LeadingAge Magazine · March-April 2020 • Volume 10 • Number 02

Discussion of how to serve middle market consumers is growing fast among LeadingAge members, though the definition of exactly which “middle” can be most readily served, and how, is still up in the air.

Many believe the answer will be built by starting with a housing plus services model. In this article, 2 LeadingAge housing staff discuss some of the tricky issues in defining the middle market and explain why the conversation cannot leave out the centrality of services to any useful model.

Linda Couch is vice president, housing policy, and Alisha Sanders is director, housing & services policy research, for LeadingAge.

Defining Terms and Finding a Path to a Solution

LeadingAge: Different people have different definitions of “middle market.” What does that term mean to you?

Linda Couch: My assumption is that people are talking about households with incomes between 80% and 120% of area median income [AMI].

Alisha Sanders: I don't know that I have a strict definition of the middle market in terms of area median income, but I wouldn't put it as low as 80%; I might start it at 100%. The challenge of this conversation is that we all come to it with a different perspective. I hear some people say the middle market goes down to 60% of AMI. That's a different conversation.

LeadingAge: Is 60% the floor—the bottom edge of AMI that makes people ineligible for any kind of public assistance?

Linda Couch: There are different kinds of programs. Technically, the HUD assisted programs can go up to 80% of AMI, but in reality, they do not. The vast majority of people [being subsidized] have incomes far below that. There's only a share that's available up to 80%. Programs will say that at least 75% [of beneficiaries] have to go below 30% of AMI, and you can have a small share going up to 80%. In the Section 202 program, everyone has to have an income below 50% of AMI.

Generally, HUD programs serve households below 30% of area median, regardless of what technically they're allowed to. And many programs serve below 20% or even 10% of AMI. As a rule, the tax credit program typically serves households at 50% or at 60% but can now serve households up to 80%.

LeadingAge: In practical terms, what are the incomes of the people who are getting help?

Alisha Sanders: In 202 properties, the median income is around $13,500.

Linda Couch: And I think in public housing, they're around the same, usually between $12,000 and $15,000.

LeadingAge: John Cochrane of HumanGood has been quoted to the effect that the middle market is not monolithic, that it should be thought of as middle markets—plural. Aren’t we talking about distinct layers?

Linda Couch: We should be clear about what we’re talking about. Yes, there are layers. But we also need to talk about why we’re talking about a certain income group. Is it because they can’t afford housing, or services, or something else our members can provide?

Alisha Sanders: That's true. It seems like the conversation often defines the problem in terms of housing, but what we're talking about more is the ability to access services and pay for ongoing care.

Linda Couch: We also know that every individual's needs are different when it comes to services. So, to come up with a national standard for what someone's housing plus services needs are seems, on the face of it, very expensive.

LeadingAge: Some people are trying to figure out how they can take a life care model and scale it down. Others are talking about taking a basic housing-plus-services model and scaling it up. Members I’ve talked to seem to be coming down on the side of the latter approach: housing plus services in some form.

Alisha Sanders: Even in affordable housing communities, the moderate income residents are challenging to assist. They are just above the Medicaid line, or just above the eligibility line for a lot of public resources, but don't have a lot of money to pay out-of-pocket for services like home care or those kinds of things.

These are good questions that mission-driven providers are thinking about. If middle market residents need to pay out of pocket for services, can you take advantage of economies of scale to provide that at a more affordable price in a congregate setting? Is it about providing services on a sliding scale, or providing [services in] smaller increments? The traditional home care pricing model doesn't work for most people, because it requires you to buy 4-hour blocks of time that you don't need.

Linda Couch: In my mind, this is really a straightforward long-term services and supports [LTSS] financing conversation. It gets couched as a housing issue, but it's really housing plus services, it's about everything that every senior is facing. What is great about it is that it brings up all these questions about where there are missing pieces in the LTSS puzzle.

However, we should be careful not to imply that low-income seniors today have everything they need—because there's HUD housing and Medicaid—but that is far from the truth.

Alisha Sanders: It's probably a good thing that providers are thinking more broadly about the populations they serve and should serve. It's good to have conversations about how [current] models don't work for a lot of people.

LeadingAge: Do the largest housing providers have a better chance of making a middle market solution work because of their size?

Linda Couch: I don't know if they have a better shot at it, but they are definitely getting in on it early. I know that we have life plan community members who get calls from people that they have to turn away because they can't afford to live there. And as mission-driven organizations, it breaks their hearts to have to do so. At the same time, we have a lot of affordable housing members who get calls and they have to deny people getting on the waiting list, because they are over the income [requirements].

Our providers of more affordable products are trying to see how they can go up the income scale and our higher-income members are trying to see how they can go down. LeadingAge is asking what we can do for our members to help them enter into that space and be successful at serving seniors in it.

Alisha Sanders: I don't know if affordable housing providers are better positioned to be successful in this, but they probably come at it from an orientation that can help bring some light to the conversation. They really focus on the housing, and then look to the community for how they can partner or collaborate to bring in or connect with services.

Gene Mitchell is editor of LeadingAge magazine.