The Effect of Elevating the Supplemental Poverty Measure on Government Program Eligibility and Spending

Kevin Corinth

doi:10.1515/bejeap-2023-0203

Article

The Effect of Elevating the Supplemental Poverty Measure on Government Program Eligibility and Spending

Kevin Corinth

Published/Copyright: October 30, 2023

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From the journal The B.E. Journal of Economic Analysis & Policy Volume 24 Issue 1

Abstract

A recent National Academy of Sciences report recommends elevating the Supplemental Poverty Measure (SPM) to the “nation’s headline poverty statistic.” I project how making the SPM the official poverty measure would affect eligibility for government assistance programs whose eligibility thresholds are tied to the official poverty line. Making the SPM the official poverty measure would increase the poverty line for a family of four by 20 percent in 2024. The eligibility threshold for a family of four would consequentially increase by $8320 for the Supplemental Nutrition Assistance Program (SNAP), $8512 for Medicaid adults, and by larger amounts for Medicare Part D Low Income Subsidies, the National School Lunch Program, and Affordable Care Act premium subsidies (once temporarily relaxed eligibility rules are restored in 2026). Effects on eligibility thresholds would grow over time because the SPM thresholds grow faster over time than the current official thresholds. As a result of the higher eligibility thresholds, I estimate that in 2024 SNAP would cover 2.0 million additional households with spending rising by $2.6 billion, and that Medicaid would cover 1.3 million additional recipients with spending rising by $5.6 billion.

Keywords: Supplemental Poverty Measure; poverty guidelines; government assistance

Corresponding author: Kevin Corinth, American Enterprise Institute, 1789 Massachusetts Ave. NW, Washington, DC 20036, USA; and IZA, Bonn, Germany, E-mail: kevin.c.corinth@gmail.com

The views in this paper reflect those of the author alone.

Acknowledgments

I thank Richard Burkhauser, Leslie Ford, Angela Rachidi, Matt Weidinger, and Scott Winship for helpful comments.

Appendix Tables

Appendix Table 1:

Average official poverty thresholds and poverty guidelines by family size, by year: Scenario in which Official Poverty Measure remains official measure.

	Family/household size
Year	1	2	3	4	5	6	7	8
Average official poverty thresholds
2021	$13,788	$17,529	$21,559	$27,740	$32,865	$37,161	$42,156	$47,093
2022	$14,891	$18,932	$23,284	$29,960	$35,495	$40,135	$45,530	$50,862
2023	$15,605	$19,839	$24,400	$31,395	$37,195	$42,057	$47,711	$53,298
2024	$16,075	$20,437	$25,135	$32,341	$38,316	$43,325	$49,148	$54,904
2025	$16,425	$20,882	$25,682	$33,045	$39,151	$44,268	$50,219	$56,100
2026	$16,762	$21,310	$26,210	$33,724	$39,954	$45,177	$51,250	$57,252
2027	$17,108	$21,750	$26,750	$34,419	$40,778	$46,109	$52,306	$58,432
2028	$17,482	$22,225	$27,335	$35,171	$41,669	$47,116	$53,449	$59,709
2029	$17,876	$22,726	$27,951	$35,964	$42,609	$48,179	$54,655	$61,055
2030	$18,282	$23,242	$28,585	$36,781	$43,576	$49,272	$55,895	$62,441
2031	$18,697	$23,770	$29,235	$37,617	$44,567	$50,392	$57,166	$63,861
2032	$19,123	$24,312	$29,901	$38,474	$45,582	$51,540	$58,468	$65,315
2033	$19,560	$24,867	$30,584	$39,352	$46,623	$52,717	$59,803	$66,807
Poverty guidelines
2023	$14,580	$19,720	$24,860	$30,000	$35,140	$40,280	$45,420	$50,560
2024	$15,200	$20,600	$26,000	$31,400	$36,800	$42,200	$47,600	$53,000
2025	$15,670	$21,230	$26,790	$32,350	$37,910	$43,470	$49,030	$54,590
2026	$16,010	$21,690	$27,370	$33,050	$38,730	$44,410	$50,090	$55,770
2027	$16,350	$22,150	$27,950	$33,750	$39,550	$45,350	$51,150	$56,950
2028	$16,690	$22,610	$28,530	$34,450	$40,370	$46,290	$52,210	$58,130
2029	$17,080	$23,120	$29,160	$35,200	$41,240	$47,280	$53,320	$59,360
2030	$17,460	$23,640	$29,820	$36,000	$42,180	$48,360	$54,540	$60,720
2031	$17,840	$24,160	$30,480	$36,800	$43,120	$49,440	$55,760	$62,080
2032	$18,270	$24,730	$31,190	$37,650	$44,110	$50,570	$57,030	$63,490
2033	$18,700	$25,300	$31,900	$38,500	$45,100	$51,700	$58,300	$64,900

