[Joint House and Senate Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 111-536
INCOME, POVERTY, AND HEALTH CARE COVERAGE: ASSESSING KEY CENSUS
INDICATORS
OF FAMILY WELL-BEING IN 2008
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 10, 2009
__________
Printed for the use of the Joint Economic Committee
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
HOUSE OF REPRESENTATIVES SENATE
Carolyn B. Maloney, New York, Chair Charles E. Schumer, New York, Vice
Maurice D. Hinchey, New York Chairman
Baron P. Hill, Indiana Jeff Bingaman, New Mexico
Loretta Sanchez, California Amy Klobuchar, Minnesota
Elijah E. Cummings, Maryland Robert P. Casey, Jr., Pennsylvania
Vic Snyder, Arkansas Jim Webb, Virginia
Kevin Brady, Texas Sam Brownback, Kansas, Ranking
Ron Paul, Texas Minority
Michael C. Burgess, M.D., Texas Jim DeMint, South Carolina
John Campbell, California James E. Risch, Idaho
Robert F. Bennett, Utah
Nan Gibson, Executive Director
Jeff Schlagenhauf, Minority Staff Director
C O N T E N T S
----------
Members
Hon. Carolyn B. Maloney, Chair, a U.S. Representative from New
York........................................................... 1
Hon. Sam Brownback, Ranking Minority, a U.S. Senator from Kansas. 3
Hon. Maurice D. Hinchey, a U.S. Representative from New York..... 4
Hon. Kevin Brady, a U.S. Representative from Texas............... 4
Hon. Elijah E. Cummings, a U.S. Representative from Maryland..... 6
Hon. Michael C. Burgess, M.D., a U.S. Representative from Texas.. 7
Witnesses
Dr. Rebecca Blank, Under Secretary for Economic Affairs,
Department of Commerce......................................... 10
Dr. Cecilia Rouse, Member, Council of Economic Advisers.......... 12
Dr. Karen Davis, President, The Commonwealth Fund................ 27
Dr. Harry Holzer, Professor of Public Policy, Georgetown
University and Institute Fellow, Urban Institute............... 29
Mr. Thomas P. Miller, Resident Fellow, American Enterprise
Institute...................................................... 31
Submissions for the Record
Prepared statement of Representative Carolyn B. Maloney, Chair... 40
Prepared statement of Representative Elijah E. Cummings.......... 41
Letter from Representative Michael C. Burgess, M.D. to Rebecca
Blank.......................................................... 42
Letter from Representative Michael C. Burgess, M.D. to Cecilia
Rouse.......................................................... 43
Letter from Cecilia Rouse to Representative Michael C. Burgess,
M.D............................................................ 44
Prepared statement of Dr. Rebecca Blank.......................... 48
Prepared statement of Dr. Cecilia Rouse.......................... 52
Prepared statement of Mr. Joseph Stiglitz........................ 58
Prepared statement of Dr. Karen Davis............................ 59
Prepared statement of Dr. Harry Holzer........................... 78
Prepared statement of Mr. Thomas P. Miller....................... 80
INCOME, POVERTY, AND HEALTH CARE
COVERAGE: ASSESSING KEY CENSUS
INDICATORS OF FAMILY WELL-BEING
IN 2008
----------
THURSDAY, SEPTEMBER 10, 2009
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 1:02 p.m., in Room
210, Cannon House Office Building, The Honorable Carolyn B.
Maloney (Chair) presiding.
Representatives present: Maloney, Hinchey, Cummings, Brady,
and Burgess.
Senators present: Casey and Brownback.
Staff present: Nan Gibson, Colleen Healy, Elisabeth Jacobs,
Andrew Wilson, Dean Clancy, Lydia Mashburn, Jeff Schlagenhauf,
and Chris Frenze.
OPENING STATEMENT OF THE HONORABLE CAROLYN B. MALONEY, CHAIR, A
U.S. REPRESENTATIVE FROM NEW YORK
Chair Maloney. I would like to call this meeting to order
and recognize other members for 5 minutes after my opening
statement, and then I would like to introduce the first panel.
First, I would like to thank our witnesses for joining us
today to discuss the 2008 official government statistics on
income, poverty, and health insurance coverage that were
released this morning by the Commerce Department's Census
Bureau. These are among the most important indicators of family
well-being, and the picture from 2000 to 2008 is rather grim.
Between 2000 and 2008 median income fell by nearly $2,200;
the number of Americans living in poverty grew by 8.2 million,
and nearly 8 million people joined the ranks of the uninsured.
American families have lost a decade due to the failed economic
policies of the Bush Administration.
Nearly one year ago this committee held a hearing at the
request of the late Senator Edward Kennedy on poverty in
America. Senator Kennedy was home. He was sick and he called
and said, Please have this hearing. I want to watch it. I wish
I could be there. But he was very devoted to helping the poor
and was a strong and vocal and effective advocate, and although
we have lost the lion of the Senate, his dream lives on in the
Democratic Congress and in all of us. We will certainly
continue his work on behalf of the less fortunate.
The economic fortunes of most Americans tend to rise and
fall with the strength of the economy. During the economic
expansion of the Clinton era when unemployed hovered at around
4 percent, poverty fell to 11.3 percent, its lowest level in
decades. However, the weak economic recovery of the 2000s under
the previous Administration did not lead to a further reduction
in poverty, which now stands almost two full percentage points
above its 2000 level.
Today in the United States one out of every eight people,
almost 40 million, live in poverty. The majority of people
living in poverty are among the working poor. Worse still, 19
percent of our children, or almost one in five, now lives in
poverty.
Median household income fell to $50,000, the lowest level
since 1997, which means that the typical American family
actually lost economic ground during the last recovery. Our
economy may have grown, but those gains did not trickle down to
the vast majority of families and the gap between the haves and
the have-nots grew larger.
Too many jobs do not pay enough or lack the benefits to
ensure families can make ends meet. Over one-quarter of U.S.
jobs pay low wages and do not provide health insurance or a
retirement plan, according to the Center for Economic and
Policy Research.
Today's data on health insurance coverage are a sobering
reminder of the impact of our broken system. 46.3 million
Americans are uninsured, a figure that rose 20.6 percent
between 2000 and 2008. Nearly one in 10 children are growing up
without health insurance and over 30 percent of Hispanics lack
any coverage at all. The share of Americans with private health
insurance eroded over the eight years of the Bush
administration as the cost of providing employer-based coverage
crept upwards. Insurance premiums charged to employers
increased by more than 100 percent between 2000 and 2008.
The 2008 data reflect the first year of the Bush recession,
but the legacy of his Administration's failed economic policies
has continued to bring havoc on many families. Recent estimates
suggest that continued increase in the unemployment rate
between January of 2009 and August of 2009 mean that over 2
million more Americans have joined the ranks of uninsured so
far this year.
The time for comprehensive health insurance reform is now.
As the data show, our Nation's families simply cannot afford to
wait any longer. America's Affordable Health Choices Act
includes provisions that will stop the rise in uninsured
Americans by making affordable comprehensive coverage available
to all of our citizens.
The bill includes subsidies for low and moderate income
families to purchase health insurance coverage as well as a
well-designed health insurance exchange. Within that health
insurance exchange, Americans will have the option of choosing
between the private insurers or choosing a public option. The
inclusion of a public option is key to promoting competition
and bringing down costs, and competition and cost control is
key to reversing the distressing trend in uninsurance that we
have seen year after year in the census data before this
committee.
I look forward to the witnesses' testimony. I thank them
for their research, for their commitment and for being here
today, and I recognize Senator Brownback.
[The prepared statement of Representative Maloney appears
in the Submissions for the Record on page 40.]
Senator Brownback. Thank you very much. Thank you Madam
Chairman. I appreciate that. Good to see you again. Welcome
back from the break.
Chair Maloney. Good to see you again. We have one of our
joint bills on the floor next week. I will tell you about it.
On to passage.
OPENING STATEMENT OF THE HONORABLE SAM BROWNBACK, RANKING
MINORITY, A U.S. SENATOR FROM KANSAS
Senator Brownback. Hopefully on to passage. Thanks. Also I
thank the witnesses. I appreciate your being here as well.
There was an interesting dialogue happening last night, and
that was on the question that this hearing is about, and that
is how many people are not covered in the United States. So I
am hopeful that our witnesses are going to be able to
illuminate that number somewhat. The President used a figure, I
think he said 30 million, and he said that the program will not
cover illegal aliens. His adviser David Axelrod in the media
afterwards said that the President made clear that this is a
program for American citizens who are not covered.
Now, does that then exclude people that are here legally
but are not American citizens? And it is important because it
gets at what is the universe and what is the number that we are
looking at. And I am hopeful we can get a paper out of the
Joint Economic Committee about what is the number, how many
people are not covered in the United States, and is it
citizens, noncitizens, the people here legally, illegally, so
that the American public can really look at this and understand
what is the actual number of the universe that we are looking
at. The percentage of citizens without insurance, according to
this most recent survey, stood at 13 percent; for noncitizens
44.7 percent are without coverage. I think it is important if
we can get at what is the actual universe and the number, and I
think this committee can help out in the debate with getting
the actual number.
Chair Maloney. I would be delighted to do a joint report on
that with the minority.
Senator Brownback. If we can get that in agreement, that
would be--I think that would be useful for us to be able to do.
The chairwoman was talking about ways to get at this and
who the groups are. I would also note that family composition
is a key part on insurance coverage. There is a report out that
we put forward that among married individuals with a spouse
present the rate of coverage is 10.6 percent while the range is
from 21.2 to 33.4 among other status of individuals whether
they are married or not. Education level matters; 7.7 percent
of those with a Bachelor's Degree or higher lack coverage while
more than 20 percent of those with only a high school education
lack coverage. So I think too here we see ways to get at the
issue and addressing issues, whether it is family structure,
education, as important ones to address as well.
And finally I would hope that we would look at this whole
health care debate as one we would want to go at incrementally
to deal with and not do a massive dollop of Federal intrusion.
We did--in Southeast Kansas a little community-based clinic got
some Federal support to get it started that is serving a region
in my state where we have some high poverty level numbers. Got
it started. It now is sustaining itself mostly off of community
support but also off of people coming in and using the
services. They provide health care services, dental services,
psychological services within this clinic, and I thought that
is a much more practical and cost-effective way and the size of
the debt and the deficit that we are looking at and the out of
control entitlement spending, instead of starting a new
entitlement, wouldn't we be better off to be very narrow and
focused on incremental movement and getting our entitlement
spending under control as a much better way to go forward?
Anyway, I look forward to the witnesses helping us with
what the actual number of that is and breaking that out.
Thank you, Chairwoman.
Chair Maloney. Thank you. And the Chair recognizes Mr.
Hinchey from the great state of New York.
OPENING STATEMENT OF THE HONORABLE MAURICE D. HINCHEY, A U.S.
REPRESENTATIVE FROM NEW YORK
Representative Hinchey. First of all, Madam Chairman, I
want to thank you very much for conducting this hearing, and
the timing of it I think is very, very appropriate. I am very
anxious to hear the statements that are going to be made by Dr.
Blank and Dr. Rouse, and I thank you both very much for being
here with us. The information that you are going to be
providing us in the context of other information which is
outflowing as a result of recent surveys is going to be very
important to this committee and to this Congress in order to
deal with the economic circumstances that we are confronting.
The circumstances are serious. This is the most serious
economic condition that this country has faced since the 1930s,
and we are beginning now to see some indications of
improvement, but that has taken a long time.
The economic circumstances for households across America
were worse at the end of last year than they were 8 years
earlier. So that indicates quite clearly how long this deep
recession has been going on, how it has fluctuated from time to
time over the course of those 8 years, and what the emerging
situation is now. And there is somewhat of a mild improvement
apparently based in part at least on the introduction of the
American Recovery and Investment Act, only 25 percent of which
is actually out there now.
So it is quite clear that this Congress has a lot more to
do, and in order to do it we are going to need the appropriate
accurate information, and that appropriate accurate information
is coming from a number of sources but particularly today
obviously from you, and I thank you very much for being here
and for doing that and I am very anxious to hear what you are
about to say.
Thanks.
Chair Maloney. Mr. Brady for 5 minutes.
OPENING STATEMENT OF THE HONORABLE KEVIN BRADY, A U.S.
REPRESENTATIVE FROM TEXAS
Representative Brady. Thank you, Madam Chairman. Not much
news--I want to welcome the witnesses before the committee
today. Not much news today.
The recession has taken a toll on families. Surprisingly,
the number of uninsured is staying relatively stable as it has
for quite a while. It has been around 15 percent and the number
of those in poverty has increased and thankfully is still below
the average of 13.9 percent since the 1960s. And we have a lot
of work to do.
I do question the accuracy of our poverty numbers. A
compilation based almost solely on the price of food versus net
income and ignoring key issues such as energy and medical costs
and other costs doesn't seem accurate and also by excluding
what occurs to help people in the lower part of our economic
ladder such as government assistance programs, food stamps,
Medicaid, housing vouchers, and tax credits. I think in taking
it in total we are not getting a good picture of those in
poverty in America today. We deserve a good picture.
The National Academy of Sciences has proposed that we
really incorporate a bundle of family expenditures. I think
that is a better way to go, would give us that along with some
adjustments for geography. Living in Manhattan and being poor
is different than living in rural east Texas and being poor,
and our statistics ought to reflect that.
