The Data on Poverty and Health Insurance You're Not Reading

If you are like most Americans reading about this week's poverty and health insurance report,[1] you are not getting all of the facts. This week's Census Bureau report, based on the Current Population Survey (CPS), has predictably garnered much media attention. While pundits and the press have focused on the rising poverty and uninsurance rates, there has been little discussion of what happens to people who are poor or uninsured. Do the poor tend to stay poor? Do those who lack health insurance stay uninsured for short or long periods of time?

 

While most of the CPS-based report focuses on the static issues of year-to-year health insurance and poverty rates, there is a small mention of another Census Bureau series of reports called the "Dynamics of Economic Wellbeing."[2] These reports, based on data from the long-standing Survey of Income and Program Participation (SIPP), track actual individuals over time, as opposed to the CPS, which only provides snapshot information. For that reason, the CPS has been criticized for providing an incomplete picture of these social indicators.

 

By surveying people over time, SIPP provides a rich source of data and information for policymakers and public at-large. In the SIPP reports are some startling but seldom-reported findings:

  • Poverty is often short-lived. More than half of all poverty "spells" (time spent in poverty) last less than four months, and about 80 percent last less than a year. (See Chart 1.) In fact, very few people-only about 2 percent of the total population-are chronically poor in America, as defined by living in poverty for four years or more.[3]
     
  • Substantial income mobility, both upward and downward, exists in America. About 38 percent of all households in the lowest income quintile rose to a higher quintile within three years. An almost equal percentage (34 percent) of all households in the top quintile fell within three years.[4]
     
  • Spells of uninsurance are short-lived. The typical family that loses health insurance is uninsured for only 5.6 months on average.[5]
     
  • Very few people lack health insurance long-term. Only 3.3 percent of all Americans went without some kind of health insurance for four or more years. Additionally, only one in nine people were without health insurance for more than two years of the four-year study period. (See Chart 2.)
     
  • Health insurance coverage rates have risen over time. In 1996, some 8.8 percent were without health insurance for the entire year, a figure that dropped to 8.0 percent by 1999. Conversely, 78.2 percent of all Americans had health insurance for the entire year in 1996, which rose to 80.4 percent by 1999.

Such data present a very different picture of poverty and the uninsured than what has been reported this week. Although the rates of poverty and uninsurance have increased on a static year-to-year basis according to the CPS, this phenomenon is likely to be short-lived among affected persons, according to the SIPP.

 

Additionally, when it comes to health insurance, the Census Bureau's own statisticians argue that SIPP provides a better measure of health insurance coverage than CPS.[6] In a recent research report on the differences between CPS and SIPP in this regard, Census Bureau statistician Shailesh Bhandari wrote,

 

Since the SIPP collects monthly information and allows us to see changes from month to month, SIPP may be closer to the truth. This implies that although designed to estimate the coverage at some point during a year, the CPS is underestimating it.[7]

 

In short, the CPS data provide an incomplete picture on poverty and health insurance in America. Policymakers would be well advised to look to other data, such as SIPP, to gauge what actually happens to people who fall into poverty or lose their health insurance. Only then will public policy be fully informed, and America can truly have an intelligent debate on how to better address these problems.

 

Kirk A. Johnson, Ph.D., is Senior Policy Analyst in the Center for Data Analysis at The Heritage Foundation



[1] U.S. Census Bureau, "Income, Poverty, and Health Insurance Coverage in the United States: 2003." Report No. P60-226, August 2004, at http://www.census.gov/prod/2004pubs/p60-226.pdf.

[2] Ibid, p. 2.

[3] U.S. Census Bureau, "Dynamics of Economic Wellbeing: Poverty 1996-1999." Report No. P70-91, July 2003, at http://www.bls.census.gov/sipp/p70s/p70-91.pdf.

[4] U.S. Census Bureau, "Dynamics of Economic Well-being: Movements in the U.S. Income Distribution 1996-1999," Report No. P70-90, July 2004, at http://www.bls.census.gov/sipp/p70s/p70-95.pdf.

[5] U.S. Census Bureau, "Dynamics of Economic Well-being: Health Insurance 1996-1999," Report No. P70-92, August 2003, at http://www.bls.census.gov/sipp/p70s/p70-92.pdf.

[6] For more on this point, see Derek Hunter, "Counting the Uninsured: Why Congress Should Look Beyond the Census Figures," Heritage Foundation Webmemo #555, August 26, 2004, at http://www.heritage.org/research/healthcare/wm555.cfm.

[7] Shailesh Bhandari, "People with Health Insurance: A Comparison of Estimates from Two Surveys," Survey of Income and Program Participation Report No. 243, June 8, 2004, at http://www.sipp.census.gov/sipp/workpapr/wp243.pdf.

About the Author

Kirk A. Johnson, Ph.D. Visiting Fellow
Center for Data Analysis