Sources: Creamer et al. (2022); Becerra (2023); U.S. Department of Health and Human Services (2023); Congressional Budget Office (2023); author’s calculations. Average official poverty thresholds for 2021 are taken from page 20 of Creamer et al. (2022). Average official poverty thresholds in 2022 through 2033 are calculated by multiplying the average threshold in the previous year by the ratio of the annual CPI-U in the current year to the annual CPI-U in the previous year. Poverty guidelines are calculated in accordance with the process laid out in Becerra (2023) and U.S. Department of Health and Human Services (2023). For a given year T, the poverty guideline for a family of four is equal to the average official poverty threshold for year T − 2, times the ratio of the CPI-U in year T − 1 to the CPI-U in year T − 2, rounded up to the nearest $50. The poverty guidelines for all other family sizes in year T are calculated by applying the mean increment between family sizes from average poverty thresholds reported for year T − 1, rounded up to the nearest $20. Projected values of the CPI-U are from Congressional Budget Office (2023). Separate poverty guidelines for Alaska and Hawaii are not shown.

Appendix Table 2:

Average official poverty thresholds and poverty guidelines by family size, by year: Scenario in which Supplemental Poverty Measure becomes official measure.

	Family/household size
Year	1	2	3	4	5	6	7	8
Average official poverty thresholds
2021	$14,282	$19,617	$28,589	$33,149	$37,318	$41,398	$45,966	$51,528
2022	$15,526	$21,326	$31,079	$36,037	$40,569	$45,004	$49,970	$56,017
2023	$16,409	$22,540	$32,848	$38,088	$42,878	$47,566	$52,814	$59,205
2024	$17,077	$23,457	$34,185	$39,638	$44,623	$49,501	$54,964	$61,615
2025	$17,581	$24,150	$35,194	$40,808	$45,940	$50,963	$56,586	$63,434
2026	$18,488	$25,396	$37,010	$42,913	$48,310	$53,592	$59,505	$66,706
2027	$19,067	$26,190	$38,167	$44,255	$49,821	$55,268	$61,367	$68,792
2028	$19,670	$27,019	$39,376	$45,657	$51,398	$57,018	$63,310	$70,970
2029	$20,316	$27,906	$40,668	$47,155	$53,085	$58,889	$65,387	$73,299
2030	$21,012	$28,862	$42,061	$48,771	$54,904	$60,907	$67,628	$75,811
2031	$21,738	$29,859	$43,515	$50,456	$56,801	$63,011	$69,965	$78,431
2032	$22,491	$30,894	$45,023	$52,204	$58,769	$65,195	$72,389	$81,148
2033	$23,270	$31,963	$46,581	$54,011	$60,804	$67,451	$74,895	$83,957
Poverty guidelines
2023	$18,570	$24,330	$30,090	$35,850	$41,610	$47,370	$53,130	$58,890
2024	$19,560	$25,640	$31,720	$37,800	$43,880	$49,960	$56,040	$62,120
2025	$20,350	$26,650	$32,950	$39,250	$45,550	$51,850	$58,150	$64,450
2026	$20,990	$27,510	$34,030	$40,550	$47,070	$53,590	$60,110	$66,630
2027	$21,550	$28,250	$34,950	$41,650	$48,350	$55,050	$61,750	$68,450
2028	$22,680	$29,720	$36,760	$43,800	$50,840	$57,880	$64,920	$71,960
2029	$23,470	$30,730	$37,990	$45,250	$52,510	$59,770	$67,030	$74,290
2030	$24,200	$31,700	$39,200	$46,700	$54,200	$61,700	$69,200	$76,700
2031	$24,970	$32,730	$40,490	$48,250	$56,010	$63,770	$71,530	$79,290
2032	$25,840	$33,860	$41,880	$49,900	$57,920	$65,940	$73,960	$81,980
2033	$26,750	$35,050	$43,350	$51,650	$59,950	$68,250	$76,550	$84,850