I also question the data limitations emphasized by the
Census Bureau itself in reviewing changes in median household
income over several years. For example, according to the Census
Bureau data, the current population survey aren't useful for
looking at changes for the same household over time. So there
is no attempt to follow households if they move nor are any
households in the current population survey for more than 2
consecutive years. So we are not really tracking families as
they move up and down, mainly up, the economic ladder.
Other census data consistently has shown high rates of
movement from one income group to another over time, including
the middle fifth. For example, according to one census study,
about 50 percent of households in the middle fifth move to
another income group over as little as 3 years.
The Census Bureau has said research shows health insurance
coverage is underreported for a number of reasons. It reports
the percentage of people without health insurance in 2008 is
not statistically different from 2007 at 15.4 percent. But
there is no doubt that this information today, rather than
being used as an attempt to flog this government-run plan back
to life, ought to be the starting point of how do we really get
more accurate discussion, more accurate data on these two very
important groups, families who are living in poverty and those
who do not have health insurance.
The final point. I have been looking forward for many years
to working on health care and was really pleased when the
Republican Congress created the Children's Health Insurance
Program and funded it for 10 years. I was pleased that we
finally, as Republicans, were the ones who created some
subscription drug plans for our seniors, which is working much
better than expected or anticipated. And I was pleased that we
doubled the research for the National Institutes of Health in
such lifesaving medical breakthroughs in cancer and chronic
illnesses. I still--and I am disappointed that although the
House passed relief for small businesses and reforms, tort
reforms in lawsuit abuse, it was defeated in the Senate over
the years.
I still think the President is exactly right to push for
health care reform in America today. Unfortunately, the
American public is not buying this plan. They are absolutely
right in knowing the government will interfere between the
doctor and their patient, some of the most intimate decisions
they are making. They know this will add terribly to the huge
deficits we already have, and they know instinctively that this
will lead to rationing in future years as it does in Medicare
and as it does in the VA.
So I was disappointed last night. I thought the President
was needlessly partisan, I think probably destroyed any
opportunity for both parties to work together to really come up
with a thoughtful solution for health care, which is really
what families want to have happen.
With that, I yield back.
Chair Maloney. Thank you. Congressman Cummings.
OPENING STATEMENT OF THE HONORABLE ELIJAH E. CUMMINGS, A U.S.
REPRESENTATIVE FROM MARYLAND
Representative Cummings. Thank you very much, Madam Chair.
Today's Census Bureau report is a stark reminder of the
economic inequalities that continue to permeate our society.
While the current recession has been equal opportunity,
impacting almost every sector of the economy and crossing
racial and geographic boundaries, there is also a widening and
growing gap between society's haves and have-nots. The
inequalities that persist are disappointing, disheartening, and
given the policies pursued by the previous Administration,
clearly foreseeable. Eight years of blind adherence to
deregulation and supply-side policies resulted in reduced
income for African Americans and Hispanics, continuing gender
pay inequity, and an increasing number of children born into
poverty.
As my colleagues know, I have never been one to mince words
and today is no exception. I remain outraged at the outlook
facing so many African American children and so many children
in our country. According to the Annie Casey Foundation,
between 1994 and 2000, the child poverty rate fell by 30
percent. This was the largest decrease in child poverty since
the 1960s. Key children's health indicators improved across
every major racial group and in nearly all of the states. Since
2000, however, child poverty has increased roughly so that
roughly 2.5 million more children lived in poverty in 2008 than
in 2000. That is 2.5 million children who have been left behind
in the wealthiest Nation in the world.
In my home state of Maryland approximately 133,000 children
live below the poverty line, another 209,000 live at 125
percent of poverty. Through no fault of their own, these
children find themselves questioning when or if the next meal
is coming. A young man from Maryland named Deamonte Driver is a
tragic example of how vulnerable our children are. In 2007
Deamonte needed $80, an $80 tooth extraction to fix a painful
abscess. Without access to dental treatment, the abscess went
untreated and predictably became infected. The infection spread
to his brain and ultimately it took a 12-year-old from us.
Deamonte died because he could not get $80 worth of treatment.
That happened in America. That happened 40 miles from where--
less than 40 miles from where we are sitting right now.
One hundred forty-three million Americans find themselves
without dental coverage. And while every one of them is at risk
for serious health problems, again the most defenseless and
vulnerable are our Nation's children and young adults. To that
end I appeal to my colleagues in the Congress to guarantee that
dental coverage was part--included in the recent State
Children's Health Insurance Program. I am pleased that this
legislation was included in the SCHIP bill that President Obama
signed into law.
I know that today's report does not measure the impact of
SCHIP, the stimulus, and the other actions taken to assist
families who are most in need in our country. However, the
report does underscore and reinforce the need for and the
timeliness of these actions. Not only is poverty increasing but
state and local governments cannot bear the brunt of the crisis
and the public resources upon which the working class depend
are becoming scarce.
As we saw earlier this summer, 18 states have been forced
to borrow over $12 billion from the Federal Government to
maintain their unemployment funds. Further, the essential
temporary assistance to needy families has become increasingly
unavailable under the weight of continuing economic turmoil.
Despite this dismal outlook, we are seeing signs of hope.
Unemployment has held relatively steady over the last few
months and the Labor Department announced this morning that
initial jobless claims were fewer than expected.
So we still have a lot of work to do; however, today's
report reminds us why continued decisive action by the Congress
is required as well as a commitment to understanding the real
impact of past policies on those who are at risk.
So I look forward to the testimony of all of our witnesses
today and a productive discussion. The stakes for our families
have never been higher.
And with that, Madam Chairman, I yield back.
[The prepared statement of Representative Elijah E.
Cummings appears in the Submissions for the Record on page 41.]
Chair Maloney. Thank you very much.
Congressman Burgess.
OPENING STATEMENT OF THE HONORABLE MICHAEL C. BURGESS, M.D., A
U.S. REPRESENTATIVE FROM TEXAS
Representative Burgess. Thank you, Madam Chairman. The
hearing that we are having today, Income, Poverty, and Health
Insurance Coverage: Accessing Key Census Indicators of Family
Well-Being, is certainly curious in its timing coming after the
presidential speech last night.
Undoubtedly the issues of economic disparity are especially
acute in a recession. Incomes stagnate, jobs are lost, people
are suffering. But, I cannot recall a single time this
committee has held a hearing on the U.S. Census report on
income poverty and health insurance coverage in the United
States a mere 3 hours after the report was released to the
public. This is after all an annual report, a report which is
surveyed every year and delivered several months later. So why
the critical time, the curious timing, about holding this
hearing? Indeed, in light of the President's speech last night,
and Senator Brownback referenced this, we heard some curious
numbers from the President last night. Instead of 47 million
uninsured, he talked about 30 million uninsured, so I would be
very interested to see the witnesses comment on that.
Issues of income and poverty have been with us for decades.
When Medicaid was enacted, the percentage of poor in this
country was around 13.9 percent, and today with the population
100 million larger, the poverty rate is 12.5 percent. So it
arguably could show some progress, but it is essentially the
same number. And again I would ask the question why is it
critical to have--the timing of this hearing becomes, again, of
interest.
Now Dr. Karen Davis, for which I have very high regard, is
going to testify today before this committee and the title of
her statement is Hearing on the Uninsured before the Joint
Economic Committee. So if our witness is speaking about the
uninsured, then that is what is really what this hearing is
about. This hearing isn't about trying to find more answers in
how we can solve the income disparities. If it were, we would
have experts in education who would talk to us about the number
one cause of economic disparity is the lack of education.
This hearing isn't about trying to find more answers about
how we can solve issues of the poor. If it were, where are the
advocates for the chronically poor who can tell us what makes
people poor and what makes them remain that way?
This hearing is about health care, and merely providing
health insurance is not always the answer. Providing health
insurance to the poor will not give them better quality of
care. Sometimes it doesn't even give them care at all. It can
only help mitigate the cost of care.
Right now we have Medicaid and for kids we have the State
Children's Health Insurance Program. Again it begs the
question. When you look at the numbers in Medicaid there are
6.4 million people who the Census Bureau is not counting even
though they are enrolled in the Medicaid program; so the
Medicaid undercount is 6.4 million. Eligible but not enrolled
in government coverage, an additional 4.3 million were eligible
for public programs like Medicaid and the State Children's
Health Insurance Program but were not enrolled. And again when
we had the discussions about extending the State Children's
Health Insurance Program, many of us on my side felt that it
was critical to find those kids, albeit they are hard to find,
albeit they live sometimes in desperate circumstances, but
those are the very children that we should be helping with the
State Children's Health Insurance Program and to expand
coverage to higher income levels without going after the
children that should be covered first seems to me to be an odd
way to approach trying to improve a Federal program.
And income does not necessarily determine access to health
care. We all know about the EMTALA laws. We have a provider
mandate in this country. As a physician who practiced for 25
years, I was well aware that when I got a call in the middle of
the night to attend a woman in labor, I had 30 minutes to show
up or I could be fined as much as $50,000. Indeed, that was
burned into my psyche, and there never once was a time where I
failed to respond to that call in the middle of the night and
deliver care, whether compensated or not, because I knew the
Federal Government was holding a fairly big stick over me to
ensure that that occurred.
The numbers are disconcerting, but at the same time I am
not sure that we are following the numbers accurately and
validly. Now Senator Brownback talked about community clinics,
federally qualified health centers. I don't see the number of
people covered. Fifty million people who get their care in a
federally qualified health program are apparently not accounted
for in the census report. There are huge problems with the
geographic disparities of federally qualified health centers. I
have worked for 5 years to get one in a relatively or a very--
an area in my district that has a very high infant mortality
rate, and we have only this July managed to get one opened up
and it took an enormous amount of work both locally and up here
to get that done. That shouldn't have been so hard to do
because it was a program that was already in existence and
didn't require a great deal of additional funding and yet will
deliver a lot for the citizens of Fort Worth.
Now, as we analyze the critical issue of providing cost-
effective health care to every American, I think it is
important to note that access to health care should not depend
on income, it should not depend on race nor should the solution
immediately be to give everyone health insurance. Access to
health care is critical but access to health insurance is
merely a facilitator.
One of the takeaways I hope we have from this hearing is
how we reduce the costs of health care so that everyone can
afford it whether they are insured or not.
I yield back the balance of my time.
[A letter from Representative Michael C. Burgess, M.D. to
Rebecca Blank appears in the Submissions for the Record on page
42.]
[A letter from Representative Michael C. Burgess, M.D. to
Cecilia Rouse appears in the Submissions for the Record on page
43.]
[A letter from Cecilia Rouse to Representative Michael C.
Burgess, M.D. appears in the Submissions for the Record on page
44.]
Chair Maloney. I thank the gentleman for his statement and
all of the panelists for being here. I thank my colleagues.
I would now like to introduce the first panel. We have two
panels today. Dr. Rebecca Blank is Under Secretary of Commerce
for Economic Affairs as the economic adviser to the Secretary
of Commerce and head of the Economic and Statistics
Administration. Dr. Blank has management responsibility for the
two top statistical agencies in the United States, the Census
Bureau and the Bureau of Economic Analysis. Prior to coming to
the Commerce Department, Dr. Blank was the Robert S. Kerr
senior fellow at the Brookings Institution. Dr. Blank graduated
summa cum laude in economics from the University of Minnesota
and holds a Ph.D. in economics from MIT. She was dean of the
Gerald R. Ford School of Public Policy at the University of
Michigan and co-director of the National Poverty Center. Dr.
Blank served as a member of President Clinton's Council of
Economic Advisers.
Dr. Cecilia Rouse is a member of the President's Council of
Economic Advisers. Dr. Rouse is currently on leave from
Princeton University where she is the Theodore A. Wells
Professor of Economic and Public Affairs. She has been a senior
editor of ``The Future of Children'' and the Journal of Labor
Economics. She is the founding director of the Princeton
University Education Research Section and has been the director
of the Industrial Relations Section. She was a member of the
MacArthur Foundation's Research Network on the Transition to
Adulthood. Rouse served on the National Economic Council under
President William Clinton from 1998 to 1999. She holds a Ph.D.
in economics from Harvard University.
Thank you very much and, given the importance of this
issue, I grant Dr. Blank and Dr. Rouse as much time as they may
consume. Thank you.
STATEMENT OF DR. REBECCA BLANK, UNDER SECRETARY FOR ECONOMIC
AFFAIRS, DEPARTMENT OF COMMERCE
Dr. Blank. Thank you very much. It is always dangerous to
give too much time to speakers, you know.
Madam chairwoman, Ranking Member Brady and Senator
Brownback, and distinguished members of the committee, I want
to thank you for inviting me here to discuss the income,
poverty, and health insurance data released today by the U.S.
Census Bureau at the Department of Commerce. Today's data
release provides detailed information on the economic
circumstances of American families in the year 2008.
I don't need to remind you that 2008 was not a good year
economically. The recession officially started in January of
that year. GDP fell by 1.9 percent over the year, and
employment fell by 2.2 percent, while the unemployment rate
rose from 4.9 percent of the labor force to 7.2 percent. The
last half of the year was particularly difficult with gas
prices that reached over $4 per gallon in midsummer, a virtual
collapse in the financial sector that fall, and the start of a
global recession. Under these circumstances it is not
surprising that the news in today's data release is not good.
