Poverty and Uninsured Rates Drop, Thanks to Pandemic-Era Policies

The Census Bureau released some heartening news Tuesday.

Child poverty is at a historic low, according to the bureau's annual report on income, poverty and health insurance. And the rate of Americans without health insurance also dropped in 2021 compared to the previous year.

But the good news may be short lived. Both gains were driven by temporary pandemic-related policies, and without action by policymakers, they could quickly unravel.

Child tax credit key to drop in poverty

Childhood poverty dropped substantially in 2021, falling from 9.7% in 2020 down to 5.2%. The overall poverty rate for all age groups was just under 8% — a decline from 9.2% in 2020.

These figures are based on the Supplemental Poverty Measure, which takes into account all kinds of expenses families have, as well as that range of pandemic aid many families received.

Poverty experts attribute much of this improvement to the child tax credit which Congress boosted in 2021 in the American Rescue Plan. Congress also expanded it to include millions more low-income families.

The child tax credit gives families more money to spend on essentials, says Sharon Parrott, who has researched the issue for the Center on Budget and Policy Priorities.

"They spend it on their housing, food, education, they're able to do some of those extracurricular activities that high income families take for granted," she says. "They are investing in their kids and their families are able to make ends meet in really important ways."

And Parrott says all these things can have long term benefits for kids, like doing better in school and being healthier.

Uninsured rate approaches record lows, thanks to Medicaid

The census numbers show 8.3% of Americans – or 27.2 million people – did not have any health insurance in 2021. That's an improvement from 2020, when 8.6% of people were uninsured.

The force behind this trend is Medicaid, the public health insurance option for people with low incomes, according to census officials who briefed reporters Tuesday.

"The reason the Medicaid rates have increased is because of a COVID relief bill that Congress passed in March of 2020," says Sabrina Corlette of the Georgetown University Center on Health Insurance Reforms.

The Families First Coronavirus Response Act essentially mandated that state Medicaid programs not force enrollees to requalify for the program – so states could enroll new people but not kick anyone off. Because of this "continuous enrollment provision," Medicaid has grown significantly.

Another area of growth was Medicare, though census officials noted that that's due to more people turning 65 and becoming eligible, not because of a policy change.

What happens when pandemic measures end

Policy experts say this week's good news may be fleeting. The expanded child tax credit ended in December, just as inflation was starting to climb to historic highs. The policy supporting more people getting health insurance is set to run out in a few months.

"As soon as the public health emergency is declared over – which could be as early as January – that safety net that was in that COVID relief bill goes away," says Corlette. "And so we could see this historic increase in the rates of the insured be reversed."

More than 15 million people could lose Medicaid, according to an estimate from the Department of Health and Human Services released last month. The analysis suggests nearly half of those losing coverage will be because of administrative issues – such as challenges with filling out the paperwork to reapply – and not because they no longer qualify for coverage. Some will be able to get coverage elsewhere, but millions more may become uninsured.

When it comes to poverty, inflation could start to affect these rates. In fact, one group already is seeing more poverty in the 2021 numbers and that is seniors. Census officials say this is likely because they're on fixed incomes, and already last year inflation was starting to tick up, really squeezing their budgets.

But again, Census officials stressed that Social Security did keep more than 26 million people out of poverty, and that includes several million children being raised by grandparents.

How to hold on to temporary gains

In terms of U.S. trends over time, the Census numbers released Tuesday on child poverty and health insurance are encouraging, experts say, and it's now up to policymakers to act to keep these gains.

"Any of the improvements that we see – whether it's insurance or poverty – are a reflection of political choices," says Jamila Michener – a professor of government at Cornell and an expert on Medicaid.

The Biden administration and many Democrats would like to make the expanded child tax credit permanent. The U.S. House passed such a measure but it did not survive in the Senate. Several Republican Senators have proposed more limited ways to expand the child tax credit.

"What we don't know is the trade-offs," says Angela Rachidi, a senior fellow at the American Enterprise Institute. "We know inflation increased dramatically over the past year. To what extent did all this government transfer of income contribute to that, I think, is still a question."

Some researchers note that the U.S. has a long way to go with gains in health and insurance rates, when compared to similar high-income countries.

"[Among] our peer countries, we have one of the highest rates of uninsurance in the world and also poorer health outcomes," notes Corlette. "And that's been an issue for us even before the pandemic."

A landmark study in 2013 enumerated the many ways Americans don't have as healthy or long lives as people do in similarly wealthy countries.

One striking illustration of this came with the new life expectancy numbers released two weeks ago. Countries all over the world had a drop in life expectancy after the first year of the pandemic, but many have been able to rebound.

America has not – instead life expectancy dropped for two years in a row, the first time that's happened in the U.S. in a century.