Sources: Census Bureau, Current Population Survey Annual Social and Economic Supplement, 2022; Becerra (2023); U.S. Department of Health and Human Services (2023); Congressional Budget Office (2023); U.S. Bureau of Labor Statistics (2022); author’s calculations. Average official poverty thresholds for 2021 are calculated as the mean SPM threshold by family size calculated in the 2022 Current Population Survey Annual Social and Economic Supplement (corresponding to calendar year 2021). Average official poverty thresholds in 2022 through 2033 are calculated by multiplying the average threshold in the previous year by the percent change in the 5-year average of per capita Personal Consumption Expenditures (PCE). The 5-year average is based on the 5 years prior to the year in question, and values in the 5-year average are updated to current year dollars based on growth in the FCSUti CPI-U. The projected growth in the FCSUti CPI-U is equal to the growth in the CPI-U plus 0.1 percentage point. Poverty guidelines are calculated in accordance with the process laid out in Becerra (2023) and U.S. Department of Health and Human Services (2023). Projected values of the CPI-U are from Congressional Budget Office (2023). Separate poverty guidelines for Alaska and Hawaii are not shown.

Appendix Table 3:

Government spending on entitlement programs with eligibility thresholds that depend on poverty guidelines, 2019 and 2021.

	Government spending (billions $)
Program	2019	2021
Medicaid	$615	$734
SNAP	$60	$114
ACA premium subsidies	$40	$67
Medicare Part D subsidies	$27	$34
School lunch program	$14	$9
Total	$756	$958

Source: Centers for Medicare and Medicaid Services; U.S. Department of Agriculture; Internal Revenue Service; Congressional Budget Office; U.S. Department of the Treasury. Government spending on ACA premium subsidies in 2021 is based on Treasury estimates of tax expenditures, which includes both monthly outlays and refundable credits paid at tax filing.

Appendix Table 4:

State-specific Supplemental Poverty Measure-based poverty guidelines, family of four, 2024–2033.

