Proposal to Change Poverty Calculations Could Cause 60,000 to Lose Public Benefits in California

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Source: California Health Report

California advocacy groups are decrying a Trump administration proposal to change one of the measurements to determine the federal poverty level, a move that could force tens of thousands of state residents to lose their public benefits over the next decade.

The U.S. Office of Management and Budget has proposed switching calculations for the federal poverty level from the Consumer Price Index for All Urban Consumers to what is known as the Chained Consumer Price Index for All Urban Consumers. The former calculates what a large array of goods cost over the passage of time. The latter is based on how consumer-spending habits change to buy less expensive goods.

The Congressional Budget Office has calculated that over the next decade, prices under the non-chained CPI would rise 27 percent, but only 24.5 percent under the chained CPI.

Advocates say this would have a disproportionate impact on low-income Californians, because they spend a large part of their income on staples such as food and diapers, and they have fewer resources to comparison shop than do more affluent consumers

The UC Berkeley Labor Center has estimated that if the revised inflation index is adopted in 2021, by 2028 60,000 adults and children would be dropped from the Medi-Cal rolls because they would no longer meet the income cutoff. There would also be fewer people eligible for CalFresh, the state’s food stamps program, and many other income-based public programs.

“We think that’s a move in the wrong direction,” said Michael Odeh, director of health policy for Children Now, an Oakland-based organization that advocates for public policies benefiting children. “Fewer kids and their families would be eligible for benefits they need, and we’re troubled by this. We really don’t think this a thoughtful proposal.”

Cary Sanders, senior director of federal policy for the California Pan-Ethnic Health Network, another advocacy group based in Oakland, also blasted the proposal.

“We’re very concerned with the impact this would have on low-income Californians, communities of color, children and rural parts of the state,” Sanders said. She added that one in 10 state residents officially live in poverty, and the numbers who are functionally poor are actually much higher given California’s high cost of living.

According to the First 5 Association of California, which represents the state’s 58 county-level First 5 Commissions, a single-parent household in the state required $66,000 a year to cover basic needs in 2017—more than triple the poverty threshold for that same household.

“Moving the line in the sand labeled ‘poverty’ doesn’t change the reality on the ground for kids,” said Moira Kenney, executive director of First 5 Association, in a statement.

Middle-income Californians would also be impacted by the proposed change, particularly in terms of the premium tax credits they receive to purchase health insurance on the state’s health insurance exchange. The Berkeley Labor Center projects that a family of four earning $80,000 per year would have to pay an additional $300 per year in health insurance premiums under a revised index.

“That’s a big deal. Obviously that will lead to more people becoming uninsured, and more people having to pay more out of pocket for their insurance,” said Anthony Wright, executive director of Health Access California, which advocates for expanding insurance coverage for the state’s residents. “It takes us in the wrong direction.”

Although the federal Office of Management and Budget received more than 2,200 comments on the proposed changes, they have not yet been publicly posted.

Last Updated 07/10/2019

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