MacArthur Awards $2.7 Million to Support Research on How Housing Matters

Background: Research shows that lower-income older adults are likely to experience multiple chronic illnesses and deteriorating physical and cognitive functioning as they age. Left unaddressed, these physical and mental challenges compromise an older person's health, quality of life, and ability to live independently. They also contribute to higher health and long-term care costs, the bulk of which are paid for by the Medicare and Medicaid programs.

Anticipated growth in the aging population will exacerbate these challenges over the next 20 years. One promising strategy to address this increased need would bring health and long-term services and supports into publicly-assisted, congregate senior housing properties. The positive impact that supportive housing can have on the lives of other vulnerable populations, including the homeless, has already been demonstrated by prior research. These findings suggest that creating linkages between housing and services could also yield important benefits for older housing residents, housing providers, and public health care payers. Yet, few studies have examined the specific impact of housing-plus-services models on older adults.

Design: This study will provide empirical evidence about the role of publicly- assisted, service-enriched housing for older adults in allowing residents to “age in place” in a cost-effective manner. The project will build on an ongoing study, supported by the U.S. Departments of Health and Human Services (HHS) and Housing and Urban Development (HUD), to develop the first-ever dataset to link demographic, health status and health service utilization data for elderly residents of publicly-assisted housing. Major activities of this project will include:

1. Surveying a sample of housing properties drawn from the HHS/HUD dataset to ascertain the range of services available at selected properties in 10 jurisdictions;
2. Comparing the health care utilization of residents living in publicly assisted service-enriched housing with the health care utilization of older adults living in non-service-enriched housing and non-publicly assisted housing environments in the same community;
3. Developing case studies of service-enriched housing properties;
4. Conducting benefit-cost studies of the service programs offered by case study sites; and
5. Interviewing state and local officials responsible for developing policies that impact the provision of housing and services.

Outcomes: This study is the first national effort to assess whether publicly-assisted, service-enriched senior housing can serve as an effective platform for meeting the health and long-term care needs of low-income older residents, while helping to reduce care costs. Study results could help inform future policy and practice discussions aimed at developing effective strategies to: (1) implement the Affordable Care Act, (2) control Medicare and Medicaid costs, (3) rebalance long-term care systems at the state level, and (4) inform HUD's commitment to pursuing housing as a platform for the provision of services.

Background: The lack of affordable housing for the elderly is a significant social problem. An important factor in private and public sector efforts to address housing needs is the strong complementarity between health and housing at older ages, suggesting housing and health issues should be considered in tandem. Unfortunately, public agencies concerned with health and housing issues are split between the state, local, and federal levels. This split is mirrored in academic research: those focusing on housing rarely consider health; those focusing on health rarely consider housing.

The project has six specific aims:

1. To analyze the determinants of the demand to age in place, with a focus on the role of local housing affordability.
2. To examine the role housing affordability plays in long-term care, intergenerational transfers of time and money, and shared living arrangement decisions.
3. To examine the impact of access to affordable housing options on the health and well-being of older Americans.
4. To examine differential impacts by race/ethnicity, immigrant status, education, region, and proximity to kin.
5. To examine the extent to which housing arrangements, especially those that integrate some amount of care, affect Medicare utilization and spending.
6. To examine the impact of the Great Recession on housing affordability of older Americans, and the consequent impact on health, living arrangements and well-being.

Design: This research will use an innovative approach to the empirical economic analysis of the relationship between affordable housing and the health, medical expenditures, and living arrangements of older Americans. Detailed location-based data on subsidized and unsubsidized senior housing options as well as Medicare claims records will be merged to data on older individuals in the 1992-2012 waves of the Health and Retirement Study (HRS).

Outcomes: The project makes a number of important contributions. First, it seeks to expand empirical economic analysis about elderly housing affordability and its impact in a broad set of domains. Second, it quantifies the direct health benefits from affordable housing. Third, it directly estimates the impact on the Medicare program of elderly affordable housing and residential choices. Fourth, it helps to illuminate the short-run impact of the Great Recession on older Americans. Finally, it directly informs a number of current affordable housing and aging policy efforts at the federal and state levels: efforts to sustain federal funding for Section 202, Section 8, and the Low-Income Housing Tax Credit programs; the expansion of subsidies at the state and federal levels for home modifications to help elderly age in place; clear and cost-effective benefits to justify expanded in-home and housing related services under the Older Americans Act, currently up for reauthorization; and the potential savings to Medicare and Medicaid from bundling in-home and community-based care with affordable housing.

Background: The project will provide a better understanding of whether, and under what circumstances, reverse mortgages lead to increased financial security, well-being and independence in older age. Reverse mortgages as a means of equity extraction can serve as a substantial source of supplemental income in retirement while enabling seniors to stay in their homes. However, reverse mortgages are complex and costly financial products and little is known about their appropriateness and longer term impact. The hypothesis to be tested is that the decision to obtain a reverse mortgage is influenced by a variety of factors, including individual, market and household characteristics, but also by the ability of the senior to appropriately evaluate the decision, as moderated by decision frames and access to information. Thus, reverse mortgages are expected to be empirically related to financial security and indicators of independence and well-being for a subset of seniors; however, reverse mortgages may be associated with additional financial strain for homeowners who were not a good fit for the reverse mortgage at the time of counseling.

Design: The project leverages several unique client level datasets, not otherwise publicly available, to accomplish two primary objectives:

1. Explore the decision making processes of seniors considering reverse mortgages; and
2. Evaluate the impact of the decision to obtain a reverse mortgage on financial, housing, and physical well-being and independence.

The combination of data from multiple sources will result in a robust dataset with longitudinal observations of more than 30,000 seniors considering reverse mortgages from 2006-2013, including indicators of financial, housing and physical health and well-being both before and after the receipt of a reverse mortgage. Specifically, this project will combine administrative and credit record data on seniors receiving counseling for reverse mortgages from CredAbility, a nonprofit housing counseling organization, withclient level data from the National Council on Aging’s (NCOA) Financial Interview Tool, and loan level reverse mortgage transaction data from the U.S. Department of Housing and Urban Development (HUD). Additional information on long-term outcomes will be collected through a follow-up survey of 5,000 purposively selected seniors from the sample database. The survey provides a unique opportunity to collect self-reported indicators of independence and well-being, matched with administrative data on financial security from longitudinal credit report data. Both the propensity to receive a reverse mortgage and the impact of the reverse mortgage on longer term outcomes will be evaluated using standard econometric techniques.

Outcomes: The aging of the baby boomer generation, combined with the increasing financial insecurity of seniors facing retirement, creates a critical and timely policy need for this research. This project will directly inform current policy debates surrounding the appropriateness of reverse mortgages for seniors, and the necessary regulatory, underwriting and counseling procedures that should be in place moving forward.This research is strategically positioned to inform key policy actors including the U.S. Department of Housing and Urban Development and the new Consumer Financial Protection Agency.