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The Census Bureau released some encouraging news on Tuesday.
Child poverty at historic low, bureau says Annual Report on income, poverty and health insurance. And the rate of Americans without health insurance also fell in 2021 from the previous year.
But the good news may be short-lived. Both gains were driven by temporary pandemic-related policies, and without action from policymakers, they could quickly unravel.
Child tax credit key to poverty reduction
Child poverty has decreased significantly in 2021, from 9.7% in 2020 to 5.2%. The overall poverty rate for all age groups was just under 8%, down from 9.2% in 2020.
These figures are based on the Additional measure of povertywhich takes into account all kinds of family expenses, as well as the range of pandemic aid that many families have received.
Poverty experts attribute much of this improvement to the child tax credit that Congress strengthened in 2021 in the US bailout. Congress also expanded it to include millions of other low-income families.
Child tax credit gives families more money to spend on essentials, says Sharon Parrotwho studied the issue for the Center on Budget and Policy Priorities.
“They spend it on their housing, their food, their education, they can do some of those extracurricular activities that high-income families take for granted,” she says. “They invest in their children and their families are able to make ends meet in a very big way.”
And Parrott says all of these things can have long-term benefits for kids, like doing well in school and being healthier.
Uninsured rate nears record lows, thanks to Medicaid
Census figures show that 8.3% of Americans — or 27.2 million people — had no health insurance in 2021. That’s an improvement from 2020, when 8.6% of people did were not insured.
The force behind this trend is Medicaid, the public health insurance option for low-income people, according to census officials who briefed reporters on Tuesday.
“The reason Medicaid rates have gone up is because of a COVID relief bill that Congress passed in March 2020,” says Sabrina Corlette from the Georgetown University Center on Health Insurance Reforms.
The Families First Coronavirus Response Act essentially required that state Medicaid programs not require enrollees to requalify for the program — so states could enroll new people but not fire anyone. Because of this “continuous enrollment provision”, Medicaid has increased dramatically.
Health insurance is another area of growth, though census officials noted that this was due to more people turning 65 and becoming eligible, not because of a change in policy.
What happens when pandemic measures end
Policy experts say the good news this week could be fleeting. The expansion of the child tax credit ended in December, just as inflation was starting to hit historic highs. The policy supporting more people taking out health insurance is set to expire in a few months.
“As soon as the public health emergency is declared over — which could be as early as January — that safety net that was in that COVID relief bill disappears,” Corlette says. “And so we could see this historic rise in policyholder rates reversed.”
More than 15 million people could lose Medicaid, according to an estimate from the Department of Health and Human Services released last month. The analysis suggests that nearly half of those who will lose cover will be due to administrative issues – such as difficulty completing paperwork to reapply – and not because they are no longer eligible for cover. Some will be able to get coverage elsewhere, but millions more may no longer be insured.
As far as poverty is concerned, inflation could start to affect these rates. In fact, one group already sees more poverty in the 2021 figures and that is the elderly. Census officials say it’s probably because they have fixed incomes, and already last year inflation was starting to rise, which really squeezed their budgets.
But again, census officials pointed out that Social Security has kept more than 26 million people out of poverty, and that includes several million children raised by grandparents.
How to keep temporary gains
In terms of U.S. trends over time, census figures released Tuesday on child poverty and health insurance are encouraging, experts say, and it is now up to policymakers to act to sustain those gains.
“Any improvements we see – whether in insurance or poverty – reflect policy choices,” says Jamila Michener – a Cornell government professor and Medicaid expert.
The Biden administration and many Democrats would like to make the expanded child tax credit permanent. The United States House passed such a measure, but it did not survive the Senate. Several Republican senators have proposed more limited ways to expand the child tax credit.
“What we don’t know are the trade-offs,” says Angela Rachidi, senior fellow at the American Enterprise Institute. “We know that inflation has increased dramatically over the past year. How much all these government revenue transfers have contributed to that, I think, remains a question.”
Some researchers note that the United States still has a long way to go to improve health and insurance rates, compared to similar high-income countries.
“[Among] our peer countries, we have one of the highest rates of uninsurance in the world and also poorer health outcomes,” notes Corlette. “And that was a problem for us even before the pandemic.
A landmark study in 2013 listed the many ways Americans don’t live as healthy or as long as people in equally wealthy countries.
The new life expectancy figures released two weeks ago are a striking illustration of this. Countries around the world have seen a drop in life expectancy after the first year of the pandemic, but many have been able to rebound.
America doesn’t have – instead life expectancy abandoned for two years in a row, the first time this has happened in the United States in a century.