	2024	2025	2026	2027	2028	2029	2030	2031	2032	2033
Alabama	$32,350	$33,600	$34,700	$35,650	$37,500	$38,700	$39,950	$41,300	$42,700	$44,200
Arizona	$36,750	$38,150	$39,400	$40,500	$42,600	$44,000	$45,400	$46,900	$48,500	$50,200
Arkansas	$31,200	$32,400	$33,450	$34,400	$36,150	$37,350	$38,550	$39,800	$41,200	$42,600
California	$46,150	$47,950	$49,500	$50,900	$53,500	$55,250	$57,050	$58,900	$60,950	$63,050
Colorado	$39,450	$41,000	$42,300	$43,500	$45,750	$47,250	$48,750	$50,400	$52,100	$53,900
Connecticut	$40,950	$42,500	$43,900	$45,150	$47,450	$49,000	$50,600	$52,250	$54,050	$55,900
Delaware	$36,750	$38,150	$39,400	$40,500	$42,600	$44,000	$45,400	$46,900	$48,500	$50,200
Dist. Columbia	$45,650	$47,400	$48,950	$50,300	$52,900	$54,650	$56,400	$58,250	$60,250	$62,350
Florida	$38,400	$39,900	$41,150	$42,350	$44,500	$45,950	$47,450	$49,000	$50,700	$52,450
Georgia	$35,300	$36,700	$37,900	$38,950	$40,950	$42,300	$43,650	$45,100	$46,650	$48,250
Idaho	$33,100	$34,400	$35,500	$36,500	$38,400	$39,650	$40,950	$42,250	$43,700	$45,250
Illinois	$36,650	$38,050	$39,300	$40,400	$42,500	$43,850	$45,300	$46,800	$48,400	$50,050
Indiana	$33,700	$35,000	$36,100	$37,150	$39,050	$40,350	$41,650	$43,000	$44,500	$46,000
Iowa	$32,350	$33,600	$34,700	$35,650	$37,500	$38,750	$40,000	$41,300	$42,700	$44,200
Kansas	$32,600	$33,850	$34,950	$35,950	$37,800	$39,000	$40,300	$41,600	$43,050	$44,500
Kentucky	$32,000	$33,250	$34,350	$35,300	$37,150	$38,350	$39,550	$40,900	$42,300	$43,750
Louisiana	$32,950	$34,250	$35,350	$36,350	$38,200	$39,450	$40,700	$42,050	$43,500	$45,000
Maine	$35,450	$36,850	$38,050	$39,100	$41,150	$42,450	$43,850	$45,300	$46,850	$48,450
Maryland	$42,800	$44,450	$45,900	$47,200	$49,650	$51,250	$52,900	$54,650	$56,500	$58,450
Massachusetts	$42,700	$44,400	$45,800	$47,100	$49,550	$51,150	$52,800	$54,550	$56,400	$58,350
Michigan	$34,400	$35,750	$36,900	$37,950	$39,900	$41,200	$42,550	$43,950	$45,450	$47,000
Minnesota	$36,300	$37,700	$38,900	$40,000	$42,050	$43,450	$44,850	$46,300	$47,900	$49,550
Mississippi	$31,000	$32,200	$33,250	$34,200	$35,950	$37,100	$38,300	$39,550	$40,950	$42,350
Missouri	$33,150	$34,450	$35,600	$36,600	$38,450	$39,700	$41,000	$42,350	$43,800	$45,300
Montana	$32,650	$33,950	$35,000	$36,000	$37,850	$39,100	$40,350	$41,700	$43,150	$44,600
Nebraska	$33,050	$34,350	$35,450	$36,450	$38,350	$39,600	$40,850	$42,200	$43,650	$45,150
Nevada	$37,100	$38,550	$39,800	$40,900	$43,050	$44,450	$45,850	$47,400	$49,000	$50,700
New Hampshire	$40,750	$42,350	$43,700	$44,950	$47,250	$48,800	$50,400	$52,050	$53,850	$55,700
New Jersey	$43,000	$44,650	$46,100	$47,400	$49,850	$51,450	$53,150	$54,900	$56,750	$58,750
New Mexico	$32,650	$33,950	$35,000	$36,000	$37,850	$39,100	$40,350	$41,700	$43,100	$44,600
New York	$41,600	$43,250	$44,600	$45,900	$48,250	$49,800	$51,450	$53,150	$54,950	$56,850
North Carolina	$33,850	$35,200	$36,350	$37,350	$39,300	$40,550	$41,850	$43,250	$44,750	$46,300
North Dakota	$32,300	$33,550	$34,650	$35,600	$37,450	$38,650	$39,900	$41,250	$42,650	$44,100
Ohio	$33,350	$34,650	$35,750	$36,750	$38,650	$39,950	$41,200	$42,600	$44,050	$45,550
Oklahoma	$31,200	$32,400	$33,450	$34,400	$36,200	$37,350	$38,550	$39,850	$41,200	$42,600
Oregon	$37,700	$39,150	$40,400	$41,550	$43,700	$45,150	$46,600	$48,100	$49,750	$51,500
Pennsylvania	$35,650	$37,050	$38,250	$39,350	$41,350	$42,700	$44,100	$45,550	$47,100	$48,750
Rhode Island	$36,000	$37,400	$38,600	$39,700	$41,750	$43,100	$44,500	$45,950	$47,550	$49,200
South Carolina	$33,050	$34,350	$35,450	$36,450	$38,350	$39,600	$40,900	$42,250	$43,650	$45,200
South Dakota	$31,100	$32,350	$33,350	$34,300	$36,100	$37,250	$38,450	$39,750	$41,100	$42,500
Tennessee	$33,800	$35,100	$36,250	$37,250	$39,200	$40,450	$41,800	$43,150	$44,650	$46,200
Texas	$36,000	$37,400	$38,650	$39,700	$41,750	$43,150	$44,500	$46,000	$47,550	$49,200
Utah	$35,000	$36,350	$37,500	$38,600	$40,550	$41,900	$43,250	$44,650	$46,200	$47,800
Vermont	$37,050	$38,500	$39,750	$40,850	$43,000	$44,350	$45,800	$47,300	$48,950	$50,650
Virginia	$41,100	$42,700	$44,100	$45,300	$47,650	$49,200	$50,800	$52,500	$54,300	$56,150
Washington	$40,450	$42,050	$43,400	$44,600	$46,950	$48,450	$50,000	$51,650	$53,450	$55,300
West Virginia	$30,950	$32,150	$33,200	$34,100	$35,900	$37,050	$38,250	$39,500	$40,850	$42,250
Wisconsin	$33,550	$34,850	$36,000	$37,000	$38,900	$40,200	$41,500	$42,850	$44,300	$45,850
Wyoming	$31,600	$32,850	$33,900	$34,850	$36,650	$37,850	$39,100	$40,400	$41,750	$43,200

Sources: Census Bureau, Current Population Survey Annual Social and Economic Supplement, 2022; Becerra (2023); U.S. Department of Health and Human Services (2023); Congressional Budget Office (2023); U.S. Bureau of Labor Statistics (2022); author’s calculations. Poverty guidelines shown here are based on the scenario in which the Census Bureau reports state-specific average poverty thresholds under the Supplemental Poverty Measure. Poverty guidelines are calculated in accordance with the process laid out in Becerra (2023) and U.S. Department of Health and Human Services (2023), after calculating state-specific SPM thresholds based on average thresholds calculated from the Current Population Survey Annual and Social Economic Supplement and increasing state-specific thresholds based on the percentage increase in forecasted United States average thresholds. Projected values of the CPI-U are from Congressional Budget Office (2023). Separate poverty guidelines for Alaska and Hawaii are not shown.

