The Trump administration is proposing a change to what income level is considered “poverty,” which could result in thousands of Kentuckians losing food stamps, health insurance and other programs that serve people with low incomes.
Currently the poverty threshold is $12,490 for one person — it’s a calculation that generally increases every year as the government adjusts for inflation. That inflation is based on the consumer price index, which includes the cost of food a typical person or family needs to maintain a healthy diet. Right now, as the consumer price index increases, so does the poverty threshold.
But the proposed change would rely instead on what’s called a “chained consumer price index.” This means if the cost of food goes up, the government will assume people are substituting lower-cost items. This means the government would raise the consumer price index by a smaller amount, and the poverty threshold won’t increase as much.
According to Urban Institute Vice President for Income and Benefits Greg Acs, this means:
“The poverty line won’t grow as fast and so fewer and fewer people will be considered poor,” he said.
People that are the edge of poverty could then lose eligibility in programs like Medicaid, food stamps, free and reduced price lunch, Low-Income Home Energy Assistance and Head Start.
Acs’ team at the Urban Institute recently released a report analyzing what impact the proposal could have. They analyzed a hypothetical scenario where the change was implemented in 2001, and looked at how many Kentuckians would have been kicked off food stamps (SNAP) by 2016.
“4,000 households who had been receiving SNAP would no longer be eligible for the program,” Acs said.
Nationwide, the report estimated 579,000 adults and children would have lost food stamps. And according to another analysis by the left-leaning Center for Budget and Policy Priorities, there would have been a similar effect for health programs. After ten years of the proposed change, the report estimated 250,000 low-income people would lose access to Medicare’s prescription program, 300,000 low-income children would lose government-provided health insurance and millions of people who buy insurance on Healthcare.gov would lose financial assistance to pay for coverage.
CBPP Vice President for Health Policy Aviva Aron-Dine said the Trump Administration wants a more accurate look at how many people are actually poor.
“The administration…argues using it to update the poverty line would make those poverty statistics more accurate,” Aron-Dine said.
There are some economists who argue the chained consumer price index is a more accurate measure of inflation and how people actually adjust spending as food costs increase. But Aron-Dine and many economists argue that the poverty threshold is already too low. The threshold was set in the 1960s and was based on the cost of food for a family back then, which typically consisted of a third of a household budget.
But the share of income that people pay for food has decreased. Meanwhile, people are paying for new or more expensive necessities, like doctor’s appointments and health insurance, childcare and transportation. The very definition of poverty, both Acs and Aron-Dine argue, is outdated and actually is too low — and this proposed change won’t help.
“There is strong evidence that the poverty line already underestimates what families need to get by — that means that lowering it further cannot make it more accurate,” Aron-Dine said. “Data show that families close to the poverty line — the people the proposal would redefine as no longer poor — face high rates of material hardships such food insecurity, missed payments for rent or mortgages, or problems paying medical bills.”
Comments on the proposed change are open until June 21. The Trump administration could make the change at any time after that date.