Sequester Likely to Cripple Aging In Place Programs

The impending March 1 sequester means cuts in spending for nearly all federal programs, but the impact on seniors may be disproportionately higher because of effective rate cuts to the Older Americans Act (OAA) and other non-defense discretionary (NDD) programs.

With Congress so far unable to reach a balanced budget deal to avert the sequester—which exempts Social Security, Medicaid, and the Supplemental Nutrition Assistance Program—other programs including Medicare and housing will see spending reduced by $85 billion.

Much of the reduced spending is on the budget’s discretionary side, says Amy Gotwals, senior director of public policy and advocacy at the National Association of Area Agencies on Aging (n4a), and it will affect senior-serving programs such as home-delivered meals, rides for doctors appointments or shopping trips, and in-home support for daily chores of getting dressed, cleaning, or cooking. 

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“All of those programs are at very grave risk,” she says. “Any ‘savings’  from the sequester would pale in comparison to the added costs from premature nursing home placement for seniors who can no longer remain in their homes and communities; poorer nutrition and health consequences; increased falls and other avoidable crises that put vulnerable seniors at risk.”

There’s been furor regarding the upcoming 2% cuts to Medicare provider reimbursements and defense spending, but the amount of funding slashed from other programs varies and will likely have a much deeper impact on the non-defense discretionary side. The OAA is looking at a 5.2% cut for the remaining seven months of fiscal year 2013, translating to an effective rate of 9% considering the funds that have already been expended in the first five months, according to Gotwals. 

“This [disparate rate for cuts depending on mandatory, defense, or non-defense programs] is so arbitrary, and it’s going back to the part of the budget that’s already been whacked,” she says, referencing earlier cuts totaling $1.5 trillion over 10 years to discretionary spending included in fiscal year 2011 appropriations.

Under sequestration that takes effect March 1, Gotwals says, 18.6 million fewer congregate and home-delievered meals would be served, and 2.1 million fewer transportation rides would be available for seniors. Another 1.6 million people would not be able to get in-home personal care services, and more than 62,000 family caregivers would lose access to respite care, counseling, and other supportive services that help sustain their caregiving roles. 

Older Americans receiving Social Security won’t see their benefits affected, AARP told its members in a statement on the sequestration, but they might see other areas of impact.

“The program’s administrative funding, however, will be further cut at a time when budget constraints have already hampered the agency’s ability to provide timely, efficient and accurate service to Americans,” said AARP. “We remain concerned about the potential negative impact of an increased backlog of claims, reduced hours and possible additional closures at the Social Security Administration’s field offices, which serve beneficiaries in communities throughout the nation.”

The Department of Housing and Urban Development’s various programs, such as housing counseling agencies—including those which offer HECM counseling—and LIHEAP (low income housing energy assistance program) are expected to eventually see an impact from the across-the-board cuts. 

“If the sequestration is a true, across-the-board cut—all subsidy and grant contracts would likely experience a 5.1%-5.3% cut, most likely to come off the end of the funding allocation year—leaving shortfalls that HUD will hope that Congress will finally step up to the plate to cover last minute or after-the-fact,” says LeadingAge

Ultimately, cuts will be “all over the map,” Gotwals says. “We don’t know what that’s going to look like. The cuts are unavoidable, but there are options in how they’re implemented.”  

Written by Alyssa Gerace 

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  • Hmmmm, let me think about this. People who want to age at home will need a reverse mortgage to pay for the financial help they will need to do that. Seems to me this is a perfect support to the RM idea and what we have been saying from the RM industry. The government cost of bringing food to the home can be borne by the proceeds in an RM don’t-need-to-pay-it-back loan for those who have been wise enough to build home equity. Seems like a win-win deal to me. Reduces the cost of government mandated services taxpayers don’t want to cover. What’s the rub?

  • this is nothing more than this administration’s attempt to politicize the work of budgeting and spending. The President has refused to administer the cuts in a way that makes sense, but instead is looking to purposefully wreak the most impact on the vulnerable. Releasing illegals, closing federal cases against drug offenders, aiming at every child and senior program possible is, in Bob Woodward’s words, “madness”

  • I’m with Warren, the RM takes pressure off a whole host of gov benefits. I’ve had on a COUPLE occasions (don’t want to make it seem bigger than it really is) had someone hold off on the reverse mortgage until they exhausted all the means possible to get some local govt benefits (that a counselor had suggested) like property tax deferral, help with oil heat bill, help with phone bill, help with food (food stamps), etc, etc. By they time they got back to me they needed the RM twice as bad as before since the delay caused other bills to back up and the only help I remember them getting was with the food stamps and some type of reduction in their heating oil. The RM gives them the buffer they need.

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