Health Care Costs Put 10 Million More Americans in Poverty

According to the Census Bureau, 15.1 percent of Americans were living in poverty in 2010. That’s 46.2 million of us. But when the Census Bureau determines whether or not a family or individual is living in poverty, it uses a measure that hasn’t substantially changed since the 1960s. This measure ignores some important factors that affect a family’s finances during the year, such as the high cost of health care.

The U.S. Census Bureau’s current measure

consists of a set of thresholds for families of different sizes and compositions that are compared to before-tax cash income to determine a family’s poverty status. At the time they were developed, the official poverty thresholds represented the cost of a minimum diet multiplied by three (to allow for expenditures on other goods and services).

Many people living with health care issues know that the cost of breakfast, lunch, and dinner multiplied by three doesn’t come close to reaching the costs of their care—and it certainly doesn’t leave any left over for other expenses. So over the last 16 years, the Census Bureau has worked on a way to more accurately measure a family’s income and expenses. And this year, they released a report on the supplemental poverty measure –a measure that takes into account federal programs, which were shown to be helpful in reducing poverty; work expenses; and the cost of medical care and health insurance premiums when measuring poverty.

According to a blog post from The Commonwealth Fund about the supplemental poverty measure report, an additional 10 million people would be considered to be living in poverty if we accounted for medical expenses. That’s 2 million children, 5 million adults, and 3 million seniors who are being pushed into poverty by their medical costs.

With that many of us facing poverty, it is clear that Medicare, Medicaid, and CHIP, which assure that people can afford to get care the care they need, are vitally important.

And, these statistics underscore the important role that the Affordable Care Act will play in preventing people from falling into poverty. By expanding coverage to millions more Americans through Medicaid and premium tax credits, placing limits on out-of-pocket costs, and eliminating exclusions for pre-existing conditions, we will see fewer and fewer people impoverished by the cost of their health care.