Trump Admin finds easy way to reduce poverty: Just claim that fewer people are poor!



In the far simpler days of 2001, when the President of the United States didn't suck up to genocidal dictators and thank Russia for helping him win the Electoral College, an episode of The West Wing aired entitled "The Indians in the Lobby".

I was instantly reminded of the scene above* (in reverse) when I read this story by Justin Sink at Bloomberg News:

The Trump administration may alter the way it determines the national poverty threshold, putting Americans living on the margins at risk of losing access to welfare programs.

The possible move would involve changing how inflation is calculated in the “official poverty measure,” the White House Office of Management and Budget said in a regulatory filing on Monday. The formula has been used for decades to determine whether people qualify for certain federal programs and benefits.

The measure, first set in the 1960s, is calculated at three times the cost of a minimum food diet and adjusted every year as prices rise. In 2018, a family of four making no more than $25,900 was considered impoverished. The figure determines eligibility for a wide swath of federal, state, and non-profit programs, including Medicaid and food stamps.

Not just traditional Medicaid either, by the way: The poverty level also determines eligibility for ACA Medicaid expansion (138% FPL), Advance Premium Tax Credits (100 - 400% FPL) and Cost Sharing Reductions (100 - 250% FPL). If you reduce the FPL dollar amount, you reduce the number of people eligible for all three of these things.

By changing the index the government uses to calculate how much the cost of living rises or falls, the poverty level could rise at a slower rate.

One proposal the Office of Management and Budget suggested in the filing is to shift to so-called chained CPI, which regularly shows a slower pace of price gains than traditional measures. Chained CPI shows slower inflation growth because it assumes consumers will substitute less expensive items when prices for specific individual goods increase significantly.

As the West Wing clip above notes, the current FPL formula probably is due for an update...but not by utilizing chained CPI. The problem with using chained CPI when it comes to healthcare expenses, for instance, is that healthcare costs increase at a faster rate than the CPI...which means as time goes on, ACA subsidies would cover a smaller and smaller percentage of premiums, deductibles and so forth.

*(as an aside: I was a bit confused by the West Wing dialogue claiming that 100% FPL equalled $17,500, since it's only up to $12,490 today...until I realized that Sam was referring to a family of four, not an individual).