Appendix Table B1:

Average Official Poverty Measure thresholds, survey-based calculation versus Census reported, 2021.

Family size	Survey-based	Census reported	Difference
1	$13,788	$13,788	$0
2	$17,536	$17,529	$7
3	$21,561	$21,559	$2
4	$27,739	$27,740	−$1
5	$32,864	$32,865	−$1
6	$37,161	$37,161	$0
7	$42,153	$42,156	−$3
8	$47,093	$47,093	$0

Source: Creamer et al. (2022); Current Population Survey Annual Social and Economic Supplement, 2022; author’s calculations. Thresholds are family weighted averages of Census reported thresholds calculated over all families in the 2022 Current Population Survey Annual Social and Economic Supplement (CPS ASEC), corresponding to income year 2021. Following Census, the primary family and related subfamilies are combined into a single family unit for purposes of calculating average thresholds. Survey-based average thresholds are calculated by the author using the public use CPS ASEC. Census reported thresholds are those reported on page 20 of Creamer et al. (2022).

Appendix Table C1:

Maximum, mean, and share receiving Supplemental Nutrition Assistance Program benefits, and mean income, by household size, select years.

	Maximum monthly				Mean monthly	Households between 100 % and 130 %
	SNAP benefit				SNAP benefit	and 130 % of poverty guidelines, 2019
Household	2019	2023	2024	2033	2019	Share receiving	Mean annual
size						SNAP	income
1	$192	$281	$289	$426	$64	0.45	$14,397
2	$353	$516	$532	$783	$113	0.37	$19,404
3	$505	$740	$762	$1126	$174	0.45	$24,595
4	$642	$939	$967	$1427	$211	0.41	$29,562
5	$762	$1116	$1150	$1697	$224	0.45	$34,821
6	$914	$1339	$1379	$2035	$252	0.26	$39,520
7	$1011	$1480	$1525	$2250	$264	0.39	$44,905
8	$1155	$1691	$1742	$2571	$304	0.37	$48,825
9	$1299	$1902	$1959	$2892	$555	0.05	$54,709
10	$1443	$2113	$2177	$3213	$544	0.29	$55,300

Sources: Census Bureau, Current Population Survey Annual Social and Economic Supplement, 2020; U.S. Department of Agriculture SNAP Quality Control Data, 2019; U.S. Department of Agriculture; Becerra (2023); U.S. Department of Health and Human Services (2023); Congressional Budget Office (2023); author’s calculations. Dollar values are in nominal terms. Maximum monthly SNAP benefits for 2019 and 2023 are the benefit levels published by the U.S. Department of Agriculture, and maximum benefits for 2024 and 2033 are imputed by the author. The mean SNAP benefit for 2019 and share of households between 100 % and 130 % of poverty guidelines is based on SNAP Quality Control data, using the gross income measure it reports. Mean annual income of households between 100 % and 130 % of poverty guidelines is based on the 2020 CPS ASEC, which is used to ensure consistency with the incomes of newly eligible households when calculating benefit phase outs. Households in Alaska and Hawaii are excluded.

Appendix Table C2:

Medicaid eligibility thresholds as share of poverty guidelines, by state and individual type.

