We submitted public comments to the Trump Administration’s proposal to change how the Census Bureau’s Official Poverty Measure (OPM) is adjusted annually for inflation. As we have previously written, while this sounds like a highly technical change, it would likely result in fewer children eligible for Medicaid and the Children’s Health Insurance Program (CHIP) relative to current law, with the number of children losing Medicaid and CHIP growing larger over time. Many of these children would likely end up uninsured. We encourage you to submit your own comments here by the June 21, 2019 deadline.
Our comments make three key points:
1. Replacing the current inflation adjustment with another adjustment such as chained CPI (C-CPI-U) is not likely to result in a more accurate measure of poverty. The OPM, which is used to measure poverty for statistical purposes, is annually adjusted by the Consumer Price Index for All Urban Consumers (CPI-U). Using another measure, such as chained CPI which produces lower measures of annual inflation than CPI-U, would result in a lower OPM than would otherwise be the case, with the reductions growing larger each year. Research, however, indicates that chained CPI is not likely to be a more accurate measure of inflation for purposes of measuring poverty. For example, two studies (here and here) suggest that in recent years, inflation has actually risen faster for low-income households than for households overall. In fact, if the Administration is to consider any changes to how the OPM is determined, it should make adjustments that would effectively raise it. Researchers, for example, have developed the Census Bureau’s Supplemental Poverty Measure, based on groundbreaking work conducted by the National Academy of Sciences, which better measures the cost of current basic living expenses and produces a poverty threshold that is higher than the OPM for most household types. Notably, the Administration includes no analysis from the Census Bureau on critical questions like how using another measure of inflation would affect the accuracy of the OPM or what a review of the relevant research literature finds.
2. Nothing in federal statute or regulations requires the Administration to review or change the longstanding use of CPI-U. This is a potential change that is entirely discretionary and yet the Administration includes no detailed legal and policy analysis justifying such a change from the use of CPI-U for purposes of adjusting the OPM for inflation.
3. The Administration did not conduct any analysis or estimates of the likely significant impact on federal low-income programs including Medicaid and CHIP. The Administration acknowledges that the HHS poverty guidelines (which are used to measure poverty for administrative purposes) are based on the OPM and that such guidelines are used to determine eligibility and benefits for numerous federal, state and local government programs. That includes, among others, federal low-income programs such as Medicaid and CHIP. It is essential that if the Administration is to make such a significant change to calculating the OPM — which, in turn, would affect determination of the HHS poverty guidelines — it must also include detailed analysis and estimates of the likely effects such as whether such a change is permissible under federal law, how it would affect eligibility, benefits and access to needed services to all federal programs that rely on the HHS poverty guidelines which are based on the OPM, and how it would affect providers that furnish services to program beneficiaries. The Center on Budget and Policy Priorities, for example, estimates that using chained CPI to adjust the OPM would result in more than 300,000 fewer low-income children enrolled in Medicaid and CHIP by 2029, relative to current law. The Administration must also certainly solicit extensive public comments through formal rulemaking. But the Administration includes no such analysis and even explicitly states that it “is not currently seeking comment on the poverty guidelines or their application.” The Administration merely states that resulting “changes in the poverty thresholds, including how they are updated for inflation over time, may affect eligibility for programs that use the poverty guidelines.”
As a result, our comments strongly recommend that the CPI-U should continue to be used to measure poverty, as under longstanding law and practice.