Senior Living History: 1940 – 1949

Jeff Hoyt Jeff Hoyt Editor in Chief

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WORLD WAR II

Library of Congress: America from the Great Depression to World War II Black-and-White Photographs from the FSA-OWI, 1935-1945

During World War II many seniors came out of retirement to help with the war effort. Their employment income probably kept many of them off the welfare rolls during the war. However, they had to retire again when servicemen returned home and needed jobs. The war added to the size of the disabled population who needed long-term care. It also created many new widows and orphans who needed financial assistance. In 1939, the Social Security Act expanded to include survivors’ and dependents’ benefits. The war greatly increased the number of people covered under the system. After the war, the Veterans Administration added new benefits for newly disabled veterans or surviving spouses.

The size of the elderly and disabled population was growing. Many of them were now eligible for government payments of one kind or another, including veterans benefits, old-age assistance, Social Security, and unemployment assistance. Many of those payments could be used to pay for nursing home care, so they encouraged the development of care facilities.

Retired army officer registering men for Selective Service at the Chamber of Commerce. Library of Congress: America from the Great Depression to World War II Black-and-White Photographs from the FSA-OWI, 1935-1945

OAA Availability Expands, Federal Share Increases

Library of Congress: America from the Great Depression to World War II Black-and-White Photographs from the FSA-OWI, 1935-1945

The government made many amendments to the Social Security Act. It increased the cap on Old Age Assistance payments and the percentage of OAA paid for by the federal government. The cap on the total combined payment that was eligible for a federal match increased from $30 a month to $50 a month. Meanwhile, the maximum federal share of the payment increased from 50 to 60 percent from 1936 to 1948. (Advisory Council Report, 1948)

OAA Payments
Year Cap on Total Combined Payment Federal Share of Payment
1936 $30 50%
1939 $40 50%
1946 $45 2/3 of first $15, 1/2 of remainder (56% on maximum benefit)
1948 $50 3/4 of first $20, 1/2 of remainder (60% on maximum benefit)

The states welcomed the opportunity to share public assistance costs with the federal government. By 1940, every state had set up an Old Age Assistance program. Coverage increased until 22 percent of the age 65+ population were receiving OAA benefits averaging about $20 a month in 1940, where utilization leveled off. Somewhere between 2,000,000 and 2,200,000 people received OAA each year throughout the 1940s, representing about 23 percent of the age 65+ population by 1950.

OAA Plagued by High Costs and Misconceptions

The public was confused about who OAA payments were intended for. This was because they were called “pensions.” Also, the Social Security welfare plan was introduced at the same time as the Social Security insurance plan. Many people did not understand that OAA was only intended to provide cash payments to the needy, not to everyone aged 65 or older.

The law required states to ensure that payments only went to those who were truly in need.  They had to investigate all other sources of income and deduct them from the maximum monthly allotment. “All sources of support had to be explored – even small stipends that children provided to help their parents and the potential yield of a vegetable garden belonging to applicants. Sometimes children were asked whether they could help their parents – even if they currently were not providing assistance.” This meant that many beneficiaries got much less than the $30 monthly payment they had initially heard about. In Texas, the average allotment was only $15 per month. (Texas DHS, 1991) Some people felt they had been misled or taken advantage of. Others resented the probing questions they had to endure to receive benefits.

Even the social workers employed by the states to determine eligibility were confused. They didn’t know whether they were supposed to deny benefits to protect the public purse or help people qualify for benefits. As one man said, “I have been advised to give my farm and everything away so I could draw the old age pension. If I was to do that I would be crazy–I’d wake up some morning and find myself in the asylum.” Another man reported, “I could git me in old age pension, if I wanted to sign my life insurance away. Woman from the state come here some time ago I says, ‘Nothin’ doin”, I says. ‘Think I’m goin’ to sign away my chance for a decent burial?’ I says ‘That’s all I got to look forward to.’”  (Federal Writer’s Project, 1939)

Although the number of people receiving OAA stayed fairly stable during the 1940s, benefits increased precipitously, even after accounting for inflation. Average benefits restated in 1940 dollars increased by nearly 20 percent from 1940 to 1950. (Friedberg, 1998) Gross OAA expenditures doubled from $474 million in 1940 to $960 million by 1947. (Advisory Council Report, 1948)

OAA Benefits in the 1940’s
Percent of 65+ Receiving Benefit Average Annual Benefit Average Monthly Benefit Gross Expenditures
1934 3% $174 $14.50 $31,200,000
1940 22% $241 $20.01 $474,000,000
1947 22% $420 $35.04 $960,000,000

The percentage of people aged 65 and older receiving OAA would be high if most people in this age group were retired, as is true today. However, about half of all men aged 65 to 74 still worked during this period. (Friedberg, 1998) Either those who were employed earned so little that many still qualified for welfare benefits, or a very large percentage of those who were not working were receiving benefits. Whatever the reason, the percentage of the elderly who received welfare benefits during the 1940s was extremely high.

