funding, the Census Bureau and BLS will produce national estimates for a Research SPM (report was issued November 2011).
The 1995 NRC panel struggled with how to incorporate medical care needs into a poverty measure. The 1995 report observed that such needs are highly variable across the population, much more variable than needs for such items as food and housing. Some people may need no or little medical care, whereas others may need very expensive treatments and spend a lot on medical care, resulting in a skewed distribution. If medical care needs are incorporated into the threshold, then one would end up with a large number of thresholds to reflect different levels of medical care need, thereby complicating the poverty measure. As a result, it would be very easy to make an erroneous poverty classification. The NRC panel therefore recommended a two-index poverty measure: (1) a measure of economic poverty, which would look at resources adequate to obtain nonmedical necessities (food, clothing, shelter, and utilities), and (2) a measure of medical care risk, which would measure medical insurance coverage or resources adequate to buy needed treatment.
The economic poverty measure became the SPM which excludes medical care. The SPM thresholds for economic poverty therefore do not include any medical care needs, and the resources that are compared with that threshold to determine poverty status subtract medical out-of-pocket expenses from income to determine the measure of resources available for other basic necessities. It also does not add the value of medical benefits to income.
Experimental Poverty Measures1
Based on the recommendations of the 1995 NRC report, the Census Bureau, with BLS, prepared a set of experimental measures as illustrative examples of what a new economic poverty measure would look like. In 2000, an Open Letter on Revising the Official Measure of Poverty was sent to the Office of Management and Budget and the director of the Census Bureau, with suggestions on how to move forward with the economic
1 The experimental poverty measures have been updated regularly and are available at www.census.gov/hhes/povmeas/methodology/nas/index.html.