The data released today indicate that between 2007 and 2008
real median household income fell by 3.6 percent, from just
over 52,000 to just over 50,000. This is the lowest level
recorded since 1998, indicating there was little growth for the
average American family, the family that is in the middle of
the income distribution, over the past 10 years. Median income
fell in all families and among all race and ethnicity
categories. These income changes were in part driven by
declines in real median earnings of full-time workers among
both men and women.
The poverty rate rose from 12.5 percent in 2007 to 13.2
percent in 2008, with 39.8 million individuals living in
families whose income was below the official Federal poverty
line. This is the highest poverty rate since 1997. Poverty also
increased particularly among Hispanics and among noncitizens.
Poverty increases were also concentrated in the Midwest and in
the West. A bit of good news is that the elderly experienced no
increase in poverty during 2008. And Mr. Brady, I would be
delighted to come back and talk about what our poverty
statistics do include and don't in question and answer if that
would be useful.
I am not going to discuss the health insurance numbers in
this report. That will be the subject of Dr. Rouse's testimony.
These 2008 numbers are better understood when they are put in
the context of the historical trends. Since 1979, income among
middle American families has risen but most of that increase
occurred during the expansion of the 1980s and the expansion of
the 1990s.
If you have a copy of my testimony, Table 1 shows this, but
I will also say it verbally. Table 1 indicates that median
income rose just under 11 percent in the expansion following
the recession of the early 1980s. It rose 13 percent following
the recession of 1991. But the expansion of the 2000s was
different. Median income rose only 1.6 percent during the
expansion between 2001 and 2007. With the economic turndown in
2008, we are back to a level of median income similar to where
we were 10 years ago. Middle income Americans made no gains in
income over this time period.
We see a similar pattern when we look at poverty rates. The
poverty rate always rises steeply during recessions but falls
during expansions. As Table 1 indicates, poverty fell by 1.5
percentage points during the expansion of the 1980s and fell by
almost 3 percentage points during the expansion of the 1990s.
Following the expansion that came after 2001, however, poverty
continued to rise. Poverty rose by 8/10 of a percentage point
over the expansion of the 2000s. So a higher share of the
population was poorer in 2007 than in 2001. The 2008 data show
a further steep increase as expected in a recession year, but
the fact that the expansions in the 2000s did nothing to reduce
poverty means increases in 2008 are off a higher base.
Clearly, the bad news about income and poverty in today's
data mirrors the bad news throughout the economy in 2008. The
reduced income and higher poverty numbers directly reflect the
increases in unemployment over 2008 that lowered earnings among
American families.
But we are seeing now some signs of recovery in the
economy, and private sector forecasts predict positive GDP
growth during the second half of this year. I expect that the
economy overall will not show the same declines from 2008 into
2009 as it did from 2007 into 2008. Unfortunately, even with an
improving economy, the higher unemployment rates that we are
experiencing, and will continue to experience during 2009, will
almost surely lead to further declines in income and further
increases in poverty in the current year. Unemployment lags the
business cycle, and until job growth is reestablished, income
and poverty will not change those trends.
The long-term challenge is to assure that the economic
recovery that we are entering brings better economic times to
all Americans with increases in income throughout the income
distribution. This Administration, since taking office at the
beginning of 2009, is working on a host of policies designed to
improve the lives of American families. We are focused on
improving educational opportunities from preschool through
college, reforming health care so that all Americans have
access to insurance and families are not bankrupted by health
emergencies, and helping to create a growing sector of green
business and green jobs to improve both energy efficiency and
to employ more Americans in jobs that make the environment
better for us all. Furthermore, the stimulus package approved
by Congress this past winter raises incomes and helps create
jobs, improving family well-being in 2009 relative to what it
would have been without this additional assistance.
Today's data tells us what we already knew: 2008 was not a
good year economically for Americans. Fortunately, this is old
news. There are signs of economic recovery throughout the
economy aided by the measures that Congress and this
Administration have taken to restore credit markets and
stimulate economic growth. We have good reason to believe the
news in future years is likely to be better.
Thank you.
[The prepared statement of Rebecca Blank appears in the
Submissions for the Record on page 48.]
Chair Maloney. Thank you so much.
Dr. Rouse.
STATEMENT OF DR. CECILIA ROUSE, MEMBER, COUNCIL OF ECONOMIC
ADVISERS
Dr. Rouse. Chair Maloney, Vice Chairman Schumer, Ranking
Members Brady and Brownback, and other distinguished members of
the committee, thank you very much for inviting me to join you
today to discuss the Census Bureau's release of data on income,
poverty, and health insurance coverage in the United States in
2008.
The data released today provide an important piece of our
overall understanding of the economic conditions that existed
during the first year of the current recession. Based on survey
data of households last March regarding their income and health
insurance coverage during the 2008 calendar year, the data
confirmed what we had already surmised. Along with rising
unemployment last year, families were trying to get by with
less income and many more had slipped into poverty and the
number of people without health insurance continued to
increase. These data confirmed that the recession was well
underway in 2008.
These trends reinforced the need to expand health insurance
coverage to more Americans, as would be achieved through the
President's plan for health insurance reform. They also provide
a new lens for which to view the critical importance of the
American Recovery and Reinvestment Act of 2009 and many other
programs proposed by President Obama designed to help increase
incomes, reduce poverty, and pull the economy out of recession.
In the remaining minutes of my oral testimony, I would like
to give an overview of the trends in health insurance coverage
in the census report as well as amplifications for health
insurance reform as articulated by the President last night. I
would then like to review some of the Administration's policies
designed to increase incomes and reduce poverty. More complete
remarks are included in my written statement.
According to the new census estimate, the number of
individuals without health insurance increased significantly
from 45.7 million in 2007 to 46.3 million in 2008. The data
also indicates that the fraction of U.S. residents without
health insurance stood at 15.4 percent in 2008, a rate that was
only slightly higher than that in 2007 and substantially higher
than that in 2000. The estimated number of U.S. residents
without health insurance increased by almost 8 million from
2000 to 2008.
These overall changes mask important differences by the
type of health insurance that individuals have. The fraction of
U.S. residents with employment-based health insurance declined
significantly from 59.3 percent in 2007 to 58.5 percent 2008,
continuing a trend from the past several years, as there has
been a 5.7 percentage point decline in the fraction of U.S.
residents with private employment-based health insurance since
2000. In contrast, from 2007 to 2008, the fraction of
individuals with public health insurance increased
substantially.
Most of this increase was attributable to a rise in the
fraction with Medicaid or CHIP, which was likely driven by the
declining incomes caused by the first year in the recession.
The change in health insurance coverage from 2007 to 2008
differed significantly by age. For example, the fraction of
adults between the ages of 18 and 64 without health insurance
increased significantly and as a result more than one out of
every five nonelderly adults was without health insurance in
2008, an increase of more than 3 percentage points since 2000.
In contrast, the fraction of children without health insurance
declined significantly during the same period to nearly--to
just under 10 percent in 2008. As a result of this decline,
both the number and fraction of children without health
insurance is at its lowest level since the census began
collecting such comparable data in 1987.
A close examination of the Census Bureau's data reveals
that the decline in the number of children without health
insurance was almost entirely driven by an increase in their
Medicaid coverage, which more than offset a substantial decline
in private health insurance coverage among children. While this
strongly suggests that Medicaid has cushioned the effects of
the economic downturn on children, we must remember that prior
to 2007 increases in Medicaid coverage were serving to offset
substantial declines in private health insurance coverage among
children, which fell from 70.2 percent in 2000 to 64.2 percent
in 2007.
Before discussing the Administration's policies, it is
worth highlighting that the estimates from the Census Bureau
are meant to count the number of individuals who are
continuously uninsured throughout the year and yet a big
motivation for health insurance reform is to address the
instability that results when people risk losing their health
insurance when they move, lose their job, or change jobs.
Estimates from other surveys regarding the number who are
uninsured at some point--at any one point during the year
suggest that the number of those who experience such
instability is much higher. It is also important to remember
that the census data are from 2008. Recent survey data from
Gallup indicate that the fraction of adults without health
insurance has continued to increase this year. Gallup data
suggest a 1.5 percentage point increase in the percent of
adults who are uninsured in the average month in the first 6
months of 2008 compared to the average month since--in the
first 6 months of 2009.
The Administration has aggressively worked to ensure that
all Americans are covered by health insurance. In February,
President Obama signed into law an historic expansion of the
Children's Health Insurance Program, and the Recovery Act
included the unprecedented government subsidy of COBRA
payments, enabling millions of unemployed workers to maintain
their health insurance while continuing to look for new
employment. Of course reform as articulated by the President
last night would result in an even larger expansion of health
insurance coverage by providing new tax credits to help people
buy insurance and to help small businesses cover their
employees.
In the President's plan, individuals would be able to shop
for health insurance in an exchange where they could compare
the price and quality of alternative insurance products and
select the one that best fits their needs. The President's plan
would also provide more stability and security for those who
currently have insurance by prohibiting excluding individuals
with preexisting conditions and preventing insurance companies
from dropping coverage when people are sick and need it most.
It would also cap out-of-pocket expenses to protect people
financially when they get sick and eliminate extra charges for
preventative care.
The trends summarized above during the last several years
are likely to continue without decisive action. Health
insurance premiums are rising three times more rapidly than
wages and thus an increasing share of workers and their
families will simply be unable to afford insurance if current
trends continue.
The committee also asked me to address what steps the
Administration is taking to reverse the trends in income and
poverty and improve the well-being of families across the
country. The largest and most visible strategy pursued by the
Administration and Congress was to pass the nearly $800 billion
Recovery Act. Through a balanced package of State fiscal
relief, individual tax credits, and an increase in the Federal
safety net, much of the Recovery Act provides short-term help
to the ailing economy. For example, it has helped states
maintain important state programs such as Medicaid and to
retain public sector employees during a time of fiscal
distress. The Recovery Act also includes billions of dollars in
tax relief for more than 95 percent of working families to help
them retain more of their take-home pay. It also includes a
significant increase in the Federal safety net which is
benefiting millions of struggling Americans while
simultaneously helping to buoy the economy by supporting
aggregate demands.
Yesterday the Center on Budget and Policy Priorities
released estimates that find that several provisions of the
Recovery Act, including improvements in health unemployment
insurance, tax credits for working families, and an increase in
food stamps, prevented 6 million Americans from falling into
poverty and reduced the severity of poverty for an additional
33 million in 2009. Clearly getting people back to work is
critical for increasing incomes and reducing poverty. To this
end the Recovery Act increased funding for job training, which
can be vital to helping displaced workers retrain for promising
jobs in areas of high demand.
Recognizing that we not only want to recover from this
recession but also build an even stronger economy, the Recovery
Act also contained provisions to help boost incomes in the
longer term. Two of the best documented long-term public
investments to raise incomes are those in early childhood
education and public education. The President's 2010 fiscal
year budget goes even further with investments in high-quality
early childhood education, a simplified Federal financial
student aid form, and an ambitious plan to invest in our
Nation's community colleges.
Finally, the President's budget also calls for funding
promising strategies to help those who were struggling even
before the start of the current recession. As one component,
his budget proposes investing in innovative, comprehensive
strategies for helping neighborhoods. The budget also proposes
grants to states to provide home visits for low income parents
and pregnant women. Such home visitation programs have been
shown through rigorous research to be highly effective in
improving child health and development, readiness for school,
and improving parenting ability.
Thank you for giving me an opportunity to review the data
in this new census report and to share the Administration's
strategies for returning prosperity to all Americans. I am
happy to answer any questions you may have.
[The prepared statement of Cecilia Rouse appears in the
Submissions for the Record on page 52.]
Chair Maloney. Thank you. And I will begin the questioning.
Many of us are very focused on expanding health insurance
coverage in the President's speech last night, so I would like
to address the health care issue.
Our Nation's businesses are under tremendous cost pressures
right now, and due to rising health insurance premiums and
falling revenues, they are under even more pressure. Could you
elaborate, Dr. Rouse or Dr. Blank, on how these trends have
impacted individual health insurance coverage both over the
course of the last year and the longer term?
Dr. Rouse. I am happy to respond, although, Dr. Blank, if
you want to as well.
So there is no question that with increasing health
insurance premiums, an increasing number of employers are
dropping coverage for their workers. Those who are not--part of
the reason that they are dropping the coverage is because the
premiums are just too expensive. Those companies that are not
dropping coverage are shifting some of the increase in premiums
onto the compensation of employees. So what workers are finding
is that a greater share of their total compensation is in the
form of health insurance coverage rather than in the form of
take-home pay.
Chair Maloney. And how will the health insurance reform
proposals currently under consideration in Congress help ease
the erosion in health insurance coverage rates?
Dr. Rouse. The President's plan would help to--first of
all, a major component of the President's plan is to get the--
try to get the cost increases under control. And so if we are
able to slow the rate of growth of health insurance costs, that
will definitely spill over into controlling the cost of health
care premiums, which will lower the cost for employers and
workers. In addition, when there are millions of Americans who
are uninsured, many of them do seek access in other places, and
part of those uninsured costs are also being borne by those
individuals who do have insurance and also by expanding
coverage is another form--that is one small component of
actually controlling some of the increasing costs in health
insurance.