State	Age 0	Age 1–5	Age 6–18	Adult parent	Adult non-parent
Alabama	141 %	141 %	141 %	13 %
Alaska	203 %	203 %	203 %	133 %	133 %
Arizona	147 %	141 %	133 %	133 %	133 %
Arkansas	142 %	142 %	142 %	133 %	133 %
California	261 %	261 %	261 %	133 %	133 %
Colorado	142 %	142 %	142 %	133 %	133 %
Connecticut	196 %	196 %	196 %	155 %	133 %
Delaware	212 %	142 %	133 %	133 %	133 %
Dist. of Columbia	319 %	319 %	319 %	216 %	210 %
Florida	206 %	140 %	133 %
Georgia	205 %	149 %	133 %
Hawaii	308 %	308 %	308 %	133 %	133 %
Idaho	142 %	142 %	133 %	133 %	133 %
Illinois	313 %	313 %	313 %	133 %	133 %
Indiana	208 %	158 %	158 %	133 %	133 %
Iowa	375 %	167 %	167 %	133 %	133 %
Kansas	166 %	149 %	133 %	33 %
Kentucky	195 %	159 %	159 %	133 %	133 %
Louisiana	212 %	212 %	212 %	133 %	133 %
Maine	191 %	157 %	157 %	133 %	133 %
Maryland	317 %	317 %	317 %	133 %	133 %
Massachusetts	200 %	150 %	150 %	133 %	133 %
Michigan	212 %	212 %	212 %	133 %	133 %
Minnesota	283 %	275 %	275 %	200 %	200 %
Mississippi	194 %	143 %	133 %
Missouri	196 %	150 %	150 %	133 %	133 %
Montana	143 %	143 %	143 %	133 %	133 %
Nebraska	213 %	213 %	213 %	133 %	133 %
Nevada	160 %	160 %	133 %	133 %	133 %
New Hampshire	318 %	318 %	318 %	133 %	133 %
New Jersey	194 %	142 %	142 %	133 %	133 %
New Mexico	300 %	300 %	240 %	133 %	133 %
New York	218 %	149 %	149 %	200 %	200 %
North Carolina	210 %	210 %	133 %
North Dakota	170 %	170 %	170 %	133 %	133 %
Ohio	206 %	206 %	206 %	133 %	133 %
Oklahoma	205 %	205 %	205 %	133 %	133 %
Oregon	185 %	133 %	133 %	133 %	133 %
Pennsylvania	215 %	157 %	133 %	133 %	133 %
Rhode Island	261 %	261 %	261 %	133 %	133 %
South Carolina	208 %	208 %	208 %	95 %
South Dakota	182 %	182 %	182 %
Tennessee	195 %	142 %	133 %
Texas	198 %	144 %	133 %
Utah	139 %	139 %	133 %	133 %	133 %
Vermont	312 %	312 %	312 %	133 %	133 %
Virginia	143 %	143 %	143 %	133 %	133 %
Washington	210 %	210 %	210 %	133 %	133 %
West Virginia	158 %	141 %	133 %	133 %	133 %
Wisconsin	301 %	186 %	151 %	95 %
Wyoming	200 %	200 %	200 %

Source: Centers for Medicare and Medicaid Services. Special eligibility thresholds for pregnant women are excluded because pregnancy status cannot be determined in the Current Population Survey Annual Social and Economic Supplement. Eligibility thresholds that are not directly tied to the poverty guidelines are excluded. Children’s Health Insurance Program benefits are excluded because they are not an entitlement. Adult parents are assumed to be able to obtain coverage under Medicaid expansion if not covered in their own right.

Appendix A: Translating Poverty Thresholds into Poverty Guidelines

The poverty guidelines are calculated annually by the HHS Secretary, who according to statute must take the official poverty thresholds published by the Census Bureau, update them forward one year by the percent increase in the CPI-U, and adjust them for families of different sizes.^[6] In order to establish the poverty guidelines for 2023, this statutory guidance has been interpreted by the HHS Secretary to entail the following set of steps:^[7]

Identify the average threshold for each family size reported by the Census Bureau in their latest annual report on poverty. The most recent thresholds correspond to calendar year 2021.
Multiply the average threshold for each family size by the ratio of the annual CPI-U in 2022 to the annual CPI-U in 2021.
Determine the mean increment when moving from family size n to family size n + 1, for n = {1, 2, …, 7}. Round up the mean increment to the nearest $20.
Calculate the poverty guideline for a family of four as the inflation adjusted poverty threshold for a family of four, rounded up to the nearest $50.
Apply the rounded, mean increment calculated in step 3 to calculate the poverty guideline for all other family sizes, relative to the guideline established for a family of four.

In order to translate poverty thresholds into poverty guidelines for future years using this set of steps, I rely on projections of the CPI-U published in the February 2023 forecasts of the Congressional Budget Office (CBO), which include forecasts for each year through 2033 (Congressional Budget Office 2023).

