Indeed, if the burden of health-care expenses were not taken into account, then 10 million fewer people would have been classified as poor.
One of the biggest jumps in poverty under the new method is among people with private health insurance. We tend to think of such people, most of whom get coverage through their jobs, as being better equipped to handle the cost of getting sick. But even those who are insured are increasingly vulnerable to high health-care costs, in no small part because, as costs keep rising, employers have shifted more of the burden onto workers. The share of employees with an insurance deductible of $1,000 or more for single coverage has tripled in the past five years. The trend is especially strong among small businesses, where half of workers face a deductible of at least $1,000 in 2011. For those on the edge of poverty, a big medical bill could send you over it — even if you have insurance.
The effect of health-care costs is particularly acute for the elderly, with the proportion of seniors living in poverty increasing from 9 percent under the official census measure to 16 percent under the alternative measure. Under the new method, an astounding 49 percent of seniors are living at or below twice the poverty level, a threshold at which people are still considered low-income (up from 35 percent under the official method).
The revised census measure sheds light on the influence of health costs on poverty and crystallizes the effects government programs have on people’s financial well-being. Under the old measure, you could give a family food stamps or assistance with energy or medical costs and it would make no difference in the official count of how many Americans are poor. The new method helps clarify how public policy makes a difference, for good or for ill. For example, providing assistance with medical costs or home heating subsidies reduces the number of people counted as poor.
And there would be no reason to stop at a CBO analysis of poverty impact. The implications of proposed legislation on jobs could be examined, and a fuller picture of the broader economic impact of legislation could be made clear, earlier.