Repairing the Healthcare System: Bloomberg Seeks New Way to Decide Who Is Poor

Stanley Feld M.D.,FACP,MACE

Mayor Michael Bloomberg of New York City is a man who looks like he is thinking. He should be running for President.

“The Bloomberg administration, frustrated by the federal government’s Great Society method of determining who is poor, is developing its own measure, which city officials say will offer a more modern and accurate picture of poverty.”

I discovered in studying the definition of poverty many smart people are frustrated by the definition and rules generated by the definition of poverty. Both the definition and the rules were developed in 1960 based on a 1955 study. I wonder how many government officials and healthcare policy makers know the origin of the poverty rules.

“The current federal poverty threshold was developed in the 1960s by Mollie Orshansky, an economist with the Social Security Administration, who based her number on a 1955 Department of Agriculture study that said low-income Americans spent about a third of their after-tax money on food. If a family had an annual income equal to three times the annual cost of basic groceries, Ms. Orshansky reasoned, they were not poor. If they fell below that income threshold, they were.”

America is different in 2008 than it was in 1960. It is difficult to envision rules made in 1955 being applied in 2008. It would be foolhardy to believe these policies could have a positive effect on the intended citizens using obsolete rules.

“Mollie’s Measure, as it is known in poverty circles, is still pegged to an annual grocery bill, adjusted for little more than price increases over time. The current poverty threshold for a family of four (two adults and two children) is a little under $21,000.”

Poverty is an important political issue in this election year. Yet not a single democratic candidate or republican candidate has challenged the antiquated definition of poverty. All they do is talk about how our wealthy nation does or does not take care of its less fortunate.

Michael Bloomberg is smart. He has pledged to reduce poverty in New York City. He is taking it seriously. He understands the danger of not helping our less fortunate citizens as seen recently in France and Britain.

“About a year ago, the mayor announced that the city would put $150 million in public and private money toward new antipoverty programs.

In developing the new programs, however, the city discovered a serious obstacle: the federal poverty standard was all but useless in assessing whether the efforts were having an effect. This was especially frustrating for the mayor, whose business background and Harvard M.B.A. have conditioned him to look for measurable results.

Mr. Bloomberg is seeking a balanced approach in devising New York’s formula.
The federal method of calculating the income of poor people does not take into account the value of the extensive benefits that governments give out, like housing vouchers. But the city method will, offering an in-depth look at the assistance provided by New York, which has perhaps the most generous safety net in the nation.

Upwards of 600,000 families in the city are in public housing or receive substantial rental assistance. Other aid that would be counted toward income includes food stamps, subsidized child care and cash that is returned to families through the earned income tax credit and other tax credits. These benefits can be worth thousands of dollars a year for each family, and if that were the only change made in the formula, the number of poor in New York would drop drastically.”

New York is looking to establish a more realistic picture of how much money is needed to live there. Mayor Bloomberg is also going to help people get aid from sources that are available such as food stamps and housing vouchers as part of the program to help the poor.

“ In its new formula, the city would set its poverty threshold at about 80 percent of the median amount spent by American families on essential goods, which would include food, rent, clothing, utilities, and a little extra. Costs would be adjusted to reflect New York prices.”

Enter the critics.

“Though city officials insist they are approaching this undertaking without bias, it is almost impossible to separate the process from politics. "

Douglas J. Besharov, a scholar with the American Enterprise Institute in Washington, is watching the New York experiment intently and not without some cynicism that the city will come up with a far too generous formula. "It is highly likely they will come up with a higher poverty rate," he said. "It is perfectly safe politically in New York and it certainly is a good P.R. device for the mayor who wants to be a poverty crusader.”

The critics’ job is to criticize even if the criticism makes no sense. If much of the aid is worthless now and not getting to the less fortunate it would be prudent to figure out how to get the aid to the needy.

“So the city began drafting a new measure, based on research done a decade ago by the National Academy of Sciences. Dozens of respected poverty researchers in the nation have been asked to weigh in as well.”

There has been an outpouring of criticism even before the criteria are established.

“Of course, New York City’s adoption of a new calculus, which skeptics predict is certain to conclude that there are more poor here than previously counted, could be met with opposition from other areas around the country, like rural states, especially if the city uses the new measure to argue that it deserves more federal aid.”

Isn’t this silly? All politics is local. Most economic situations are local. The federal government should establish policy philosophies. The rules have to be developed by the conditions in the individual states and cities consistent with the policy philosophy. If the local government of New York City wants to have employees for low paying jobs, New York City has to have affordable housing, food and medical care available. These essentials need to be subsidized using correct means test rules developed by the federal, state and local governments.

Mayor Bloomberg’s goal is to make a great city greater. The only way to accomplish the goal is to have the people of the city reach for this goal. This is accomplished by providing people with incentive to get ahead, real hope for a better lifestyle.

Mayor Bloomberg's philosophy applies to Repairing The Healthcare System also. In my opinion, if the people owned their healthcare dollar, with the opportunity to save for their retirement if they used their healthcare dollar wisely, we could develop a functional market driven healthcare system no matter what their socioeconomic status is. Presently, we have a dysfunctional market driven system. It is driven by facilitator stakeholders that are not considering the interests of the patient primarily.
Let us take our hats off to Mayor Bloomberg. Someone is finally thinking clearly about the problems.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.