Ability of Pay Work Group Report

1. Ability of Pay Work Group Report April 14, 2011

2. Ability to Pay Work Group • Areas of focus: • Poverty • Unemployment • Uninsurance • Elements of discussion • Data availability and feasibility • Measures • Methods • NOT: weighting • Goal: provide input into work of other groups

3. Ability to Pay Work Group • Poverty • Start with use of official poverty thresholds and percent below these thresholds • Concerns raised: • Outdated, arbitrary threshold, but it is official • Geographic: does not adjust for cost of living (except AK, HI) • Other weaknesses: focused on cash income, not other non-cash programs • Concerns over data: small samples in areas where population is small • Question: how do we get data to add to measure?

4. Ability to Pay Work Group • Poverty • Computing indices ourselves and finding the right data proved difficult • Census and BLS: computing “Supplemental Poverty Measure” (SPM) • Spoke with Census folks and they shot down use of this measure in short run • “The official statistical poverty measure…is the statistical measure …sometimes identified in legislation regarding program eligibility and funding distribution. For a variety of reasons, the SPM will not be the measure used to estimate eligibility for government programs.” • “The SPM is designed to provide information on aggregate levels of economic need at a national level or within large subpopulations or areas.” [Italics: Dick]

5. Ability to Pay Work Group • Poverty • Potential solution: leave opening in future to use better measure when we are comfortable doing so • Quote from Interagency Working Group Report… “The Working Group envisions that the Census Bureau will update the SPM on an annual basis and improve it as new data, new methods, and further research become available. Historically, BLS has contributed to research on and produced the poverty thresholds (based on BLS expenditure data) and provided these expenditure-based thresholds to the Census Bureau for use in its poverty measurement research; it will continue to play this role with the SPM. As with any statistic regularly published by a Federal statistical agency, the Working Group expects that changes in this measure over time will be decided upon in a process led by research methodologists and statisticians within the Census Bureau in consultation with BLS and with other appropriate data agencies and outside experts, and will be based on solid analytical evidence.” • Another avenue: • Use broader measures of low income: • Not just percent <100% official poverty line • But Percent<200% PL

6. Ability to Pay Work Group • Unemployment • Official measure undercounts problem due to discouraged workers and other issues • Possible solution: • Use percent of population not employed • Probably narrow this to non-elderly adults • Uninsurance • Quasi-official estimates from Census Bureau • Controversies over these measures: data, methods, interpretation • In short run, no option available but to use ACS measures of uninsurance • Issue of how this will be affected by ACA • All measures have small sample problem in small populations areas