The federal and state governments reacted in different ways to the exploding costs of the program. Some states just cut their appropriations. For example, Texas Department of Public Welfare Executive Director Adam J. Johnson sent the following letter to all program recipients in October 1939:

“Because there is not enough money coming into the Old Age Assistance Fund in Texas to pay all the old age assistance grants in full, we are forced to cut $6.00 off the grant of everybody on the rolls. This is to notify you that, beginning with this warrant, your grant must be cut by $6.00 below what the Investigator recommends for you and you have been receiving. We regret having to do this, but are powerless to prevent it. Please understand this is due entirely to lack of funds and is not our fault nor the fault of the Investigator, and that the Investigator cannot increase your grant just to take care of the cut. The revenue coming in is not sufficient to do this. Grants to those who are eligible will be increased again as soon as funds are provided.” (Texas DHS, 1991)

The benefit levels had risen so much that by 1948 the average OAA benefit ($38.18 per month) greatly exceeded the average Social Security benefit ($25.13 per month), providing a perverse disincentive for people to provide for their old age by working and saving. (Advisory Council Report, 1948) Amendments were proposed for the Social Security Old Age Insurance program to increase payment levels and expand coverage to more people. In 1939, Social Security OAI was amended to pay benefits to widows, widowers, and dependent children of workers who died. This action was primarily to start moving this population off of the welfare rolls. However, the most significant changes weren’t made until 1950.

Benefits Change Family Living Arrangements

Library of Congress: America from the Great Depression to World War II Black-and-White Photographs from the FSA-OWI, 1935-1945

One effect of the new federal benefits was on the living arrangements for seniors. Dora Costa studied the relationship between income, marital status, and living arrangements in older women. She found that older women were only half as likely as older men to be married. In earlier eras, those women would have been living with their children. Costa noted a significant drop in the percentage of elderly unmarried women who were living with their children in the 1940s. She attributed this directly to the new source of income from OAA. (Costa, 1997) This new independence was good news in many ways. It also meant that it was less likely that a family member would be present in the same house if those older women needed supervision or medical care in the future.

The oldest resident at the Ida B. Wells Housing Project. The picture on the wall is her family when she was a child. Library of Congress: America from the Great Depression to World War II Black-and-White Photographs from the FSA-OWI, 1935-1945

National Health Insurance Proposed But Defeated

Public interest in national health insurance increased during the 1940s. It would be another 20 years before the Medicare program would finally pass the legislature. The first salvo occurred during the administration of President Franklin Roosevelt. The Social Security Board drafted a bill that was introduced in 1943, by Senator Wagner and Senator James Murray of Montana and Representative John Dingell of Michigan. Historian Peter Corning says,

“As its drafters and sponsors had expected, the Wagner-Murray-Dingell bill signaled the beginning of the political debate that would come to a climax in the postwar years…[It] was the most comprehensive social measure ever introduced in Congress. It envisioned a federally sponsored health insurance program, along with permanent and temporary disability, maternity and death benefits, full federalization of the existing Federal-State unemployment insurance, expansion of old-age and survivors’ insurance, and enlargement of public assistance.” (Corning, 1969)

After President Roosevelt died and the war ended, President Truman tried to revive the issue. It was blocked in large part because of the opposition of the American Medical Association (AMA). The organization mounted a massive campaign to defeat the bill. As Corning puts it,

“On the heels of President Truman’s election victory, an ‘Armageddon’ psychology set in within the AMA. In December 1948, the AMA’s House of Delegates met, in an atmosphere of crisis and voted a special assessment of $25 per member to resist ‘the enslavement of the medical profession.’ A prominent public relations firm was hired and a $4.5 million fund was deployed to wage a ‘national education campaign’ against the Wagner-Murray-Dingell bill. The campaign included publicity through the mass media, nationwide distribution of pamphlets, a vast speech making effort, and a drive to win and publicize specific pledges of support for the AMA’s position from the press and other private organizations.” (Corning, 1969)

At the same time, labor unions and the insurance industry encouraged employers to provide health insurance to their employees. The insurance was an alternative to a government-sponsored program. Truman and the bill’s supporters eventually conceded defeat and dropped the bill.

