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The 15 Percent: Misinformation about U.S. Poverty

In September, the Census Bureau reported that the poverty rate in the United States reached its highest level since 1993. More than 15 percent of Americans, or about 46.2 million people, are now living in poverty. While these figures are deeply troubling, they understate the problem because the federal poverty level does not adequately capture economic hardship.

Based on a formula established by Molly Orshansky of the Social Security Administration in 1964, the federal poverty thresholds and guidelines are often criticized as an inadequate measure of economic status, especially for older people. For example, although fewer people age 65 and over are living in poverty than other age groups, it is important to note that older people must actually be poorer than younger people to be considered poor by the federal government because the formula assumes that older people do not need to consume as much food. The formula ignores the growing out of pocket payments among Medicare beneficiaries. For Americans of any age our current methods for calculating poverty are out of date because they do not include common expenses, including child care, commuting, and other work related expenses.

The relationship between poverty and health is well established in the public health literature. Poor people are more likely to suffer from disease and to die prematurely and are less likely to receive health care services than people with higher incomes. Rates of infant mortality, premature death, avoidable mortality, and avoidable hospital conditions are all significantly higher among residents of low income neighborhoods in the U.S. Senator Bernie Sanders (I-VT) put it well, “poverty is a death sentence.”

Yet, at a hearing of the Senate Health Subcommittee on Primary Health and Aging in September, Republican Senator Rand Paul of Kentucky challenged the idea that we should respond to the new poverty figures with government action. “If poverty is a death sentence,” said Rand, “it’s big government that has acted as judge and jury.” The exchange between Sanders and Paul revisits long standing disagreements about the causes of poverty.

For the past several decades, conservatives in the U.S. have questioned the value of most social programs. In the words of President Reagan, “Government is not the solution to our problems; government is the problem.” Government is not capable of raising people out of poverty, they claim; it buries them deeper by making people dependent on government and encouraging a “culture of poverty.”

But there is now a mountain of evidence refuting this view. Prior to the adoption of our major social insurance programs, Social Security and Medicare, older persons were among the poorest in the nation. These two programs raised many of them out of poverty. Between 1970 and 2000 the percentage of persons 65 and older living below the federal poverty line fell from 26 to just over 10.2. The improvements in socioeconomic status associated with these programs have contributed to declines in mortality. A host of means-tested social welfare programs, including the Earned Income Tax Credit, Medicaid, the State Child Health Insurance Program, and Temporary Assistance for Needy Families, have also helped to protect against poverty and improve population health.

Paul Krugman argues that “lack of compassion has become a matter of principle, at least among the G.O.P’s base.” He writes, quite correctly, that modern conservatism is hostile to a society that tries to use government “to mitigate some of the ‘common hazards of life.’” Understanding the debate between liberals and conservatives requires more than suggesting that conservatives don’t care about poor people. Most conservative critics of social welfare programs deny that they lack compassion. Debates about social welfare programs – and the role of government generally – reflect a complex, and often misleading, set of claims about facts and values.

Michael K. Gusmano is a research scholar at The Hastings Center and an associate professor of health policy and management at New York Medical College. His is coauthor most recently of Health Care in World Cities.

Published on: October 28, 2011
Published in: Health Care Reform & Policy

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