Rethinking Elderly Poverty: Time for a Health Inclusive Poverty Measure?

Sanders Korenman, CUNY Institute for Demographic Research (CIDR)
Dahlia Remler, Baruch College, City University of New York (CUNY)

Census’s Supplemental Poverty Measure (SPM) doubles elderly poverty vs. the “Official” Poverty Measure because it subtracts medical out-of-pocket (MOOP) expenditures from income, following the recommendation of an NAS expert panel. We analyze this recommendation despite the panel’s desire for a health-inclusive poverty measure (HIPM). We conclude that a HIPM is now feasible if health needs are conceptualized as needs for health insurance, and with universally available plans with non-risk-rated premiums and caps on MOOP, conditions met by the ACA exchanges and Medicare Advantage Plans. We describe four HIPMs and present analyses and evidence that the SPM MOOP deduction results in a less valid and upwardly-biased measure of elderly poverty; excluding assets from resources exacerbates this bias since assets fund MOOP. Many elderly classified poor by SPM’s MOOP deduction are not poorly insured persons with incomes near the poverty line, but well-insured persons with incomes well above the poverty line.