Chair Maloney. Dr. Rouse, the CEA released a report earlier
this year explaining why health insurance reform was critical
to our Nation's economic health, and that report suggested that
health insurance reform could have a dramatic impact on
families' incomes. The health reform legislation proposed by
the President would result in almost 10,000 in additional
income for the typical family of four.
Could you elaborate on the connection between health reform
and family income?
Dr. Rouse. As I was just mentioning, one of the problems
with our current system of health insurance is that the costs
have continued to skyrocket. And if we are able to bend the
curve on health care costs, if we are able to slow the increase
in costs of health insurance, what that will mean is that
instead of workers taking so much of their compensation in the
form of health care insurance, instead they will be able to
take home a greater share of total compensation in terms of
income.
Dr. Blank. Can I also respond to that?
Chair Maloney. Certainly.
Dr. Blank. One of the real concerns in terms of trying to
look at the well-being of families is to look at what they
actually have to spend on food, clothing, shelter, and
necessities. Out-of-pocket medical expenditures have been
growing in this country. And if indeed health insurance reform
is effective at both covering more people with access as well
as controlling costs, that really will affect the well-being in
terms of the take-home pay that people have to spend on the
things that they want to spend it on, as opposed to the things
they have to spend it on, such as health care.
Chair Maloney. My time is almost up, but the health
insurance reform proposal includes subsidies aimed at making
health insurance affordable for low and moderate income
families, and could you elaborate on why such subsidies are
important for achieving universal coverage?
Dr. Rouse. The President's plan--a major component of the
President's plan is that there should be shared responsibility.
In order for there to be--the way insurance works is by pooling
risks across many individuals we can lower the cost for any one
individual, and he strongly believes that there should be
shared responsibility across individuals, businesses, and the
government. However, with that shared responsibility could be
quite difficult for many families, for especially low income
families, and so in order to ensure that everybody is covered
by health insurance the President's plan recognizes that there
will need to be subsidies for some families.
Chair Maloney. Thank you. My time has expired.
Senator Brownback.
Senator Brownback. Thank you very much. Ladies, thank you
very much for joining us too and for your presentation.
I believe the President's price tag on the proposal was--I
thought he said last night around $900 billion over 10; is that
correct?
Dr. Rouse. That is correct.
Senator Brownback. I didn't quite catch last night how he
was breaking down the payment for that. He did say he is not
going to add to the deficit. So where is the money coming from?
Dr. Rouse. The President is committed to paying for the
entire plan. He does not believe that the plan should add to
the deficit, $1 to the deficit. The plan will be paid for
through a combination of making Medicare and Medicaid more
efficient. Currently there is----
Senator Brownback. How much out of that?
Dr. Rouse [continuing]. I think--I should probably get back
to you with the exact. I don't think--we are still working on--
we have to see the details, but I think he is working at
roughly half of it would come out of squeezing the inefficiency
in the current system, and then he is also looking to raise
revenue elsewhere.
Senator Brownback. So about $450 billion out of savings
from Medicare and Medicaid and $450 billion in tax increases?
Dr. Rouse. This will depend very heavily on what the
ultimate plan looks like, but what the President is committed
to doing is finding savings from the inefficiency in the
current program and raising revenue in other places.
Senator Brownback. Have you had a chance to look at that
anywhere on how you save that quantity of money on Medicaid or
Medicare? I mean that is a pretty big number to try to squeeze
efficiencies in a system that--I presume people have been
trying to do that for some period of time but----
Dr. Rouse. I believe that is certainly true. There is a lot
of evidence that if you look at the expenditures in the United
States compared to other countries that we spend a lot more
compared to other countries for the kind of outcomes, health
outcomes that we get. If you look at data across counties in
the United States, you find that in two counties where there
are similar demographics, similar health care provisions,
similar outcomes, in one county they are spending much more
than the other.
So we know there is inefficiency. Medical experts,
researchers and doctors, have been looking at this and
specifically identified ways in which the current system is
inefficient, and the President is looking at a range of options
and will consider a range of options in order to do so.
Senator Brownback [continuing]. What number of Americans
presently are not getting health care?
Dr. Rouse. I don't actually know the answer to that
question.
Dr. Blank. I don't know. Some of the most recent data we
have available is this data. Unfortunately, there is quite a
lag on this; so we know who doesn't have insurance. That is a
different question than who doesn't get health care.
Senator Brownback. That is correct.
Dr. Blank. Obviously a good number of people get some form
of uncompensated care through emergency services. So I think
the evidence is it is much more expensive to provide those
goods and services.
Senator Brownback. But do you know of any data where we
could collect that, what percent or what number of Americans
are not getting health care?
Dr. Blank. The Medical Expenditure Survey does collect all
sorts of information on exactly what type of health care over a
period of time people do receive. So----
Senator Brownback. I want to know who is not getting health
care.
Dr. Blank [continuing]. You mean the definition of both
what is needed as opposed to what is received, and I don't
believe we have a data set that does that clearly.
Senator Brownback. Are you working at that data set?
Dr. Blank. I know there is work inside the Department of
Health and Human Services to improve some of their measures on
this. They have a variety of more detailed health insurance and
medical coverage and care surveys that they collect. I can't
speak to the specifics of that.
Senator Brownback. It is pertinent and germane to the
earlier question because you have got a system that--you cited
the Gallup poll. I have seen a Gallup poll that says 80-plus
percent of Americans are satisfied with their own health care.
Maybe you haven't seen that one or I would be happy to provide
that to you. And you have a huge amount of cross-subsidization
taking place in this current system. And you are going to take
$450 billion out of it in Medicare and Medicaid, and if you do
that you are going to have a big impact on the system. I
presume you are going to try to make it up on the other end of
it as a proposal, but I wonder if you are going to really end
up with a better system than if you would go incrementally at
these pieces where we are now, trying to get at cost and get at
coverage rather than let's go at a different system. And if you
are going to pull that much money out of the current system on
it, which I really--I will be very impressed to see getting
$450 billion out of Medicare and Medicaid without impacting
current coverage and support for it. And part of the proposal
is to up Medicaid rates and coverages in the states, which is
going to drive up costs to the states. I think this is a
pertinent number to find both of those out because it is going
to have a big impact on current recipients of health care in
the system.
So I am hopeful we can get that number of Americans that
are not currently getting any health care, or have some lack of
coverage, and the impact that is going to have when you take
$450 billion out of Medicare and Medicaid.
My time is up. I hope you could help us with some of those
numbers.
Chair Maloney. Thank you, Senator.
Mr. Hinchey.
Representative Hinchey. I think it is very clear. We have a
circumstance in health care where the price of health care is
going up and the number of people who are able to obtain health
insurance is going down. More and more people are losing their
health insurance. We have a very dramatic set of circumstances
there.
More than 46 million Americans without health insurance,
and if they are getting health care, they are not getting it in
a preventive way. They are getting it only when they are
desperate and they can find their way into the emergency room
of a hospital or some other situation. This is what is driving
up the price of health care in this country so dramatically and
how it has risen so much over the course of the last decade.
I would like to ask you a question about income and
equality. As I mentioned and as you mentioned, Dr. Blank, the
households were economically worse off at the end of 2008 than
they were in 2000. The situation got substantially worse over
the course of those 8 years. You had real median household
income in 2007 go down $324, or 0.6 percent below where it was
in 2000. In 2008, real median household income in the U.S. fell
3.6 percent--from $52,163 in 2007, to just over $50,000 in
2008.
So the real median income for the wealthiest households in
this country increased, and increased dramatically, between
2000 and 2007, while incomes for households at the middle and
lower incomes declined. That is the situation that we have seen
over the course of the previous 8 years. Income at the lowest
20th percentile fell 6 percent, $1,285; and at the 10th
percentile it fell by 4.5 percent, $579. As a result of that,
we have seen minorities experiencing the largest drop in
household income between 2000 and 2007.
The income inequality remained unchanged in 2008.
I would just ask you if you can give us an answer to this
question: What policies can be attributed to cause the
situation for lower-income earners and minorities to have
become worse off during that period of time between 2000 and
2008?
Dr. Blank. So there is enormous research literature in the
economics profession, as you can imagine, trying to answer
exactly that question. And I think that the consensus is that a
good amount of this is simply shifts in the demand for
different types of skills in the labor market, so that we have
gone through an extended period where the demand for more
skilled workers is rising quite rapidly and the demand for less
skilled workers is falling. The result of that, in part, has
been rises in the wages among more skilled workers, who are up
near the top of the income distribution, and declines in the
wages of less skilled workers, who are near the bottom of the
distribution.
Now, there are other things happening as well in terms of
shifts between the U.S. versus other countries. There are
shifts in terms of unionization which--as unionization
continues to decline, that reduces wages disproportionately
among low-skilled workers.
So you see a number of trends happening out there, all of
which have resulted in exactly these shifts. Some research
suggests that at the very top of the distribution a
disproportionate share of the very large income growth was
occurring in the financial sector. That, of course, mirrors the
whole bubble of the financial sector that we are all too well
aware of, given what happened in 2008 when some of that broke.
Representative Hinchey. Ms. Rouse, any comments on that?
Dr. Rouse. I was also going to talk about the role that--it
is very clear that what employers demand now are workers with
strong analytical skills, strong interpersonal skills, skills
that one acquires by not only completing high school, but
actually going on to postsecondary education. So there is a
very strong relationship between this rising inequality and the
types of education that individuals have, which underscores the
importance of a strong educational and training program.
Representative Hinchey. I assume that the change in Federal
taxes in 2003 had an impact on that as well. It put more money
in the hands of the wealthiest people, as we have seen, and it
also caused a decline in the income and economic sustainability
of middle-income and lower middle.
Dr. Blank. All the indications of people who have looked at
the effects of those tax changes agree that is absolutely true.
The data, you are looking at here, is pretax income, so this
does not net out taxes. So the numbers you were citing would
look even bigger if you took that into account.
Representative Hinchey. Thank you very much.
Chair Maloney. Mr. Brady.
Representative Brady. Thank you, Madam Chairman.
Unfortunately, the numbers show that actually the top 1 percent
wage earners actually gained more under President Clinton's
years and ended up paying more taxes under President Bush's
years. This sort of points, though, to the problem here which
is, I think this new government is relying too much on funny
numbers for important policy decisions.
The stimulus was a great example. We were promised that the
unemployment rate would not go above 8 percent if we passed
that bill. It is at 9.7 percent today and still growing. Said
it would create an immediate jolt to the economy. We have lost
another 2 million jobs.
And in the sector--I always follow the manufacturing and
construction sectors because we were told by the Administration
economists that the stimulus would disproportionately create
new jobs in the manufacturing and construction sectors. In
fact, they have lost 900,000 jobs since March. They have
actually--the areas where the White House promised the big job
gains have seen the biggest losses.
The stimulus, unfortunately, is slow. Too much of it is
wasted and not focused on jobs, which is why the majority of
Americans not only believe the stimulus isn't working, but it
will make the situation worse for the country in future years.
The poverty numbers, I think, are equally flawed.
Dr. Blank, in testimony just last September before this
committee you said, ``There's widespread agreement that our
poverty measure is badly flawed. It needs to be updated.'' You
observed, ``In the year since the current definition was
developed, the biggest expansions in antipoverty assistance
come through the tax system, such as expansion of the earned
income tax credit, through in-kind benefits such as food stamps
and Section 8. Because the historical poverty measure is based
only on family cash income, it is unaffected by many of these
changes.''
You went on to say, ``Why does this matter? Our measure of
poverty rate is insensitive to many of the most significant
policy changes designed to help low-income families that we've
made in this country. In a fundamental way our poverty measure
has undercounted policy gains.''
Dr. Blank, do you still hold this position, that our
poverty measure is badly flawed and needs to be updated?
Dr. Blank. Our official poverty measure measures only
certain things and not others. It is a measure of pretax
income, cash income. And pretax cash income is primarily what
people get from their jobs. So in a recessionary period, when
you lose a lot of employment, precash income tells you how much
has been lost because of that loss of employment. In that sense
it tells you something, but it does not measure the effect of a
lot of the policies that we have in place.
Representative Brady. You would stand by that statement
that this poverty measure is badly flawed and needs to be
updated?
Dr. Blank. I strongly encourage people to look at the
official measure as well as a variety of the alternative
measures that the U.S. Census Bureau produces.
Representative Brady. Your position is this same?
Dr. Blank. I certainly will agree that you need to look at
more than just the official poverty number.
Representative Brady. I don't have time to pin you down. I
am just wondering, has it changed, or do you still have the
same view?
Dr. Blank. I have the same view that we need to go beyond
the official measure.
Representative Brady. Let me ask about the income measure,
too, because I think this, too, has been, again, funny numbers.
One of the complaints both Democrats and Republicans have
had about the No Child Left Behind program is that it measures
class by class each year. It doesn't follow children from grade
to grade to follow all the progress.
Our income numbers have the same flaw; as the Census Bureau
has said, it is not a picture of what has happened to the same
households over a time period. Medians like those from the
current population survey conceal an enormous amount of
movement in the income of individual households, and the
numbers seem to prove the Census Bureau out, as their numbers
show that about 60 percent of households in the middle fifth
can exit in as little as 3 years.
