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56–323 2010

S. HRG. 111–536 

INCOME, POVERTY, AND HEALTH CARE 

COVERAGE: ASSESSING KEY CENSUS INDICATORS 

OF FAMILY WELL-BEING IN 2008 

HEARING 

BEFORE THE

JOINT ECONOMIC COMMITTEE 

CONGRESS OF THE UNITED STATES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 10, 2009 

Printed for the use of the Joint Economic Committee 

( 

(II) 

JOINT ECONOMIC COMMITTEE 

[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress] 

HOUSE OF REPRESENTATIVES 

CAROLYN B. MALONEY, New York, Chair 

MAURICE D. HINCHEY, New York 

BARON P. HILL, Indiana 

LORETTA SANCHEZ, California 

ELIJAH E. CUMMINGS, Maryland 

VIC SNYDER, Arkansas 

KEVIN BRADY, Texas 

RON PAUL, Texas 

MICHAEL C. BURGESS, M.D., Texas 

JOHN CAMPBELL, California 

SENATE 

CHARLES E. SCHUMER, New York, Vice 

Chairman 

JEFF BINGAMAN, New Mexico 

AMY KLOBUCHAR, Minnesota 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

SAM BROWNBACK, Kansas, Ranking Minority 

JIM DEMINT, South Carolina 

JAMES E. RISCH, Idaho 

ROBERT F. BENNETT, Utah 

NAN GIBSON, Executive Director 

JEFF SCHLAGENHAUF, Minority Staff Director 

(III) 

C O N T E N T S 

MEMBERS

Hon. Carolyn B. Maloney, Chair, a U.S. Representative from New York .......... 1 

Hon. Sam Brownback, Ranking Minority, a U.S. Senator from Kansas ............. 3 

Hon. Maurice D. Hinchey, a U.S. Representative from New York ...................... 4 

Hon. Kevin Brady, a U.S. Representative from Texas ......................................... 4 

Hon. Elijah E. Cummings, a U.S. Representative from Maryland ...................... 6 

Hon. Michael C. Burgess, M.D., a U.S. Representative from Texas ................... 7 

WITNESSES

Dr. Rebecca Blank, Under Secretary for Economic Affairs, Department of 

Commerce ............................................................................................................. 10 

Dr. Cecilia Rouse, Member, Council of Economic Advisers .................................. 12 

Dr. Karen Davis, President, The Commonwealth Fund ....................................... 27 

Dr. Harry Holzer, Professor of Public Policy, Georgetown University and 

Institute Fellow, Urban Institute ....................................................................... 29 

Mr. Thomas P. Miller, Resident Fellow, American Enterprise Institute ............ 31 

SUBMISSIONS FOR THE RECORD

Prepared statement of Representative Carolyn B. Maloney, Chair .................... 40 

Prepared statement of Representative Elijah E. Cummings ............................... 41 

Letter from Representative Michael C. Burgess, M.D. to Rebecca Blank .......... 42 

Letter from Representative Michael C. Burgess, M.D. to Cecilia Rouse ............ 43 

Letter from Cecilia Rouse to Representative Michael C. Burgess, M.D. ............ 44 

Prepared statement of Dr. Rebecca Blank ............................................................. 48 

Prepared statement of Dr. Cecilia Rouse ............................................................... 52 

Prepared statement of Mr. Joseph Stiglitz ............................................................ 58 

Prepared statement of Dr. Karen Davis ................................................................ 59 

Prepared statement of Dr. Harry Holzer ............................................................... 78 

Prepared statement of Mr. Thomas P. Miller ....................................................... 80 

(1) 

INCOME, POVERTY, AND HEALTH CARE 

COVERAGE: ASSESSING KEY CENSUS 

INDICATORS OF FAMILY WELL-BEING 

IN 2008 

THURSDAY, SEPTEMBER 10, 2009 

CONGRESS OF THE UNITED STATES, 

JOINT ECONOMIC COMMITTEE, 

Washington, DC. 

The committee met, pursuant to call, at 1:02 p.m., in Room 210, 

Cannon House Office Building, The Honorable Carolyn B. Maloney 

(Chair) presiding. 

Representatives present: Maloney, Hinchey, Cummings, 

Brady, and Burgess. 

Senators present: Casey and Brownback. 

Staff present: Nan Gibson, Colleen Healy, Elisabeth Jacobs, Andrew Wilson, Dean Clancy, Lydia Mashburn, Jeff Schlagenhauf, 

and Chris Frenze. 

OPENING STATEMENT OF THE HONORABLE CAROLYN B. 

MALONEY, CHAIR, A U.S. REPRESENTATIVE FROM NEW YORK 

Chair Maloney. I would like to call this meeting to order and 

recognize other members for 5 minutes after my opening statement, and then I would like to introduce the first panel. 

First, I would like to thank our witnesses for joining us today to 

discuss the 2008 official government statistics on income, poverty, 

and health insurance coverage that were released this morning by 

the Commerce Department’s Census Bureau. These are among the 

most important indicators of family well-being, and the picture 

from 2000 to 2008 is rather grim. Between 2000 and 2008 median income fell by nearly $2,200; the 

number of Americans living in poverty grew by 8.2 million, and 

nearly 8 million people joined the ranks of the uninsured. American families have lost a decade due to the failed economic policies 

of the Bush Administration. 

Nearly one year ago this committee held a hearing at the request 

of the late Senator Edward Kennedy on poverty in America. Senator Kennedy was home. He was sick and he called and said, 

Please have this hearing. I want to watch it. I wish I could be 

there. But he was very devoted to helping the poor and was a 

strong and vocal and effective advocate, and although we have lost 

the lion of the Senate, his dream lives on in the Democratic Congress and in all of us. We will certainly continue his work on behalf 

of the less fortunate. 

2 

The economic fortunes of most Americans tend to rise and fall 

with the strength of the economy. During the economic expansion 

of the Clinton era when unemployed hovered at around 4 percent, 

poverty fell to 11.3 percent, its lowest level in decades. However, 

the weak economic recovery of the 2000s under the previous Administration did not lead to a further reduction in poverty, which 

now stands almost two full percentage points above its 2000 level. 

Today in the United States one out of every eight people, almost 

40 million, live in poverty. The majority of people living in poverty 

are among the working poor. Worse still, 19 percent of our children, or almost one in five, now lives in poverty. Median household income fell to $50,000, the lowest level since 

1997, which means that the typical American family actually lost 

economic ground during the last recovery. Our economy may have 

grown, but those gains did not trickle down to the vast majority of 

families and the gap between the haves and the have-nots grew 

larger. 

Too many jobs do not pay enough or lack the benefits to ensure 

families can make ends meet. Over one-quarter of U.S. jobs pay low 

wages and do not provide health insurance or a retirement plan, 

according to the Center for Economic and Policy Research. 

Today’s data on health insurance coverage are a sobering reminder of the impact of our broken system. 46.3 million Americans 

are uninsured, a figure that rose 20.6 percent between 2000 and 

2008. Nearly one in 10 children are growing up without health insurance and over 30 percent of Hispanics lack any coverage at all. 

The share of Americans with private health insurance eroded over 

the eight years of the Bush administration as the cost of providing 

employer-based coverage crept upwards. Insurance premiums 

charged to employers increased by more than 100 percent between 

2000 and 2008. 

The 2008 data reflect the first year of the Bush recession, but the 

legacy of his Administration’s failed economic policies has continued to bring havoc on many families. Recent estimates suggest that 

continued increase in the unemployment rate between January of 

2009 and August of 2009 mean that over 2 million more Americans 

have joined the ranks of uninsured so far this year. 

The time for comprehensive health insurance reform is now. As 

the data show, our Nation’s families simply cannot afford to wait 

any longer. America’s Affordable Health Choices Act includes provisions that will stop the rise in uninsured Americans by making affordable comprehensive coverage available to all of our citizens. 

The bill includes subsidies for low and moderate income families 

to purchase health insurance coverage as well as a well-designed 

health insurance exchange. Within that health insurance exchange, 

Americans will have the option of choosing between the private insurers or choosing a public option. The inclusion of a public option 

is key to promoting competition and bringing down costs, and competition and cost control is key to reversing the distressing trend 

in uninsurance that we have seen year after year in the census 

data before this committee. 

I look forward to the witnesses’ testimony. I thank them for their 

research, for their commitment and for being here today, and I recognize Senator Brownback. 

3 

[The prepared statement of Representative Maloney appears in 

the Submissions for the Record on page 40.] 

Senator Brownback. Thank you very much. Thank you Madam 

Chairman. I appreciate that. Good to see you again. Welcome back 

from the break. 

Chair Maloney. Good to see you again. We have one of our joint 

bills on the floor next week. I will tell you about it. On to passage. 

OPENING STATEMENT OF THE HONORABLE SAM BROWNBACK, RANKING MINORITY, A U.S. SENATOR FROM KANSAS 

Senator Brownback. Hopefully on to passage. Thanks. Also I 

thank the witnesses. I appreciate your being here as well. 

There was an interesting dialogue happening last night, and that 

was on the question that this hearing is about, and that is how 

many people are not covered in the United States. So I am hopeful 

that our witnesses are going to be able to illuminate that number 

somewhat. The President used a figure, I think he said 30 million, 

and he said that the program will not cover illegal aliens. His adviser David Axelrod in the media afterwards said that the President made clear that this is a program for American citizens who 

are not covered. 

Now, does that then exclude people that are here legally but are 

not American citizens? And it is important because it gets at what 

is the universe and what is the number that we are looking at. And 

I am hopeful we can get a paper out of the Joint Economic Committee about what is the number, how many people are not covered 

in the United States, and is it citizens, noncitizens, the people here 

legally, illegally, so that the American public can really look at this 

and understand what is the actual number of the universe that we 

are looking at. The percentage of citizens without insurance, according to this most recent survey, stood at 13 percent; for noncitizens 44.7 percent are without coverage. I think it is important if 

we can get at what is the actual universe and the number, and I 

think this committee can help out in the debate with getting the 

actual number. 

Chair Maloney. I would be delighted to do a joint report on that 

with the minority. 

Senator Brownback. If we can get that in agreement, that 

would be—I think that would be useful for us to be able to do. 

The chairwoman was talking about ways to get at this and who 

the groups are. I would also note that family composition is a key 

part on insurance coverage. There is a report out that we put forward that among married individuals with a spouse present the 

rate of coverage is 10.6 percent while the range is from 21.2 to 33.4 

among other status of individuals whether they are married or not. 

Education level matters; 7.7 percent of those with a Bachelor’s Degree or higher lack coverage while more than 20 percent of those 

with only a high school education lack coverage. So I think too here 

we see ways to get at the issue and addressing issues, whether it 

is family structure, education, as important ones to address as well. 

And finally I would hope that we would look at this whole health 

care debate as one we would want to go at incrementally to deal 

with and not do a massive dollop of Federal intrusion. We did—in 

Southeast Kansas a little community-based clinic got some Federal 

4 

support to get it started that is serving a region in my state where 

we have some high poverty level numbers. Got it started. It now 

is sustaining itself mostly off of community support but also off of 

people coming in and using the services. They provide health care 

services, dental services, psychological services within this clinic, 

and I thought that is a much more practical and cost-effective way 

and the size of the debt and the deficit that we are looking at and 

the out of control entitlement spending, instead of starting a new 

entitlement, wouldn’t we be better off to be very narrow and focused on incremental movement and getting our entitlement spending under control as a much better way to go forward? 

Anyway, I look forward to the witnesses helping us with what 

the actual number of that is and breaking that out. 

Thank you, Chairwoman. 

Chair Maloney. Thank you. And the Chair recognizes Mr. Hinchey from the great state of New York. 

OPENING STATEMENT OF THE HONORABLE MAURICE D. 

HINCHEY, A U.S. REPRESENTATIVE FROM NEW YORK 

Representative Hinchey. First of all, Madam Chairman, I 

want to thank you very much for conducting this hearing, and the 

timing of it I think is very, very appropriate. I am very anxious to 

hear the statements that are going to be made by Dr. Blank and 

Dr. Rouse, and I thank you both very much for being here with us. 

The information that you are going to be providing us in the context of other information which is outflowing as a result of recent 

surveys is going to be very important to this committee and to this 

Congress in order to deal with the economic circumstances that we 

are confronting. The circumstances are serious. This is the most serious economic condition that this country has faced since the 

1930s, and we are beginning now to see some indications of improvement, but that has taken a long time. 

The economic circumstances for households across America were 

worse at the end of last year than they were 8 years earlier. So 

that indicates quite clearly how long this deep recession has been 

going on, how it has fluctuated from time to time over the course 

of those 8 years, and what the emerging situation is now. And 

there is somewhat of a mild improvement apparently based in part 

at least on the introduction of the American Recovery and Investment Act, only 25 percent of which is actually out there now. 

So it is quite clear that this Congress has a lot more to do, and 

in order to do it we are going to need the appropriate accurate information, and that appropriate accurate information is coming 

from a number of sources but particularly today obviously from 

you, and I thank you very much for being here and for doing that 

and I am very anxious to hear what you are about to say. 

Thanks. 

Chair Maloney. Mr. Brady for 5 minutes. 

OPENING STATEMENT OF THE HONORABLE KEVIN BRADY, A 

U.S. REPRESENTATIVE FROM TEXAS 

Representative Brady. Thank you, Madam Chairman. Not 

much news—I want to welcome the witnesses before the committee 

today. Not much news today. 

5 

The recession has taken a toll on families. Surprisingly, the number of uninsured is staying relatively stable as it has for quite a 

while. It has been around 15 percent and the number of those in 

poverty has increased and thankfully is still below the average of 

13.9 percent since the 1960s. And we have a lot of work to do. 

