Assignment: Poverty and Health Insurance

1. Poverty in the USis defined as having insufficient resources to meet one's basic needs.

A. In your view, what are the five most important basic needs?

B. Did you include health care/medical care among them? Explain why or why not.

C. Two interesting poverty concepts for policy purposes are the "pre-transfer" poverty rate and the "post-transfer" poverty rate.

The pre-transfer rate tells us what % of people would be poor based on their family's "market" income (mostly labor market earnings).

The post-transfer poverty rate tells us what % of people would be poor based on their family's market income PLUS government benefits they receive.

i. Why might we be interested in the pre-transfer poverty rate?

ii. Why might we be interested in the post-transfer poverty rate?

iii. Suppose the pre-transfer poverty rate is 23% and the post-transfer poverty rate is 11%. How would you interpret the difference between the pre-transfer and post-transfer poverty rate (of 12%)?

iv. (somewhat challenging): What assumptions are you making in your answer to part iii?  Explain.

D. No current US poverty measure currently includes health insurance benefits provided by government (Medicaid, Medicare, etc.) or by employers as part of a family's income.

i. Given your answers to part A and B, is this exclusion problematic for measuring poverty?

ii. What are the implications of this exclusion for evaluating the impact on poverty of the Affordable Care Act (which resulted in greatly expanded eligibility to the poor for Medicaid in more than half the states and subsidies for low-income families to purchase insurance nationally)?