So my question is, within the income data, why don't we
update it or add another indicator that actually follows
households so we can see what that growth in income truly is?
It seems like we are taking snapshots of different parts of the
horse race rather than the snapshot of the entire race that
families are running.
Dr. Blank. Two answers to that. One is that the median
household income, I think, answers a particular question that
is different than what you are asking. It tells you what is the
income level below which half of the people in 2008 lived. You
can compare that to what is the income level below which half
of the people in 2007 or 2006 lived.
That is actually an incredibly interesting statistic. It
doesn't say that it is the same person in the middle of the
distribution, but it does tell you what the well-being of
America looks like in terms of where are people placed.
Your question about longitudinal data is right on. It is
very important to follow households over time if you want to
understand the dynamics of income distribution, who is moving
up and who is moving down at any point in time. The Census
Bureau has a major survey called the Survey of Income and
Program Participation--that they are in the midst of revising,
actually, through long discussions and some additional
appropriations from Congress--that does exactly that; it
follows the same households for 3 to 4 years at a time.
Representative Brady. I think getting a more accurate
picture that way will be helpful again as we delve into all the
policy issues.
Madam Chairman, thank you.
Chair Maloney. I want to thank the gentleman for his
questioning and certainly would join him in a letter to the
Appropriations Committee for funding for a longitudinal study
such as Dr. Blank put forward.
Also, I would like to ask both Dr. Blank and Dr. Rouse to
put in writing to the committee--I think it is an important
question--if you wanted to improve the poverty measure, how
would you improve it? What else would you include in it?
I think that is something this committee and members on
both sides of the aisle should take a look at. Maybe it could
be the subject of another hearing.
Mr. Cummings.
Representative Cummings. Thank you very much, Madam Chair.
Thank you all for your testimony.
The Chair had a report done recently on women and how women
are affected with regard to health care and health insurance.
One of the very interesting pieces of that report was they
talked about women who may have been married and they--the
husband was older. He then goes on to Medicare and there is a
gap; and she may not have been working for a while or whatever,
and it leads to--so she has to find insurance.
And I was just wondering, it is not just women, but how are
the near-elderly fairing--I am just curious--with regard to
poverty? Because we have got safety nets. Certainly, we have
got Medicare and then, of course, you have got Social Security,
but what about folks who come short of that age-wise?
Dr. Blank. This report does not do that type of age
breakdown. Once we actually can go into the raw data and look
at that, you can answer that question.
Here is what I do know, that the burden of job loss often
follows disproportionately on people who are not quite at 65.
They are people who lose their jobs. When they lose their jobs,
they have a great deal of difficulty finding another job. They
often retire early because of the difficulty of finding other
jobs. The challenges they face include both income challenges
as well as health insurance challenges, since they aren't yet
eligible for Medicaid.
So if you look at displaced worker surveys, surveys of
workers who have part of major plant closings, a
disproportionate number of those who either never come up to
the same income level again or never work again are exactly the
group you are talking about, the workers over the age of 55 who
have not yet hit eligibility for Medicare and Social Security.
Representative Cummings. Another issue, as far as the
biggest changes in income and poverty, I am trying to figure
out, geographically where have they been found? Does it always
track the states with the highest unemployment, and do you
track the poverty rate with other data such as foreclosure
rates and things of that nature?
Dr. Blank. The foreclosure rates don't figure into this
report except as they affect income and poverty numbers. What
you see is that the biggest increases in poverty and also the
largest reductions in income are occurring in the Midwest and
they are occurring over in the western states. That is
absolutely consistent with both what we are seeing in our
foreclosure data--some of the worst-hit states in foreclosure
are in the West--and what we are seeing in unemployment data
with some of the highest unemployment data are there in the
Midwest, in the so-called Rust Belt, which is really feeling
the effects of this recession on manufacturing.
Representative Cummings. So you are saying that it is
consistent with unemployment then?
Dr. Blank. Yes. Unemployment and poverty tend to track each
other reasonably closely.
Representative Cummings. Does the current census data show
that expanding economic opportunity generally is a viable
method of closing health care disparities and should,
therefore, be seen as an important public health intervention?
Dr. Rouse. The report certainly shows that the rate of
uninsurance among those that have been working is much lower
than the rate of uninsurance among those who haven't worked in
the prior year. Unfortunately, there is not more nuanced data,
at least in this report, that would allow us to go beyond that.
Representative Cummings. The President said something last
night that was very interesting, and--he said something to the
effect that during a 2-year period one out of every three
Americans had an insurance gap.
Why did you smile?
And that said a lot to me, because what that says is that
we--I heard a lot of my Republican colleagues talk about this
47 million, but then you heard on any given day you may have up
to 68 million people with no insurance. And that seems to be
kind of consistent with that gap problem.
The gap problem also is significant in that as we get
older, just in case people didn't know it, you are more likely
to get a preexisting condition, and so therefore, if you have
got a gap and you don't have COBRA or whatever, you have got a
problem getting insurance.
Is that a fair statement?
Dr. Rouse. Absolutely.
The reason I smiled is because when we look at the census
data that was released, it is one measure of how to think about
uninsurance. But really a lot of the motivation for the
President's plan is the fact that health insurance is unstable;
and so if you look at data that tries to measure were you ever
uninsured during the course of this year, the rate of those who
have had a period of uninsurance is more like 71 million.
And so really it is much, much worse when we look at and
consider the instability of the current health insurance
market.
Representative Cummings. I see my time is up. Thank you.
Chair Maloney. Thank you.
Senator Casey.
Senator Casey. Thank you very much, Madam Chair. Thank you
for allowing Senators to come over here to be a part of this
hearing.
Chair Maloney. Thank you for being here.
Senator Casey. I do want to pick up on something that he
said as well as what others said. I am glad he raised that
question of health care because I have got a lot to say, but I
have only got 4 minutes and I do want to get a question in.
Just with regard to the data, first, that you outline--and
I appreciate both of you being here and your testimony and your
public service. One of the things that I try to keep an eye on
is, what are the differentials with regard to poverty or
income, median income or poverty by race, for example. I think
some of them are stunning and instructive about the challenge
we have ahead of us.
I guess median household income fell 3.6 percent 2007 to
2008. That is all median income; is that correct?
Dr. Blank. That is right.
Senator Casey. African American households fell 2.8 percent
and Hispanic households, 5.6 percent, correct? Big losses
across the board.
The poverty rate numbers are maybe even more stunning.
Sometimes that income number doesn't say much. But am I correct
to say that between 2007 and 2008, poverty among the
demographic category called Hispanic is up to now 23.2 percent?
Dr. Blank. That is correct.
Senator Casey. Almost a quarter. And among African
Americans, unchanged in that year, but still even higher--24.7.
So in both groups you have got almost a quarter of them
living in poverty, both African Americans and Hispanics. So it
tells you something about the challenge we have coming out of a
recession because, of course, this measure in 2007, when things
were relatively, and in some cases, a lot better economically
across the board, going into 2008.
But I would ask you if you can comment on that in the
context of that time period and those numbers in relationship
to where we are now in a recession, but contrary to what we
have heard here today, the Fed saying today in an AP story that
we are coming out of a recession. Unfortunately, a lot of
people won't feel that for a long, long time--feel it in a
positive way, because job loss will still be high.
Do you have anything you want to say about the time periods
within which those numbers were measured?
Dr. Blank. The biggest impact of recession on poverty and
income is through unemployment. And unemployment
disproportionately hits lower-skilled and lower-wage workers;
the people who lose their jobs are those who are lower wage,
who are working part-time, who may be even trying to hold
second jobs. So if you look at the distribution of
unemployment, it is very skewed towards the bottom end of the
income distribution.
What happens to income and to poverty is that
disproportionately income declines and poverty goes up among
exactly the groups of workers who tend to be low-income
workers; and that is disproportionately single-female-headed
households, persons of color, people of Hispanic background,
exactly the groups you are pointing to.
Senator Casey. And this is a hard question to answer. I
know you can't answer with any precision, probably either of
you, smart as you are.
But if we are looking at that 24.7 percent poverty rate for
African Americans and 23.2 for Hispanics in that 2007-2008
period, if you could snapshot it today, meaning this part of
2009, you don't have to be an expert extrapolator to say that
number is probably up in both instances; is that correct?
Dr. Blank. I would expect that to be true since
unemployment has risen since the middle of 2008, which is the
way to think about these numbers.
Senator Casey. I will use my remaining 30 seconds to just
do a little bit of rebuttal on what we had heard on health
care.
First of all, the Finance Committee in the Senate has not
weighed in yet on a lot of the costs. That is their job to do.
It wasn't the job of the President to outline specific cuts,
specific ways to pay for this. The Congress still has a lot of
work to do; we have got to get to work and get it done and give
him a bill. That is point number one.
Point number two, for those who forgot, we spend $2
trillion every year--$2 trillion every year--on the health care
system, and we are trying to fix it with a fraction of that.
Another point we should make: that we are spending $2 trillion
on a system that doesn't work for people. It denies them
coverage and treatment on preexisting conditions; it
discriminates against women; and it hammers them, as Dr. Blank
said, with regard to out-of-pocket costs.
So at some point in time we are going to have to choose the
team we are on here. We are either on the team that is moving
forward with President Obama to fix a lot of what is wrong or
you are on another team. And I will let others describe what
team they are on.
In terms of how we can pay for it, it is going to be a long
list of things. Tax policy is part of it. I have my own ideas
about that. Antifraud measures are part of it. Prevention is
part of it. Best practices are part of it.
The Geisingers, not to just brag about Pennsylvania, have
figured this out in the private sector. The savings from
prevention, the savings from how we manage disease better, all
those savings and better health outcomes are not government
theories; they have been proven in the private sector. What we
are trying to do is take those really good ideas and make them
the norm, not the exception.
So we can figure this out. We know how to do a lot of this.
When I say we, I mean the American people; not government, the
American people. We can figure this out. And for those who
complain about government and government health care, which is
about half of what the American people get--some kind of
American health, thank goodness. Thank God we are smart enough
to do that.
And I will end with this. One-third of rural kids in
American get Children's Health Insurance or Medicaid, one-third
of rural kids. So for those who are talking about cutting
government and attacking government health care, they better
think about a lot of people, including rural kids in America;
not just kids in big cities, but rural kids as well.
And I know what it is going to do to our state if we don't
take action on health care. In the next 7 years the average
family income is going to have to dedicate 52 percent of their
income to health care. I don't know a family in Pennsylvania,
or America--haven't met them yet, hope I never meet them--who
will walk up to us and say, ``Don't do anything about health
care. Just let it go the way it is. I can pay 52 percent of my
income to health care. Don't worry about me. I will be just
fine and so will my family.''
That is where we are headed, folks, if we don't do anything
about health care.
Unfortunately, the numbers nationally are about the same:
52 percent of the income in Pennsylvania, 45 for the country.
That is the direction we are headed right now, inexorably,
undeniably, if we just sit back and say, ``It got a little
complicated. We couldn't do it.''
Chair Maloney. Thank you so much, Senator Casey. Thank you
very much for those words.
And I want to thank our distinguished panelists.
I now would like to introduce the second panel, but I first
would like to note that the record will remain open for 2 weeks
so that witnesses on this panel can revise their written
testimony to include the new census data that was just released
a few hours ago.
I would also like to ask unanimous consent to place in the
record a statement by Nobel Laureate Joseph Stiglitz, a
professor at Columbia University.
[The prepared statement of Joseph Stiglitz appears in the
Submissions for the Record on page 58.]
Chair Maloney. First, we have Dr. Karen Davis with the
Commonwealth Fund. Dr. Davis is a nationally recognized
economist with a distinguished career in public policy and
research. Before joining the Fund she served as chairwoman of
the Department of Health Policy and Management at Johns Hopkins
School of Public Health, where she also held an appointment as
Professor of Economics. She served in the Department of Health
and Human Services between 1977 and 1980 and was the first
woman to head a U.S. public health service agency.
Dr. Harry Holzer is Professor of Public Policy at
Georgetown University. Dr. Holzer was a founding director of
the new Georgetown Center on Poverty, Inequality, and Public
Policy. He is currently a Senior Fellow at the Urban Institute,
a Senior Affiliate at the National Poverty Center at the
University of Michigan, a National Fellow of the Program on
Inequality and Social Policy at Harvard University, a
Nonresident Senior Fellow at The Brookings Institution, and a
Research Affiliate of the Institute for Research on Poverty at
the University of Wisconsin at Madison.
Prior to coming to Georgetown, Professor Holzer served as
Chief Economist for the U.S. Department of Labor and Professor
of Economics at Michigan State University. He holds a Ph.D. in
Economics from Harvard University.
Thomas Miller is a former Health Economist for the Joint
Economic Committee between 2003 and 2006, where he worked on
health care policy and regulation. Prior to joining the
committee, he worked as the Director of Health Policy Studies
at the Cato Institute and as Program Director at Economic
Policy Studies. Mr. Miller has also worked as a private
attorney and as a journalist. He received his J.D. from Duke
University School of Law and a B.A. from New York University.
I thank you all for coming and for your dedication to
public service.
Chair Maloney. I would like first to call on Dr. Davis.
Thank you.
