By Michael A. Fletcher
The Washington Post, November 7, 2011
The Census Bureau on Monday released a new, comprehensive poverty measure that painted a more dismal picture of the nation’s economic landscape than the official measure from September.
The report found that 49.1 million Americans — 16 percent of the population — lived in poverty in 2010, which is higher than the 46.2 million Americans found to live in poverty by the official measure released in September.
The new report marked the culmination of a years-long effort by the Census Bureau to come up with a poverty measure that takes into account the huge amounts of money in social services benefits provided to the needy, as well as their expenses for things such as medical care and payroll taxes.
The increased level of poverty revealed by the supplemental measure is at odds with what some poverty experts expected. The increased level of poverty was fueled by the sharply higher levels of poverty among senior citizens found by the alternative measure.
The poverty rate for those 65 and older was 15.9 percent based on the supplemental measure, much higher than the 9 percent rate for the elderly when using the official poverty yardstick.
And…
The Research SUPPLEMENTAL POVERTY MEASURE: 2010
Current Population Reports
United States Census Bureau, November 2011
The National Academy of Sciences (NAS) established the Panel on Poverty and Family Assistance, which released its report titled Measuring Poverty: A New Approach in the spring of 1995. Based on its assessment of the weaknesses of the current poverty measure, this NAS panel of experts recommended having a measure that better reflects contemporary social and economic realities and government policy.
SPM (Supplemental Poverty Measure) family resources should be defined as the value of cash income from all sources, plus the value of in-kind benefits that are available to buy the basic bundle of goods (FCSU) minus necessary expenses for critical goods and services not included in the thresholds. In-kind benefits include nutritional assistance, subsidized housing, and home energy assistance. Necessary expenses that must be subtracted include income taxes, social security payroll taxes, childcare and other work-related expenses, child support payments to another household, and contributions toward the cost of medical care and health insurance premiums, or medical out-of-pocket (MOOP) costs.
Resource measure:
Official Poverty Measure: Gross before-tax cash income
Supplemental Poverty Measure: Sum of cash income, plus in-kind benefits that families can use to meet their FCSU needs, minus taxes (or plus tax credits), minus work expenses, minus out-of-pocket medical expenses
For children, not accounting for the EITC (Earned Income Tax Credit) would result in a poverty rate of 22.4 percent, rather than 18.2 percent. The inclusion of each of the listed in-kind benefits results in lower poverty rates for children. Not subtracting MOOP (medical out-of-pocket expenses) from the income of families with children would have resulted in a poverty rate of 15.4 percent. Findings are similar for the other two age groups shown. For the 65 years and older group, however, WIC (Women, Infants, and Children program) has no statistically significant effect while SPM (Supplemental Poverty Measure) rates increase by about 7.3 percentage points with the subtraction of MOOP from income. Clearly, the subtraction of MOOP has an important effect on SPM rates for this group.
From the Summary
Results showed a higher proportion of several groups were poor using the SPM. These groups were adults aged 18 to 64 and 65 and over, those in married-couple families or with male householders, Whites, Asians, the foreign born, homeowners with mortgages, and those with private health insurance.
Since in-kind benefits help those in extreme poverty, there were lower percentages of individuals with resources below half the SPM threshold for most groups. The effect of benefits received from each program and expenses on taxes and other non-discretionary expenses on SPM rates were examined. It was shown that medical out-of-pocket expenses had an important effect on SPM rates and on the well-being of those 65 years and older, in particular.
http://www.census.gov/prod/2011pubs/p60-241.pdf
Comment:
By Don McCanne, MD
Many have believed that our poverty rates would not be so dismal if more factors were considered such as the value of social services benefits, thus the supplemental poverty measure was created. The shocking result is that poverty rates are actually greater, especially because of the additional drain on resources of out-of-pocket medical expenses – a measure even worse for those over 65.
PNHP’s version of single payer would provide first dollar coverage, eliminating out-of-pocket expenses such as deductibles, co-payments, and coinsurance. This would not only reduce financial barriers to health care, it would also reduce U.S. poverty levels. This is partly what we mean by “improved” in “an improved Medicare for all.”