How Trump's Plan to Redefine Poverty Would Impact Health Care and Food Stamps

The potential change in the federal poverty line would lower the number of people who qualify for social services by almost 1 million.
by | June 27, 2019 AT 4:00 AM
People sitting in waiting room.
People waiting to receive free groceries from a food pantry. (AP/David A. Lieb)

SPEED READ:

  • The Trump administration is considering changing how the government calculates the federal poverty line.
  • According to the Center on Budget and Policy Priorities, the change could cause nearly 1 million people to lose health care or food stamps over 10 years.
  • The comment period for the proposal ended last week, but the administration is not required to respond to feedback.
 

The Trump administration is proposing to redefine the federal poverty line, a move that would disqualify nearly 1 million low-income families from social services over the next decade.

In May, the Office of Management and Budget published a notice in the Federal Register seeking comments on the proposal to change the calculation for poverty. The comment period ended last week.

The federal poverty line is calculated using the Consumer Price Index for All Urban Consumers, which measures inflation. Instead of the CPI-U, the Trump administration is looking into switching to the Chained Consumer Price Index for All Urban Consumers, or chained CPI, which comparatively slows the growth of inflation and would consider fewer people to be poor.

Research shows families need to make at least two to three times the federal poverty line -- even more in expensive cities -- to meet basic needs, particularly as the cost of child care and housing continues to grow exponentially. Right now, the federal poverty line for a family of three is $20,780.

This isn't the first effort to switch to chained CPI. The 2017 federal tax law uses chained CPI to measure inflation. The Obama administration proposed using it for Social Security benefits, but that idea was shot down after congressional Democrats objected.

 

Impact on Benefits

On paper, the impact looks small. If the proposed change goes into effect, it would mean a difference of 0.2 to 0.3 percentage points in the number of people no longer considered poor per year.

"In the short run, say two to three years, it doesn’t mean a heck of a lot. But that percent change over time gets bigger and bigger," says Gregory Acs, vice president for income and benefits policy at the Urban Institute.

The Center on Budget and Policy Priorities (CBPP), a left-leaning think tank, released a report this month examining the 10-year impact of the proposal:

  • More than 300,000 children, and some pregnant women, would lose health care through Medicaid and the Children’s Health Insurance Program;
  • More than 250,000 adults who gained Medicaid coverage from the Affordable Care Act’s expansion would lose it;
  • More than 150,000 people who buy insurance on the ACA marketplace would lose or see their health subsidies reduce;
  • More than 100,000 children would become ineligible for free or reduced-price school meals; and
  • Nearly 200,000 people would lose food stamp benefits. After 15 years, that number would grow to 600,000. 

That last finding is in line with analysis by the Urban Institute, which found that 579,000 food stamp users would have been deemed ineligible if the program had been using chained CPI over the past 15 years. That represents less than 2 percent of food stamp users, but 42 percent of them are children.

Backers of chained CPI say it's a better way to measure inflation, and they like that it could slow government spending and reduce the federal deficit over time. For example, if the Obama administration had changed Social Security benefits to be measured with chained CPI, it would have saved the federal government $130 billion over 10 years, The Washington Post reported at the time.

But critics of the proposal say it's cruel to kick people off social programs when the current poverty line is already too low for people to get by. They also accuse the Trump administration of attempting to make the change under the radar instead of proposing legislation through Congress or going through the formal rulemaking process that requires a federal agency to respond to public comments.

"This proposal is one more piece of an effort the administration has been very clear about: using its administrative authorities to try to achieve cuts to health care, nutrition and other basic assistance programs that have so far been rejected by Congress," says Aviva Aron-Dine, CBPP's vice president of health policy.

 

What Happens Next?

If the Trump administration is successful, Acs says states could create their own measures of poverty for social programs instead of relying on the federal poverty line.

There is already precedent for this. Under the Affordable Care Act, states have the option of letting people who make slightly more than the federal poverty line -- $28,676 for a family of three -- to qualify for Medicaid.

Now that the comment period is over, Aron-Dine says the federal government could move forward with this policy at any time. But she believes lawsuits could follow.

"I think it's fair to say," she says, "that there are some legal questions about this action [and] about the process they're taking and whether they have sufficiently considered a change that would affect millions of people."

Meanwhile, some welfare experts and economists argue that inflation is an antiquated way of measuring poverty.

"The poverty line was a great piece of social science in the 1960s, but adjusting for inflation doesn’t really capture the people’s needs today," says Acs. "You need to set the poverty line based on circumstances," like whether or not someone has access to high-speed internet and how much debt they have.

 

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*CORRECTION: A previous version of this story misspelled Gregory Acs' name.