STATEMENT OF DR. KAREN DAVIS, PRESIDENT, THE COMMONWEALTH FUND
Dr. Davis. Thank you, Madam Chairman, Senator Casey. It is
a pleasure to be invited to testify at this hearing on income,
poverty, and health insurance coverage.
This morning, the U.S. Bureau of the Census released the
alarming news that the number of uninsured Americans hit 46.3
million, up from 45.7 million in 2007. This increase would have
been much worse without the growth in government-provided
insurance, a 4.4 million increase, including a 3.0 million
increase in coverage under Medicaid. In contrast, employment-
based coverage declined by about 1.1 million, down from 177.4
million in 2007 to 176.3 million in 2008.
Today's data release shows the importance of the Nation's
safety net insurance system--Medicaid and the Children's Health
Insurance Program, CHIP. The major bright spot in this new data
was the fact that the rate of uninsured children is at its
lowest since 1987, at 9.9 percent. This improvement was a
reflection of increased coverage for children under government
health insurance programs, which rose from 31.1 percent in 2007
to 33.2 percent in 2008.
However, more than 7.3 million children remain uninsured,
which highlights the importance of the reauthorization and
expansion of the CHIP program to 4 million more uninsured low-
income children earlier this year.
States have also played an important role in stepping up to
the plate to address the issue of the uninsured. Massachusetts,
which enacted health reform in April of 2006, has moved into
first place, with the lowest uninsured rate in the Nation.
Today, we learned that in Massachusetts only 5.5 percent of the
population was uninsured in 2008, compared with 25.1 percent in
Texas, the state with the highest uninsured rate. Massachusetts
leads the Nation as a result of its 2006 comprehensive health
reform.
The most alarming news in today's census release is that
the number of adults under age 65 without health insurance is
high and rising, with 20.3 percent of adults ages 18 to 64
uninsured in 2008, up from 19.6 percent in 2007, an additional
1\1/2\ million uninsured adults.
There were about 1 million fewer people covered by
employment-based coverage, down from 177 million to 176
million, and this included a marked decline in coverage among
part-time workers. But even these numbers may be an
understatement of the individuals affected by the severe and
ongoing recession.
If census numbers are based on counts of people without
coverage at any point in the year, these numbers--in other
words, if people were insured early in 2008, and lost their
coverage later in the year, they are counted as insured for
2008. So the continued rise in the unemployment rate in 2009
likely means many more uninsured in 2009.
Since the start of this decade, when 38 million were
uninsured, health insurance coverage has steadily eroded--a
jump in uninsured of 20 percent over the decade. Even before
the severe recession, the number of uninsured was projected to
grow to 61 million people by 2020. We simply cannot afford to
continue on our current course.
This tragedy of gaps in health insurance coverage has real
consequences for Americans--not just those who are uninsured,
but those who are underinsured as well. Earlier, one of the
members asked about people not getting the care that they need.
The 2007 Commonwealth Fund Biennial Health Insurance Survey
shows that 68 percent of the uninsured went without needed care
because of cost. Uninsured and underinsured people with chronic
conditions are less likely than people with health coverage to
report managing their conditions, more likely to report not
filling prescriptions or skipping doses of drugs and, as Mr.
Hinchey noted, more likely to use emergency rooms and be
hospitalized.
The health insurance system in this country is
fundamentally broken. It does not accomplish what insurance was
created to accomplish, ensure access to needed care and protect
against the financial hardship that medical bills can cause.
The deterioration in health insurance coverage has reached the
point where financial hardship is not the exception, but the
rule.
Our study shows that 72 million people report problems with
medical bills or accumulated medical debts. More than three-
fifths of them incurred those bills when they were insured, not
when they were uninsured. In fact, a total of 116 million
adults, two-thirds of those under age 65, are either uninsured
at some point during the year, underinsured, or report
difficulties obtaining needed care and paying their medical
bills.
We pay a price for being the only major country without
health insurance coverage. The Council of Economic Advisors
estimates that covering the uninsured would result in a net
increase in economic well-being totaling $100 billion a year.
Coverage for all would increase the labor supply and level the
playing field for large and small businesses.
Recognizing the seriousness of our flawed health insurance
system, Congress began to take action early this year to cover
more people who are at high risk. Reauthorization and expansion
of CHIP will cover an estimated 4.1 million uninsured low-
income children, in addition to the 7 million children already
covered. The CHIP program has been a major success, as we see
in the declining rate of uninsured children.
Provisions in the American Recovery and Reinvestment Act of
2009 are also helping prevent the loss of health insurance
coverage as a result of the severe and sustained economic
recession. The act provided $86.6 billion over 27 months to
help states maintain and expand Medicaid enrollment as more
unemployed working families qualified for coverage. In
addition, it provided a 65 percent premium subsidy to help
recently unemployed workers retain their employer coverage
under COBRA, a program Senator Kennedy helped establish in
1985.
Measures to help achieve health reform now under
consideration in the Congress would also help with the long-
term trend in the number of uninsured by creating health
insurance exchanges by providing income-related premium
assistance for individuals up to three to four times the
Federal poverty level, by expanding the Medicaid program for
those up to 133 to 150 percent of the poverty level, by having
an essential benefit package with a cap on cost-sharing, and by
sharing employer financing of coverage with special assistance
for small businesses.
The Congressional Budget Office estimates that the House
bill would reduce the number of uninsured people by 37 million
people by 2019. The comprehensive reforms proposed by the
President will help spark economic recovery, put the Nation
back on the path to fiscal responsibility, ensure that all
families are able to get the care they need while protecting
their financial security.
The cost of inaction is high. The time has come to take
bold steps to ensure the health and economic security of this
and future generations. Health reform is an urgently needed
investment in a better health system and a healthier and
economically more productive America.
Thank you.
[The prepared statement of Karen Davis appears in the
Submissions for the Record on page 59.]
Chair Maloney. Great.
Dr. Holzer.
STATEMENT OF DR. HARRY HOLZER, PROFESSOR OF PUBLIC POLICY,
GEORGETOWN UNIVERSITY AND INSTITUTE FELLOW, URBAN INSTITUTE
Dr. Holzer. Thank you, Madam Chairwoman, Mr. Brady, and Mr.
Cummings, for giving me the opportunity to speak to you today
about the income and poverty numbers that the Census Bureau
released this morning. I will focus on the income and poverty
numbers exclusively and not on health care.
We now know that the years 2000 through 2007 represented a
complete business cycle. And so comparing those two end years,
2000 and 2007, enables us to infer a secular trend in income
and poverty that the Nation experienced for most of the current
decade; and then the additional differences between 2007 and
2008 represent only the beginning of the most serious economic
downturn since the 1930s.
There is a lot to discuss in this report. I am going to
limit myself to four points.
Point number one: The numbers for the period 2000 to 2007
are really quite disturbing. Real median income failed to rise
over the entire period and poverty did rise over that secular
period. Indeed, the poverty rate rose quite substantially, by
about 2 percentage points for certain groups like children and
African Americans.
Quite disturbingly, these trends occurred while the
Nation's overall productivity rose by nearly 20 percent. So
both low-income and middle-income American families failed to
share in the economic prosperity generated by our economy in
that 7-year period.
Now, of course, there are important questions about how
these numbers are measured, as Mr. Brady pointed out earlier,
and especially how we adjust for inflation and how we measure
poverty. However, it is quite clear to me the faulty
measurement does not likely account for these trends.
My second point: Between 2007 and 2008 the beginning of the
current recession did cause real income to fall and poverty to
rise. We have heard about a lot of those numbers already. The
data do show that some groups, like Hispanics and Asians in
some regions of the country, like the Midwest, were harder hit
than others. I am most struck by the fact that the
deterioration we have seen is very widespread and affects
virtually all regions and all demographic groups.
Point number three: The worst is yet to come. Even if the
recession officially ends this year, meaning that the
production of goods and services and the economy begins to
recover, the unemployment rate will continue to worsen for the
rest of this year and into next year. That is because
employment is a lagging indicator, with employers creating new
jobs and hiring more workers only after they are confident of a
strong recovery and product demand that cannot be met by their
current workers and by the current inventories.
So real incomes will continue to fall and poverty will
continue to rise certainly for 1 more year and maybe for a few
more and almost certainly by more than we have witnessed so far
between 2007-2008. In fact, I would predict that the biggest
increases in poverty declines and income will occur during the
next year, and it will likely take several years beyond 2010
before real income and poverty fully recover from the effects
of this downturn.
Therefore, my fourth point is on policy: I think, in light
of all these facts, economic policy over the next few years
must focus both on the severe near-term impacts of the current
recession and on the longer-term stagnation in the incomes of
low- and middle-income Americans, with the greatest attention
paid to those most vulnerable.
So how might we accomplish these twin policy goals? Over
the next 2 years, I think we need to continue to focus on the
downturn and ensure that workers who cannot find employment due
to no fault of their own face an adequate safety net. That
means that unemployment insurance will need to be extended
beyond the provisions of this year's recovery legislation.
For low-income and part-time workers who are still
ineligible for unemployment insurance--and there are a lot of
them--other forms of cash assistance and food stamps and
perhaps even community service jobs will need to be provided;
and the states facing severe fiscal crises may need some
additional assistance, as well, beyond what appeared in ARRA.
But we must also begin to implement policies that address
the longer-term stagnation in the incomes of American workers
and their families. When the economy and the labor market do
begin to recover, jobs will be created that require more skills
than most Americans currently have, and that is true even in
positions that don't necessarily require a 4-year college
degree, more in the middle of the skill distribution.
Therefore, we need to invest more effectively in the education
and the training of all of our workers through everything from
high-quality prekindergarten programs, K through 12, into
higher education and job training for disadvantaged youth and
adults.
There are other approaches besides education and training
that also might help, such as higher minimum wages and more
collective bargaining, and these policy tools might be employed
as well.
There will continue to be hard-to-employ, poor people whose
skills and wages might not improve over time. For them, we need
to create stronger incentives to work and supports when they do
work, even at low wages. And, of course, I will say, echoing
the previous speaker, that health insurance reform must remain
a top priority, not only to ensure coverage for millions of
families who now lack such protection or who might lose it, but
to ensure that growing medical costs do not continue to absorb
the earnings growth of increasingly productive American
workers.
I will be happy to elaborate more on these points during
the discussion period that follows.
Thank you very much.
[The prepared statement of Harry Holzer appears in the
Submissions for the Record on page 78.]
Chair Maloney. Mr. Miller.
STATEMENT OF THOMAS P. MILLER, RESIDENT FELLOW, AMERICAN
ENTERPRISE INSTITUTE
Mr. Miller. Thank you, Chairwoman Maloney, Congressman
Brady, and all the members of the Joint Economic Committee. It
is a pleasure and honor to be appearing before this body on the
other side of the table as a witness on this important issue
after previously serving on the committee staff for 3 years
earlier this decade.
I didn't go into witness protection, though. I am currently
a Resident Fellow at the American Enterprise Institute and
quite visible on that front, I think.
To very briefly update my prepared testimony in light of
this morning's release of the CPS supplement relating to health
insurance coverage, we have already heard most of the
statistical highlights. My takeaway points are: there is no
noticeable, substantially significant trend that is a change
from the past, and the deepest effects of the 2009 impact of
the recession have not been fully captured in what, after all,
are last year's data.
We may continue to avoid the worst that some imagine, but
repairing the economy and restoring vigorous economic growth is
job number one. However, we certainly also need to reform our
overall health care system and particularly its many misaligned
incentives to encourage improved value in health care services,
enhanced information that is relevant and actionable, and
better decision-making by all parties, including health care
consumers.
We should and can redirect existing subsidies in a more
targeted manner to assist better the most vulnerable members of
the population, but the supply of resources for transfer
payments is exhaustible. If everyone believes that someone else
is paying most of their health care bills, those health costs
will grow even higher in the future while we run out of
imaginary dollars to shuffle back and forth.
More actors in the system need to be able to find out what
services and products and political promises actually are worth
what they are said to be and determine what they, rather than
someone else, would be willing to pay for them.
Now, turning to a few summary highlights of my prepared
testimony, our various efforts to measure dimensions of the
problems of the uninsured help to some degree, but they do
remain inexact and less precise than sometimes assumed. Various
sources of information, including the CPS, tell parts of a
rather complex story with a number of subnarratives.
For example, I think I have heard some confusion here in
describing what the CPS actually measures. It is right on the
box on the opening page, which says, This is measuring, most of
the time, a moment in time at which people are uninsured,
rather than what was once assumed, measuring people being
uninsured for the entire year.
They have been saying this for the last couple of years.
Sometimes it doesn't get through. There are other surveys which
give a more nuanced, elongated cross-sectional measure as to
exactly how long someone has been uninsured.
The portion of the total number of uninsured on which we
most need to focus are indeed the long-term, more chronically
uninsured. That is a big enough problem as it is. The costs of
health care are intertwined with the affordability of health
insurance, and reforming the delivery system, as well as
lessening the demands we place upon it, would deliver the most
return on our investments in true reform.
I am not here to buy or sell, or cheerlead for or against
any particular proposals on Capitol Hill today, unless you ask
me to. However, some diversionary factoids of the uninsured
debate need to be placed in perspective. The magnitude of
alleged cost-shifting, for example, from the uninsured's
receipt of uncompensated care to the premium costs of the
privately insured has been overstated. So, too, is the relative
burden of the uninsured imposed on our emergency care services.