Appendix B: Methodology for Projecting Future SPM Thresholds

To project future increases in the SPM thresholds, I begin by calculating the average SPM threshold by family size in 2021 from the public use version of the 2022 CPS ASEC, which includes income and poverty information for calendar year 2021. Note that I must calculate the average SPM thresholds because they are not currently reported in the Census poverty report. As shown in Appendix Table B1, I can almost exactly replicate the average OPM thresholds reported by Creamer et al. (2022), validating the use of the public use CPS ASEC to calculate average SPM thresholds as well.^[8]

The next step is to forecast how these average SPM thresholds in 2021 will change over time. Because I am not aware of projections over the next decade of spending on food, clothing, shelter, utilities, telephone and internet services, I instead rely on CBO forecasts of Personal Consumption Expenditures (PCE) more generally to update the SPM thresholds.

I begin by calculating per capita PCE in each year, using projections of PCE and the U.S. population aged 16 and over from Congressional Budget Office (2023). I then form 5-year averages of per capita PCE, to match the 5-year averages used by the Bureau of Labor Statistics (BLS) to calculate SPM thresholds. The 5-year average for year T is equal to the arithmetic mean of per capita PCE over the set of years, {T − 5, T − 4, T − 3, T − 2, T − 1, }, with per capita PCE in each of the five years put in terms of year T prices.^[9]

BLS uses a specially created price index called the FCSUti CPI-U to adjust spending in all five years of the 5-year average to the current year.^[10] I follow the same approach when calculating the 5-year average of per capita PCE. Because the FCSUti CPI-U is available only until 2021, and because there are no forecasts of which I am aware, I calculate the mean percentage point difference in the annual growth of the FCSUti CPI-U and CPI-U over the period 2002–2021, the entire period for which both measures are available (U.S. Bureau of Labor Statistics 2022).

The mean percentage point difference is 0.1 percentage point. I then form a projected FCSUti CPI-U whose annual growth is equal to the forecasted growth in the CPI-U plus an additional 0.1 percentage point each year. Finally, I increase the 2021 average SPM thresholds by the annual percent increase in the 5-year average of per capita PCE as defined above.

Because there could be important differences in annual changes in per capita PCE versus spending on food, clothing, shelter, utilities, telephone and internet services, I test whether these approaches lead to a similar evolution of SPM thresholds for the years 2007–2021, when sufficient data are available to calculate changes in both sets of thresholds. Appendix Figure B1 shows the SPM thresholds and SPM thresholds updated based on changes in per capita PCE (as adjusted using 5-year averages and the FCSUti CPI-U price index as described above), each indexed to 2007.

Appendix Figure B1:

SPM Thresholds and Modified SPM Thresholds Based on Growth in Per Capita Personal Consumption Expenditures, Indexed to 2007, 2007–2021. Sources: U.S. Bureau of Labor Statistics (2022); Congressional Budget Office (2023); author’s calculations. SPM thresholds are obtained from U.S. Bureau of Labor Statistics (2022). For each year, I calculate the weighted average threshold over the three housing tenure types, using as weights the reported percentage of the weighted sample. The modified SPM thresholds are calculated by taking the same 2007 SPM threshold and increasing it each year based on changes in the 5-year average of per capita Personal Consumption Expenditures (PCE), using the FCSUti CPI-U as reported by U.S. Bureau of Labor Statistics (2022) to put dollar values in the 5-year average into dollars corresponding to the year in question.

The modified SPM thresholds based on per capita PCE grow slightly faster overall, as they are 42 percent higher in 2021 compared to 2007, while the SPM thresholds are 38 percent higher. The rates of change are similar except for 2012–2015 when the SPM series is flatter. The lower growth rate of the SPM series during the 2012–2015 period may be a result of lower spending growth in the middle part of the spending distribution relative to mean spending, which would be expected if spending inequality grew over this period. Consistent with this explanation Mayer and Sullivan (2023), find that the ratio of the 90th to the 50th percentile of total consumption fell from 2005 to 2011, and then grew from 2011 to 2016 before falling slightly in 2017. Unfortunately, I am unaware of forecasts of median expenditures, and thus, I rely on projections of overall mean expenditures for future forecasts of the SPM thresholds. Despite this limitation, the growth in the modified SPM thresholds that I use to project SPM threshold growth in future years appear to be a reasonable approximation to growth in the SPM thresholds themselves, at least historically.

Appendix C: Methodology for Estimating Effects on Program Recipients and Spending

This appendix describes the methodology for estimating the effects of making the SPM the official poverty measure on SNAP and Medicaid recipients and spending.

