Widow Poverty and Out-of-Pocket Medical Expenditures at the End of Life

PWP-CCPR-2003-022

Abstract

Elderly widows are three times as likely to live in poverty as older married people. This study investigates this gap, as well as the gap in wealth and income more generally, using national panel data from the 1990s in the United States. It is found that 44 percent of the difference in economic status between widows (and widowers) and married elderly is due to differences in economic status that existed between the groups prior to widowhood. The remaining 56 percent is due to issues more directly related to the death of a spouse including the loss of income and expenses associated with dying. This study examines the role of out-of-pocket medical expenditures of the deceased spouse in contributing to the poor financial status of elderly widows. On average, out-of-pocket medical expenditures in the final two years of life are equal to 30 percent of the couple’s annual income. For couples in the bottom quarter of the income distribution, these expenditures are 70 percent of their income. These analyses show that the purchase of health care services for a dying spouse does drive some surviving spouses into poverty.  Our estimates indicate that of the 56 percent increase in poverty that is due to widowhood, one-quarter can be attributed to end of life out-of-pocket health care expenditures.