We do need to fix a more limited problem of lack of
coverage for the medically uninsurable, preferably with more
transparent, targeted subsidies that cap maximum out-of-pocket
exposure to high-cost medical conditions and with additional
protections for those maintaining continued insurance coverage.
Again, the magnitude of that significant problem has been
overstated as well.
Although some would see underinsurance spreading throughout
the majority of our current private health insurance policies,
that perception does not square with the actual percentage of
the U.S. health care spending dollar that continues to be paid
through third parties rather than patients themselves.
We certainly can and must do better, but the most important
changes will begin with improving how health care is delivered
and how our personal health is maintained and improved.
Thank you.
[The prepared statement of Thomas P. Miller appears in the
Submissions for the Record on page 80.]
Chair Maloney. Thank you very, very much.
I thank all of the panelists. I will begin the questioning
first with Dr. Davis.
As you pointed out in your testimony, we have achieved
almost universal coverage in medical care for elderly Americans
through Medicare, and we are making tremendous progress toward
ensuring all of our Nation's children. Why do you think there
is such resistance to providing universal coverage for everyone
else?
Don't working Americans that are struggling every day to
make ends meet, don't they deserve health coverage too? Why is
there such resistance, do you think?
Dr. Davis. It is shortsighted. There are health and
economic costs of having people who are uninsured. If workers
are uninsured, they are more likely to go without prescription
drugs, for example, to control the chronic conditions, more
likely to have complications of those conditions, whether it is
a stroke from hypertension, amputation from diabetes; and as a
result, they are going to become disabled and unable to work
or, unfortunately, die prematurely as a result of being unable
to get the care that they need. It is obviously an economic
problem for the families themselves.
We find that there are 72 million adults, ages 18 to 64,
who have difficulty paying medical bills or have accumulated
medical debt. We ask about what are some of the consequences of
that. They use up all of their savings, they take out credit
card debt. They even take out home loans. They forgo other
basic necessities to pay medical bills.
So these are serious economic problems for households and
they are serious economic consequences for businesses and for
the Nation as a whole.
As I said in my testimony, the Council of Economic Advisers
estimates that we lose half of 1 percent of the gross domestic
product because of this problem in our Nation.
Chair Maloney. Thank you very much.
Dr. Holzer, of all the troubling information in this new
report, the one that troubles me the most is the continuing
growing gap between the haves and the have-nots. How can we
reverse this trend of increasing inequality in our Nation?
Dr. Holzer. I think since there are a variety of factors
that contributed to that growing inequality, it will require a
variety of policy responses.
I think it is very important, as some of the previous
speakers suggested, to start with education and training and to
invest more and more effectively, the entire range of
education, starting with pre-K, going all the way up to higher
education, and to give more middle-income Americans low-income
Americans access to higher education.
But I think there are other things going on besides that.
The economic outcomes we see in the job market are a function
both of labor market trends and labor market institutions.
Labor market institutions, like the minimum wage and collective
bargaining, which historically have protected the lowest income
Americans from the most severe effects of the markets, I think
we have allowed those institutions to weaken too much over
time. So I think we could do more on that front to bolster
their protective effects.
Again, for those people who will face low wages no matter
what they do, I think more income supports like expansions of
the earned income tax credit, child care, transportation
assistance and, of course, health care coverage, all those
things would help to narrow the gap.
Finally, a lot of the growth and inequality has really
occurred at the very, very, very top end of the income
distribution, the top 1 percent, the top one-tenth of 1
percent. Of course, as Dr. Blank said before, some of that
reflected the financial market bubble that has burst. I still
sense those people are going to do very, very well for
themselves even after that bubble is burst. There, I think
there are financial market regulations to make compensation
more effective in that sector, and returning to a more
progressive tax structure. I think all of those things would
start to address the problem you have just laid out for us.
Chair Maloney. Great answer, the best answer I have ever
heard. I ask this to every official that comes before this
committee and the Financial Services Committee. Great answer.
Families never recovered from the last recession before
they got hit by the current downfall, did they? Is that true,
they never had an opportunity to recover, and they were hit and
really lost a decade of growth and opportunity?
Dr. Holzer. That is correct. Again, one can quibble with
exactly the right way to measure this. Some people believe--I
believe--that our measures of inflation that we used to adjust
over time might be a little overstated, so if you adjusted for
that, maybe they got back to the level they were at in 2000.
But as I emphasized before, we have had nearly 20 percent
productivity growth over the 7-year period preceding the
downturn. That is fairly stunning, almost unprecedented in
productivity growth, and for none of that to show up in the
median incomes of American families is truly a stunning
development.
Again, I think there is no one reason for why that
occurred. But what we can say is, policy did nothing to help.
In some ways, tax policy made things worse. And I think
starting to make sure that when we have a prosperous economy
that is more widely shared really does need to be a top
priority for economic policy.
Chair Maloney. I think the point in your testimony that
even during the affluent years we didn't share the prosperity,
we grew the disparity, is a really stunning report.
My time has expired, and I recognize my colleague, my good
friend on the other side of the aisle, Mr. Brady.
Representative Brady. Thank you, Madam Chairman.
First, congratulations, Dr. Holzer, for being the best
answer ever from the Chair. Put that in your resume starting
right now.
Mr. Miller, what happened? The rate of children without
health care coverage actually declined in 2008. When was the
last time it was this slow?
Mr. Miller. I don't know that historically. What we have
essentially proven is that we can insure the cheapest people to
insure and have public coverage crowd out private coverage.
That has some benefits to it in terms of covering more
children, but those resources did not go to necessarily the
place where people were most in need of health insurance and
additional health care.
Representative Brady. I think one of the reasons the
American public is now adamantly opposed to the new government-
run plan is the deficit. Huge numbers, according to CBO, on top
of Medicare's bankruptcy and the military, appropriately, plus
all the huge deficits we are running today.
Do you agree with the CBO's appraisal that the Democrat
health proposal would add hundreds of billions of dollars of
Federal spending over the next decade?
Mr. Miller. Well, it is clear from the earlier CBO analysis
that the proposals have not bent the cost curve down; they have
turned it back up. And what is more disturbing--and there was
just a report yesterday by way of the Petersen Foundation, done
by the Lewin folks, which says you should not look at just the
teaser rate.
Remember, this urgent crisis, we don't really do anything
for 4 years, it is so important. Of course, there are a lot of
bureaucrats to hire and regulations to write. So the cost of
that first 10 years is really for 6 years of a phase-in period.
And then, when you look beyond that period of time, as CBO
pointed out as well, when you have those future costs growing
again at a rate much more above the rate of the resources to
support them, you are making the problem worse rather than
better.
The early years will be tough enough, but the outyears will
really kill us, all at a time where we are double counting what
we say we are saving in Medicare to help Medicare
beneficiaries, but actually we are spending it twice to also
pay for this expansion. It is creative accounting. It makes a
good speech, but double-entry bookkeeping still is done by some
people.
Representative Brady. It does look like an adjustable rate
mortgage or one of those zero interest credit card rates. The
question is never, Can you afford the first payments? Can you
afford them once it gets cranked up? And I think that is the
public's concern as well.
A lot of people look at the maze of bureaucracy, 31 new
Federal agencies, commissions and mandates in this bill. They
worry that the bureaucracy imposed by this health plan will
interfere between them and their doctors as they make
decisions. Your view?
Mr. Miller. Well, that is probably why we need the first 4
years to fill all those boxes. It is going to take a while to
staff it up.
Actually, beyond just the structure, what you always have
to realize in legislation on Capitol Hill is--and I have worked
on it--there are broad pieces of language which empower much
more beyond that. All the regulations that fill in those
details, the broad grants of discretionary authority to the
health choices commissioner--interesting Orwellian title, but
we can mean different things by that. Because you can do
something and aren't prohibited from doing it, you have got a
lot of time on your hands to make sure that you can get things
just right when they didn't work the first couple of years.
So it is the empowerment of the multiple stages of later,
follow-on regulation; just one more detail because we couldn't
quite get it in legislative language, but we know eventually
you folks--the round pegs--will fit into that square hole.
Representative Brady. Rationing is a concern by a lot of
people, one they have seen occur in other government-run plans
around the world. They see it in the veterans' care today,
where we have very long wait lines, very slow processing,
especially disability cases, and even cut some veterans off.
You see it in Medicare today, although it is a little more
hidden then. You see it in rationing of physician
reimbursements, for example.
Your thoughts about, will this new health care plan
ultimately lead to rationing as the government in future years
just doesn't have enough money to cover all these demands?
Because we already know from Medicare and others this has
occurred already. Your thoughts.
Mr. Miller. We can always do one thing and sacrifice other
things and then you make those type of choices, but they tend
to be someone else's choices rather than yours.
The real reaction to rationing is not the reality that
resources are limited and you can't have everything, but it is
who is going to make those choices. The rationing word really
applies to more arbitrary, distant decisions that don't pay
attention to what your needs and your preferences are, your
conversation with those who are treating you, how do you use
your family resources, as opposed to what seems to be a
standardized pattern of, ``Well, this works for most of the
folks in the average population; fall into line.''
So it is that resistance, not to the economic realities
that the sky is not unlimited, but to distant, arbitrary,
third-party decisions on what is the most vital set of
decisions in everyone's personal life that is what is
terrifying some Americans and certainly raising legitimate
concerns among many more.
Representative Brady. Do we have real competition in the
health care insurance today?
Mr. Miller. We could do better. We have a large number of
insurance companies. And we can play games. I used to work in
antitrust law. It is all how you define the market. You can
make something look like a monopoly or look like it is
perfectly competitive, depending on who is drawing the boxes.
There are ways to have more competition in health
insurance. Part of it is thinking about reducing barriers to
entry for more competitors, rather than creating one large
competitor that gets to set its own prices and determinations.
That is different from empowering other insurance companies or
other ways to deliver care, such as through interstate
purchasing.
But there are other ways as well to have more buyers and
sellers than have the alternative of thinking a muscular public
plan will be benign in its later years after it promises low
prices at the start.
Representative Brady. Madam Chairman, I went over time,
and, like you, want to see health care reformed, just have some
differences in how to get there. Thanks.
Chair Maloney. I want to thank my colleague.
But I would like to ask Dr. Davis and Dr. Holzer to respond
to Mr. Miller's comments on rationing and who makes the
decision. Under the Democratic plan, the doctors and the
patients are making these decisions, but I would like to hear
your response if you would so wish.
Dr. Davis. Absolutely.
There is no provision that would ration care under health
reform. In fact, if we look at the Medicare program, the
surveys that we have done of Medicare beneficiaries, a rate
that it is much easier for them to get access to care.
And for people under age 65, they are much more satisfied
with their care. They have a greater choice of physician. It is
easier to get an appointment. I think we have got a long
experience about access to care.
On the point about competition in the insurance market, in
all but three states in this country, two insurance companies
cover 50 percent of the enrollment or more. Mr. Miller said he
has worked in antitrust. When I studied antitrust economics,
our rule of thumb was if four firms control more than 50
percent of the market, you don't have a competitive market. We
have two insurance companies controlling the market in all but
three states.
And then the final point that I would like to make in
response to Mr. Miller's comments is just a technical point
about the definition of the uninsured in the report. What the
census says is that people were considered uninsured if at
any--if they were uninsured for the entire year. If they were
covered by any type of health insurance at any point during the
year, they were considered to be insured.
So these are not point-in-time estimates, and it is a
problem with the recession, that if you had coverage in early
2008, lost your job and were uninsured at the end of 2008, you
were not counted in these uninsured numbers because you had to
have been without health insurance for the entire year to be
counted as uninsured.
Chair Maloney. Thank you.
Dr. Holzer.
Dr. Holzer. Well, I want to be very careful in answering
this because I think both of my colleagues here have much more
expertise in health care. So I will tread very softly. I will
just make a couple of quick comments.
Mr. Miller suggested that this proposal will not bend the
cost curve down; it will bend it up. I think that is
inaccurate. I think the right way to think about this is that
again we do spend over $2 trillion a year right now. If we
believe that an extra $90 billion would be spent every year
covering the uninsured, that is an increase, that is a one-time
permanent increase of about 4 percent. That would raise the
whole curve up by 4 percent. But then if you do manage to
restrain the growth in health care spending over time, let us
say somehow we were very successful and brought that down by 1
percent a year, then after 4 years you have already offset the
growth in costs associated with higher coverage, and then
beyond that you are reducing that cost, not raising it. So I
think we have to be careful to throw those allegations around.
Another thing is when one talks about the CBO estimates,
quite frankly our entire profession sometimes needs to be a
little more humble in some of the estimates it puts out there.
And I would say this regardless of who is in charge of CBO.
There is a lot of uncertainty about those estimates.
Now, Jon Gabel of NORC, the National Opinion Research
Center, had a piece in The New York Times a week or two ago
saying that there is a long history of CBO understating cost
savings in Medicare associated with policy changes. And, you
know, the errors--if the errors bounce around, sometimes they
are bigger, sometimes they are smaller, then they net out. But
what we are saying is CBO has consistently underestimated. And
it is very hard. Look, it is not a big criticism of CBO. It is
very hard to know what a lot of these savings, the exact
magnitude they will generate. And I don't think the CBO model
is really in a position to cost out a lot of potential
reductions. So some of the CBO projections are a little bit
disturbing, but I think we need to be careful and not put too
much weight on those as we discuss the possible savings.
