Health-wealth association among older Americans: Racial and ethnic differences

Using five-year longitudinal data from the AHEAD survey, this study investigated the direction of association between health and wealth among elderly people. In particular, it focused on how this association varied across racial and ethnic groups. The study found that there was a significant nonmonotonic association between health and wealth and the direction of the association was from health to wealth, but not from wealth to health, and that race and ethnicity moderated the effect of health on wealth. Implications for social policy are discussed. Key words: elderly people; ethnicity; health; race; social policy; wealth ********** The impressive improvements in economic status and health among older Americans were two major public policy achievements of the past century. The 1935 Social Security Act and its 1939 amendments provided monthly cash benefits to retired workers and their spouses ages 65 and over. The increase in cash benefits in early 1970s and the automatic cost of living adjustment since then have remarkably improved the economic status of older Americans. Between 1959 and 1999, the poverty rate for the elderly population dropped from 35% to less than 10% (U.S. Census Bureau, 2000). Advancements in medical technology and increased access to medical care through the Medicare and Medicaid programs have significantly improved the health status and life expectancy of older Americans. Life expectancy at age 65 increased from 12 years at the beginning of the 20th century to 18 years in 1998 (National Center for Health Statistics, 2000). In 1992, 75% of noninstitutionalized elderly people ages 65 to 74 years and 67% of those ages 75 years and over considered their health as good, very good, or excellent (U.S. Census Bureau, 1996). Despite of these impressive improvements, many elderly people still reported that poor health and financial worries were their biggest concerns ("American Option," 1999). A long life expectancy means that elderly people need to spread their economic resources over a longer period of time than their parents' generation. It also means that many of them may live the additional years with chronic health problems and functional dependency associated with the aging process. The Medicare and social security programs were designed in an era when life expectancy was shorter and major health problems among the elderly population were acute rather than chronic. These programs may not be able to meet the changing needs of the elderly population in the new millennium. The situation is further complicated by the fact that economic status and health are positively associated. Elderly people who have better health are more likely to have greater economic resources than those with poor health and vice versa (see Feinstein, 1993, and National Institute on Aging [NIA], 1999, for reviews). Although the association between economic status and health is well documented, the direction of the causation is not clear. It is likely that higher economic status leads to better health as people who have more economic resources can afford better medical care, better foods, and better living environments throughout their life course. It is also possible that better health leads to higher economic status as people with good health are able to fully participate in the labor market, earn more income, and accumulate more wealth throughout their life course (NIA; Smith, 1998; Smith & Kington, 1997). Furthermore, many earlier studies on the association between health and economic status used household income as the only indicator for economic status. Although many researchers acknowledged the importance of income, others argued that wealth, measured by household net worth, may be a better measure of economic status for elderly people because it reflects the socioeconomic standing of older people throughout their life course (Hurd, 1989; Mutchler & Burr, 1991; Smith & Kington, 1997). …