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U.S. Poverty Rate Drops; Ranks of Uninsured Grow
Census Data Show Mixed View of Post-Recession Economy

By N.C. Aizenman and Christopher Lee
Washington Post Staff Writers
Wednesday, August 29, 2007

The nation's poverty rate declined last year for the first time this decade, but the number of Americans without health insurance rose to a record 47 million, according to annual census figures released yesterday.

Maryland edged out New Jersey as the nation's richest state, with a median household income of $65,144. The Washington region ranked second among metropolitan areas, with three suburban Washington counties -- Fairfax, Loudoun and Howard -- maintaining their status as the nation's wealthiest large counties. Montgomery and Prince William counties also registered in the top 10.

Nationally, however, the statistics from the U.S. Census Bureau offer a mixed picture of the economy's recovery from the recession of 2000-01.

Although median household income, adjusted for inflation, rose for the second straight year, it has not reached the pre-recession high of 1999.

The increase from 2005 to 2006 in median household income, to $48,201, appeared to be mainly the result of a jump in the number of people per household who held a full-time job rather than a rise in wages. Earnings of both men and women declined by slightly more than 1 percent.

Although the poorest households had the largest percentage income gain from 2005 to last year, income inequality remains at a record high. The share of income going to the 5 percent of households with the highest incomes has never been greater.

The 2006 poverty rate of 12.3 percent remained higher than during the recession. And the slight drop in the rate from 12.6 percent the year before was driven by a decrease in poverty among those older than 65. There was no change in the rates for children or for adults 18 to 24

The release of the statistics yesterday drew divergent responses from the Bush administration and its critics.

"To be in worse shape in the fifth year of a recovery than during the previous recession is both unprecedented and disappointing," said Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities.

U.S. House Speaker Nancy Pelosi (D-Calif.) placed the blame on the administration's economic policies. "Enormous tax cuts for the wealthy and massive budget deficits have failed the vast majority of the American people," she said in a statement. "The rich have gotten richer, but every other income group under the Bush administration has lost ground."

White House spokesman Tony Fratto disagreed, saying that the data on household income are "good numbers," considering the many blows the economy has suffered, including the Sept. 11, 2001, terrorist attacks and the bursting of the stock market bubble.

"Our economy was in very bad shape for a significant period of time, and when that happens, you are going to see incomes fall," Fratto said.

President Bush released a statement describing the figures as confirmation of the wisdom of his approach. "When we keep taxes low, spending in check and our economy open -- conditions that empower businesses to create new jobs -- all Americans benefit," he said.

The president said that "challenges remain" in reducing the number of people without health insurance.

The addition of about 2.2 million people to the ranks of those without medical insurance was attributed largely to continuing declines in employer-sponsored insurance coverage, census officials said.

In all, 15.8 percent of Americans lacked coverage last year, up from 15.3 percent in 2005.

Children fared worse. Last year, 11.7 percent of people younger than 18 lacked health insurance, up from 10.9 percent in 2005. The percentage of uninsured children has increased two years in a row after declining for at least five years, according to the census data.

The new figures stirred debate between Congress and the White House over the future of the $5 billion a year State Children's Health Insurance Program, which helps insure 6.6 million children whose families earn too much to qualify for Medicaid but not enough to afford insurance on their own.

The Senate and House have passed separate bills that would increase funding and make it possible to enroll millions of children for coverage. Bush has promised to veto the bills, saying that they would inappropriately increase the federal role in health care and extend coverage to middle-class families that might otherwise get private insurance.

The administration recently announced new administrative rules that will make it harder for states to enroll children from families that earn more than 250 percent of the poverty level, or $51,625 for a family of four.

U.S. Rep. Frank Pallone Jr. (D-N.J.), chairman of a House subcommittee on health, said in a statement that he is "particularly troubled" that the number of uninsured children has risen for two years.

"Clearly, these disturbing increases over the last two years demonstrate a need to strengthen this important health-care program that provides access to health insurance for our most vulnerable children," Pallone said, referring to the State Children's Health Insurance Program. "I hope these sobering statistics will serve as a wake-up call to President Bush to reconsider his veto threat of this critically important legislation."

But Fratto said Bush remains convinced that the program should remained focused on low-income uninsured children and that expanding it would encourage some middle-class parents to switch their children from private coverage to the government.

"The target population for SCHIP is not being adequately served," Fratto said. "It's not a question of whether SCHIP should be expanded; it's making SCHIP work in a way that it was intended to work."

The figures also reflect a continuing decline in employer-provided coverage. The percentage of people covered by employer-based health insurance fell to 59.7 percent in 2006, down from 60.2 percent in 2005. The figure was 64.2 percent as recently as 2000.

Business leaders have said the spiraling costs of health insurance are threatening their competitiveness in the global market, forcing companies to shift more expenses to workers or consider dropping the benefit.

The new census data show that many of the newly uninsured are working Americans from middle- and high-income families. Of the 2.2 million people who became uninsured in 2006, 1.4 million had a household income of $75,000 or higher. About 1.2 million of the newly uninsured worked full time.

"This is about the problem of the uninsured spreading to the middle class and working people," said Harvard Medical School professor Stephanie J. Woolhandler, a liberal advocate of creating a government-run national health insurance program. "That's the thing that's emerging newly this time."

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