I do question the accuracy of our poverty numbers. A compilation 

based almost solely on the price of food versus net income and ignoring key issues such as energy and medical costs and other costs 

doesn’t seem accurate and also by excluding what occurs to help 

people in the lower part of our economic ladder such as government 

assistance programs, food stamps, Medicaid, housing vouchers, and 

tax credits. I think in taking it in total we are not getting a good 

picture of those in poverty in America today. We deserve a good 

picture. 

The National Academy of Sciences has proposed that we really 

incorporate a bundle of family expenditures. I think that is a better 

way to go, would give us that along with some adjustments for geography. Living in Manhattan and being poor is different than living in rural east Texas and being poor, and our statistics ought to 

reflect that. 

I also question the data limitations emphasized by the Census 

Bureau itself in reviewing changes in median household income 

over several years. For example, according to the Census Bureau 

data, the current population survey aren’t useful for looking at 

changes for the same household over time. So there is no attempt 

to follow households if they move nor are any households in the 

current population survey for more than 2 consecutive years. So we 

are not really tracking families as they move up and down, mainly 

up, the economic ladder. 

Other census data consistently has shown high rates of movement from one income group to another over time, including the 

middle fifth. For example, according to one census study, about 50 

percent of households in the middle fifth move to another income 

group over as little as 3 years. 

The Census Bureau has said research shows health insurance 

coverage is underreported for a number of reasons. It reports the 

percentage of people without health insurance in 2008 is not statistically different from 2007 at 15.4 percent. But there is no doubt 

that this information today, rather than being used as an attempt 

to flog this government-run plan back to life, ought to be the starting point of how do we really get more accurate discussion, more 

accurate data on these two very important groups, families who are 

living in poverty and those who do not have health insurance. 

The final point. I have been looking forward for many years to 

working on health care and was really pleased when the Republican Congress created the Children’s Health Insurance Program 

and funded it for 10 years. I was pleased that we finally, as Republicans, were the ones who created some subscription drug plans for 

our seniors, which is working much better than expected or anticipated. And I was pleased that we doubled the research for the National Institutes of Health in such lifesaving medical breakthroughs in cancer and chronic illnesses. I still—and I am disappointed that although the House passed relief for small busiVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
6 

nesses and reforms, tort reforms in lawsuit abuse, it was defeated 

in the Senate over the years. 

I still think the President is exactly right to push for health care 

reform in America today. Unfortunately, the American public is not 

buying this plan. They are absolutely right in knowing the government will interfere between the doctor and their patient, some of 

the most intimate decisions they are making. They know this will 

add terribly to the huge deficits we already have, and they know 

instinctively that this will lead to rationing in future years as it 

does in Medicare and as it does in the VA. 

So I was disappointed last night. I thought the President was 

needlessly partisan, I think probably destroyed any opportunity for 

both parties to work together to really come up with a thoughtful 

solution for health care, which is really what families want to have 

happen. 

With that, I yield back. 

Chair Maloney. Thank you. Congressman Cummings. 

OPENING STATEMENT OF THE HONORABLE ELIJAH E. 

CUMMINGS, A U.S. REPRESENTATIVE FROM MARYLAND 

Representative Cummings. Thank you very much, Madam 

Chair. Today’s Census Bureau report is a stark reminder of the 

economic inequalities that continue to permeate our society. While 

the current recession has been equal opportunity, impacting almost 

every sector of the economy and crossing racial and geographic 

boundaries, there is also a widening and growing gap between society’s haves and have-nots. The inequalities that persist are disappointing, disheartening, and given the policies pursued by the 

previous Administration, clearly foreseeable. Eight years of blind 

adherence to deregulation and supply-side policies resulted in reduced income for African Americans and Hispanics, continuing gender pay inequity, and an increasing number of children born into 

poverty. 

As my colleagues know, I have never been one to mince words 

and today is no exception. I remain outraged at the outlook facing 

so many African American children and so many children in our 

country. According to the Annie Casey Foundation, between 1994 

and 2000, the child poverty rate fell by 30 percent. This was the 

largest decrease in child poverty since the 1960s. Key children’s 

health indicators improved across every major racial group and in 

nearly all of the states. Since 2000, however, child poverty has increased roughly so that roughly 2.5 million more children lived in 

poverty in 2008 than in 2000. That is 2.5 million children who have 

been left behind in the wealthiest Nation in the world. 

In my home state of Maryland approximately 133,000 children 

live below the poverty line, another 209,000 live at 125 percent of 

poverty. Through no fault of their own, these children find themselves questioning when or if the next meal is coming. A young 

man from Maryland named Deamonte Driver is a tragic example 

of how vulnerable our children are. In 2007 Deamonte needed $80, 

an $80 tooth extraction to fix a painful abscess. Without access to 

dental treatment, the abscess went untreated and predictably became infected. The infection spread to his brain and ultimately it 

took a 12-year-old from us. Deamonte died because he could not get 

7 

$80 worth of treatment. That happened in America. That happened 

40 miles from where—less than 40 miles from where we are sitting 

right now. 

One hundred forty-three million Americans find themselves without dental coverage. And while every one of them is at risk for serious health problems, again the most defenseless and vulnerable are 

our Nation’s children and young adults. To that end I appeal to my 

colleagues in the Congress to guarantee that dental coverage was 

part—included in the recent State Children’s Health Insurance 

Program. I am pleased that this legislation was included in the 

SCHIP bill that President Obama signed into law. 

I know that today’s report does not measure the impact of 

SCHIP, the stimulus, and the other actions taken to assist families 

who are most in need in our country. However, the report does underscore and reinforce the need for and the timeliness of these actions. Not only is poverty increasing but state and local governments cannot bear the brunt of the crisis and the public resources 

upon which the working class depend are becoming scarce. 

As we saw earlier this summer, 18 states have been forced to 

borrow over $12 billion from the Federal Government to maintain 

their unemployment funds. Further, the essential temporary assistance to needy families has become increasingly unavailable under 

the weight of continuing economic turmoil. 

Despite this dismal outlook, we are seeing signs of hope. Unemployment has held relatively steady over the last few months and 

the Labor Department announced this morning that initial jobless 

claims were fewer than expected. 

So we still have a lot of work to do; however, today’s report reminds us why continued decisive action by the Congress is required 

as well as a commitment to understanding the real impact of past 

policies on those who are at risk. 

So I look forward to the testimony of all of our witnesses today 

and a productive discussion. The stakes for our families have never 

been higher. 

And with that, Madam Chairman, I yield back. 

[The prepared statement of Representative Elijah E. Cummings 

appears in the Submissions for the Record on page 41.] 

Chair Maloney. Thank you very much. 

Congressman Burgess. 

OPENING STATEMENT OF THE HONORABLE MICHAEL C. 

BURGESS, M.D., A U.S. REPRESENTATIVE FROM TEXAS 

Representative Burgess. Thank you, Madam Chairman. The 

hearing that we are having today, Income, Poverty, and Health Insurance Coverage: Accessing Key Census Indicators of Family WellBeing, is certainly curious in its timing coming after the presidential speech last night. 

Undoubtedly the issues of economic disparity are especially acute 

in a recession. Incomes stagnate, jobs are lost, people are suffering. 

But, I cannot recall a single time this committee has held a hearing 

on the U.S. Census report on income poverty and health insurance 

coverage in the United States a mere 3 hours after the report was 

released to the public. This is after all an annual report, a report 

which is surveyed every year and delivered several months later. 

8 

So why the critical time, the curious timing, about holding this 

hearing? Indeed, in light of the President’s speech last night, and 

Senator Brownback referenced this, we heard some curious numbers from the President last night. Instead of 47 million uninsured, 

he talked about 30 million uninsured, so I would be very interested 

to see the witnesses comment on that. 

Issues of income and poverty have been with us for decades. 

When Medicaid was enacted, the percentage of poor in this country 

was around 13.9 percent, and today with the population 100 million larger, the poverty rate is 12.5 percent. So it arguably could 

show some progress, but it is essentially the same number. And 

again I would ask the question why is it critical to have—the timing of this hearing becomes, again, of interest. 

Now Dr. Karen Davis, for which I have very high regard, is going 

to testify today before this committee and the title of her statement 

is Hearing on the Uninsured before the Joint Economic Committee. 

So if our witness is speaking about the uninsured, then that is 

what is really what this hearing is about. This hearing isn’t about 

trying to find more answers in how we can solve the income disparities. If it were, we would have experts in education who would 

talk to us about the number one cause of economic disparity is the 

lack of education. 

This hearing isn’t about trying to find more answers about how 

we can solve issues of the poor. If it were, where are the advocates 

for the chronically poor who can tell us what makes people poor 

and what makes them remain that way? 

This hearing is about health care, and merely providing health 

insurance is not always the answer. Providing health insurance to 

the poor will not give them better quality of care. Sometimes it 

doesn’t even give them care at all. It can only help mitigate the 

cost of care. 

Right now we have Medicaid and for kids we have the State 

Children’s Health Insurance Program. Again it begs the question. 

When you look at the numbers in Medicaid there are 6.4 million 

people who the Census Bureau is not counting even though they 

are enrolled in the Medicaid program; so the Medicaid undercount 

is 6.4 million. Eligible but not enrolled in government coverage, an 

additional 4.3 million were eligible for public programs like Medicaid and the State Children’s Health Insurance Program but were 

not enrolled. And again when we had the discussions about extending the State Children’s Health Insurance Program, many of us on 

my side felt that it was critical to find those kids, albeit they are 

hard to find, albeit they live sometimes in desperate circumstances, 

but those are the very children that we should be helping with the 

State Children’s Health Insurance Program and to expand coverage 

to higher income levels without going after the children that should 

be covered first seems to me to be an odd way to approach trying 

to improve a Federal program. 

And income does not necessarily determine access to health care. 

We all know about the EMTALA laws. We have a provider mandate in this country. As a physician who practiced for 25 years, I 

was well aware that when I got a call in the middle of the night 

to attend a woman in labor, I had 30 minutes to show up or I could 

be fined as much as $50,000. Indeed, that was burned into my psyVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
9 

che, and there never once was a time where I failed to respond to 

that call in the middle of the night and deliver care, whether compensated or not, because I knew the Federal Government was holding a fairly big stick over me to ensure that that occurred. 

The numbers are disconcerting, but at the same time I am not 

sure that we are following the numbers accurately and validly. 

Now Senator Brownback talked about community clinics, federally 

qualified health centers. I don’t see the number of people covered. 

Fifty million people who get their care in a federally qualified 

health program are apparently not accounted for in the census report. There are huge problems with the geographic disparities of 

federally qualified health centers. I have worked for 5 years to get 

one in a relatively or a very—an area in my district that has a very 

high infant mortality rate, and we have only this July managed to 

get one opened up and it took an enormous amount of work both 

locally and up here to get that done. That shouldn’t have been so 

hard to do because it was a program that was already in existence 

and didn’t require a great deal of additional funding and yet will 

deliver a lot for the citizens of Fort Worth. 

Now, as we analyze the critical issue of providing cost-effective 

health care to every American, I think it is important to note that 

access to health care should not depend on income, it should not 

depend on race nor should the solution immediately be to give everyone health insurance. Access to health care is critical but access 

to health insurance is merely a facilitator. 

One of the takeaways I hope we have from this hearing is how 

we reduce the costs of health care so that everyone can afford it 

whether they are insured or not. 

I yield back the balance of my time. 

[A letter from Representative Michael C. Burgess, M.D. to Rebecca Blank appears in the Submissions for the Record on page 42.] 

[A letter from Representative Michael C. Burgess, M.D. to Cecilia 

Rouse appears in the Submissions for the Record on page 43.] 

[A letter from Cecilia Rouse to Representative Michael C. Burgess, M.D. appears in the Submissions for the Record on page 44.] 

Chair Maloney. I thank the gentleman for his statement and 

all of the panelists for being here. I thank my colleagues. 

I would now like to introduce the first panel. We have two panels 

today. Dr. Rebecca Blank is Under Secretary of Commerce for Economic Affairs as the economic adviser to the Secretary of Commerce and head of the Economic and Statistics Administration. Dr. 

Blank has management responsibility for the two top statistical 

agencies in the United States, the Census Bureau and the Bureau 

of Economic Analysis. Prior to coming to the Commerce Department, Dr. Blank was the Robert S. Kerr senior fellow at the Brookings Institution. Dr. Blank graduated summa cum laude in economics from the University of Minnesota and holds a Ph.D. in economics from MIT. She was dean of the Gerald R. Ford School of 

Public Policy at the University of Michigan and co-director of the 

National Poverty Center. Dr. Blank served as a member of President Clinton’s Council of Economic Advisers. 

Dr. Cecilia Rouse is a member of the President’s Council of Economic Advisers. Dr. Rouse is currently on leave from Princeton 

University where she is the Theodore A. Wells Professor of EcoVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
10 

nomic and Public Affairs. She has been a senior editor of ‘‘The Future of Children’’ and the Journal of Labor Economics. She is the 

founding director of the Princeton University Education Research 

Section and has been the director of the Industrial Relations Section. She was a member of the MacArthur Foundation’s Research 

Network on the Transition to Adulthood. Rouse served on the National Economic Council under President William Clinton from 

1998 to 1999. She holds a Ph.D. in economics from Harvard University. 

Thank you very much and, given the importance of this issue, I 

grant Dr. Blank and Dr. Rouse as much time as they may consume. Thank you. 

STATEMENT OF DR. REBECCA BLANK, UNDER SECRETARY 

FOR ECONOMIC AFFAIRS, DEPARTMENT OF COMMERCE 

Dr. Blank. Thank you very much. It is always dangerous to give 

too much time to speakers, you know. 

Madam chairwoman, Ranking Member Brady and Senator 

Brownback, and distinguished members of the committee, I want 

to thank you for inviting me here to discuss the income, poverty, 

and health insurance data released today by the U.S. Census Bureau at the Department of Commerce. Today’s data release provides detailed information on the economic circumstances of American families in the year 2008. 

I don’t need to remind you that 2008 was not a good year economically. The recession officially started in January of that year. 

