was $327 billion in 2017. But that’s just the health care costs. When you factor in the cost of lost wages among older people with diabetes who cannot work, we calculate that diabetes alone can cost an individual $20,000 per year.
Like many chronic conditions, diabetes is more prevalent among Blacks and Hispanics/Latinos (16.4 percent and 14.7 percent respectively). Black people lose $35.4 billion to diabetes and hypertension, and Hispanics lose $40.9 billion yearly just to diabetes in treatment and lost wages, according to our calculations.
The Inflation Reduction Act includes a proposed $35 monthly cap on insulin, which will be a huge relief to these older Americans’ already-stretched wallets. On average, Blacks and Hispanics age 60 and over already spend $4,000 per year more than whites due to chronic disease and lose $3,000 more than whites in wages because they are more likely to experience job interruptions due to these conditions.
The legislation is a first down payment on ensuring that all Americans can age with dignity. But more is needed. According to the Elder Index, it costs an older adult in poor health between $2,000 and $2,500 every month to afford the basic necessities of food, health care, housing, and transportation. When you consider that the average Social Security benefit in January 2022 was $1,600 per month, it’s clear there’s a significant gap to fill.
We believe aging with dignity should be a right, not a privilege, in America. The Inflation Protection Act is an important step forward in ensuring aging well for all.
Ramsey Alwin is president and CEO of the National Council on Aging and the current chair of the Leadership Council of Aging Organizations.