National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Proposed Approach: Recommendation

« Previous: Medical Care Needs and Resources
Suggested Citation:"Proposed Approach: Recommendation." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 225

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DEFINING RESOURCES 225 medical expenses directly, and the dollar amounts for such expenses as health insurance premiums, deductibles, copayments, and payments for uncovered services can be high. Yet little thought has been given to how to adjust the poverty thresholds or the family resource definition to appropriately account for these costs. Proposed Approach: Recommendation We propose 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. Hence, the concept we propose for the poverty thresholds includes such budget categories as food and housing but not medical care. For consistency, we propose 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. Although the proposed measure excludes medical care from both the poverty thresholds and family resources, it does not ignore the effects of the health care financing system or of people's health status on economic poverty. If people incur higher out-of-pocket medical care expenses (e.g., because they are sicker or have inadequate or no insurance coverage), their disposable income for comparison to the poverty threshold will be lower, and vice versa. The proposed measure will also be sensitive to any changes in the health care financing system that increase families' disposable income and thereby reduce economic poverty (e.g., more widespread insurance coverage with limits on out- of-pocket expenses), as well as to changes that decrease disposable income and thereby increase economic poverty (e.g., tax increases to pay for health insurance). In contrast, the current poverty measure cannot be sensitive to changes in health care financing, whether these changes increase or reduce families' disposable income. Although the proposed measure is far better than the current measure in accounting for health care costs and resources, it does not directly assess the extent to which everyone has access to a package of health insurance benefits that protects them against the risk of being unable to afford needed medical attention. Hence, it is very important that research continue on developing indicators of the adequacy of health insurance coverage. We urge that these indicators be cross-tabulated with but kept separate from the economic poverty measure: that measure cannot directly include all aspects of well-being, and it is particularly difficult to try to include medical care in it. RECOMMENDATION 4.3. Appropriate agencies should work to develop one or more "medical care risk" indexes that measure the economic risk to families and individuals of having no or inadequate health insurance coverage. However, such indexes should be kept separate from the measure of economic poverty.

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Measuring Poverty: A New Approach Get This Book
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Each year's poverty figures are anxiously awaited by policymakers, analysts, and the media. Yet questions are increasing about the 30-year-old measure as social and economic conditions change.

In Measuring Poverty a distinguished panel provides policymakers with an up-to-date evaluation of:

  • Concepts and procedures for deriving the poverty threshold, including adjustments for different family circumstances.
  • Definitions of family resources.
  • Procedures for annual updates of poverty measures.

The volume explores specific issues underlying the poverty measure, analyzes the likely effects of any changes on poverty rates, and discusses the impact on eligibility for public benefits. In supporting its recommendations the panel provides insightful recognition of the political and social dimensions of this key economic indicator.

Measuring Poverty will be important to government officials, policy analysts, statisticians, economists, researchers, and others involved in virtually all poverty and social welfare issues.

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