Benefit Bulletin: July 2018

Benefit Bulletin: July 2018

"Official" Poverty Measure Undercounts The Number Of Older Americans Living In Poverty
By Arthur Cooper, Board Chairman

An alternate measure of inflation, the Supplemental Poverty Measure, indicates that the number of older adults who are living in poverty is larger than what the “official” poverty measure reports, according to a recent analysis from the non-partisan Kaiser Family Foundation.  The way in which the government measures poverty is important because eligibility for critical low–income programs such as Medicaid, food stamps, and rental subsidies is determined by income, and tied to the “official” U.S. poverty measure.  A greater number of needy people would qualify for safety-net programs like Medicaid, if the government were to use the more accurate Supplemental Poverty Measure to determine eligibility.

Millions of people, age 65 and older, have very limited incomes, and minimal savings.  In 2016, half of all Medicare beneficiaries had incomes less than $26,200.  A looming question is whether the official measure still provides an accurate picture of poverty.

Incredibly, to count as poor under the official poverty measure, your income must fall below a threshold, which is based on subsistence level food costs in 1955.  When adopted in 1963, the poverty threshold was defined as three times the “subsistence food budget” for a family of a given size.  Unlike other government measures, like the consumer price index, which undergoes continual changes to methodology, the official poverty measure has never changed, other than annual adjustments for inflation.

The Supplemental Poverty Measure reflects out-of-pocket medical spending and adjusts for the cost of living depending on where you live which are not taken into account by the official poverty measure.  Here are some key findings from the analysis:

  • In 2016, under the Supplemental Poverty Measure 14.5% of adults age 65 and older lived in poverty, compared to 9.3% under the official poverty measure.
  • More than 42.4% of people 65 and older had incomes below 200% of poverty under the Supplemental Poverty Measure, compared to 30.4% under the official measure.
  • Under both measures, the poverty rate increases with age, and was higher for people in relatively poor health.

TSCL believes that the Supplemental Poverty Measure is a more fair and appropriate measure of poverty today.  We encourage you to ask Congressional candidates where they stand on programs to reduce poverty affecting older Americans.


Sources:  “The Supplemental Poverty Measure: 2016,” U.S. Census Bureau, September 2017.  “How Many Seniors Are Living in Poverty? National and State Estimates Under the Official and Supplement Poverty Measures in 2016,” Kaiser Family Foundation, March 2, 2018.