Including Health Insurance in Poverty Measurement: The Impact of Massachusetts Health Reform on Poverty

Abstract

We develop and implement what we believe is the first conceptually valid health-inclusive poverty measure (HIPM)—a measure that includes health care or insurance in the poverty needs threshold and health insurance benefits in family resources—and we discuss its limitations. Building on the Census Bureau’s Supplemental Poverty Measure, we construct a pilot HIPM for the under-65 population under ACA-like health reform in Massachusetts. This pilot is intended to demonstrate the practicality, face validity and value of a HIPM. Results suggest that public health insurance benefits and premium subsidies accounted for a substantial, one-third reduction in the poverty rate. Among low-income families who purchased individual insurance, premium subsidies reduced poverty by 9.4 percentage points.