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U.S. poverty rate hit 11-year high in 2008

Incomes fell and the ranks of the uninsured grew slightly, though not as much as expected, the Census Bureau says.

September 11, 2009|Don Lee and Lisa Girion

WASHINGTON AND LOS ANGELES — The government's first broad look at the recession's effect on the nation's households in 2008 showed the poverty rate jumped to an 11-year high, incomes sank across the board and the number of people without health insurance rose to 46.3 million.

As bleak as these statistics were from the Census Bureau on Thursday, they captured only part of the devastating effects of the economic downturn that worsened last fall and into this year.

Experts said they expected the official poverty rate, which rose to 13.2% of the nation from 12.5% in 2007, to keep climbing this year and next, reversing the progress made in the 1990s.

With the U.S. unemployment rate averaging 8.9% this year and increasing almost every month, compared with 5.8% in 2008, incomes are likely to deteriorate further as well.

The median household income -- the point at which half were more and half were less -- fell 3.6% to $50,303 last year from 2007, the Census Bureau said.

The drop in the median income was the biggest decline for the first year of a recession since World War II, said Lawrence Katz, a Harvard University economist. Given the meager income gains for most workers in recent years, he said, "We've basically seen a lost decade for typical American families."

A layoff early last year was a big setback for Matt Guagliardo, 64. With his job loss, the Clovis, Calif., man lost his medical coverage. Unable to afford insurance on his own, he had hoped to manage until he turned 65 and qualified for Medicare.

Then he found out he had prostate cancer.

"It was the perfect storm," said Guagliardo, who has spent more than $3,000 on treatment and is pleading with a hospital to give him the same discounts it gives insurers on a $19,000 bill.

Although job losses are slowing and the economy is expected to technically come out of recession as soon as this quarter, the Census Bureau's annual report on income, poverty and health insurance added fuel to calls for a national healthcare overhaul, as well as a strengthening of other social programs aimed at helping the unemployed, the poor and other vulnerable groups.

"These numbers are disturbing in themselves, but they were before the real bottom fell out," Rep. Jim McDermott (D-Wash.) said shortly after filing a bill to extend unemployment benefits for an additional 13 weeks in states such as California that had jobless rates averaging at least 8.5% over the last three months.

With the loss of about 3 million jobs last year, the number of people with employment-based health insurance coverage declined to 176.3 million from 177.4 million. Those losses helped drive up the ranks of the uninsured by 600,000 from 45.7 million in 2007.

But the full effect of those losses was blunted by a second year of increases in people qualifying for Medicare and federal safety-net programs.

The number of people covered by government health insurance -- including Medicare for seniors, Medicaid for the poor and the Children's Health Insurance Program (CHIP) -- climbed to 87.4 million in 2008 from 83 million.

Private coverage, on the other hand, declined by 1 million, to 201 million. That continues a long-term trend driven by rising costs that have made private insurance unaffordable for many individuals and employers. Cherry-picking, the practice of insurers selling coverage to only the healthiest and excluding many of those with preexisting conditions, also has contributed to the erosion of private insurance.

Job losses have surged this year, and experts believe that the number of people without health insurance has moved closer to 50 million.

"Over the last 12 months, it's estimated that the ranks of the uninsured have swelled by nearly 6 million people," Obama said Thursday, stumping for a healthcare overhaul.

Los Angeles physician Hector Flores said he has seen many of his patients at Family Care Specialists Medical Group lose coverage. When that happens, he said, "they tend to ration their own care, which is really unfortunate."

By the Census Bureau's count, some 39.8 million people in the U.S. fell below the poverty line last year, which was $22,025 for a family of four and $10,991 for individuals. That was up from 37.3 million in 2007.

The poverty rate climbed to 23.2% for Latinos, up from 21.5%. It rose to 8.6% for whites from 8.2%, and to 11.8% for Asians from 10.2%. The poverty figure was statistically unchanged for blacks at 24.7%.

The recession took a big toll in the inner city, where poverty rose to 17.7% last year compared with 9.8% for the suburbs.

Sheldon Danziger, director of the National Poverty Center at the University of Michigan, predicted that the overall poverty rate would surpass 14% in 2009 and possibly climb even higher in 2010.

The nation's poverty rate was at its lowest at 11.1% in 1973, and has hovered at about 12.5% in recent years even as the economy expanded.

"We need to have both a growing economy and focused government policies if we're going to make a dent in poverty," he said.

--

don.lee@latimes.com

lisa.girion@latimes.com

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