someone who is interested in knowing how one might distinguish between the poor and the nonpoor in the data sets available.
Suppose that most necessities can be purchased either with dollars or with something almost indistinguishable from dollars, for example, food stamps. If everything can be bought with dollars, the 1995 NRC panel proposed a complicated but in principle straightforward way to derive poverty thresholds to identify the specific number of dollars U.S. families need to cover necessities. The panel could not extend this conceptual method to cover the dollars needed to buy necessary medical care, yet they thought that was a necessity also.
Medical care can be purchased with dollars, Burtless observed, but the price of some common kinds of care is so extraordinarily high that few people actually buy it with ordinary dollars. They rely on their health insurance to reimburse the cost of essential care, especially if it is expensive. What about the people who lack health insurance? Or those who must obtain a lot of care that is not covered by their insurance? Or those who are completely uninsured but are in robust good health and are very unlikely to suffer any serious health catastrophe over the next year?
The 1995 NRC panel’s solution to this problem was to suggest that family resources be calculated by subtracting the amount of money a family spent on health insurance premiums and out-of-pocket medical expenses— or the predicted amount of money it was expected to spend—from the other resources it had to pay for necessities. If family resources minus out-of-pocket medical expenses were too little to cover the cost of these nonmedical necessities in the thresholds, then the family was to be classified as poor.
Burtless said that many social scientists were dissatisfied with this solution. Based on their paper, he thought that Meier and Wolfe also appear dissatisfied with it. A problem they mention is that actual out-of-pocket spending may not reflect the necessary or recommended level of care (or spending) given family members’ health conditions. In other words, families in strained financial circumstances may forgo necessary or recommended care because they cannot afford it. If the NRC panel’s recommendation is followed, given the health condition of the members of the family, too few dollars will be subtracted from the family’s resources to reflect the necessary care it ought to receive if it is to be classified as nonpoor.
He further stated that he is troubled by a recommendation that would disproportionately lift the poverty rate of groups in the population that have been the direct beneficiaries of so much technical progress and taxpayer assistance to pay for the care—the aged, the disabled, the nondisabled adults and children who benefit under costly public health insurance programs. It seems paradoxical to him that so many public resources are provided to health-challenged and low-income people, yet the proposed