The Effects of Chronic Health Conditions On Income Adequacy

Background and Purpose: Poverty levels of older adults have improved consistently over the past 50 years.  This is due to the stability of Social Security, Pensions, and Medicare. However, due to the recent economic recession and the increasing costs of health care, older adults are less financially secure.          

The lack of adequate monetary income and the increased prevalence and cost to treat chronic health conditions among mid-aged and older American populations may threaten their economic security. The purpose of this study was to examine two main issues: 1. whether chronic health conditions affect the income adequacy of older adults, and 2. the extent to which insurance (disability and supplemental health) and family transfers buffer the impact on income adequacy.    

Methods: Longitudinal survey data from the Health and Retirement Study (2004, 2006, 2008, and 2010) were used to conduct this study. Data from the core survey and a supplemental leave-behind questionnaire were merged and analyzed using structural equation modeling.

Results: Results from the data analysis delineate the significance of relationships among health-related variables and income adequacy. There was a significant relationship between chronic health conditions and income adequacy. Severe health conditions had a more significant effect on income adequacy than did mild conditions. Using Baron and Kenny’s methods for testing moderating variables, defined as interaction terms, disability insurance, supplemental health insurance, and family transfers buffered the effects on income adequacy.

Implications: This research focuses on a timely and highly significant social problem: the impact of health conditions on income adequacy among mid-aged and older Americans. The implications of this study are critical to the economic security of Americans. Since income can be used as a resource to finance health care, inadequate levels of income can threaten older Americans’ financial security. This topic has the potential to inform policy and scholarly debates on the subject of financial security. It also will inform decision-makers about effective interventions that could possibly slow the growing prevalence of chronic health conditions and as a result, improve levels of income adequacy.