for 2010 were published by the Census Bureau in November 2011 (Short, 2011). Using the traditional measure, the poverty rate for 2010 was 15.2 percent. Using the new SPM, the poverty rate was 16.0 percent. The biggest change was among the elderly, for whom the poverty rate was 9.0 percent under the old poverty measure and 15.9 percent under the SPM (Short, 2011:6). This is not surprising given that the elderly as a group have the most need for medical care, pay premiums for Medicare (and often private insurance), and often have high out-of-pocket expenses for copays, deductibles, and noncovered services.
The Census Bureau went further to provide sensitivity analyses of the effects of including and excluding particular factors from the new SPM. These analyses indicated that the effect of subtracting out-of-pocket expenses for medical care and insurance premiums from net income after taxes, in-kind transfers, child support payments, and work-related expenses was to increase the poverty rate by 3.3 percentage points in 2010—from 12.7 percent to 16 percent poor. This represents an increase of about 10 million people who were counted as poor by the SPM because of their medical care expenses—during 2010 (Short, 2011:9).
These 10 million people who were pushed into poverty—as well as people who would have been poor even if they did not have any medical care expenses but were further impoverished by their out-of-pocket medical care expenses—represent the proportion of the population who experienced the economic burden of medical care expenses in their families’ inability to meet their nonmedical needs. Over time, the SPM will be able to track changes in the extent to which individuals and families with modest or low incomes are impoverished as a result of spending on health insurance premiums and other medical care expenses that are high relative to their incomes. However, although the Census Bureau has the data available, its current reporting does not assess the extent to which families or individuals who are poor without considering medical care expenses are pulled deeper into poverty (well below the threshold) as a result of health insurance premiums and medical care expenses, nor does its reporting assess the extent to which families or individuals with higher incomes pay large percentages for medical care.
With the enactment of the Affordable Care Act (ACA) in 2010, national policy set a goal of making health insurance and medical care affordable by providing income-related premium subsidies and tax credits and establishing national standards for health insurance to ensure access with financial protection for essential medical care services. The ACA establishes four tiers of health insurance coverage that will be available through new health insurance exchanges, operated at the state level. The tiers set the minimum amount of coverage most people must have to meet the requirements of being insured beginning in 2014. They also serve as benchmarks for premium and cost-sharing subsidies provided to lower and