Supplemental Poverty Formula To Account for Costs of Medical Care
On Tuesday, the U.S. Department of Commerce announced a "Supplemental Poverty Measure" that will augment the formula currently used for determining how many U.S. residents are considered to be in poverty, the Washington Post reports (Goldstein, Washington Post, 3/3).
Since the new method will be a supplemental measure, it will not influence how federal funds are distributed for health care programs and other assistance services (Yen, AP/Boston Globe, 3/2).
The older formula, which was developed in the 1960s, is based on the cost of food and a family's income.
The new formula also will take into account the costs of:
- Child care;
- Medical treatment; and
The new measure also will consider theÂ impact of certain subsidies and assistance programs.
The new formula will be used for the first time next year alongside the old measure in an annual Census Bureau report (Washington Post, 3/3).
Under the new formula, overall poverty in the U.S. is expected to increase from 13.2% to 15.8%, partially because of the escalating costs of health care.
The new measure also is expected to find that about 18.7% of U.S. residents age 65 or older are in poverty, compared with 9.7% under the old formula. Some of the change could be attributed to:
- A coverage gap in the Medicare prescription drug benefit;
- Health care deductibles; and
- Out-of-pocket expenses for Medicare premiums.