Poverty rate dips; more are uninsured - Health-care coverage absent for 47 million

Poverty rate dips; more are uninsured - Health-care coverage absent for 47 million
By William Neikirk and Judith Graham
Copyright © 2007, Chicago Tribune
August 29, 2007


WASHINGTON — Poverty diminished slightly in America last year, the Census Bureau said Tuesday, but the nation's health-insurance woes worsened as another 2.2 million people, including 700,000 children, joined the ranks of the uninsured.

The bureau's report gave a mixed picture of national economic health, suggesting the economic recovery eased poverty and helped boost incomes modestly last year.

But the figures showed health care remains a huge national issue that will play a major role in the presidential race and also when Congress returns from its summer break to take up an expansion of a children's health-care program.

The poverty rate fell to 12.3 percent in 2006 from 12.6 percent in 2005, reducing the number of the officially poor by nearly a half-million people, to 36.5 million. Of the 490,000 who escaped the ranks of the poor last year, 210,000 were 65 and older, according to the bureau. Critics said the poverty decline was disappointing because the economy has been growing since 2001.

The report said that "real," or inflation-adjusted median household income increased by 0.7 percent to $48,200 in 2006, though census officials said it has yet to reach the inflation-adjusted peak of $49,200 recorded in 1999, when the economy was booming. Median income is the point at which half earn more and half make less.

Meanwhile, the inflation-adjusted median earnings of men and women employed full time declined in 2006 for the second straight year. Household income rose because there were more full-time workers per household, suggesting that more people were working longer hours to make ends meet.

According to the report, the number of people without health insurance jumped to 47 million last year from 44.8 million in 2005. The main reason was that more employers reduced health-care coverage, according to the report.

President Bush hailed the report in a statement, saying it showed "more of our citizens are doing better in this economy, with continued rising incomes and more Americans pulling themselves out of poverty."

But the president acknowledged the data "shows that challenges remain in reducing the number of uninsured Americans. Containing costs and making health insurance more affordable is the best way to reverse this long-term trend." He touted his plan to provide tax incentives to help more Americans obtain health insurance.


Political response quick


The report proved to be a presidential candidate's gold mine. "In the richest nation on Earth, it is a moral outrage that 1 in 10 Americans families live in poverty and 47 million Americans do not have health care," said Sen. Barack Obama (D-Ill.), who has called for universal health-care coverage and stronger anti-poverty programs.

Former Sen. John Edwards of North Carolina has made reducing poverty a centerpiece of his campaign for the Democratic nomination, but it is not as prominent in other campaigns. Health care, however, is seen as a premier issue in the 2008 presidential race, and Tuesday's report gave the candidates plenty of new ammunition, though doubts remain about the political will to get it done.

Front-running Sen. Hillary Clinton (D-N.Y.) said the rise in the number of uninsured "demonstrates the urgent need to cover every American," which she and other Democratic candidates have pledged to do. Republicans also favor greater health-care coverage, but through less government intervention and more private incentives.

The sharp drop in health-care coverage for children could provide a catalyst for action by Congress when it returns from vacation.

The House and Senate have passed bills to expand the State Children's Health Insurance Program (SCHIP), but Bush has threatened a veto if either passes, arguing that the legislation goes too far.

Advocacy groups, calling on Congress to act, promised to step up their lobbying pressure.

"Action is desperately needed," said Dr. Joseph Heyman, a board member of the American Medical Association. Added spokesman Drew Nannis of AARP: "Forty-seven million people lacking health-insurance is unacceptable. … This nation needs more than stump speeches."

Illinois Gov. Rod Blagojevich urged Bush to reconsider his position on the SCHIP bills.

"The census numbers confirm what we already know — SCHIP funds need to be increased," the governor said. "Earlier this month, both the U.S. House and the Senate took important steps toward expanding health care for children by approving bills that provide substantial new dollars to states to expand coverage to additional low-income children. In Illinois alone, SCHIP has helped to provide health care for more than 316,000 children."

The children's health legislation in Congress is widely seen as a precursor of the debate over national health care. Bush has called the Democratic approach too expensive and too broad, but political momentum is building for passage of Democratic-sponsored legislation.

Risa Lavizzo-Mourey, president of the Robert Wood Johnson Foundation, called for bipartisan cooperation to pass the bill.

Sen. Charles Grassley (R-Iowa), ranking Republican on the Senate Finance Committee, said the census report "should motivate the House and the Senate to reauthorize SCHIP this fall." Without an extension, the program would expire on Sept. 30.

Earlier this year, several states, including Illinois, appeared ready to break the impasse over national health care, but so far it hasn't happened. Blagojevich's ambitious health-care plan went down to defeat in the legislature.

California Gov. Arnold Schwarzenegger's plan for statewide coverage is up in the air with only a few weeks left in the legislative session. Pennsylvania and Wisconsin are contemplating reforms, but in both cases, as throughout the nation, debate rages over how to finance broader coverage. Massachusetts' universal coverage plan went into effect this summer, but the insurance plan costs have been higher than expected, raising doubts about its workability.

Census Bureau officials noted that median household income rose for a second straight year in 2006, but Robert Greenstein, head of the Center on Budget and Policy Priorities, an advocacy group, called the rise disappointing so late in the recovery.


Working families lose ground
Jared Bernstein, an economist at the Economic Policy Institute, said despite the income increase, many working families are falling behind.

For example, in 1987, the wealthiest one-fifth of Americans earned 46.2 percent of all income, and that percentage rose to 50.5 percent in 2006. By contrast, the lowest fifth of the population in income earned 3.8 percent of all income in 1987. Last year, this lowest quintile earned 3.4 percent of all income.

Looking at the poverty figures, Republicans on the House Ways and Means Committee said they are misleading because they don't count funds that the poor receive from food stamps, Medicare, Medicaid, public housing, and employer-provided fringe benefits.

The 12.3 percent poverty rate last year is relatively low by historical standards, though it dropped below 12 percent in 1999, 2000 and 2001. In 1993, the first year of the Clinton administration, the poverty rate stood at 15.1 percent. The poverty level is the measure used to help decide eligibility for federal programs for the needy. The official poverty threshold for a family with two children last year was $20,444.

wneikirk@tribune.com

jegraham@tribune.com