GDP fell by 1.9 percent over the year, and employment fell by 2.2 

percent, while the unemployment rate rose from 4.9 percent of the 

labor force to 7.2 percent. The last half of the year was particularly 

difficult with gas prices that reached over $4 per gallon in midsummer, a virtual collapse in the financial sector that fall, and the 

start of a global recession. Under these circumstances it is not surprising that the news in today’s data release is not good. 

The data released today indicate that between 2007 and 2008 

real median household income fell by 3.6 percent, from just over 

52,000 to just over 50,000. This is the lowest level recorded since 

1998, indicating there was little growth for the average American 

family, the family that is in the middle of the income distribution, 

over the past 10 years. Median income fell in all families and 

among all race and ethnicity categories. These income changes 

were in part driven by declines in real median earnings of full-time 

workers among both men and women. 

The poverty rate rose from 12.5 percent in 2007 to 13.2 percent 

in 2008, with 39.8 million individuals living in families whose income was below the official Federal poverty line. This is the highest poverty rate since 1997. Poverty also increased particularly 

among Hispanics and among noncitizens. Poverty increases were 

also concentrated in the Midwest and in the West. A bit of good 

news is that the elderly experienced no increase in poverty during 

2008. And Mr. Brady, I would be delighted to come back and talk 

about what our poverty statistics do include and don’t in question 

and answer if that would be useful. 

I am not going to discuss the health insurance numbers in this 

report. That will be the subject of Dr. Rouse’s testimony. These 

11 

2008 numbers are better understood when they are put in the context of the historical trends. Since 1979, income among middle 

American families has risen but most of that increase occurred during the expansion of the 1980s and the expansion of the 1990s. 

If you have a copy of my testimony, Table 1 shows this, but I will 

also say it verbally. Table 1 indicates that median income rose just 

under 11 percent in the expansion following the recession of the 

early 1980s. It rose 13 percent following the recession of 1991. But 

the expansion of the 2000s was different. Median income rose only 

1.6 percent during the expansion between 2001 and 2007. With the 

economic turndown in 2008, we are back to a level of median income similar to where we were 10 years ago. Middle income Americans made no gains in income over this time period. 

We see a similar pattern when we look at poverty rates. The poverty rate always rises steeply during recessions but falls during expansions. As Table 1 indicates, poverty fell by 1.5 percentage points 

during the expansion of the 1980s and fell by almost 3 percentage 

points during the expansion of the 1990s. Following the expansion 

that came after 2001, however, poverty continued to rise. Poverty 

rose by 8/10 of a percentage point over the expansion of the 2000s. 

So a higher share of the population was poorer in 2007 than in 

2001. The 2008 data show a further steep increase as expected in 

a recession year, but the fact that the expansions in the 2000s did 

nothing to reduce poverty means increases in 2008 are off a higher 

base. 

Clearly, the bad news about income and poverty in today’s data 

mirrors the bad news throughout the economy in 2008. The reduced income and higher poverty numbers directly reflect the increases in unemployment over 2008 that lowered earnings among 

American families. 

But we are seeing now some signs of recovery in the economy, 

and private sector forecasts predict positive GDP growth during the 

second half of this year. I expect that the economy overall will not 

show the same declines from 2008 into 2009 as it did from 2007 

into 2008. Unfortunately, even with an improving economy, the 

higher unemployment rates that we are experiencing, and will continue to experience during 2009, will almost surely lead to further 

declines in income and further increases in poverty in the current 

year. Unemployment lags the business cycle, and until job growth 

is reestablished, income and poverty will not change those trends. 

The long-term challenge is to assure that the economic recovery 

that we are entering brings better economic times to all Americans 

with increases in income throughout the income distribution. This 

Administration, since taking office at the beginning of 2009, is 

working on a host of policies designed to improve the lives of American families. We are focused on improving educational opportunities from preschool through college, reforming health care so that 

all Americans have access to insurance and families are not bankrupted by health emergencies, and helping to create a growing sector of green business and green jobs to improve both energy efficiency and to employ more Americans in jobs that make the environment better for us all. Furthermore, the stimulus package approved by Congress this past winter raises incomes and helps creVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
12 

ate jobs, improving family well-being in 2009 relative to what it 

would have been without this additional assistance. 

Today’s data tells us what we already knew: 2008 was not a good 

year economically for Americans. Fortunately, this is old news. 

There are signs of economic recovery throughout the economy aided 

by the measures that Congress and this Administration have taken 

to restore credit markets and stimulate economic growth. We have 

good reason to believe the news in future years is likely to be better. 

Thank you. 

[The prepared statement of Rebecca Blank appears in the Submissions for the Record on page 48.] 

Chair Maloney. Thank you so much. 

Dr. Rouse. 

STATEMENT OF DR. CECILIA ROUSE, MEMBER, COUNCIL OF 

ECONOMIC ADVISERS 

Dr. Rouse. Chair Maloney, Vice Chairman Schumer, Ranking 

Members Brady and Brownback, and other distinguished members 

of the committee, thank you very much for inviting me to join you 

today to discuss the Census Bureau’s release of data on income, 

poverty, and health insurance coverage in the United States in 

2008. 

The data released today provide an important piece of our overall 

understanding of the economic conditions that existed during the 

first year of the current recession. Based on survey data of households last March regarding their income and health insurance coverage during the 2008 calendar year, the data confirmed what we 

had already surmised. Along with rising unemployment last year, 

families were trying to get by with less income and many more had 

slipped into poverty and the number of people without health insurance continued to increase. These data confirmed that the recession was well underway in 2008. 

These trends reinforced the need to expand health insurance coverage to more Americans, as would be achieved through the President’s plan for health insurance reform. They also provide a new 

lens for which to view the critical importance of the American Recovery and Reinvestment Act of 2009 and many other programs 

proposed by President Obama designed to help increase incomes, 

reduce poverty, and pull the economy out of recession. 

In the remaining minutes of my oral testimony, I would like to 

give an overview of the trends in health insurance coverage in the 

census report as well as amplifications for health insurance reform 

as articulated by the President last night. I would then like to review some of the Administration’s policies designed to increase incomes and reduce poverty. More complete remarks are included in 

my written statement. 

According to the new census estimate, the number of individuals 

without health insurance increased significantly from 45.7 million 

in 2007 to 46.3 million in 2008. The data also indicates that the 

fraction of U.S. residents without health insurance stood at 15.4 

percent in 2008, a rate that was only slightly higher than that in 

2007 and substantially higher than that in 2000. The estimated 

13 

number of U.S. residents without health insurance increased by almost 8 million from 2000 to 2008. 

These overall changes mask important differences by the type of 

health insurance that individuals have. The fraction of U.S. residents with employment-based health insurance declined significantly from 59.3 percent in 2007 to 58.5 percent 2008, continuing 

a trend from the past several years, as there has been a 5.7 percentage point decline in the fraction of U.S. residents with private 

employment-based health insurance since 2000. In contrast, from 

2007 to 2008, the fraction of individuals with public health insurance increased substantially. 

Most of this increase was attributable to a rise in the fraction 

with Medicaid or CHIP, which was likely driven by the declining 

incomes caused by the first year in the recession. The change in 

health insurance coverage from 2007 to 2008 differed significantly 

by age. For example, the fraction of adults between the ages of 18 

and 64 without health insurance increased significantly and as a 

result more than one out of every five nonelderly adults was without health insurance in 2008, an increase of more than 3 percentage points since 2000. In contrast, the fraction of children without 

health insurance declined significantly during the same period to 

nearly—to just under 10 percent in 2008. As a result of this decline, both the number and fraction of children without health insurance is at its lowest level since the census began collecting such 

comparable data in 1987. 

A close examination of the Census Bureau’s data reveals that the 

decline in the number of children without health insurance was almost entirely driven by an increase in their Medicaid coverage, 

which more than offset a substantial decline in private health insurance coverage among children. While this strongly suggests that 

Medicaid has cushioned the effects of the economic downturn on 

children, we must remember that prior to 2007 increases in Medicaid coverage were serving to offset substantial declines in private 

health insurance coverage among children, which fell from 70.2 

percent in 2000 to 64.2 percent in 2007. 

Before discussing the Administration’s policies, it is worth highlighting that the estimates from the Census Bureau are meant to 

count the number of individuals who are continuously uninsured 

throughout the year and yet a big motivation for health insurance 

reform is to address the instability that results when people risk 

losing their health insurance when they move, lose their job, or 

change jobs. 

Estimates from other surveys regarding the number who are uninsured at some point—at any one point during the year suggest 

that the number of those who experience such instability is much 

higher. It is also important to remember that the census data are 

from 2008. Recent survey data from Gallup indicate that the fraction of adults without health insurance has continued to increase 

this year. Gallup data suggest a 1.5 percentage point increase in 

the percent of adults who are uninsured in the average month in 

the first 6 months of 2008 compared to the average month since— 

in the first 6 months of 2009. 

The Administration has aggressively worked to ensure that all 

Americans are covered by health insurance. In February, President 

14 

Obama signed into law an historic expansion of the Children’s 

Health Insurance Program, and the Recovery Act included the unprecedented government subsidy of COBRA payments, enabling 

millions of unemployed workers to maintain their health insurance 

while continuing to look for new employment. Of course reform as 

articulated by the President last night would result in an even 

larger expansion of health insurance coverage by providing new tax 

credits to help people buy insurance and to help small businesses 

cover their employees. 

In the President’s plan, individuals would be able to shop for 

health insurance in an exchange where they could compare the 

price and quality of alternative insurance products and select the 

one that best fits their needs. The President’s plan would also provide more stability and security for those who currently have insurance by prohibiting excluding individuals with preexisting conditions and preventing insurance companies from dropping coverage 

when people are sick and need it most. It would also cap out-ofpocket expenses to protect people financially when they get sick 

and eliminate extra charges for preventative care. 

The trends summarized above during the last several years are 

likely to continue without decisive action. Health insurance premiums are rising three times more rapidly than wages and thus an 

increasing share of workers and their families will simply be unable to afford insurance if current trends continue. 

The committee also asked me to address what steps the Administration is taking to reverse the trends in income and poverty and 

improve the well-being of families across the country. The largest 

and most visible strategy pursued by the Administration and Congress was to pass the nearly $800 billion Recovery Act. Through a 

balanced package of State fiscal relief, individual tax credits, and 

an increase in the Federal safety net, much of the Recovery Act 

provides short-term help to the ailing economy. For example, it has 

helped states maintain important state programs such as Medicaid 

and to retain public sector employees during a time of fiscal distress. The Recovery Act also includes billions of dollars in tax relief 

for more than 95 percent of working families to help them retain 

more of their take-home pay. It also includes a significant increase 

in the Federal safety net which is benefiting millions of struggling 

Americans while simultaneously helping to buoy the economy by 

supporting aggregate demands. 

Yesterday the Center on Budget and Policy Priorities released estimates that find that several provisions of the Recovery Act, including improvements in health unemployment insurance, tax credits for working families, and an increase in food stamps, prevented 

6 million Americans from falling into poverty and reduced the severity of poverty for an additional 33 million in 2009. Clearly getting people back to work is critical for increasing incomes and reducing poverty. To this end the Recovery Act increased funding for 

job training, which can be vital to helping displaced workers retrain for promising jobs in areas of high demand. 

Recognizing that we not only want to recover from this recession 

but also build an even stronger economy, the Recovery Act also 

contained provisions to help boost incomes in the longer term. Two 

of the best documented long-term public investments to raise inVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
15 

comes are those in early childhood education and public education. 

The President’s 2010 fiscal year budget goes even further with investments in high-quality early childhood education, a simplified 

Federal financial student aid form, and an ambitious plan to invest 

in our Nation’s community colleges. 

Finally, the President’s budget also calls for funding promising 

strategies to help those who were struggling even before the start 

of the current recession. As one component, his budget proposes investing in innovative, comprehensive strategies for helping neighborhoods. The budget also proposes grants to states to provide 

home visits for low income parents and pregnant women. Such 

home visitation programs have been shown through rigorous research to be highly effective in improving child health and development, readiness for school, and improving parenting ability. 

Thank you for giving me an opportunity to review the data in 

this new census report and to share the Administration’s strategies 

for returning prosperity to all Americans. I am happy to answer 

any questions you may have. 

[The prepared statement of Cecilia Rouse appears in the Submissions for the Record on page 52.] 

Chair Maloney. Thank you. And I will begin the questioning. 

Many of us are very focused on expanding health insurance coverage in the President’s speech last night, so I would like to address the health care issue. 

Our Nation’s businesses are under tremendous cost pressures 

right now, and due to rising health insurance premiums and falling 

revenues, they are under even more pressure. Could you elaborate, 

Dr. Rouse or Dr. Blank, on how these trends have impacted individual health insurance coverage both over the course of the last 

year and the longer term? 

Dr. Rouse. I am happy to respond, although, Dr. Blank, if you 

want to as well. 

So there is no question that with increasing health insurance 

premiums, an increasing number of employers are dropping coverage for their workers. Those who are not—part of the reason that 

they are dropping the coverage is because the premiums are just 

too expensive. Those companies that are not dropping coverage are 

shifting some of the increase in premiums onto the compensation 

of employees. So what workers are finding is that a greater share 

of their total compensation is in the form of health insurance coverage rather than in the form of take-home pay. 

Chair Maloney. And how will the health insurance reform proposals currently under consideration in Congress help ease the erosion in health insurance coverage rates? 

Dr. Rouse. The President’s plan would help to—first of all, a 

major component of the President’s plan is to get the—try to get 

the cost increases under control. And so if we are able to slow the 

rate of growth of health insurance costs, that will definitely spill 

over into controlling the cost of health care premiums, which will 

lower the cost for employers and workers. In addition, when there 

are millions of Americans who are uninsured, many of them do 

seek access in other places, and part of those uninsured costs are 

also being borne by those individuals who do have insurance and 

also by expanding coverage is another form—that is one small comVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
16 

ponent of actually controlling some of the increasing costs in health 

insurance. 

