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 percent of the population, lacked health insurance for all of 2018, up from 7.9 percent 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 percent, 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.
Tuesday’s figures will give further ammunition to Democratic presidential candidates, several of whom have made extending health insurance coverage to all Americans a central plank of their campaigns. Surveys consistently show that health care ranks one of the top concerns for voters heading into the 2020 election.
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 decade-long 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,” Mr. 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 percent in 2015 and 3.1 percent in 2016.
And while Tuesday’s report showed the benefits of what now ranks as the longest economic expansion on record, it also showed 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.
Democrats and Republicans alike have tapped into the sense among many voters that the economy is not working for them.
“It’s two solid economic cycles of struggling to either stay in place or get back out of a hole,” said Arloc Sherman, a senior fellow at the Center on Budget and Policy Priorities. “You can see why people would be impatient for real progress.”
Health insurance
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 Obamacare enrollments. It announced that 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 a 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 the consumer group Families USA, and a former top Medicaid official in the Obama administration. Mr. Fishman said he was particularly disheartened to see declines in the number of children with health insurance.
Brian Blase, a former special assistant to Mr. 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 Mr. Blase, who is now president of the consulting and research firm Blase Policy Strategies.
Historically, health insurance coverage has tended to increase when the economy grows, since most Americans get health plans through employers. Indeed, before 2018, the uninsured rate had not risen in any year since 2008.
The 2018 trend may have reversed this year, as Obamacare premiums stabilized and more states expanded their Medicaid programs to cover the working poor.
Household income
There was robust growth in jobs and economic output last year, leading most experts to expect solid income gains as well. But median household income — the level at which half of households make more money and half make less — was $63,179 in 2018, little changed from 2017. The Census Bureau made significant changes to its methodology in 2013, making comparisons to earlier years difficult, but 2018’s household income is the highest recorded in the report. The record is too slim to be statistically important.
Some slowdown in income growth is to be expected. Much of the growth earlier in the recovery was driven by people returning to work. Now, with the unemployment rate near a five-decade low, most Americans are working, meaning income gains primarily reflect higher wages for people who were already employed, said Ernie Tedeschi, an economist at Evercore ISI. Among full-time, year-round workers, earnings rose more than 3 percent for both men and women.
In a reversal of the pattern that held in recent years, incomes grew more for poorer households last year. Income inequality, as measured by the Gini index and adjusted for household size, fell slightly last year.
There has been a “theme of the recovery finally seeping down to the most marginal workers and families in America,” and “you see that in 2018,” Mr. Tedeschi said.
The census report measures income before taxes, so the income changes don’t directly reflect the impact of the tax law that Mr. Trump signed in December 2017.
Poverty
There were 38 million people living in poverty in the United States in 2018, 11.8 percent of the population. The poverty rate has fallen relatively steadily since 2010, when it topped 15 percent. Among children, the poverty rate was 16.2 percent, also down from 2017.
Those figures are based on the government’s official measure of poverty, which counts the number of people living in households that earn below a certain threshold — about $20,000 for a family of three in 2018. Economists have long criticized the official measure for failing to account for regional differences in cost of living and for government benefits such as food stamps, housing assistance and the earned-income tax credit, among other shortcomings.
Under an alternative measure, which attempts to account for such issues, the poverty rate is a bit higher, at 13.1 percent in 2018, little changed from 2017. More seniors and fewer children are poor under that methodology.