Poverty & Health Insurance

The Census Bureau just released its report “Income, Poverty and Health Insurance Coverage in the United States: 2006.”  There is both some good news and some bad news in the report. 

Starting with the good news, real median household income rose for the second consecutive year, reaching $48,201, up from $47,845 in 2005 and $47,323 in 2004.  The bad news is that it is still substantially lower than in 1999, when median real household income was $49,163.  Virtually all the increase in 2006 was among white households (up 1.1%), while there was no statistically significant change for other ethnic groups.  There was no statistically significant change in income in-equality in 2006, although it tilted towards more inequality. 

The Gini index, the best single number description of income inequality, where 0 is perfect equality and 1 is one person with all the income, was 0.47 up from 0.469 in 2005.  Over the last decade the Gini index has increased from 0.455 to the current 0.47.  That is a significant change; however, in no single year was the change significant.  In 2006, the top 20% of households had 50.5% of the total income in the country, up slightly from 50.4% last year, the share earned by the bottom 40% was unchanged at 12.0%.

There was also finally some good news on the poverty front as the poverty rate fell to 12.3% in 2006 from 12.6% in 2005.  Virtually all of the improvement came among Hispanics where the rate declined to 20.6% from 21.8%.  Poverty also declined significantly among the elderly, where the poverty rate fell to 9.4% from 10.1% in 2005. 

Again, the bad news is that the overall poverty rate is still well below its year 2000 low of 11.3%. Children are more likely to be poor, with a poverty rate of 17.4%, unchanged from last year, than working age people who had a poverty rate of 10.8%, also unchanged from 2005.  By region, poverty rose slightly in the Northeast to 11.5%, but fell in the other three regions.  The South continues to have the highest poverty rate at 13.8%.

Unlike the news on income and poverty, which was sort of a mixed bag, there were a few hopeful emerging trends after several years of awful news. But the same cannot be said about the health insurance section of the report.  The best that can be said is that the size of the untapped market for Wellpoint (WPT), Humana (HUM - Analyst Report) and Aetna (AET - Analyst Report) is growing.  The percentage of Americans without health insurance grew to 15.8% in 2006 from 15.3% in 2005. 

In absolute numbers, there were 47 million uninsured up from 44.8 million in 2005.  The percentage of people covered by employment-based coverage dropped to 59.7% from 60.2% in 2005.  Meanwhile, the percentage of people covered by government programs (Medicare, Medicaid, VA) fell to 27.0% from 27.3%.  In what is sure to become a widely quoted figure in the context of the current political debate on the S-CHIP program, the rate of uninsured among children rose to 11.7% from 10.9%. 

There were 700,000 more kids without health insurance coverage in 2006 than there were in 2005.  Hispanics were the ethnic group most likely to be uninsured, with a staggering rate of 34.1%. Perhaps Humana needs to spend a few more advertising dollars at Telemundo, since in raw numbers it is a very open market.  Young adults (18-24 yeas old) were the age group most likely to be uninsured, followed closely by their older brothers and sisters (25-34 years old) with a uninsured rate of 26.9%.  The rate for this group was up sharply from 25.7% in 2005. 

Geography also plays a major role in the rate at which people have health insurance, although the rate went up in all four regions.  The South (19.0% vs. 18.0% in 2005) and the West (17.9% vs. 17.6%) had much higher rates of uninsured than did the Midwest (11.4% vs. 11.3%) or the Northeast (12.3% vs. 11.7%).  Texas (24.1%) and Florida (20.3%) had the highest uninsured rate while Minnesota (8.5%) and Hawaii (8.6%) had the fewest uninsured.

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