increasingly competes for resources to cover other basic needs. Taxes, work-related expenses, and child support are not available to cover such basic needs as food, clothing, and shelter, and neither are medical care expenses for insurance premiums, copays, deductibles, or other out-of-pocket costs.
In response to a request from the U.S. Congress, in 1992 the Committee on National Statistics (CNSTAT) at the National Academy of Sciences/National Research Council (NAS/NRC)3 established the Panel on Poverty and Family Assistance: Concepts, Information Needs, and Measurement Methods to address the various concerns about the poverty measure as well as the related conceptual and methodological issues in establishing standards for welfare payments to needy families. The panel concluded that the current measure needs to be revised; it no longer accurately reflects the differences in the extent of economic poverty across population groups and geographic areas or over time.
In its 1995 report, Measuring Poverty: A New Approach, the CNSTAT panel proposed an approach that separates the measurement of economic poverty from the measurement of medical care needs and the adequacy of resources to meet those needs. The proposed concept for the poverty thresholds includes such budget categories as food and housing but not medical care. For consistency, the panel proposed that medical insurance benefits not be added to income and that out-of-pocket medical care expenses (including health insurance premiums) be subtracted from income as part of determining families’ disposable income that is available for nonmedical basic necessities (National Research Council, 1995:51-52). Because the proposed revised poverty measure would not directly address the availability of affordable medical care, the panel further recommended that the federal government develop a separate measure of medical care risk that would estimate the economic risk to families and individuals lacking adequate health insurance coverage (National Research Council, 1995:69).
The issuance of the CNSTAT report prompted numerous meetings at which policy analysts and researchers considered ways to implement the panel’s recommendations for a new and improved poverty measure. The Census Bureau and the Bureau of Labor Statistics (BLS) collaborated on extensive research to develop and evaluate experimental NRC-based poverty measures, which have been published on the Census Bureau’s website.4 These measures incorporate technical improvements to the proposed NRC measure; they also vary one or more aspects of the proposed measure when there was not agreement on the best implementation (e.g., including medical care premiums and other out-of-pocket expenditures in the threshold
3 The National Research Council is the operating arm of the National Academy of Sciences.