Possible Change to Federal Poverty Level Calculation - Public Comment Period

The Idaho Nonprofit Center wants to make you all aware of potential changes to the Federal Poverty Level calculation as it impacts many of your missions. We recently received the below communication from one of our partners and members, the United Way of the Treasure Valley, written by their President and CEO, Nora Carpenter.  
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We are including the entirety of her message below.

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Friends and Community Partners,

​I know you join me in wanting the best possible pathways to success for our low and moderate income Idaho neighbors. With that in mind, I would like to share some news from Washington DC regarding potential updates to the calculation for the Federal Poverty line (FPL), the qualifying measure for many Federal and State support programs.

Copied below you will find information regarding a recently released notice opening a public comment period regarding proposed changes in the method for calculating the FPL. Also included are links to the notice and the comment portal.

While United Way is a big fan of updating the calculation of FPL to be more reflective of the 21st Century realities, United Way is not a fan of the proposed methodology. You may agree or feel differently. Regardless, I hope you will take time to participate in the public comment period so our Idaho voices may be heard and noted.

Thank you for all you and your team do to help Idahoans be their best.

Regards,

Nora Carpenter, President & CEO
United Way of the Treasure Valley

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FAQ: Proposal to Lower the Federal Poverty Line

What change is proposed?

​On May 6, the Office of Management and Budget (OMB) issued a notice requesting comments on changing the methodology for updating the federal poverty line for inflation. The notice floats the idea of updating the Census Bureau’s poverty thresholds using an alternative, lower measure of inflation than the traditional Consumer Price Index (known as the CPI-U) — either the “chained” CPI or the Personal Consumption Expenditures Price Index. This would result in lower poverty thresholds, with the gap between the current and proposed methodology increasing each year.

How would the proposal affect low- and moderate-income people?

​Each year the Department of Health and Human Services (HHS) puts out poverty guidelines, which are the basis for program eligibility and/or benefits in many health care, nutrition, and other basic assistance programs. Because the HHS poverty guidelines are based directly on the Census Bureau’s poverty thresholds, the proposed change would lower the income-eligibility cutoffs for all of these programs, cutting or eliminating assistance to some individuals and families. 
 
The policy’s impact would be small at first but would grow each year. For example, by the tenth year, millions of people would lose eligibility for, or receive less help from, health and nutrition programs:

• Hundreds of thousands of seniors and people with disabilities would lose or receive less help from Medicare’s Part D Low-Income Subsidy, meaning they would pay higher premiums for drug coverage and pay more out of pocket for prescription drugs.
  
  
• Hundreds of thousands of children and adults would lose comprehensive coverage through Medicaid or CHIP.
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• Millions of ACA marketplace consumers would receive lower premium tax credits, meaning they would pay higher premiums.

Significant numbers of low-income households, primarily in working families, would lose eligibility for federal nutrition assistance programs including SNAP, WIC, and free school meals.

Would the change make the poverty line more accurate?

No.The Administration’s claim that the alternative indices would be appropriate for adjusting the poverty line because they more accurately measure inflation has several flaws:

• The poverty line is already below what is needed to raise a family. Research has identified many ways in which it is inadequate; for example, it doesn’t take into account the full costs of low-income families’ basic necessities, and largely excludes some necessities that have become more important in families’ budgets in recent decades like child care. High rates of hardship among families with incomes just above the poverty line provide more evidence of its inadequacy. The proposal, by ignoring all other issues and making a single change that would further lower the poverty line, would make the poverty line less accurate.
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• Studies suggest that costs may rise more rapidly for low-income households than for the population as a whole. This means that adjusting the poverty line — meant to equal the level of income needed for families to be able to afford the basics — by a lower measure of inflation would make the poverty line more out-of-touch with families’ true expenses each year.

What’s the next step in the process?

​For now, OMB is seeking comments on the possible change. Comments are due June 21 and can be submitted here. After that, it’s not clear whether the Administration will undertake any additional process; it might just try to implement a change through OMB guidance, rather than seek additional comments and issue a regulation. 
 
All comments are important. Comments – along with statements, analyses, op-eds, and social media efforts – help draw attention to the issue. The comments themselves also create a record that agencies generally have to show they’ve appropriately considered before taking action to implement the policy change; otherwise, the courts may judge their actions “arbitrary and capricious.” Thoughtful, meaty comments from a range of sectors and perspectives are the priority, rather than a huge volume of comments. 

What kinds of issues should the comments address?

It’s useful to submit comments that directly address the Administration’s argument for the change. They don’t necessarily have to address the technical merits of different inflation measures; instead, they could explain why the current measure falls short of what families need to make ends meet, so lowering it over time would make it less accurate.
 
If you would like more information or to discuss further, please don’t hesitate to reach out.  Thanks as always for your leadership.

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All information provided by Idaho Nonprofit Center partner and member, United Way of the Treasure Valley.

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