Hill-Burton Act Stimulates Licensing of Healthcare

Built as a nursing home around 1948. Library of Congress: Architecture and Interior Design for 20th Century America Photographs by Samuel Gottscho and William Schleisner, 1935-1955

World War II halted construction and development of every kind. By the end of the war, many buildings needed replacement or modernization. The national health insurance program that was being discussed highlighted the poor quality of the nation’s health care infrastructure. It could only be improved by devoting significant funds to the construction and modernization of hospitals. During the high-profile controversy over national health insurance, Senators Joseph Lister Hill of Alabama and Harold Burton of Ohio quietly carved out hospital construction financing into a separate bill. They introduced the Hospital Survey and Construction Act of 1946 (commonly called the Hill-Burton Act). Compared to the high cost of national healthcare insurance, the Hill-Burton Act seemed relatively risk-free and inexpensive, and it passed with little fanfare.

Hill-Burton created a system to provide federal financing for the construction of new hospitals in rural and poor areas in need. It also modernized hospitals in metropolitan areas. The sponsors meant only to build hospitals where they would be useful. The bill called for each state to develop an agency to organize and coordinate health planning for the state. It also had states determine where state hospitals ought to be built. These agencies were charged with pre-approving the design of the buildings before they were built. This was a level of oversight in health care construction design that had never existed.

The sponsors felt that wealthier areas would be able to build their hospitals without federal assistance. They directed funding primarily to areas that were poor or rural. One controversy before the final text of the bill was approved was whether or not federal funding could be provided to hospitals that were not publicly owned. The concern was that it might not be appropriate to gift taxpayer money to non-public entities. There was never any consideration of including proprietary hospitals in the program. In the end, the bill allowed funding for nonprofit hospitals as loans that would be repaid. The repayment involved providing a certain amount of free care to people who would have ended up under the care of the government. (Perlstadt, 1995)

Hill-Burton financing led to an explosion in public and non-profit hospital construction. It paved the way for the federal and state governments to design, regulate, and finance health care institutions. These institutions later become nursing homes.

Many Buildings Converted to Nursing Homes

Built as a hotel in 1833. Converted to a sanitarium in 1941. Converted to a nursing home in 1945. Library of Congress: Historic American Buildings Survey (HABS)

As a result of the Hill-Burton legislation, many of the old hospitals that were being replaced became nursing homes. In the late 1940s, residential and commercial construction resumed after the war. The explosive demand for construction made it hard to find the resources to build new buildings. However, older buildings came on the market as they were replaced. The end of the war ushered in an era of nursing home conversions. Hundreds of hotels, homes, and other existing buildings of all kinds were converted to nursing homes.
Conrad Theophilus Home, 1402 St. James Court, Louisville, KY

Built as a private home in 1892 by Theophilus Conrad.Converted to Rose Anna Hughes Presbyterian Nursing Home in 1947. Library of Congress: Historic American Buildings Survey (HABS)

Fredrick Opocensky Home, Niobrara, NE

Built as “the largest, most pretentious home in the small rural community” in 1910. Bought by doctor who used the upper rooms as hospital in 1945. Operated as Thierolf’s Rest Home from 1946-1970. Acquired by U.S. Army Corps of Engineers in 1975 and later demolished. Library of Congress: Historic American Buildings Survey (HABS)

Governor Joseph R. Bodwell House, Kennebec County, ME

Built as private home prior to 1866 Converted to a nursing home sometime in the twentieth century. Library of Congress: Historic American Buildings Survey (HABS)

Government Role in Paying for Chronic Care is Reconsidered

A 1948 Social Security Advisory Council report suggested that poor people needing medical care should receive additional Old Age Assistance (OAA) payments, as the amount they were receiving was insufficient to cover it.

“Care for aged and chronically ill persons is a growing problem and in the opinion of the Council is a Federal concern. Today more than 350,000 recipients of old-age assistance are bedridden or are so infirm as to require considerable help in eating, dressing, and getting about indoors. Of them, about 50,000 are living in commercial boarding or nursing homes or private institutions. Some of these persons living in such homes or institutions are getting very unsatisfactory care. Of those living in their own homes or with others, many need prolonged treatment in medical institutions.” (Advisory Council, 1948)

For example, the average cost of nursing home care for those in Connecticut was $118 a month. This was far more than the maximum OAA payment of  $50 a month.

Written By:
Jeff Hoyt
Editor in Chief
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