Chair Maloney. Dr. Rouse, the CEA released a report earlier 

this year explaining why health insurance reform was critical to 

our Nation’s economic health, and that report suggested that 

health insurance reform could have a dramatic impact on families’ 

incomes. The health reform legislation proposed by the President 

would result in almost 10,000 in additional income for the typical 

family of four. 

Could you elaborate on the connection between health reform 

and family income? 

Dr. Rouse. As I was just mentioning, one of the problems with 

our current system of health insurance is that the costs have continued to skyrocket. And if we are able to bend the curve on health 

care costs, if we are able to slow the increase in costs of health insurance, what that will mean is that instead of workers taking so 

much of their compensation in the form of health care insurance, 

instead they will be able to take home a greater share of total compensation in terms of income. 

Dr. Blank. Can I also respond to that? 

Chair Maloney. Certainly. 

Dr. Blank. One of the real concerns in terms of trying to look 

at the well-being of families is to look at what they actually have 

to spend on food, clothing, shelter, and necessities. Out-of-pocket 

medical expenditures have been growing in this country. And if indeed health insurance reform is effective at both covering more 

people with access as well as controlling costs, that really will affect the well-being in terms of the take-home pay that people have 

to spend on the things that they want to spend it on, as opposed 

to the things they have to spend it on, such as health care. 

Chair Maloney. My time is almost up, but the health insurance 

reform proposal includes subsidies aimed at making health insurance affordable for low and moderate income families, and could 

you elaborate on why such subsidies are important for achieving 

universal coverage? 

Dr. Rouse. The President’s plan—a major component of the 

President’s plan is that there should be shared responsibility. In 

order for there to be—the way insurance works is by pooling risks 

across many individuals we can lower the cost for any one individual, and he strongly believes that there should be shared responsibility across individuals, businesses, and the government. 

However, with that shared responsibility could be quite difficult for 

many families, for especially low income families, and so in order 

to ensure that everybody is covered by health insurance the President’s plan recognizes that there will need to be subsidies for some 

families. 

Chair Maloney. Thank you. My time has expired. 

Senator Brownback. 

Senator Brownback. Thank you very much. Ladies, thank you 

very much for joining us too and for your presentation. 

I believe the President’s price tag on the proposal was—I thought 

he said last night around $900 billion over 10; is that correct? 

Dr. Rouse. That is correct. 

17 

Senator Brownback. I didn’t quite catch last night how he was 

breaking down the payment for that. He did say he is not going to 

add to the deficit. So where is the money coming from? 

Dr. Rouse. The President is committed to paying for the entire 

plan. He does not believe that the plan should add to the deficit, 

$1 to the deficit. The plan will be paid for through a combination 

of making Medicare and Medicaid more efficient. Currently there 

is—— 

Senator Brownback. How much out of that? 

Dr. Rouse [continuing]. I think—I should probably get back to 

you with the exact. I don’t think—we are still working on—we have 

to see the details, but I think he is working at roughly half of it 

would come out of squeezing the inefficiency in the current system, 

and then he is also looking to raise revenue elsewhere. 

Senator Brownback. So about $450 billion out of savings from 

Medicare and Medicaid and $450 billion in tax increases? 

Dr. Rouse. This will depend very heavily on what the ultimate 

plan looks like, but what the President is committed to doing is 

finding savings from the inefficiency in the current program and 

raising revenue in other places. 

Senator Brownback. Have you had a chance to look at that 

anywhere on how you save that quantity of money on Medicaid or 

Medicare? I mean that is a pretty big number to try to squeeze efficiencies in a system that—I presume people have been trying to do 

that for some period of time but—— 

Dr. Rouse. I believe that is certainly true. There is a lot of evidence that if you look at the expenditures in the United States 

compared to other countries that we spend a lot more compared to 

other countries for the kind of outcomes, health outcomes that we 

get. If you look at data across counties in the United States, you 

find that in two counties where there are similar demographics, 

similar health care provisions, similar outcomes, in one county they 

are spending much more than the other. 

So we know there is inefficiency. Medical experts, researchers 

and doctors, have been looking at this and specifically identified 

ways in which the current system is inefficient, and the President 

is looking at a range of options and will consider a range of options 

in order to do so. 

Senator Brownback [continuing]. What number of Americans 

presently are not getting health care? 

Dr. Rouse. I don’t actually know the answer to that question. 

Dr. Blank. I don’t know. Some of the most recent data we have 

available is this data. Unfortunately, there is quite a lag on this; 

so we know who doesn’t have insurance. That is a different question than who doesn’t get health care. 

Senator Brownback. That is correct. 

Dr. Blank. Obviously a good number of people get some form of 

uncompensated care through emergency services. So I think the 

evidence is it is much more expensive to provide those goods and 

services. 

Senator Brownback. But do you know of any data where we 

could collect that, what percent or what number of Americans are 

not getting health care? 

18 

Dr. Blank. The Medical Expenditure Survey does collect all 

sorts of information on exactly what type of health care over a period of time people do receive. So—— 

Senator Brownback. I want to know who is not getting health 

care. 

Dr. Blank [continuing]. You mean the definition of both what is 

needed as opposed to what is received, and I don’t believe we have 

a data set that does that clearly. 

Senator Brownback. Are you working at that data set? 

Dr. Blank. I know there is work inside the Department of 

Health and Human Services to improve some of their measures on 

this. They have a variety of more detailed health insurance and 

medical coverage and care surveys that they collect. I can’t speak 

to the specifics of that. 

Senator Brownback. It is pertinent and germane to the earlier 

question because you have got a system that—you cited the Gallup 

poll. I have seen a Gallup poll that says 80-plus percent of Americans are satisfied with their own health care. Maybe you haven’t 

seen that one or I would be happy to provide that to you. And you 

have a huge amount of cross-subsidization taking place in this current system. And you are going to take $450 billion out of it in 

Medicare and Medicaid, and if you do that you are going to have 

a big impact on the system. I presume you are going to try to make 

it up on the other end of it as a proposal, but I wonder if you are 

going to really end up with a better system than if you would go 

incrementally at these pieces where we are now, trying to get at 

cost and get at coverage rather than let’s go at a different system. 

And if you are going to pull that much money out of the current 

system on it, which I really—I will be very impressed to see getting 

$450 billion out of Medicare and Medicaid without impacting current coverage and support for it. And part of the proposal is to up 

Medicaid rates and coverages in the states, which is going to drive 

up costs to the states. I think this is a pertinent number to find 

both of those out because it is going to have a big impact on current recipients of health care in the system. 

So I am hopeful we can get that number of Americans that are 

not currently getting any health care, or have some lack of coverage, and the impact that is going to have when you take $450 

billion out of Medicare and Medicaid. 

My time is up. I hope you could help us with some of those numbers. 

Chair Maloney. Thank you, Senator. 

Mr. Hinchey. 

Representative Hinchey. I think it is very clear. We have a 

circumstance in health care where the price of health care is going 

up and the number of people who are able to obtain health insurance is going down. More and more people are losing their health 

insurance. We have a very dramatic set of circumstances there. 

More than 46 million Americans without health insurance, and 

if they are getting health care, they are not getting it in a preventive way. They are getting it only when they are desperate and 

they can find their way into the emergency room of a hospital or 

some other situation. This is what is driving up the price of health 

19 

care in this country so dramatically and how it has risen so much 

over the course of the last decade. 

I would like to ask you a question about income and equality. As 

I mentioned and as you mentioned, Dr. Blank, the households were 

economically worse off at the end of 2008 than they were in 2000. 

The situation got substantially worse over the course of those 8 

years. You had real median household income in 2007 go down 

$324, or 0.6 percent below where it was in 2000. In 2008, real median household income in the U.S. fell 3.6 percent—from $52,163 

in 2007, to just over $50,000 in 2008. 

So the real median income for the wealthiest households in this 

country increased, and increased dramatically, between 2000 and 

2007, while incomes for households at the middle and lower incomes declined. That is the situation that we have seen over the 

course of the previous 8 years. Income at the lowest 20th percentile 

fell 6 percent, $1,285; and at the 10th percentile it fell by 4.5 percent, $579. As a result of that, we have seen minorities experiencing the largest drop in household income between 2000 and 

2007. 

The income inequality remained unchanged in 2008. 

I would just ask you if you can give us an answer to this question: What policies can be attributed to cause the situation for 

lower-income earners and minorities to have become worse off during that period of time between 2000 and 2008? 

Dr. Blank. So there is enormous research literature in the economics profession, as you can imagine, trying to answer exactly 

that question. And I think that the consensus is that a good 

amount of this is simply shifts in the demand for different types 

of skills in the labor market, so that we have gone through an extended period where the demand for more skilled workers is rising 

quite rapidly and the demand for less skilled workers is falling. 

The result of that, in part, has been rises in the wages among more 

skilled workers, who are up near the top of the income distribution, 

and declines in the wages of less skilled workers, who are near the 

bottom of the distribution. 

Now, there are other things happening as well in terms of shifts 

between the U.S. versus other countries. There are shifts in terms 

of unionization which—as unionization continues to decline, that 

reduces wages disproportionately among low-skilled workers. 

So you see a number of trends happening out there, all of which 

have resulted in exactly these shifts. Some research suggests that 

at the very top of the distribution a disproportionate share of the 

very large income growth was occurring in the financial sector. 

That, of course, mirrors the whole bubble of the financial sector 

that we are all too well aware of, given what happened in 2008 

when some of that broke. 

Representative Hinchey. Ms. Rouse, any comments on that? 

Dr. Rouse. I was also going to talk about the role that—it is 

very clear that what employers demand now are workers with 

strong analytical skills, strong interpersonal skills, skills that one 

acquires by not only completing high school, but actually going on 

to postsecondary education. So there is a very strong relationship 

between this rising inequality and the types of education that indiVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
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viduals have, which underscores the importance of a strong educational and training program. 

Representative Hinchey. I assume that the change in Federal 

taxes in 2003 had an impact on that as well. It put more money 

in the hands of the wealthiest people, as we have seen, and it also 

caused a decline in the income and economic sustainability of middle-income and lower middle. 

Dr. Blank. All the indications of people who have looked at the 

effects of those tax changes agree that is absolutely true. The data, 

you are looking at here, is pretax income, so this does not net out 

taxes. So the numbers you were citing would look even bigger if 

you took that into account. 

Representative Hinchey. Thank you very much. 

Chair Maloney. Mr. Brady. 

Representative Brady. Thank you, Madam Chairman. Unfortunately, the numbers show that actually the top 1 percent wage 

earners actually gained more under President Clinton’s years and 

ended up paying more taxes under President Bush’s years. This 

sort of points, though, to the problem here which is, I think this 

new government is relying too much on funny numbers for important policy decisions. 

The stimulus was a great example. We were promised that the 

unemployment rate would not go above 8 percent if we passed that 

bill. It is at 9.7 percent today and still growing. Said it would create an immediate jolt to the economy. We have lost another 2 million jobs. 

And in the sector—I always follow the manufacturing and construction sectors because we were told by the Administration 

economists that the stimulus would disproportionately create new 

jobs in the manufacturing and construction sectors. In fact, they 

have lost 900,000 jobs since March. They have actually—the areas 

where the White House promised the big job gains have seen the 

biggest losses. 

The stimulus, unfortunately, is slow. Too much of it is wasted 

and not focused on jobs, which is why the majority of Americans 

not only believe the stimulus isn’t working, but it will make the situation worse for the country in future years. 

The poverty numbers, I think, are equally flawed. 

Dr. Blank, in testimony just last September before this committee you said, ‘‘There’s widespread agreement that our poverty 

measure is badly flawed. It needs to be updated.’’ You observed, ‘‘In 

the year since the current definition was developed, the biggest expansions in antipoverty assistance come through the tax system, 

such as expansion of the earned income tax credit, through in-kind 

benefits such as food stamps and Section 8. Because the historical 

poverty measure is based only on family cash income, it is unaffected by many of these changes.’’ 

You went on to say, ‘‘Why does this matter? Our measure of poverty rate is insensitive to many of the most significant policy 

changes designed to help low-income families that we’ve made in 

this country. In a fundamental way our poverty measure has 

undercounted policy gains.’’ 

Dr. Blank, do you still hold this position, that our poverty measure is badly flawed and needs to be updated? 

21 

Dr. Blank. Our official poverty measure measures only certain 

things and not others. It is a measure of pretax income, cash income. And pretax cash income is primarily what people get from 

their jobs. So in a recessionary period, when you lose a lot of employment, precash income tells you how much has been lost because of that loss of employment. In that sense it tells you something, but it does not measure the effect of a lot of the policies that 

we have in place. 

Representative Brady. You would stand by that statement 

that this poverty measure is badly flawed and needs to be updated? 

Dr. Blank. I strongly encourage people to look at the official 

measure as well as a variety of the alternative measures that the 

U.S. Census Bureau produces. 

Representative Brady. Your position is this same? 

Dr. Blank. I certainly will agree that you need to look at more 

than just the official poverty number. 

Representative Brady. I don’t have time to pin you down. I am 

just wondering, has it changed, or do you still have the same view? 

Dr. Blank. I have the same view that we need to go beyond the 

official measure. 

Representative Brady. Let me ask about the income measure, 

too, because I think this, too, has been, again, funny numbers. 

One of the complaints both Democrats and Republicans have had 

about the No Child Left Behind program is that it measures class 

by class each year. It doesn’t follow children from grade to grade 

to follow all the progress. 

Our income numbers have the same flaw; as the Census Bureau 

has said, it is not a picture of what has happened to the same 

households over a time period. Medians like those from the current 

population survey conceal an enormous amount of movement in the 

income of individual households, and the numbers seem to prove 

the Census Bureau out, as their numbers show that about 60 percent of households in the middle fifth can exit in as little as 3 

years. 

