Tricky poverty measures influence coverage levels

March 1, 2007

Millions of people's lives have been influenced by the work of Mollie Orshansky, even though very few people know who she is. Dozens of health-related programs throughout history have benefitted from Mollie's contributions, including programs through HHS, charitable agencies, private companies and managed care. In 1963, it was Mollie-an accomplished mathematical genius and daughter of a poor immigrant family-who developed the U.S. government's official measure of poverty and the guidelines for what we call the Federal Poverty Level (FPL) today.

While working for the Social Security Administration, she used the cost of a "nutritionally adequate diet" as the foundation for a family's cost-of-living expenses, knowing that the U.S. Department of Agriculture, where she had worked for 13 years, had established that a typical American family spent one-third of its income on food. She multiplied the cost of food by three and established thresholds. In 1965, the poverty level for a family of four was $3,130; in 1975, it was $5,050; in 1985, $10,650; and in 1995, $15,150. This year's Federal Poverty Level is $20,650 for a family of four.

The emerging universal coverage proposals aimed at establishing health coverage for the poor and the uninsured use the FPL and percentages of it as a qualifier for subsidies, which makes sense since it's already tied to so many social and health programs. A little foresight might be in order, however, because critics of the FPL formula continue to challenge its accuracy.

Alternative measures are being tested, but with no definitive plans to make changes, at least not yet. Obviously, there are profound economic, social and political consequences tied to how we as a country define poverty. Clearly, any health program or coverage qualifier based on the FPL stands to be affected by significant changes in the formula. Health plans and other payers are wise to keep an eye on this debate.

IRONIC TWIST

Mollie herself, who contributed so much to family welfare, experienced the distress of a broken system a few years ago. As her health began to decline, a caseworker with Adult Protective Services took Mollie against her will to a hospital and began guardianship proceedings, in spite of the fact that Mollie's niece served as a proxy with legal authority to make her healthcare decisions. A long legal battle ensued, Mollie was forced to stay in a hospital room (until her niece snuck her out), and in the end, a judge was charged with abuse of discretion. So where is she now? To the best of my knowledge, Mollie, who is in her 90s, is being well cared for by her family and home-care nurses in a New York apartment, which, fortunately, is exactly what she wanted.

Julie Miller is editor-in-chief of MANAGED HEALTHCARE EXECUTIVE. She can be reached at julie.miller@advanstar.com