Despite Pandemic, Poverty Declined Thanks To Stimulus Checks

Incomes rose and poverty fell thanks in large part to stimulus payments Congress approved last year, while health insurance levels held steady.

The coronavirus pandemic threw millions of Americans into unemployment last year, leading to the first drop in household income from work since 2011, according to a new report from the U.S. Census Bureau.

But even though the official poverty rate also increased, a supplementary measure that accounts for stimulus payments found that poverty actually fell while incomes rose.

In other words, the public health calamity turned out not to be an economic calamity, or at least less of one, thanks to government programs that provided people with assistance. Government programs that provided people with health insurance probably helped people too, although the evidence on that is a little murkier.

“Despite delays and other issues with how relief was provided, poverty would have been far worse without the unprecedented relief,” said Sharon Parrott, president of the Center on Budget and Policy Priorities.

Not long after the first coronavirus cases had been confirmed in the U.S., Congress enacted the Coronavirus Aid, Relief and Economic Security Act, creating a massive payroll subsidy for small businesses, the largest-ever expansion of unemployment insurance, and an unprecedented $1,200 relief payment for the vast majority of American adults.

The stimulus payments, in particular, had a big effect, boosting incomes by 4% and lifting more than 11 million households above the poverty line, for a 2.6 percentage point decrease in the poverty rate to 9.1%, according to the Census Bureau’s supplemental poverty measure.

The official poverty rate measure, which omits the payments because they were technically tax credits, increased by 1 percentage point to 11.4%, while the median income for households, not counting the payments, ​​declined 2.9% to $67,521.

It wasn’t the first time Congress sent out stimulus payments, but it was the first time lawmakers sent payments even to households that had no incomes at all, meaning the money was especially effective at pushing households above the poverty line.

Congress followed the CARES Act payments with a round of $600 checks in December and then a $1,400 payment earlier this year. The payments proved popular, and Democrats set up recurring monthly checks of as much as $300 per child for most households this year.

Now Democrats are hoping to continue the child payments through 2025, but are facing some opposition from members of their own party. And Sen. Joe Manchin (D-W.Va.), a key vote in the Senate, said Sunday that he doesn’t think households with no work income should be eligible for the payments.

“Don’t you think, if we’re going to help the children, that the people should make some effort?” Manchin said.

Children had higher poverty rates than adults or seniors in 2020, according to both the supplemental and official poverty measures. Experts have said the monthly child payments wold likely reduce child poverty substantially.

No Change In The Uninsured, Probably Because Of Obamacare

For health insurance, the new census report focuses on comparisons between 2020 and 2018, not 2019, in order to provide a more accurate picture of how coverage changed from before the pandemic.

Overall, the proportion of the population without coverage basically stayed the same. It went from 8.5% in 2018 to 8.6% in 2020, a tiny change that’s well within the margin of error.

The result is consistent with other recent studies, including one from the Urban Institute and one from the U.S. Centers for Disease Control and Prevention, that found no significant change in the number of uninsured Americans despite so many people losing insurance because they lost their jobs.

The likeliest explanation for that, scholars have agreed, is the existence of government insurance programs ― in particular, the Affordable Care Act, or “Obamacare,” which has made Medicaid and subsidized private insurance available to many more Americans. Official Medicaid data, from the U.S. Department of Health and Human Services, shows that enrollment increased substantially between early 2020 and early 2021.

But there’s a wrinkle in the census report: It picked up no Medicaid enrollment increase, even though it found a decline in employer-sponsored insurance. One possible explanation is that low-income Americans were less likely to respond, or at least to respond accurately, to questions about health insurance.

Although this is always a problem with survey data, it may have been particularly severe during the pandemic, as the Census Bureau made clear in an accompanying blog post. Among other things, COVID-19 relief measures blocked states from requiring people to reestablish their eligibility for Medicaid, as they frequently do, during the public health emergency. As a result, many people on Medicaid might not realize they still have coverage.

“We know based on actual data from states that Medicaid enrollment is up substantially, so the census survey is very likely an undercount of how many people are covered by Medicaid,” Larry Levitt, executive vice president of the Henry J. Kaiser Family Foundation, told HuffPost. “The census report is based on people self-reporting their health insurance coverage, which is subject to error, and probably particularly so during a turbulent period like this. States have been prohibited from ending Medicaid eligibility for anyone on the program during the pandemic, which may leave some people especially confused.”

A separate finding in the census report offers more reason to think government programs made a difference. As always, the bureau broke down insurance coverage by state, which makes it possible to compare what happened in states that expanded Medicaid eligibility to cover their entire low-income populations, taking advantage of funds the Affordable Care Act made available, and those that have not.

Among nonelderly adults living at or below the poverty line, the uninsured rate basically didn’t change in expansion states. But it went up by 2.6 points in states that didn’t expand.

There are a dozen such states, including Florida, Georgia and Texas, mostly scattered across the South and all under the control of Republican officials.

The dramatic differences in insurance coverage between states that expanded Medicaid and those that did not is nothing new. But the finding has particular relevance today, because a key part of the spending bill President Joe Biden and the Democrats are trying to pass would finance insurance coverage for low-income people living in those states and currently ineligible for Medicaid.