So my question is, within the income data, why don’t we update 

it or add another indicator that actually follows households so we 

can see what that growth in income truly is? It seems like we are 

taking snapshots of different parts of the horse race rather than 

the snapshot of the entire race that families are running. 

Dr. Blank. Two answers to that. One is that the median household income, I think, answers a particular question that is different 

than what you are asking. It tells you what is the income level 

below which half of the people in 2008 lived. You can compare that 

to what is the income level below which half of the people in 2007 

or 2006 lived. 

That is actually an incredibly interesting statistic. It doesn’t say 

that it is the same person in the middle of the distribution, but it 

does tell you what the well-being of America looks like in terms of 

where are people placed. 

Your question about longitudinal data is right on. It is very important to follow households over time if you want to understand 

the dynamics of income distribution, who is moving up and who is 

moving down at any point in time. The Census Bureau has a major 

survey called the Survey of Income and Program Participation— 

22 

that they are in the midst of revising, actually, through long discussions and some additional appropriations from Congress—that 

does exactly that; it follows the same households for 3 to 4 years 

at a time. 

Representative Brady. I think getting a more accurate picture 

that way will be helpful again as we delve into all the policy issues. 

Madam Chairman, thank you. 

Chair Maloney. I want to thank the gentleman for his questioning and certainly would join him in a letter to the Appropriations Committee for funding for a longitudinal study such as Dr. 

Blank put forward. 

Also, I would like to ask both Dr. Blank and Dr. Rouse to put 

in writing to the committee—I think it is an important question— 

if you wanted to improve the poverty measure, how would you improve it? What else would you include in it? 

I think that is something this committee and members on both 

sides of the aisle should take a look at. Maybe it could be the subject of another hearing. 

Mr. Cummings. 

Representative Cummings. Thank you very much, Madam 

Chair. Thank you all for your testimony. 

The Chair had a report done recently on women and how women 

are affected with regard to health care and health insurance. One 

of the very interesting pieces of that report was they talked about 

women who may have been married and they—the husband was 

older. He then goes on to Medicare and there is a gap; and she may 

not have been working for a while or whatever, and it leads to— 

so she has to find insurance. 

And I was just wondering, it is not just women, but how are the 

near-elderly fairing—I am just curious—with regard to poverty? 

Because we have got safety nets. Certainly, we have got Medicare 

and then, of course, you have got Social Security, but what about 

folks who come short of that age-wise? 

Dr. Blank. This report does not do that type of age breakdown. 

Once we actually can go into the raw data and look at that, you 

can answer that question. 

Here is what I do know, that the burden of job loss often follows 

disproportionately on people who are not quite at 65. They are people who lose their jobs. When they lose their jobs, they have a great 

deal of difficulty finding another job. They often retire early because of the difficulty of finding other jobs. The challenges they 

face include both income challenges as well as health insurance 

challenges, since they aren’t yet eligible for Medicaid. 

So if you look at displaced worker surveys, surveys of workers 

who have part of major plant closings, a disproportionate number 

of those who either never come up to the same income level again 

or never work again are exactly the group you are talking about, 

the workers over the age of 55 who have not yet hit eligibility for 

Medicare and Social Security. 

Representative Cummings. Another issue, as far as the biggest changes in income and poverty, I am trying to figure out, geographically where have they been found? Does it always track the 

states with the highest unemployment, and do you track the povVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
23 

erty rate with other data such as foreclosure rates and things of 

that nature? 

Dr. Blank. The foreclosure rates don’t figure into this report except as they affect income and poverty numbers. What you see is 

that the biggest increases in poverty and also the largest reductions in income are occurring in the Midwest and they are occurring over in the western states. That is absolutely consistent with 

both what we are seeing in our foreclosure data—some of the 

worst-hit states in foreclosure are in the West—and what we are 

seeing in unemployment data with some of the highest unemployment data are there in the Midwest, in the so-called Rust Belt, 

which is really feeling the effects of this recession on manufacturing. 

Representative Cummings. So you are saying that it is consistent with unemployment then? 

Dr. Blank. Yes. Unemployment and poverty tend to track each 

other reasonably closely. 

Representative Cummings. Does the current census data show 

that expanding economic opportunity generally is a viable method 

of closing health care disparities and should, therefore, be seen as 

an important public health intervention? 

Dr. Rouse. The report certainly shows that the rate of 

uninsurance among those that have been working is much lower 

than the rate of uninsurance among those who haven’t worked in 

the prior year. Unfortunately, there is not more nuanced data, at 

least in this report, that would allow us to go beyond that. 

Representative Cummings. The President said something last 

night that was very interesting, and—he said something to the effect that during a 2-year period one out of every three Americans 

had an insurance gap. 

Why did you smile? 

And that said a lot to me, because what that says is that we— 

I heard a lot of my Republican colleagues talk about this 47 million, but then you heard on any given day you may have up to 68 

million people with no insurance. And that seems to be kind of consistent with that gap problem. 

The gap problem also is significant in that as we get older, just 

in case people didn’t know it, you are more likely to get a preexisting condition, and so therefore, if you have got a gap and you 

don’t have COBRA or whatever, you have got a problem getting insurance. 

Is that a fair statement? 

Dr. Rouse. Absolutely. 

The reason I smiled is because when we look at the census data 

that was released, it is one measure of how to think about 

uninsurance. But really a lot of the motivation for the President’s 

plan is the fact that health insurance is unstable; and so if you look 

at data that tries to measure were you ever uninsured during the 

course of this year, the rate of those who have had a period of 

uninsurance is more like 71 million. 

And so really it is much, much worse when we look at and consider the instability of the current health insurance market. 

Representative Cummings. I see my time is up. Thank you. 

Chair Maloney. Thank you. 

24 

Senator Casey. 

Senator Casey. Thank you very much, Madam Chair. Thank 

you for allowing Senators to come over here to be a part of this 

hearing. 

Chair Maloney. Thank you for being here. 

Senator Casey. I do want to pick up on something that he said 

as well as what others said. I am glad he raised that question of 

health care because I have got a lot to say, but I have only got 4 

minutes and I do want to get a question in. 

Just with regard to the data, first, that you outline—and I appreciate both of you being here and your testimony and your public 

service. One of the things that I try to keep an eye on is, what are 

the differentials with regard to poverty or income, median income 

or poverty by race, for example. I think some of them are stunning 

and instructive about the challenge we have ahead of us. 

I guess median household income fell 3.6 percent 2007 to 2008. 

That is all median income; is that correct? 

Dr. Blank. That is right. 

Senator Casey. African American households fell 2.8 percent 

and Hispanic households, 5.6 percent, correct? Big losses across the 

board. 

The poverty rate numbers are maybe even more stunning. Sometimes that income number doesn’t say much. But am I correct to 

say that between 2007 and 2008, poverty among the demographic 

category called Hispanic is up to now 23.2 percent? 

Dr. Blank. That is correct. 

Senator Casey. Almost a quarter. And among African Americans, unchanged in that year, but still even higher—24.7. 

So in both groups you have got almost a quarter of them living 

in poverty, both African Americans and Hispanics. So it tells you 

something about the challenge we have coming out of a recession 

because, of course, this measure in 2007, when things were relatively, and in some cases, a lot better economically across the 

board, going into 2008. 

But I would ask you if you can comment on that in the context 

of that time period and those numbers in relationship to where we 

are now in a recession, but contrary to what we have heard here 

today, the Fed saying today in an AP story that we are coming out 

of a recession. Unfortunately, a lot of people won’t feel that for a 

long, long time—feel it in a positive way, because job loss will still 

be high. 

Do you have anything you want to say about the time periods 

within which those numbers were measured? 

Dr. Blank. The biggest impact of recession on poverty and income is through unemployment. And unemployment disproportionately hits lower-skilled and lower-wage workers; the people who 

lose their jobs are those who are lower wage, who are working 

part-time, who may be even trying to hold second jobs. So if you 

look at the distribution of unemployment, it is very skewed towards 

the bottom end of the income distribution. 

What happens to income and to poverty is that disproportionately income declines and poverty goes up among exactly the 

groups of workers who tend to be low-income workers; and that is 

disproportionately single-female-headed households, persons of 

25 

color, people of Hispanic background, exactly the groups you are 

pointing to. 

Senator Casey. And this is a hard question to answer. I know 

you can’t answer with any precision, probably either of you, smart 

as you are. 

But if we are looking at that 24.7 percent poverty rate for African Americans and 23.2 for Hispanics in that 2007–2008 period, if 

you could snapshot it today, meaning this part of 2009, you don’t 

have to be an expert extrapolator to say that number is probably 

up in both instances; is that correct? 

Dr. Blank. I would expect that to be true since unemployment 

has risen since the middle of 2008, which is the way to think about 

these numbers. 

Senator Casey. I will use my remaining 30 seconds to just do 

a little bit of rebuttal on what we had heard on health care. 

First of all, the Finance Committee in the Senate has not 

weighed in yet on a lot of the costs. That is their job to do. It 

wasn’t the job of the President to outline specific cuts, specific ways 

to pay for this. The Congress still has a lot of work to do; we have 

got to get to work and get it done and give him a bill. That is point 

number one. 

Point number two, for those who forgot, we spend $2 trillion every year—$2 trillion every year—on the health care system, and 

we are trying to fix it with a fraction of that. Another point we 

should make: that we are spending $2 trillion on a system that 

doesn’t work for people. It denies them coverage and treatment on 

preexisting conditions; it discriminates against women; and it hammers them, as Dr. Blank said, with regard to out-of-pocket costs. 

So at some point in time we are going to have to choose the team 

we are on here. We are either on the team that is moving forward 

with President Obama to fix a lot of what is wrong or you are on 

another team. And I will let others describe what team they are 

on. 

In terms of how we can pay for it, it is going to be a long list 

of things. Tax policy is part of it. I have my own ideas about that. 

Antifraud measures are part of it. Prevention is part of it. Best 

practices are part of it. 

The Geisingers, not to just brag about Pennsylvania, have figured this out in the private sector. The savings from prevention, 

the savings from how we manage disease better, all those savings 

and better health outcomes are not government theories; they have 

been proven in the private sector. What we are trying to do is take 

those really good ideas and make them the norm, not the exception. 

So we can figure this out. We know how to do a lot of this. When 

I say we, I mean the American people; not government, the American people. We can figure this out. And for those who complain 

about government and government health care, which is about half 

of what the American people get—some kind of American health, 

thank goodness. Thank God we are smart enough to do that. 

And I will end with this. One-third of rural kids in American get 

Children’s Health Insurance or Medicaid, one-third of rural kids. 

So for those who are talking about cutting government and attacking government health care, they better think about a lot of people, 

26 

including rural kids in America; not just kids in big cities, but 

rural kids as well. 

And I know what it is going to do to our state if we don’t take 

action on health care. In the next 7 years the average family income is going to have to dedicate 52 percent of their income to 

health care. I don’t know a family in Pennsylvania, or America— 

haven’t met them yet, hope I never meet them—who will walk up 

to us and say, ‘‘Don’t do anything about health care. Just let it go 

the way it is. I can pay 52 percent of my income to health care. 

Don’t worry about me. I will be just fine and so will my family.’’ 

That is where we are headed, folks, if we don’t do anything about 

health care. 

Unfortunately, the numbers nationally are about the same: 52 

percent of the income in Pennsylvania, 45 for the country. That is 

the direction we are headed right now, inexorably, undeniably, if 

we just sit back and say, ‘‘It got a little complicated. We couldn’t 

do it.’’ 

Chair Maloney. Thank you so much, Senator Casey. Thank you 

very much for those words. 

And I want to thank our distinguished panelists. 

I now would like to introduce the second panel, but I first would 

like to note that the record will remain open for 2 weeks so that 

witnesses on this panel can revise their written testimony to include the new census data that was just released a few hours ago. 

I would also like to ask unanimous consent to place in the record 

a statement by Nobel Laureate Joseph Stiglitz, a professor at Columbia University. 

[The prepared statement of Joseph Stiglitz appears in the Submissions for the Record on page 58.] 

Chair Maloney. First, we have Dr. Karen Davis with the Commonwealth Fund. Dr. Davis is a nationally recognized economist 

with a distinguished career in public policy and research. Before 

joining the Fund she served as chairwoman of the Department of 

Health Policy and Management at Johns Hopkins School of Public 

Health, where she also held an appointment as Professor of Economics. She served in the Department of Health and Human Services between 1977 and 1980 and was the first woman to head a 

U.S. public health service agency. 

Dr. Harry Holzer is Professor of Public Policy at Georgetown 

University. Dr. Holzer was a founding director of the new Georgetown Center on Poverty, Inequality, and Public Policy. He is currently a Senior Fellow at the Urban Institute, a Senior Affiliate at 

the National Poverty Center at the University of Michigan, a National Fellow of the Program on Inequality and Social Policy at 

Harvard University, a Nonresident Senior Fellow at The Brookings 

Institution, and a Research Affiliate of the Institute for Research 

on Poverty at the University of Wisconsin at Madison. 

Prior to coming to Georgetown, Professor Holzer served as Chief 

Economist for the U.S. Department of Labor and Professor of Economics at Michigan State University. He holds a Ph.D. in Economics from Harvard University. 

Thomas Miller is a former Health Economist for the Joint Economic Committee between 2003 and 2006, where he worked on 

health care policy and regulation. Prior to joining the committee, 

27 

he worked as the Director of Health Policy Studies at the Cato Institute and as Program Director at Economic Policy Studies. Mr. 

Miller has also worked as a private attorney and as a journalist. 

He received his J.D. from Duke University School of Law and a 

B.A. from New York University. 

I thank you all for coming and for your dedication to public service. 

Chair Maloney. I would like first to call on Dr. Davis. Thank 

you. 

