White House

Trump’s poverty proposal prompts alarms over cuts to Medicaid, Head Start

By changing the poverty threshold calculation, thousands would no longer be eligible for Medicaid and food stamps

Staffers set up signs for Sen. Bernie Sanders' event to introduce the Medicare for All Act of 2017 on Sept. 13, 2017. The Trump administration may roll out a memo using an alternative way to calculate the poverty threshold, potentially cutting eligibility for programs like Medicaid, Medicare subsidies, food stamps, Head Start education for young children. (Bill Clark/CQ Roll Call file photo)

Experts are voicing alarm about a Trump administration plan to change how the federal poverty level is determined and potentially cut eligibility for programs like Medicaid, Medicare subsidies, food stamps, Head Start education for young children and low-income energy assistance.

The comment period for the Office of Management and Budget proposal closes Friday. Then the agency could roll out a memo that would use an alternative way to calculate the poverty threshold.

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Multiple experts said it’s likely that the administration would use what is called the chained consumer price index, which would update the poverty line using a slower-growing inflation measure than the current method.

Douglas Holtz-Eakin, president of the American Action Forum group and a former Congressional Budget Office director, said many economists say the current measure overestimates the actual rate of inflation.

“The issue is, does it make sense to switch to something that is a more accurate measure of inflation?” he said.

Holtz-Eakin said this change has been anticipated since he served at CBO during the George W. Bush administration, when it was proposed in the White House budget.

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Holtz-Eakin said one reason why this is being considered now is that the 2017 tax law changed the method of calculating growth for tax deductions and other things to chained CPI.

“They’ve done it on the tax side of the budget,” he said. “Doesn’t it make sense to start thinking about it on the spending side?”

But some experts worry that the administration may use this proposal to curb eligibility and costs for programs like Medicaid and the Supplemental Nutrition Assistance Program, or SNAP, also known as food stamps.

“The notice describes and asks for comment on a long list of different inflation measures, but really it’s a proposal to lower the federal poverty line and thereby lower eligibility for many federal programs,” said Aviva Aron-Dine, the vice president for health policy at the Center on Budget and Policy Priorities, in a press call this week.

OMB is not using a formal rule, which would require officials to weigh the questions and comments provided by interested parties and address them before releasing a final rule. OMB’s approach would not require these steps.

The Center on Budget and Policy Priorities estimated that if this policy is implemented, thousands of people would lose access to benefits and medical coverage.

Over a decade, CBPP estimates that 300,000 adults and children would become ineligible for Medicaid or the Children’s Health Insurance Program, and 250,000 adults would lose coverage under Medicaid expansion.

The group’s analysis also predicts that millions would receive lower premium tax credits that subsidize insurance under the health care law. Over 250,000 seniors and people with disabilities would have benefits decreased or cut from the Medicare’s Part D Low-Income Subsidy Program.

“It does have the implication that fewer people over the next 10 years would be deemed as being in poverty, and you would be cutting poverty spending for that reason,” said Holtz-Eakin.

A separate analysis from the left-leaning Urban Institute examined how the proposal could affect SNAP, which provides food assistance to about one in eight Americans every month.

“Something as seemingly innocuous and technical as how we measure inflation can have consequences for the well-being of vulnerable Americans,” Gregory Acs and Laura Wheaton said in an Urban Institute report.

The report states that if the chained CPI model had been used for the five years before 2016, more than 100,000 individuals would have been ineligible for SNAP in 2016. If that model had been used 15 years earlier, 579,000 recipients would have been ineligible.

“In any given year, inflation measured by the chained CPI is only 0.2 to 0.3 percentage points lower than CPI-U inflation, on average. But over time, that small difference compounds, growing ever larger,” said Arcs and Wheaton.

It’s also unclear if a change could face legal challenges.

If OMB is considering any change to calculating the poverty measure, “it must also include detailed legal and policy analysis and estimates of the likely effects, such as whether such a change is permissible under federal law,” wrote Edwin Park, research professor at the nonpartisan Georgetown University Center for Children and Families.

Correction, 6/25/19, 1:20 p.m. | An earlier version of this story misspelled the last name of the Urban Institute’s Gregory Acs. 

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