C.1 Supplemental Nutrition Assistance Program

To estimate the SNAP recipient and spending effects of basing the poverty guidelines on the SPM, I use a population of SNAP recipients in 2019 who were “barely” eligible for benefits to extrapolate the benefits received by newly eligible SNAP recipients in future years. To begin, I use the U.S. Department of Agriculture’s (USDA) 2019 SNAP Quality Control microdata, which provides a representative sample of SNAP recipients, including their income and benefit levels.

For each household size, I estimate the number of SNAP recipient households with gross income between 100 percent and 130 percent of the OPM-based poverty guidelines, along with their mean monthly SNAP benefit. I then use the 2020 CPS ASEC to estimate the total number of households in 2019 whose pre-tax, post transfer income (excluding in-kind transfers and the value of health insurance) falls between 100 percent and 130 percent of the 2019 OPM-based poverty guideline.^[11] This allows me to calculate the share of households in this “barely” eligible group in 2019 that received SNAP. Appendix Table C1 reports, for 2019, the mean monthly SNAP benefit, the share of “barely” eligible households that received SNAP, and their mean annual income (three right-most columns).

The next step is to estimate how SNAP spending would increase in 2024–2033 by adopting SPM-based poverty guidelines. To do so, I again rely on the 2020 CPS ASEC which has income information for 2019. I do not use the more recent 2022 CPS ASEC (corresponding to income in 2021) because 2021 was atypical in terms of government assistance provided to households. I update each household’s income to future years based on projected growth in per capita wages and salaries, and I increase each household’s weight to reflect projected population growth, based on Congressional Budget Office (2023) projections. I identify newly eligible households as those whose pre-tax, post-transfer income is between 130 percent of the OPM-based poverty guideline and 130 percent of the SPM-based poverty guideline.

For each of these newly eligible households, I first impute their SNAP benefit (conditional on receiving any benefit) as the mean monthly amount in 2019 according to their household size (as reported in Appendix Table C1), updated to the relevant year. I update the SNAP benefit to the relevant year by increasing the 2019 mean amount by the dollar increase in the maximum benefit level for their household size.^[12] The mean benefit amount increases dollar for dollar with the increase in the maximum benefit because of the structure of the benefit formula for SNAP—the awarded amount is equal to a maximum dollar amount that is reduced as income rises.

I next adjust for the phase out of SNAP benefits, which phase out at a rate of 24 cents per dollar of earnings.^[13] To do so, I reduce the annualized SNAP benefit by 0.24 times the difference between the household’s income in a given year and the mean 2019 income of barely eligible households reported in Appendix Table C1. This can reduce the SNAP benefits to some households to zero. Finally, I account for incomplete take-up by multiplying the total SNAP benefit received among all newly eligible households by the share of barely eligible households who received SNAP in 2019, as reported in Appendix Table C1. Note that the share receiving SNAP among newly eligible households will ultimately be lower than the share receiving SNAP among the barely eligible, because the phase out of benefits leads some households to receive zero benefits.

C.2 Medicaid

To estimate the Medicaid recipient and spending effects of basing the poverty guidelines on the SPM, I identify individuals who are both (i) not currently covered by health insurance, and (ii) would become newly eligible for Medicaid if the poverty guidelines were based on the SPM. I rely on the 2020 CPS ASEC, corresponding to income and health insurance status as of 2019, prior to temporary COVID-era provisions that extended health insurance coverage and affected incomes of households. I again update household incomes and population weights based on projected per capita wage and salary growth and population growth respectively by Congressional Budget Office (2023). I use Medicaid eligibility rules as of July 1, 2022 to determine the ratio of the poverty guidelines states use to determine Medicaid eligibility for children of different ages, parents and other adults in all years from 2024 to 2033 (see Appendix Table C2). I also use average per-person Medicaid spending according to the risk class and state of each individual as calculated by Burkhauser et al. (Forthcoming), updated to future years for inflation.

I then assume Medicaid coverage expansions due to SPM-based poverty guidelines do not lead to increased coverage among the disabled or elderly, and thus apply Medicaid spending averages only for children and non-disabled, non-elderly adults. I also assume that expanded Medicaid eligibility does not crowd out other forms of coverage, by restricting new Medicaid enrollees to individuals without any existing health insurance coverage.^[14]

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Received: 2023-06-13

Accepted: 2023-10-09

Published Online: 2023-10-30

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Articles in the same Issue

https://doi.org/10.1515/bejeap-2023-0203

Keywords for this article

Supplemental Poverty Measure; poverty guidelines; government assistance