STATEMENT OF DR. KAREN DAVIS, PRESIDENT, THE 

COMMONWEALTH FUND 

Dr. Davis. Thank you, Madam Chairman, Senator Casey. It is 

a pleasure to be invited to testify at this hearing on income, poverty, and health insurance coverage. 

This morning, the U.S. Bureau of the Census released the alarming news that the number of uninsured Americans hit 46.3 million, 

up from 45.7 million in 2007. This increase would have been much 

worse without the growth in government-provided insurance, a 4.4 

million increase, including a 3.0 million increase in coverage under 

Medicaid. In contrast, employment-based coverage declined by 

about 1.1 million, down from 177.4 million in 2007 to 176.3 million 

in 2008. 

Today’s data release shows the importance of the Nation’s safety 

net insurance system—Medicaid and the Children’s Health Insurance Program, CHIP. The major bright spot in this new data was 

the fact that the rate of uninsured children is at its lowest since 

1987, at 9.9 percent. This improvement was a reflection of increased coverage for children under government health insurance 

programs, which rose from 31.1 percent in 2007 to 33.2 percent in 

2008. 

However, more than 7.3 million children remain uninsured, 

which highlights the importance of the reauthorization and expansion of the CHIP program to 4 million more uninsured low-income 

children earlier this year. 

States have also played an important role in stepping up to the 

plate to address the issue of the uninsured. Massachusetts, which 

enacted health reform in April of 2006, has moved into first place, 

with the lowest uninsured rate in the Nation. Today, we learned 

that in Massachusetts only 5.5 percent of the population was uninsured in 2008, compared with 25.1 percent in Texas, the state with 

the highest uninsured rate. Massachusetts leads the Nation as a 

result of its 2006 comprehensive health reform. 

The most alarming news in today’s census release is that the 

number of adults under age 65 without health insurance is high 

and rising, with 20.3 percent of adults ages 18 to 64 uninsured in 

2008, up from 19.6 percent in 2007, an additional 11⁄2 million uninsured adults. 

There were about 1 million fewer people covered by employmentbased coverage, down from 177 million to 176 million, and this included a marked decline in coverage among part-time workers. But 

even these numbers may be an understatement of the individuals 

affected by the severe and ongoing recession. 

28 

If census numbers are based on counts of people without coverage at any point in the year, these numbers—in other words, if 

people were insured early in 2008, and lost their coverage later in 

the year, they are counted as insured for 2008. So the continued 

rise in the unemployment rate in 2009 likely means many more 

uninsured in 2009. 

Since the start of this decade, when 38 million were uninsured, 

health insurance coverage has steadily eroded—a jump in uninsured of 20 percent over the decade. Even before the severe recession, the number of uninsured was projected to grow to 61 million 

people by 2020. We simply cannot afford to continue on our current 

course. 

This tragedy of gaps in health insurance coverage has real consequences for Americans—not just those who are uninsured, but 

those who are underinsured as well. Earlier, one of the members 

asked about people not getting the care that they need. The 2007 

Commonwealth Fund Biennial Health Insurance Survey shows 

that 68 percent of the uninsured went without needed care because 

of cost. Uninsured and underinsured people with chronic conditions 

are less likely than people with health coverage to report managing 

their conditions, more likely to report not filling prescriptions or 

skipping doses of drugs and, as Mr. Hinchey noted, more likely to 

use emergency rooms and be hospitalized. 

The health insurance system in this country is fundamentally 

broken. It does not accomplish what insurance was created to accomplish, ensure access to needed care and protect against the financial hardship that medical bills can cause. The deterioration in 

health insurance coverage has reached the point where financial 

hardship is not the exception, but the rule. 

Our study shows that 72 million people report problems with 

medical bills or accumulated medical debts. More than three-fifths 

of them incurred those bills when they were insured, not when 

they were uninsured. In fact, a total of 116 million adults, twothirds of those under age 65, are either uninsured at some point 

during the year, underinsured, or report difficulties obtaining needed care and paying their medical bills. 

We pay a price for being the only major country without health 

insurance coverage. The Council of Economic Advisors estimates 

that covering the uninsured would result in a net increase in economic well-being totaling $100 billion a year. Coverage for all 

would increase the labor supply and level the playing field for large 

and small businesses. 

Recognizing the seriousness of our flawed health insurance system, Congress began to take action early this year to cover more 

people who are at high risk. Reauthorization and expansion of 

CHIP will cover an estimated 4.1 million uninsured low-income 

children, in addition to the 7 million children already covered. The 

CHIP program has been a major success, as we see in the declining 

rate of uninsured children. 

Provisions in the American Recovery and Reinvestment Act of 

2009 are also helping prevent the loss of health insurance coverage 

as a result of the severe and sustained economic recession. The act 

provided $86.6 billion over 27 months to help states maintain and 

expand Medicaid enrollment as more unemployed working families 

29 

qualified for coverage. In addition, it provided a 65 percent premium subsidy to help recently unemployed workers retain their 

employer coverage under COBRA, a program Senator Kennedy 

helped establish in 1985. 

Measures to help achieve health reform now under consideration 

in the Congress would also help with the long-term trend in the 

number of uninsured by creating health insurance exchanges by 

providing income-related premium assistance for individuals up to 

three to four times the Federal poverty level, by expanding the 

Medicaid program for those up to 133 to 150 percent of the poverty 

level, by having an essential benefit package with a cap on costsharing, and by sharing employer financing of coverage with special assistance for small businesses. 

The Congressional Budget Office estimates that the House bill 

would reduce the number of uninsured people by 37 million people 

by 2019. The comprehensive reforms proposed by the President will 

help spark economic recovery, put the Nation back on the path to 

fiscal responsibility, ensure that all families are able to get the care 

they need while protecting their financial security. 

The cost of inaction is high. The time has come to take bold steps 

to ensure the health and economic security of this and future generations. Health reform is an urgently needed investment in a better health system and a healthier and economically more productive America. 

Thank you. 

[The prepared statement of Karen Davis appears in the Submissions for the Record on page 59.] 

Chair Maloney. Great. 

Dr. Holzer. 

STATEMENT OF DR. HARRY HOLZER, PROFESSOR OF PUBLIC 

POLICY, GEORGETOWN UNIVERSITY AND INSTITUTE FELLOW, URBAN INSTITUTE 

Dr. Holzer. Thank you, Madam Chairwoman, Mr. Brady, and 

Mr. Cummings, for giving me the opportunity to speak to you today 

about the income and poverty numbers that the Census Bureau released this morning. I will focus on the income and poverty numbers exclusively and not on health care. 

We now know that the years 2000 through 2007 represented a 

complete business cycle. And so comparing those two end years, 

2000 and 2007, enables us to infer a secular trend in income and 

poverty that the Nation experienced for most of the current decade; 

and then the additional differences between 2007 and 2008 represent only the beginning of the most serious economic downturn 

since the 1930s. 

There is a lot to discuss in this report. I am going to limit myself 

to four points. 

Point number one: The numbers for the period 2000 to 2007 are 

really quite disturbing. Real median income failed to rise over the 

entire period and poverty did rise over that secular period. Indeed, 

the poverty rate rose quite substantially, by about 2 percentage 

points for certain groups like children and African Americans. 

Quite disturbingly, these trends occurred while the Nation’s overall productivity rose by nearly 20 percent. So both low-income and 

30 

middle-income American families failed to share in the economic 

prosperity generated by our economy in that 7-year period. 

Now, of course, there are important questions about how these 

numbers are measured, as Mr. Brady pointed out earlier, and especially how we adjust for inflation and how we measure poverty. 

However, it is quite clear to me the faulty measurement does not 

likely account for these trends. 

My second point: Between 2007 and 2008 the beginning of the 

current recession did cause real income to fall and poverty to rise. 

We have heard about a lot of those numbers already. The data do 

show that some groups, like Hispanics and Asians in some regions 

of the country, like the Midwest, were harder hit than others. I am 

most struck by the fact that the deterioration we have seen is very 

widespread and affects virtually all regions and all demographic 

groups. 

Point number three: The worst is yet to come. Even if the recession officially ends this year, meaning that the production of goods 

and services and the economy begins to recover, the unemployment 

rate will continue to worsen for the rest of this year and into next 

year. That is because employment is a lagging indicator, with employers creating new jobs and hiring more workers only after they 

are confident of a strong recovery and product demand that cannot 

be met by their current workers and by the current inventories. 

So real incomes will continue to fall and poverty will continue to 

rise certainly for 1 more year and maybe for a few more and almost 

certainly by more than we have witnessed so far between 2007– 

2008. In fact, I would predict that the biggest increases in poverty 

declines and income will occur during the next year, and it will 

likely take several years beyond 2010 before real income and poverty fully recover from the effects of this downturn. 

Therefore, my fourth point is on policy: I think, in light of all 

these facts, economic policy over the next few years must focus 

both on the severe near-term impacts of the current recession and 

on the longer-term stagnation in the incomes of low- and middleincome Americans, with the greatest attention paid to those most 

vulnerable. 

So how might we accomplish these twin policy goals? Over the 

next 2 years, I think we need to continue to focus on the downturn 

and ensure that workers who cannot find employment due to no 

fault of their own face an adequate safety net. That means that unemployment insurance will need to be extended beyond the provisions of this year’s recovery legislation. 

For low-income and part-time workers who are still ineligible for 

unemployment insurance—and there are a lot of them—other 

forms of cash assistance and food stamps and perhaps even community service jobs will need to be provided; and the states facing 

severe fiscal crises may need some additional assistance, as well, 

beyond what appeared in ARRA. 

But we must also begin to implement policies that address the 

longer-term stagnation in the incomes of American workers and 

their families. When the economy and the labor market do begin 

to recover, jobs will be created that require more skills than most 

Americans currently have, and that is true even in positions that 

don’t necessarily require a 4-year college degree, more in the midVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
31 

dle of the skill distribution. Therefore, we need to invest more effectively in the education and the training of all of our workers 

through everything from high-quality prekindergarten programs, K 

through 12, into higher education and job training for disadvantaged youth and adults. 

There are other approaches besides education and training that 

also might help, such as higher minimum wages and more collective bargaining, and these policy tools might be employed as well. 

There will continue to be hard-to-employ, poor people whose 

skills and wages might not improve over time. For them, we need 

to create stronger incentives to work and supports when they do 

work, even at low wages. And, of course, I will say, echoing the previous speaker, that health insurance reform must remain a top priority, not only to ensure coverage for millions of families who now 

lack such protection or who might lose it, but to ensure that growing medical costs do not continue to absorb the earnings growth of 

increasingly productive American workers. 

I will be happy to elaborate more on these points during the discussion period that follows. 

Thank you very much. 

[The prepared statement of Harry Holzer appears in the Submissions for the Record on page 78.] 

Chair Maloney. Mr. Miller. 

STATEMENT OF THOMAS P. MILLER, RESIDENT FELLOW, 

AMERICAN ENTERPRISE INSTITUTE 

Mr. Miller. Thank you, Chairwoman Maloney, Congressman 

Brady, and all the members of the Joint Economic Committee. It 

is a pleasure and honor to be appearing before this body on the 

other side of the table as a witness on this important issue after 

previously serving on the committee staff for 3 years earlier this 

decade. 

I didn’t go into witness protection, though. I am currently a Resident Fellow at the American Enterprise Institute and quite visible 

on that front, I think. 

To very briefly update my prepared testimony in light of this 

morning’s release of the CPS supplement relating to health insurance coverage, we have already heard most of the statistical highlights. My takeaway points are: there is no noticeable, substantially significant trend that is a change from the past, and the 

deepest effects of the 2009 impact of the recession have not been 

fully captured in what, after all, are last year’s data. 

We may continue to avoid the worst that some imagine, but repairing the economy and restoring vigorous economic growth is job 

number one. However, we certainly also need to reform our overall 

health care system and particularly its many misaligned incentives 

to encourage improved value in health care services, enhanced information that is relevant and actionable, and better decision-making by all parties, including health care consumers. 

We should and can redirect existing subsidies in a more targeted 

manner to assist better the most vulnerable members of the population, but the supply of resources for transfer payments is exhaustible. If everyone believes that someone else is paying most of 

their health care bills, those health costs will grow even higher in 

32 

the future while we run out of imaginary dollars to shuffle back 

and forth. 

More actors in the system need to be able to find out what services and products and political promises actually are worth what 

they are said to be and determine what they, rather than someone 

else, would be willing to pay for them. 

Now, turning to a few summary highlights of my prepared testimony, our various efforts to measure dimensions of the problems 

of the uninsured help to some degree, but they do remain inexact 

and less precise than sometimes assumed. Various sources of information, including the CPS, tell parts of a rather complex story with 

a number of subnarratives. 

For example, I think I have heard some confusion here in describing what the CPS actually measures. It is right on the box on 

the opening page, which says, This is measuring, most of the time, 

a moment in time at which people are uninsured, rather than what 

was once assumed, measuring people being uninsured for the entire year. 

They have been saying this for the last couple of years. Sometimes it doesn’t get through. There are other surveys which give a 

more nuanced, elongated cross-sectional measure as to exactly how 

long someone has been uninsured. 

The portion of the total number of uninsured on which we most 

need to focus are indeed the long-term, more chronically uninsured. 

That is a big enough problem as it is. The costs of health care are 

intertwined with the affordability of health insurance, and reforming the delivery system, as well as lessening the demands we place 

upon it, would deliver the most return on our investments in true 

reform. 

I am not here to buy or sell, or cheerlead for or against any particular proposals on Capitol Hill today, unless you ask me to. However, some diversionary factoids of the uninsured debate need to be 

placed in perspective. The magnitude of alleged cost-shifting, for 

example, from the uninsured’s receipt of uncompensated care to the 

premium costs of the privately insured has been overstated. So, too, 

is the relative burden of the uninsured imposed on our emergency 

care services. 

We do need to fix a more limited problem of lack of coverage for 

the medically uninsurable, preferably with more transparent, targeted subsidies that cap maximum out-of-pocket exposure to highcost medical conditions and with additional protections for those 

maintaining continued insurance coverage. Again, the magnitude of 

that significant problem has been overstated as well. 

