Fewer Americans are living in poverty but, for the first time in years, more of them lack health insurance.
About 27.5 million people, or 8.5% of the population, lacked health insurance for all of 2018, up from 7.9% the year before, the Census Bureau reported Tuesday. It was the first increase since the Affordable Care Act passed in 2010, and experts said it was at least partly the result of the Trump administration’s efforts to undermine that law.
The growth in the ranks of the uninsured was particularly striking because the economy was doing well. The same report showed the share of Americans living in poverty fell to 11.8%, the lowest level since 2001. Median household income was $63,200, essentially unchanged from a year earlier after adjusting for inflation but significantly above where it was during the Great Recession.
“In a period of continued economic growth, continued job growth, you would certainly hope that you wouldn’t be going backwards when it comes to insurance coverage,” said Sharon Parrott, senior vice president at the liberal Center on Budget and Policy Priorities.
Surveys consistently show that health care is one of the top concerns for voters heading into the 2020 election. And Democratic candidates, several of whom have promised to extend health insurance to all Americans, are sure to use Tuesday’s figures as evidence that the current system is not working.
The declines in health insurance coverage reverse improvements since the passage of the Affordable Care Act, which established new insurance markets and financial assistance for millions of Americans who had previously struggled to obtain coverage.
There was also good news in the Census Bureau report for the White House. The decadelong recovery is at last delivering income gains to middle-class and low-income families. After decades of rising inequality, recent wage gains have been strongest for people at the bottom of the earnings ladder, said Michael R. Strain, an economist at the conservative American Enterprise Institute.
“You’re seeing improvements in employment outcomes for people with disabilities. You’re seeing improvements in employment outcomes for the formerly incarcerated,” Strain said. “These workers who are potentially more vulnerable, you’re seeing the recovery reach them.”
Democrats, however, are likely to highlight evidence that income gains have slowed since President Barack Obama’s final years in office. Median income grew 5.1% in 2015 and 3.1% in 2016, compared to less than 1% last year.
And while Tuesday’s report showed the benefits of what now ranks as the longest economic expansion on record, it also highlighted the limitations of that growth. Median household income is only modestly higher now than when the recession began in late 2007 and is essentially unchanged since the dot-com bubble burst in 2000.
David Howell, a professor of economics and public policy at the New School in New York, said economic growth in recent years has helped families recover from recession but done little to reverse the longer-run stagnation in middle-class incomes. Democrats and Republicans alike, he said, have tapped into the sense among many voters that the economy is not working for them.
“If you look at the long-run trajectory from 1979, it’s pretty disastrous,” Howell said.
The drop in insurance coverage in 2018 is relatively small compared to the long-term trend, but it suggests that policy changes under the Trump administration, which has been hostile to the health law, have made a difference.
The administration also cut back on advertising and enrollment assistance, programs that helped low-income people learn about the new insurance programs, among other changes that may have depressed the number of people signing up for health plans. The government also announced it might begin counting Medicaid enrollment as a strike against immigrants who are seeking green cards or citizenship — a policy that was finalized this year. Insurance coverage for Americans of Hispanic origin fell last year, according to the report.
The administration’s decision in 2017 to eliminate a subsidy program contributed to large price increases for health insurance in the Obamacare marketplaces in many parts of the country the following year. Research from the Department of Health and Human Services shows that more than 1 million Americans who were previously buying their own insurance left the market in 2018.
But the Census Bureau figures show that the main change in the uninsured rate came from declines in Medicaid coverage. Urged by the administration, which expressed concerns about the program’s integrity, several states started asking families to prove their eligibility for Medicaid more often in 2018. The number of Americans covered by Medicaid and the Children’s Health Insurance Program fell by more than 1.6 million last year, according to administrative data.
“The way they are doing this seems clearly designed to throw people off this program,” said Eliot Fishman, a senior director at consumer group Families USA, and a former top Medicaid official in the Obama administration. Fishman said he was particularly disheartened to see declines in the number of children with health insurance.
Brian Blase, a former special assistant to President Donald Trump for health care policy, said he’s not surprised to see enrollment in Medicaid fall. He pointed to a recent study suggesting that some Americans who had enrolled in the program in the early years of Obamacare were not in fact eligible for it. “My sense is in 2018 states probably started tightening eligibility,” said Blase, who is now president of consulting and research firm Blase Policy Strategies.
Income and Poverty
Income gains have slowed substantially as the economic expansion has matured. But the tepid progress in top-line numbers hides positive trends under the surface.
“You continue to see some progress for households in 2018, especially in the bottom of the income distribution as they benefited from a tighter economy,” said Jason Furman, who was chairman of Obama’s Council of Economic Advisers. “But the pace of that progress seems to have slowed relative to past years.”
Median household income, the level at which half of households make more money and half make less, was up just slightly to about $63,200 in 2018 from $62,600 the prior year. The change was so small that it was not statistically important. The Census Bureau made major tweaks to its methodology in 2013, making comparisons to earlier years difficult.
Some of pullback in income gains was to be expected. Increases earlier in the recovery were driven by people returning to work; for example, households where only one person worked outside the home might have become two-earner homes.
Now, with the unemployment rate near a five-decade low, household income gains must rely more heavily on raises for existing employees, said Ernie Tedeschi, an economist at Evercore ISI.
At an individual level, pay did climb by some measures. Among full-time, year-round workers, inflation-adjusted earnings rose more than 3% for both men and women.
And as some workers take home fatter paychecks, it is helping to even out inequality, if only slightly. Incomes grew more for poorer households last year, adjusting for household size. Poverty fell for households with children headed by women, and the black poverty rate was the lowest ever reported — though it is still more than double the white poverty rate.
Altogether, there were 38 million people living in poverty. The poverty rate has fallen relatively steadily since 2010, when it topped 15%. Among children, the poverty rate was 16.2%, also down from 2017.
The Trump administration applauded that progress.
Pro-worker policies are “unleashing the private sector and achieving historical gains for the most disadvantaged Americans,” Tomas J. Philipson, acting chairman of the White House Council of Economic Advisers, said in a statement.
But a broader measure that is often preferred by economists tells a less positive story. The headline poverty figures count the number of people living in households that earn below a certain threshold: about $20,000 for a family of three in 2018.
A supplementary poverty rate, which takes into account regional differences in cost of living and government benefits such as housing assistance and the earned-income tax credit, was 13.1% in 2018, little changed from 2017. More seniors and fewer children are poor under that measure.
Government programs, particularly Social Security, the earned-income tax credit and the nutrition-assistance program formerly known as food stamps, kept tens of millions of people out of poverty, the report noted.