Thinking like a social worker

…any questions? Yes. I have plenty.

New poverty measure and a trip to the hospital

on January 2, 2013

I had the misfortune of spending a portion of my Christmas in the ER.  My trip led to few hours of waiting, a couple bottles of pill, and (thankfully) one much happier and healthier me.  All I have to worry about now is taking my prescriptions on time and paying the bill.  I have insurance and a savings account so I will be fine, but my trip to the hospital made me realize how quickly medical expenses could bring (or keep) a family in poverty.

The federal government has an official poverty guideline it uses to form policies, administer programs, and conduct research, but the US Census Bureau now also uses the Supplemental Poverty Measure (SPM) to research poverty.  SPM is a more accurate and comprehensive measurement of poverty than the official poverty measure because it subtracts expenses that reduce income including medical out-of-pocket expenses (MOOP).  Individuals above the official poverty line still experience financial pressures like missing bill payments and unstable child care.  The SPM begins to study at these hardships by including not just the cost food, but shelter, utilities, taxes, work related expenses and child care costs into the measurement.

The SPM brings up some interesting links between health care and poverty.  Individuals and families only covered by public health insurance have lower poverty rates.  On the other hand, MOOP increased poverty rates, especially for older adults.  So, public health insurance lifts people out of poverty while medical expenses force people into poverty. SPM paints a new picture of poverty in America where the number of poor is higher, but public programs able to lift families out of poverty – including programs like public health insurance that may not be labeled at “anti-poverty”.

SPM vs. Official Measure: More details

The U.S. has an official poverty guideline that was implemented in 1969 to show the number of people with incomes to low to pay for food and other needed goods and services.  The problem is that the poverty threshold that determines those in poverty is an outdated tool that only looks at food cost.  In 1955, a survey determined families spent about one third of their income on food (which no longer true).  So the poverty threshold multiples the cost of the Department of Agriculture’s economy (a.k.a. cheapest) food plan by three.  Anyone below the poverty threshold is considered living in poverty.

Starting in 2011, the US census bureau also uses the SPM to research poverty.  The SPM determines its threshold by using the 33rd percentage of average cost of food, clothing, shelter, and utilities for a family multiplied by 1.2 for other necessities.  Individuals are measured to this threshold by totaling all income and benefits (i.e. EITC, SNAP, school lunch program, housing subsidies, and home energy assistance) then subtracting taxes and expenses that reduce disposal income (i.e. work related, child care, and medical out-of-pocket expenses, child support paid, and income and payroll taxes).

To learn even more about the SPM read The Research Supplement Poverty Measure:2011

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2 responses to “New poverty measure and a trip to the hospital

  1. […] previously mentioned that I spent a portion of my holidays in the ER.  Inside the hospital I “was seen” by […]

  2. […] a more accurate picture of economic distress.  Its an poverty measure similar to the SPM that I wrote about in January, but focuses on individual-level […]

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