Although some would see underinsurance spreading throughout 

the majority of our current private health insurance policies, that 

perception does not square with the actual percentage of the U.S. 

health care spending dollar that continues to be paid through third 

parties rather than patients themselves. 

We certainly can and must do better, but the most important 

changes will begin with improving how health care is delivered and 

how our personal health is maintained and improved. 

Thank you. 

[The prepared statement of Thomas P. Miller appears in the Submissions for the Record on page 80.] 

33 

Chair Maloney. Thank you very, very much. 

I thank all of the panelists. I will begin the questioning first with 

Dr. Davis. 

As you pointed out in your testimony, we have achieved almost 

universal coverage in medical care for elderly Americans through 

Medicare, and we are making tremendous progress toward ensuring all of our Nation’s children. Why do you think there is such resistance to providing universal coverage for everyone else? 

Don’t working Americans that are struggling every day to make 

ends meet, don’t they deserve health coverage too? Why is there 

such resistance, do you think? 

Dr. Davis. It is shortsighted. There are health and economic 

costs of having people who are uninsured. If workers are uninsured, they are more likely to go without prescription drugs, for example, to control the chronic conditions, more likely to have complications of those conditions, whether it is a stroke from hypertension, amputation from diabetes; and as a result, they are going 

to become disabled and unable to work or, unfortunately, die prematurely as a result of being unable to get the care that they need. 

It is obviously an economic problem for the families themselves. 

We find that there are 72 million adults, ages 18 to 64, who have 

difficulty paying medical bills or have accumulated medical debt. 

We ask about what are some of the consequences of that. They use 

up all of their savings, they take out credit card debt. They even 

take out home loans. They forgo other basic necessities to pay medical bills. 

So these are serious economic problems for households and they 

are serious economic consequences for businesses and for the Nation as a whole. 

As I said in my testimony, the Council of Economic Advisers estimates that we lose half of 1 percent of the gross domestic product 

because of this problem in our Nation. 

Chair Maloney. Thank you very much. 

Dr. Holzer, of all the troubling information in this new report, 

the one that troubles me the most is the continuing growing gap 

between the haves and the have-nots. How can we reverse this 

trend of increasing inequality in our Nation? 

Dr. Holzer. I think since there are a variety of factors that contributed to that growing inequality, it will require a variety of policy responses. 

I think it is very important, as some of the previous speakers 

suggested, to start with education and training and to invest more 

and more effectively, the entire range of education, starting with 

pre-K, going all the way up to higher education, and to give more 

middle-income Americans low-income Americans access to higher 

education. 

But I think there are other things going on besides that. The economic outcomes we see in the job market are a function both of 

labor market trends and labor market institutions. Labor market 

institutions, like the minimum wage and collective bargaining, 

which historically have protected the lowest income Americans 

from the most severe effects of the markets, I think we have allowed those institutions to weaken too much over time. So I think 

we could do more on that front to bolster their protective effects. 

34 

Again, for those people who will face low wages no matter what 

they do, I think more income supports like expansions of the 

earned income tax credit, child care, transportation assistance and, 

of course, health care coverage, all those things would help to narrow the gap. 

Finally, a lot of the growth and inequality has really occurred at 

the very, very, very top end of the income distribution, the top 1 

percent, the top one-tenth of 1 percent. Of course, as Dr. Blank 

said before, some of that reflected the financial market bubble that 

has burst. I still sense those people are going to do very, very well 

for themselves even after that bubble is burst. There, I think there 

are financial market regulations to make compensation more effective in that sector, and returning to a more progressive tax structure. I think all of those things would start to address the problem 

you have just laid out for us. 

Chair Maloney. Great answer, the best answer I have ever 

heard. I ask this to every official that comes before this committee 

and the Financial Services Committee. Great answer. 

Families never recovered from the last recession before they got 

hit by the current downfall, did they? Is that true, they never had 

an opportunity to recover, and they were hit and really lost a decade of growth and opportunity? 

Dr. Holzer. That is correct. Again, one can quibble with exactly 

the right way to measure this. Some people believe—I believe— 

that our measures of inflation that we used to adjust over time 

might be a little overstated, so if you adjusted for that, maybe they 

got back to the level they were at in 2000. 

But as I emphasized before, we have had nearly 20 percent productivity growth over the 7-year period preceding the downturn. 

That is fairly stunning, almost unprecedented in productivity 

growth, and for none of that to show up in the median incomes of 

American families is truly a stunning development. 

Again, I think there is no one reason for why that occurred. But 

what we can say is, policy did nothing to help. In some ways, tax 

policy made things worse. And I think starting to make sure that 

when we have a prosperous economy that is more widely shared 

really does need to be a top priority for economic policy. 

Chair Maloney. I think the point in your testimony that even 

during the affluent years we didn’t share the prosperity, we grew 

the disparity, is a really stunning report. 

My time has expired, and I recognize my colleague, my good 

friend on the other side of the aisle, Mr. Brady. 

Representative Brady. Thank you, Madam Chairman. 

First, congratulations, Dr. Holzer, for being the best answer ever 

from the Chair. Put that in your resume starting right now. 

Mr. Miller, what happened? The rate of children without health 

care coverage actually declined in 2008. When was the last time it 

was this slow? 

Mr. Miller. I don’t know that historically. What we have essentially proven is that we can insure the cheapest people to insure 

and have public coverage crowd out private coverage. That has 

some benefits to it in terms of covering more children, but those 

resources did not go to necessarily the place where people were 

most in need of health insurance and additional health care. 

35 

Representative Brady. I think one of the reasons the American 

public is now adamantly opposed to the new government-run plan 

is the deficit. Huge numbers, according to CBO, on top of Medicare’s bankruptcy and the military, appropriately, plus all the huge 

deficits we are running today. 

Do you agree with the CBO’s appraisal that the Democrat health 

proposal would add hundreds of billions of dollars of Federal spending over the next decade? 

Mr. Miller. Well, it is clear from the earlier CBO analysis that 

the proposals have not bent the cost curve down; they have turned 

it back up. And what is more disturbing—and there was just a report yesterday by way of the Petersen Foundation, done by the 

Lewin folks, which says you should not look at just the teaser rate. 

Remember, this urgent crisis, we don’t really do anything for 4 

years, it is so important. Of course, there are a lot of bureaucrats 

to hire and regulations to write. So the cost of that first 10 years 

is really for 6 years of a phase-in period. And then, when you look 

beyond that period of time, as CBO pointed out as well, when you 

have those future costs growing again at a rate much more above 

the rate of the resources to support them, you are making the problem worse rather than better. 

The early years will be tough enough, but the outyears will really 

kill us, all at a time where we are double counting what we say 

we are saving in Medicare to help Medicare beneficiaries, but actually we are spending it twice to also pay for this expansion. It is 

creative accounting. It makes a good speech, but double-entry bookkeeping still is done by some people. 

Representative Brady. It does look like an adjustable rate 

mortgage or one of those zero interest credit card rates. The question is never, Can you afford the first payments? Can you afford 

them once it gets cranked up? And I think that is the public’s concern as well. 

A lot of people look at the maze of bureaucracy, 31 new Federal 

agencies, commissions and mandates in this bill. They worry that 

the bureaucracy imposed by this health plan will interfere between 

them and their doctors as they make decisions. Your view? 

Mr. Miller. Well, that is probably why we need the first 4 years 

to fill all those boxes. It is going to take a while to staff it up. 

Actually, beyond just the structure, what you always have to realize in legislation on Capitol Hill is—and I have worked on it— 

there are broad pieces of language which empower much more beyond that. All the regulations that fill in those details, the broad 

grants of discretionary authority to the health choices commissioner—interesting Orwellian title, but we can mean different 

things by that. Because you can do something and aren’t prohibited 

from doing it, you have got a lot of time on your hands to make 

sure that you can get things just right when they didn’t work the 

first couple of years. 

So it is the empowerment of the multiple stages of later, followon regulation; just one more detail because we couldn’t quite get 

it in legislative language, but we know eventually you folks—the 

round pegs—will fit into that square hole. 

Representative Brady. Rationing is a concern by a lot of people, one they have seen occur in other government-run plans 

36 

around the world. They see it in the veterans’ care today, where 

we have very long wait lines, very slow processing, especially disability cases, and even cut some veterans off. You see it in Medicare today, although it is a little more hidden then. You see it in 

rationing of physician reimbursements, for example. 

Your thoughts about, will this new health care plan ultimately 

lead to rationing as the government in future years just doesn’t 

have enough money to cover all these demands? Because we already know from Medicare and others this has occurred already. 

Your thoughts. 

Mr. Miller. We can always do one thing and sacrifice other 

things and then you make those type of choices, but they tend to 

be someone else’s choices rather than yours. 

The real reaction to rationing is not the reality that resources are 

limited and you can’t have everything, but it is who is going to 

make those choices. The rationing word really applies to more arbitrary, distant decisions that don’t pay attention to what your needs 

and your preferences are, your conversation with those who are 

treating you, how do you use your family resources, as opposed to 

what seems to be a standardized pattern of, ‘‘Well, this works for 

most of the folks in the average population; fall into line.’’ 

So it is that resistance, not to the economic realities that the sky 

is not unlimited, but to distant, arbitrary, third-party decisions on 

what is the most vital set of decisions in everyone’s personal life 

that is what is terrifying some Americans and certainly raising legitimate concerns among many more. 

Representative Brady. Do we have real competition in the 

health care insurance today? 

Mr. Miller. We could do better. We have a large number of insurance companies. And we can play games. I used to work in antitrust law. It is all how you define the market. You can make something look like a monopoly or look like it is perfectly competitive, 

depending on who is drawing the boxes. 

There are ways to have more competition in health insurance. 

Part of it is thinking about reducing barriers to entry for more 

competitors, rather than creating one large competitor that gets to 

set its own prices and determinations. That is different from empowering other insurance companies or other ways to deliver care, 

such as through interstate purchasing. 

But there are other ways as well to have more buyers and sellers 

than have the alternative of thinking a muscular public plan will 

be benign in its later years after it promises low prices at the start. 

Representative Brady. Madam Chairman, I went over time, 

and, like you, want to see health care reformed, just have some differences in how to get there. Thanks. 

Chair Maloney. I want to thank my colleague. 

But I would like to ask Dr. Davis and Dr. Holzer to respond to 

Mr. Miller’s comments on rationing and who makes the decision. 

Under the Democratic plan, the doctors and the patients are making these decisions, but I would like to hear your response if you 

would so wish. 

Dr. Davis. Absolutely. 

There is no provision that would ration care under health reform. 

In fact, if we look at the Medicare program, the surveys that we 

37 

have done of Medicare beneficiaries, a rate that it is much easier 

for them to get access to care. 

And for people under age 65, they are much more satisfied with 

their care. They have a greater choice of physician. It is easier to 

get an appointment. I think we have got a long experience about 

access to care. 

On the point about competition in the insurance market, in all 

but three states in this country, two insurance companies cover 50 

percent of the enrollment or more. Mr. Miller said he has worked 

in antitrust. When I studied antitrust economics, our rule of thumb 

was if four firms control more than 50 percent of the market, you 

don’t have a competitive market. We have two insurance companies 

controlling the market in all but three states. 

And then the final point that I would like to make in response 

to Mr. Miller’s comments is just a technical point about the definition of the uninsured in the report. What the census says is that 

people were considered uninsured if at any—if they were uninsured 

for the entire year. If they were covered by any type of health insurance at any point during the year, they were considered to be 

insured. 

So these are not point-in-time estimates, and it is a problem with 

the recession, that if you had coverage in early 2008, lost your job 

and were uninsured at the end of 2008, you were not counted in 

these uninsured numbers because you had to have been without 

health insurance for the entire year to be counted as uninsured. 

Chair Maloney. Thank you. 

Dr. Holzer. 

Dr. Holzer. Well, I want to be very careful in answering this because I think both of my colleagues here have much more expertise 

in health care. So I will tread very softly. I will just make a couple 

of quick comments. 

Mr. Miller suggested that this proposal will not bend the cost 

curve down; it will bend it up. I think that is inaccurate. I think 

the right way to think about this is that again we do spend over 

$2 trillion a year right now. If we believe that an extra $90 billion 

would be spent every year covering the uninsured, that is an increase, that is a one-time permanent increase of about 4 percent. 

That would raise the whole curve up by 4 percent. But then if you 

do manage to restrain the growth in health care spending over 

time, let us say somehow we were very successful and brought that 

down by 1 percent a year, then after 4 years you have already offset the growth in costs associated with higher coverage, and then 

beyond that you are reducing that cost, not raising it. So I think 

we have to be careful to throw those allegations around. 

Another thing is when one talks about the CBO estimates, quite 

frankly our entire profession sometimes needs to be a little more 

humble in some of the estimates it puts out there. And I would say 

this regardless of who is in charge of CBO. There is a lot of uncertainty about those estimates. 

Now, Jon Gabel of NORC, the National Opinion Research Center, 

had a piece in The New York Times a week or two ago saying that 

there is a long history of CBO understating cost savings in Medicare associated with policy changes. And, you know, the errors— 

if the errors bounce around, sometimes they are bigger, sometimes 

38 

they are smaller, then they net out. But what we are saying is 

CBO has consistently underestimated. And it is very hard. Look, 

it is not a big criticism of CBO. It is very hard to know what a lot 

of these savings, the exact magnitude they will generate. And I 

don’t think the CBO model is really in a position to cost out a lot 

of potential reductions. So some of the CBO projections are a little 

bit disturbing, but I think we need to be careful and not put too 

much weight on those as we discuss the possible savings. 

Mr. Miller. If I may, I will be very brief. 

Chair Maloney. Sure. 

