percent. Differences between the two measures are also observed across age groups, showing a lower poverty rate with the SPM for children, a slightly higher poverty rate for nonelderly adults, and a much higher poverty rate with the SPM for the elderly.
The impact on the poverty rate (the percentage of people below a given threshold) can be calculated with the inclusion of each element. For example, when the earned income tax credit is added, the supplemental poverty rate goes down by about 2 percentage points. With the addition of food stamps, it falls by about 1.5 percentage points. At the other end, the subtraction of medical out-of-pocket expenses from income raises the poverty rate by 3.4 percentage points.
When these same calculations are done for children, there is a large reduction in poverty rates from the inclusion of in-kind benefits, but not so much when the calculations are done for the elderly. However, subtracting medical out-of-pocket expenses increases the poverty rate for the elderly by 7 percentage points.
Short mentioned recent research on the subject undertaken by the Census Bureau, specifically Medical Out-of-Pocket Spending Among the Uninsured, a paper presented at the Joint Statistical Meetings in August 2011. This paper examines the poverty rate under different treatments of medical out-of-pocket spending. One purpose was to make the adjustment to medical out-of-pocket spending for the uninsured. A second purpose was to assess how the SPM might respond to policy changes in health care.
The SPM was calculated under two different environments: (1) assigning to the uninsured the medical spending of the insured and (2) implementing the key features of the Affordable Care Act.
Statistical matching between the insured and the uninsured was used as a method to assign the medical out-of-pocket spending of the insured to the uninsured. And the key provisions of health care reform to be implemented in 2014 were considered, such as adult Medicaid expansion for those with family income up to 138 percent of the family poverty level, eligibility levels for the Children’s Health Insurance Program to be maintained by the states, state health insurance exchanges, and insurance premium subsidies for up to 400 percent of the family poverty level. No assumptions were made about any behavioral changes in response to implementing those measures in calculating the effect on the SPM.
SPM rates were calculated under the three scenarios: (1) before any adjustments, the poverty rate was 15.8 percent; (2) when the spending of the insured was added to the uninsured, the poverty rate increased to 19.4 percent; and (3) under the provisions of health care reform, the poverty rate was 16.4 percent, also an increase. Similar results were observed for children and for nonelderly adults. For nonelderly adults, rates calculated by race and ethnicity showed big differences, especially for the uninsured and