Mr. Miller. If I may, I will be very brief.
Chair Maloney. Sure.
Mr. Miller. The issue of the antitrust analysis is the
local market, not the state. Some antitrust people have
actually written about this in Health Affairs, Bill Kovacic,
David Hyman. It is a game. The big box of the state is not
relevant to what is going on in the local markets.
The language in the current CPS survey, I want to quote it
directly, no interpretation whatsoever: This ``estimate in the
number of people without health insurance more closely
approximates the number of people who were uninsured at a
specific point in time during the year than the number of year
of people insured for the entire year.''
That is not my language. That is written in the report by
the authors.
Finally, Jon Gabel had a very truncated analysis of CBO's
performance. It bounced all over the lot, and they have gone in
the other direction in other evaluations as well. I can find
plenty of other folks who will tell you these costs are going
up and we haven't yet made a serious effort to actually change
what is the trajectory of what is projected. We are actually
aggravating the problem rather than making it better.
Chair Maloney. I want to thank all of you. I wish every
Member of Congress had not been in another meeting and was able
to hear your testimony today. But I would like, Dr. Davis, for
you to put in writing for the committee, because I would like
to circulate it to my colleagues, your statement that every
state in the Union, save three, have only two insurance
companies controlling more than 50% of the market, therefore
there is not adequate competition. I think that is astonishing.
In any event, I know that many of you worked very hard to
get here and came long distances. I want to thank you for being
here. I want to thank you for your service to this committee
and to your universities, to government, to the private sector,
all the things you have done with your distinguished careers,
and for really talking about this very important indicator of
family well-being. This committee will continue to focus on
improving the standard of living of Americans. Your testimony
has been incredibly valuable. Thank you so much for being here.
The hearing is adjourned.
[Whereupon, at 3:06 p.m., the committee was adjourned.]
SUBMISSIONS FOR THE RECORD
Prepared Statement of Carolyn Maloney, Chair, Joint Economic Committee
I want to thank our witnesses for joining us today to discuss the
2008 official government statistics on income, poverty, and health
insurance coverage that were released this morning by the Commerce
Department's Census Bureau. These are among the most important
indicators of family well-being, and the picture from 2000 to 2008 is
rather grim.
Between 2000 and 2008, median household income fell by nearly
$2,200, the number of Americans living in poverty grew by 8.2 million,
and nearly 8 million people joined the ranks of the uninsured.
American families have lost a decade due the failed economic
policies of the Bush administration.
Nearly one year ago, this committee held a hearing at the request
of the late Sen. Edward Kennedy on poverty in America. Sen. Kennedy
devoted his career to being a strong and vocal champion for the poor.
Although we have lost the beloved liberal lion of the Senate, his dream
lives on in us and we will continue his work on behalf of the less
fortunate.
The economic fortunes of most Americans tend to rise and fall with
the strength of the economy. During the economic expansion of the
Clinton era, when unemployment hovered at around 4 percent, poverty
fell to 11.3 percent, its lowest level in decades.
However, the weak economic recovery of the 2000s under the previous
Administration did not lead to a further reduction in poverty, which
now stands almost two full percentage points above its 2000 level.
Today in the United States, one out of every 8 people--almost 40
million--lives in poverty. The majority of people living in poverty are
among the working poor. Worse still, 19 percent of our children, or
almost one in five, now lives in poverty.
Median household income fell to $50,303, the lowest level since
1997, which means that the typical American family actually lost
economic ground during the last recovery. Our economy may have grown,
but those gains did not trickle down to the vast majority of families
and the chasm between the ``haves'' and the ``have nots'' grew larger.
Too many jobs do not pay enough or lack the benefits to ensure
families can make ends meet.
Over one quarter of U.S. jobs pay low wages and do not provide
health insurance or a retirement plan, according to the Center for
Economic and Policy Research.
Today's data on health insurance coverage are a sobering reminder
of the impact of our broken system on American families. 46.3 million
Americans are uninsured, a figure that rose 20.6 percent between 2000
and 2008. Nearly one in ten children are growing up without health
insurance, and over 30 percent of Hispanics lack coverage.
The share of Americans with private health insurance eroded
precipitously over the eight years of the Bush Administration, as the
cost of providing employer-based coverage crept steadily upwards.
Insurance premiums charged to employers increased by more than 100
percent between 2000 and 2008. The 2008 data reflect the first year of
the Bush recession, but the legacy of his Administration's failed
economic policies has continued to wreak havoc on families.
Recent estimates suggest that continued increases in the
unemployment rate between January 2009 and August 2009 mean that over 2
million more Americans have joined the ranks of the uninsured so far
this year.
The time for comprehensive health insurance reform is now. As the
data show, our nation's families simply cannot afford to wait any
longer.
America's Affordable Health Choices Act (H.R. 3200) includes
provisions that will stop the rise in uninsured Americans by making
affordable, comprehensive coverage available to all citizens.
The bill includes subsidies for low- and moderate-income families
to purchase health insurance coverage, as well as a well-designed
health insurance exchange.
Within that health insurance exchange, Americans will have the
option of choosing between private insurers or choosing a public
option.
The inclusion of a public option is key to promoting competition
and bringing down costs--and competition and cost-control is key to
reversing the distressing trends in un-insurance that we have seen year
after year in the Census data.
I look forward to the testimony of our witnesses.
__________
Prepared Statement of Representative Elijah E. Cummings
Thank you, Madam Chair:
Today's Census Bureau report is a stark reminder of the economic
inequalities that continue to permeate our society.
While the current recession has been ``equal opportunity''--
impacting almost every sector of the economy and crossing racial and
geographic boundaries--it has also widened the growing gap between
society's ``haves'' and ``have-nots.''
The inequalities that persist are disappointing, disheartening, and
given the policies pursued by the previous administration, foreseeable.
Eight years of blind adherence to deregulation and supply-side
policies resulted in reduced income for African-Americans and
Hispanics, continuing gender pay inequality, and an increasing number
of children born into poverty.
As my colleagues know, I have never been one to mince words, and
today is no exception. I remain outraged at the outlook facing so many
American children.
According to the Anne E. Casey Foundation, between 1994 and 2000,
the child poverty rate fell by 30 percent. This was the largest
decrease in child poverty since the 1960s.
Key children's health indicators improved across every major racial
group, and in nearly all of the states. Since 2000, however, child
poverty has increased so that roughly 2.5 million more children lived
in poverty in 2008 than in 2000. That is 2.5 million children who have
been left behind in the wealthiest nation in the world.
In my home state of Maryland, approximately 133,000 children live
below the poverty line. Another 209,000 live at 125% of poverty.
Through no fault of their own, these children find themselves
questioning when, or if, the next meal is coming.
A young man from Maryland named Deamonte Driver is a tragic example
of how vulnerable our children are.
In 2007, Deamonte needed an $80 tooth extraction to fix a painful
abscess. Without access to dental treatment, the abscess went
untreated, and predictably, became infected.
The infection spread to his brain and ultimately took a 12 year old
from us. Deamonte died because he could not get $80 worth of treatment.
143 million Americans find themselves without dental coverage. And
while every one of them is at risk of serious health problems, again
the most defenseless and vulnerable are our nation's children and young
adults.
To that end, I appealed to my colleagues in Congress to guarantee
that dental coverage was included in the recent state Children's Health
Insurance Program. I am pleased that this legislation was included in
the S-CHIP bill that President Obama signed into law.
I know that today's report does not measure the impact of S-CHIP,
the Stimulus, and other actions taken to assist the families who are
most in need in our country.
However, the report does underscore and reinforce the need for and
timeliness of these actions.
Not only is poverty increasing, but state and local governments
cannot bear the brunt of the crisis, and the public resources upon
which the working class depend are becoming scarce.
As we saw earlier this summer, 18 states have been forced to borrow
over $12 billion from the federal government to maintain their
unemployment funds.
Further, the essential Temporary Assistance to Needy Families has
become increasingly unavailable under the weight of continuing economic
turmoil.
Despite this dismal outlook, we are seeing signs of hope--
unemployment has held relatively steady over the last few months, and
the Labor Department announced this morning that initial jobless claims
were fewer than expected.
However, today's report reminds us why continued decisive action by
the Congress is required, as well as a commitment to understanding the
real impact of past policies on those who are most at risk.
So, I look forward to the testimony of all our witnesses today and
a productive discussion--the stakes for our families have never been
higher.
With that, I yield back.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Prepared Statement of Joseph Stiglitz
The report on Income, Poverty, and Health Insurance Coverage in the
United States: 2008 results are not surprising--these dismal results
reflect the reality facing a majority of American families. The country
began the downturn in a situation where families had not fully
recovered from the last recession--median household income in 2007
adjusted for inflation was still lower than it was in 1999 and 2000.
The precipitous 3.6% drop this year has dramatically compounded these
problems, resulting in a total decline of real income for the typical
family of $2,200 over the past eight years. All the gains to the
economy have gone to the people at the top. At the bottom, matters are
even worse, as 8.2 million joined the ranks of those in poverty, a more
than 26% increase. But even these numbers do not reflect fully the
strains on the average American family: there are almost 8 million
people without health insurance.
These results--like the crisis itself--are not just simply
something that happened to the United States, an accident beyond our
control. They are the result of misguided policies. They reemphasize
the point that growth in GDP is an inadequate measure of economic
performance. These results highlight the importance of the work of the
International Commission on the Measurement of Economic Performance and
Social Progress, which I chair and which will issue its report next
Monday, September 14.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Prepared Statement of Harry J. Holzer, Professor of Public Policy,
Georgetown University and Institute Fellow, Urban Institute \1\
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\1\ The views expressed are those of the author and should not be
attributed to any institution.
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Thank you for giving me the opportunity to speak before you this
afternoon about the income and poverty numbers for 2008 that were
released this morning by the Census Bureau.
We now know that the years 2000-2007 represented a complete
business cycle, and comparing 2000 and 2007 enables us to infer the
secular trend that the nation experienced for most of the current
decade. And the differences between 2007 and 2008 represent only the
beginning of the most serious economic downturn since the 1930s.
While there is a great deal to discuss in a short period of time, I
would like to emphasize the following four points:
(1) The numbers for the period 2000-07 are quite disturbing--
real median income failed to rise over this entire period,
while poverty did rise. Indeed, the poverty rate rose
substantially (by about 2 percentage points) for certain
groups, like children and African Americans. Moreover, these
trends occurred while the nation's productivity rose by nearly
20 percent. Thus, both low- and middle-income American families
largely failed to share in the economic prosperity generated
during this period.
Of course, there are important questions about how these
numbers are measured, and especially how we adjust for
inflation and health care costs over time. But faulty
measurement likely does not account for most of these findings.
(2) Between 2007 and 2008, the beginning of the current
recession caused real income to fall and poverty to rise. The
data show that some groups (like Hispanics and Asians) and some
regions of the United States (like the Midwest) were harder hit
than others. But it is also noteworthy that the deterioration
we see so far has been very widespread, affecting most
demographic groups and regions.
(3) The worst is yet to come. Even if the recession officially
ends this year--meaning that the production of goods and
services in the economy begins to recover--the unemployment
rate will likely continue to worsen for the rest of this year
and into next year. This is because employment is a ``lagging
indicator,'' with employers creating new jobs and hiring more
workers only after they are confident of a strong recovery in
product demand that cannot be met from their current
inventories and current workers. Real income, therefore, will
continue to fall and poverty will continue to rise for a few
more years--and almost certainly by much more than what we have
witnessed between 2007 and 2008. It will likely take several
years beyond 2010 before real income and poverty fully recover
from the effects of the downturn (that is, return to 2007
levels).
(4) Economic policy over the next few years must focus both on
the severe near-term impacts of the current recession and on
the longer-term stagnation experienced by low- to middle-income
Americans, with the greatest attention paid to those who are
most vulnerable.
How might we accomplish these policy goals? Over the next few
years, we must ensure that those who cannot find work due to no fault
of their own, and their families, are protected by an adequate safety
net. Unemployment insurance (UI) will need to be extended beyond the
provisions in this year's recovery legislation. For low-income and
part-time workers ineligible for UI, other forms of cash assistance or
food stamps and perhaps community-service jobs will need to be
provided. States facing severe fiscal crises may need some additional
assistance as well.
But we must also begin to implement policies that address the
longer-term stagnation in the incomes of American workers and their
families. When the economy and the labor market do begin to recover,
jobs will be created that require more skills than many Americans
currently have--even in positions that do not require four-year college
degrees. Therefore, we need to invest more effectively in the education
and training of our workers through everything from pre-kindergarten
programs to higher education and job training for disadvantaged youth
and adults. Other approaches to earnings enhancement, such as higher
minimum wages and more collective bargaining, might be encouraged as
well.
For the hard-to-employ poor whose skills and wages might not
improve over time, we need to create stronger incentives and supports
for them to work in greater numbers, even at low wages. And health
insurance reform must remain a top priority--to ensure coverage for the
millions of families who now lack such protection or might lose it, and
to ensure that growing medical costs do not continue to absorb the
earnings growth of productive American workers.
I will be happy to elaborate more on these points during the
discussion period to follow.
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