Mr. Miller. The issue of the antitrust analysis is the local market, not the state. Some antitrust people have actually written 

about this in Health Affairs, Bill Kovacic, David Hyman. It is a 

game. The big box of the state is not relevant to what is going on 

in the local markets. 

The language in the current CPS survey, I want to quote it directly, no interpretation whatsoever: This ‘‘estimate in the number 

of people without health insurance more closely approximates the 

number of people who were uninsured at a specific point in time 

during the year than the number of year of people insured for the 

entire year.’’ 

That is not my language. That is written in the report by the authors. 

Finally, Jon Gabel had a very truncated analysis of CBO’s performance. It bounced all over the lot, and they have gone in the 

other direction in other evaluations as well. I can find plenty of 

other folks who will tell you these costs are going up and we 

haven’t yet made a serious effort to actually change what is the 

trajectory of what is projected. We are actually aggravating the 

problem rather than making it better. 

Chair Maloney. I want to thank all of you. I wish every Member of Congress had not been in another meeting and was able to 

hear your testimony today. But I would like, Dr. Davis, for you to 

put in writing for the committee, because I would like to circulate 

it to my colleagues, your statement that every state in the Union, 

save three, have only two insurance companies controlling more 

than 50% of the market, therefore there is not adequate competition. I think that is astonishing. 

In any event, I know that many of you worked very hard to get 

here and came long distances. I want to thank you for being here. 

I want to thank you for your service to this committee and to your 

universities, to government, to the private sector, all the things you 

have done with your distinguished careers, and for really talking 

about this very important indicator of family well-being. This committee will continue to focus on improving the standard of living 

of Americans. Your testimony has been incredibly valuable. Thank 

you so much for being here. 

The hearing is adjourned. 

[Whereupon, at 3:06 p.m., the committee was adjourned.] 

(39) 

SUBMISSIONS FOR THE RECORD 

40 

PREPARED STATEMENT OF CAROLYN MALONEY, CHAIR, JOINT ECONOMIC COMMITTEE

I want to thank our witnesses for joining us today to discuss the 2008 official government statistics on income, poverty, and health insurance coverage that were released this morning by the Commerce Department’s Census Bureau. These are 

among the most important indicators of family well-being, and the picture from 

2000 to 2008 is rather grim. 

Between 2000 and 2008, median household income fell by nearly $2,200, the number of Americans living in poverty grew by 8.2 million, and nearly 8 million people 

joined the ranks of the uninsured. 

American families have lost a decade due the failed economic policies of the Bush 

administration. 

Nearly one year ago, this committee held a hearing at the request of the late Sen. 

Edward Kennedy on poverty in America. Sen. Kennedy devoted his career to being 

a strong and vocal champion for the poor. Although we have lost the beloved liberal 

lion of the Senate, his dream lives on in us and we will continue his work on behalf 

of the less fortunate. 

The economic fortunes of most Americans tend to rise and fall with the strength 

of the economy. During the economic expansion of the Clinton era, when unemployment hovered at around 4 percent, poverty fell to 11.3 percent, its lowest level in 

decades. 

However, the weak economic recovery of the 2000s under the previous Administration did not lead to a further reduction in poverty, which now stands almost two 

full percentage points above its 2000 level. 

Today in the United States, one out of every 8 people—almost 40 million—lives 

in poverty. The majority of people living in poverty are among the working poor. 

Worse still, 19 percent of our children, or almost one in five, now lives in poverty. 

Median household income fell to $50,303, the lowest level since 1997, which 

means that the typical American family actually lost economic ground during the 

last recovery. Our economy may have grown, but those gains did not trickle down 

to the vast majority of families and the chasm between the ‘‘haves’’ and the ‘‘have 

nots’’ grew larger. 

Too many jobs do not pay enough or lack the benefits to ensure families can make 

ends meet. 

Over one quarter of U.S. jobs pay low wages and do not provide health insurance 

or a retirement plan, according to the Center for Economic and Policy Research. 

Today’s data on health insurance coverage are a sobering reminder of the impact 

of our broken system on American families. 46.3 million Americans are uninsured, 

a figure that rose 20.6 percent between 2000 and 2008. Nearly one in ten children 

are growing up without health insurance, and over 30 percent of Hispanics lack coverage. 

The share of Americans with private health insurance eroded precipitously over 

the eight years of the Bush Administration, as the cost of providing employer-based 

coverage crept steadily upwards. 

Insurance premiums charged to employers increased by more than 100 percent between 2000 and 2008. The 2008 data reflect the first year of the Bush recession, 

but the legacy of his Administration’s failed economic policies has continued to 

wreak havoc on families. 

Recent estimates suggest that continued increases in the unemployment rate between January 2009 and August 2009 mean that over 2 million more Americans 

have joined the ranks of the uninsured so far this year. 

The time for comprehensive health insurance reform is now. As the data show, 

our nation’s families simply cannot afford to wait any longer. 

America’s Affordable Health Choices Act (H.R. 3200) includes provisions that will 

stop the rise in uninsured Americans by making affordable, comprehensive coverage 

available to all citizens. 

The bill includes subsidies for low- and moderate-income families to purchase 

health insurance coverage, as well as a well-designed health insurance exchange. 

Within that health insurance exchange, Americans will have the option of choosing between private insurers or choosing a public option. 

The inclusion of a public option is key to promoting competition and bringing 

down costs—and competition and cost-control is key to reversing the distressing 

trends in un-insurance that we have seen year after year in the Census data. 

I look forward to the testimony of our witnesses. 

41 

PREPARED STATEMENT OF REPRESENTATIVE ELIJAH E. CUMMINGS

Thank you, Madam Chair: 

Today’s Census Bureau report is a stark reminder of the economic inequalities 

that continue to permeate our society. 

While the current recession has been ‘‘equal opportunity’’—impacting almost every 

sector of the economy and crossing racial and geographic boundaries—it has also 

widened the growing gap between society’s ‘‘haves’’ and ‘‘have-nots.’’ 

The inequalities that persist are disappointing, disheartening, and given the policies pursued by the previous administration, foreseeable. 

Eight years of blind adherence to deregulation and supply-side policies resulted 

in reduced income for African-Americans and Hispanics, continuing gender pay inequality, and an increasing number of children born into poverty. 

As my colleagues know, I have never been one to mince words, and today is no 

exception. I remain outraged at the outlook facing so many American children. 

According to the Anne E. Casey Foundation, between 1994 and 2000, the child 

poverty rate fell by 30 percent. This was the largest decrease in child poverty since 

the 1960s. 

Key children’s health indicators improved across every major racial group, and in 

nearly all of the states. Since 2000, however, child poverty has increased so that 

roughly 2.5 million more children lived in poverty in 2008 than in 2000. That is 2.5 

million children who have been left behind in the wealthiest nation in the world. 

In my home state of Maryland, approximately 133,000 children live below the poverty line. Another 209,000 live at 125% of poverty. 

Through no fault of their own, these children find themselves questioning when, 

or if, the next meal is coming. 

A young man from Maryland named Deamonte Driver is a tragic example of how 

vulnerable our children are. 

In 2007, Deamonte needed an $80 tooth extraction to fix a painful abscess. Without access to dental treatment, the abscess went untreated, and predictably, became 

infected. 

The infection spread to his brain and ultimately took a 12 year old from us. 

Deamonte died because he could not get $80 worth of treatment. 

143 million Americans find themselves without dental coverage. And while every 

one of them is at risk of serious health problems, again the most defenseless and 

vulnerable are our nation’s children and young adults. 

To that end, I appealed to my colleagues in Congress to guarantee that dental 

coverage was included in the recent state Children’s Health Insurance Program. I 

am pleased that this legislation was included in the S-CHIP bill that President 

Obama signed into law. 

I know that today’s report does not measure the impact of S-CHIP, the Stimulus, 

and other actions taken to assist the families who are most in need in our country. 

However, the report does underscore and reinforce the need for and timeliness of 

these actions. 

Not only is poverty increasing, but state and local governments cannot bear the 

brunt of the crisis, and the public resources upon which the working class depend 

are becoming scarce. 

As we saw earlier this summer, 18 states have been forced to borrow over $12 

billion from the federal government to maintain their unemployment funds. 

Further, the essential Temporary Assistance to Needy Families has become increasingly unavailable under the weight of continuing economic turmoil. 

Despite this dismal outlook, we are seeing signs of hope—unemployment has held 

relatively steady over the last few months, and the Labor Department announced 

this morning that initial jobless claims were fewer than expected. 

However, today’s report reminds us why continued decisive action by the Congress 

is required, as well as a commitment to understanding the real impact of past policies on those who are most at risk. 

So, I look forward to the testimony of all our witnesses today and a productive 

discussion—the stakes for our families have never been higher. 

With that, I yield back. 

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PREPARED STATEMENT OF JOSEPH STIGLITZ

The report on Income, Poverty, and Health Insurance Coverage in the United 

States: 2008 results are not surprising—these dismal results reflect the reality facing a majority of American families. The country began the downturn in a situation 

where families had not fully recovered from the last recession—median household 

income in 2007 adjusted for inflation was still lower than it was in 1999 and 2000. 

The precipitous 3.6% drop this year has dramatically compounded these problems, 

resulting in a total decline of real income for the typical family of $2,200 over the 

past eight years. All the gains to the economy have gone to the people at the top. 

At the bottom, matters are even worse, as 8.2 million joined the ranks of those in 

poverty, a more than 26% increase. But even these numbers do not reflect fully the 

strains on the average American family: there are almost 8 million people without 

health insurance. 

These results—like the crisis itself—are not just simply something that happened 

to the United States, an accident beyond our control. They are the result of misguided policies. They reemphasize the point that growth in GDP is an inadequate 

measure of economic performance. These results highlight the importance of the 

work of the International Commission on the Measurement of Economic Performance and Social Progress, which I chair and which will issue its report next Monday, 

September 14. 

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1The views expressed are those of the author and should not be attributed to any institution. 

PREPARED STATEMENT OF HARRY J. HOLZER, PROFESSOR OF PUBLIC POLICY, GEORGETOWN UNIVERSITY AND INSTITUTE FELLOW, URBAN INSTITUTE 1

Thank you for giving me the opportunity to speak before you this afternoon about 

the income and poverty numbers for 2008 that were released this morning by the 

Census Bureau. 

We now know that the years 2000–2007 represented a complete business cycle, 

and comparing 2000 and 2007 enables us to infer the secular trend that the nation 

experienced for most of the current decade. And the differences between 2007 and 

2008 represent only the beginning of the most serious economic downturn since the 

1930s. 

While there is a great deal to discuss in a short period of time, I would like to 

emphasize the following four points: 

(1) The numbers for the period 2000–07 are quite disturbing—real median 

income failed to rise over this entire period, while poverty did rise. Indeed, 

the poverty rate rose substantially (by about 2 percentage points) for certain groups, like children and African Americans. Moreover, these trends 

occurred while the nation’s productivity rose by nearly 20 percent. Thus, 

both low- and middle-income American families largely failed to share in 

the economic prosperity generated during this period. 

Of course, there are important questions about how these numbers are 

measured, and especially how we adjust for inflation and health care costs 

over time. But faulty measurement likely does not account for most of these 

findings. 

(2) Between 2007 and 2008, the beginning of the current recession caused 

real income to fall and poverty to rise. The data show that some groups (like 

Hispanics and Asians) and some regions of the United States (like the Midwest) were harder hit than others. But it is also noteworthy that the deterioration we see so far has been very widespread, affecting most demographic groups and regions. 

(3) The worst is yet to come. Even if the recession officially ends this year— 

meaning that the production of goods and services in the economy begins 

to recover—the unemployment rate will likely continue to worsen for the 

rest of this year and into next year. This is because employment is a ‘‘lagging indicator,’’ with employers creating new jobs and hiring more workers 

only after they are confident of a strong recovery in product demand that 

cannot be met from their current inventories and current workers. Real income, therefore, will continue to fall and poverty will continue to rise for 

a few more years—and almost certainly by much more than what we have 

witnessed between 2007 and 2008. It will likely take several years beyond 

2010 before real income and poverty fully recover from the effects of the 

downturn (that is, return to 2007 levels). 

(4) Economic policy over the next few years must focus both on the severe 

near-term impacts of the current recession and on the longer-term stagnation 

experienced by low- to middle-income Americans, with the greatest attention 

paid to those who are most vulnerable. 

How might we accomplish these policy goals? Over the next few years, we must 

ensure that those who cannot find work due to no fault of their own, and their families, are protected by an adequate safety net. Unemployment insurance (UI) will 

need to be extended beyond the provisions in this year’s recovery legislation. For 

low-income and part-time workers ineligible for UI, other forms of cash assistance 

or food stamps and perhaps community-service jobs will need to be provided. States 

facing severe fiscal crises may need some additional assistance as well. 

But we must also begin to implement policies that address the longer-term stagnation in the incomes of American workers and their families. When the economy 

and the labor market do begin to recover, jobs will be created that require more 

skills than many Americans currently have—even in positions that do not require 

four-year college degrees. Therefore, we need to invest more effectively in the education and training of our workers through everything from pre-kindergarten programs to higher education and job training for disadvantaged youth and adults. 

Other approaches to earnings enhancement, such as higher minimum wages and 

more collective bargaining, might be encouraged as well. 

For the hard-to-employ poor whose skills and wages might not improve over time, 

we need to create stronger incentives and supports for them to work in greater numVerDate Nov 24 2008 10:37 Jul 12, 2010 Jkt 056277 PO 00000 Frm 00082 Fmt 6601 Sfmt 6621 C:\DOCS\56323.TXT SHAUN PsN: DPROCT
79 

bers, even at low wages. And health insurance reform must remain a top priority— 

to ensure coverage for the millions of families who now lack such protection or 

might lose it, and to ensure that growing medical costs do not continue to absorb 

the earnings growth of productive American workers. 

I will be happy to elaborate more on these points during the discussion period to 

follow. 

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Æ 


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