Census reports more not insured

WASHINGTON – The U.S. economy produced slight improvement in income and poverty levels last year but failed to bring widespread benefits as the number of people without health insurance climbed to 47 million, according to a major report released Tuesday that reflects the nation’s underlying economic anxieties.

In its annual report on poverty, income and health insurance, the Census Bureau said median household income rose slightly to $48,201 but mainly because people were working longer hours, not because they were being paid more.

The nation’s official poverty rate inched down to 12.3 percent. The improvement was the result of gains among a single segment of the population: older people.

The number of people without health insurance jumped by 2.2 million, or about 5 percent, the biggest increase since 2002. And a trend of steady progress in reducing the number of uninsured children seemingly lurched into reverse, as more than 600,000 youths were added to the rolls of the uninsured, an increase of nearly 8 percent.

The bleak statistic on children is released at a time when President Bush is threatening to veto legislation that would expand a health insurance program for children of the working poor and that seemed certain to galvanize opposition to the administration’s stand.

The economy’s performance on issues of such importance as income and health coverage helps explain Americans’ pessimism about their circumstances, including a sharp drop in consumer confidence reported Tuesday by the Conference Board, a business research group.

“As John Kennedy pointed out, ‘A rising tide raises all boats,’ ” said Jared Bernstein, a senior economist with the liberal Economic Policy Institute in Washington. “What the census numbers reveal is that while most boats got a little lift last year, the big gains of the recovery have accrued to the yachts.”

Bush portrayed the numbers as a vindication of his economic policies of low taxes and minimal regulation. “The census data show that income gains in 2006 were substantial and widespread across all income categories. And the largest percentage income gains occurred for people in the bottom 20 percent of incomes,” the president said in a statement.

Some analysts said that what Bush failed to note was that, in dollar terms, the gains near the top were 10 times those in the bottom 20 percent, and for most Americans, improvement was not the result of raises, but of more work.

“The president is right that incomes rose and rose across the board,” said Rebecca M. Blank, a University of Michigan public policy professor who has written extensively on money and poverty. “But what the census data suggests is that earnings actually fell, which means the whole story is about people working harder and longer hours. This is one of the reasons people are not feeling good about this economic expansion.”

Conservative commentators pointed out that household income had made it most of the way back to its pre-2001 recession levels and the poverty rate was lower than in most years of the 1990s.

“What we’re seeing is a fairly typical pattern for this stage of an economic recovery,” said Stuart M. Butler, director of economic and domestic studies at the conservative Heritage Foundation. “It’s not a particularly weak one.”

But a comparison of census numbers for post-recession recoveries over the past 2 1/2 decades suggests that the past five years have been unusually weak. Even with the recent decline, the poverty rate is still six-tenths of a point higher than it was in 2001. Median household income is two-tenths of a point higher. By contrast, during the first five years after the 1982 recession, poverty fell by 1.6 percentage points and income grew by 9.3 percentage points.

“I’m disheartened by this report,” said economist Joseph Antos, of the business-oriented American Enterprise Institute. “There is nothing that has happened in the economy or in the health insurance world that would have made me think we would have this large an increase” in the number of uninsured.

Presidential contenders, particularly Democrats, have been focusing on the uninsured, and candidates cited them late Tuesday as evidence of the need for reform.

Sen. Hillary Rodham Clinton, D-N.Y., said the number of uninsured is an “even deeper outrage today” than when she and her husband, former President Bill Clinton, unsuccessfully tried to pass coverage for all in the 1990s.

Last week, Republican Mitt Romney became the latest candidate to unveil his health reform principles.

“This is going to force more of the Republican candidates to come out with health care plans. They’re going to have to respond,” Antos said. “The health care chapter of the campaign really starts today. I think it is going to be a really significant issue for the election.”

The explanation for the numbers was familiar. Employer-provided coverage continued to erode, while government health care programs held steady but did not fill the gap. And with the cost of health insurance rising more rapidly than wages, or general inflation, many people are unable to buy a personal insurance plan on the individual market, particularly if they have any pre-existing health problem.

Overall, 15.8 percent of the population was uninsured in 2006. Although non-citizens were more likely to be uninsured, native-born Americans accounted for more than 60 percent of the increase in the number of people without coverage.

White House spokesman Tony Fratto said the census report bolsters Bush’s argument for tax credits and other changes to make private health insurance more affordable for individuals. “The numbers show why it is crucially important to reform the health system in a way that allows Americans to purchase their own health insurance,” he said.

But others said the salient political message from the figures is that Bush should reconsider his threat to veto an expansion of the State Children’s Health Insurance Program. The popular federal-state partnership currently insures about 6 million children and is scheduled to expire Sept. 30.

“It’s just ridiculous that the president and some in Congress could be opposed to this,” said MIT economist Jonathan Gruber, a technical adviser to Gov. Arnold Schwarzenegger and the California Legislature. “This is as close to a no-brainer in government as legislation gets.”

The Senate has proposed expanding the $5 billion-a-year program to cover an additional 3 million children, while the House wants to extend coverage to 5 million more children. Bush has proposed to renew the program with a modest funding increase that outside experts say will not be enough to sustain current levels of coverage.