Measures of income should include health insurance, study finds

Nov 20, 2012 by Susan Kelley

The value of health insurance should be included in official measures of U.S. income and poverty, because it will help us to better evaluate public policies like Obamacare, according to a new study by a Cornell economist and his colleagues. Using this methodology, they show that Obamacare will generate significant benefits for families in the lowest economic classes—benefits overlooked when using traditional calculations.

" used to be not that big of a deal. And now it's a really big deal. We've spent an enormous amount of government money on it and we don't count it. And we should," said the study's lead author, Richard Burkhauser, the Sarah Gibson Blanding Professor of Policy Analysis in the College of .

The research shows when —whether paid for by employers or by taxpayers' money—is factored in, all sorts of statistics shift. It indicates U.S. median income is rising, not falling, as government statistics show. The income disparity between the haves and have-nots is not as wide as previously thought. As an example of how public policies could be reinterpreted, most of the benefits of Obamacare—or the Act (ACA)—will go to those with incomes in the bottom three deciles of the population. Obamacare will add about $750 per year to the income of people in the bottom 60 percent.

The study's results show that the poor and the elderly are significantly better off than the government's current calculations indicate. For example, the mean income of people 63 and older in the bottom 10 percent is $6,646. But that figure fails to show they also have worth nearly $9,000 in addition, Burkhauser said.

"The ACA is a major, major change in the , and it will mean millions and millions of people who don't have affordable coverage can go to the state exchanges and get that coverage. But that by the government to those people will not count in our government's measure of how they're doing. This paper argues we need to take that into consideration," Burkhauser said.

The researchers analyzed data from the Current Population Survey for 1995-2008, the data set most commonly used to capture yearly levels and trends in U.S. income and its distribution. They then added the value of health insurance coverage provided by employers and by Medicare and Medicaid—the government programs that provide health insurance to older and low-income people, respectively.

The paper has already helped change the way a major government agency measures U.S. income. In July, the Congressional Budget Office, the nonpartisan arbiter of the costs and consequences of government spending, changed its methodology in one of its reports, citing the arguments in an early version of the study as part of its justification for doing so.

Burkhauser emphasizes he and his colleagues have no political agenda in publishing the paper. "We're not trying to peddle anything," he said. "Rather, our aim is to illustrate the point that measures such as ours that value employer- or government-provided health insurance are useful in capturing the impact of health reforms on the levels and distribution of ."

The paper was published online in September in the journal Contemporary Economic Policy.

Explore further: Study evaluates the influence of college experiences on career outcomes

Related Stories

Middle class better off than previously thought

May 02, 2012

Long portrayed as stagnant, the income growth of the U.S. middle class may be more than 10 times greater than previously suggested by some economists, according to a new study at Cornell.

Obama's health care law

Mar 23, 2012

The US law that extends health insurance coverage to most Americans, dubbed "Obamacare" by its detractors, is 2,400 pages long but only certain points have been challenged before the US Supreme Court.

Recommended for you

College rankings go under the microscope

9 hours ago

Parents, students and admissions officials have combed through college and university rankings for years. However, education researchers have largely ignored the controversial lists. That's about to change, according to a ...

A call to US educators: Learn from Canada

23 hours ago

As states and the federal government in the U.S. continue to clash on the best ways to improve American education, Canada's Province of Ontario manages successful education reform initiatives that are equal parts cooperation ...

Devices or divisive: Mobile technology in the classroom

Apr 17, 2015

Little is known about how new mobile technologies affect students' development of non-cognitive skills such as empathy, self-control, problem solving, and teamwork. Two Boston College researchers say it's ...

Forming school networks to educate 'the new mainstream'

Apr 17, 2015

As immigration increases the number of non-English speaking "culturally and linguistically diverse" students, schools will need to band together in networks focused on the challenges of educating what has been called "the ...

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

1 / 5 (1) Nov 21, 2012
Harking back to BJ Clinton's "imputed income."

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.