Federal Assistance Lessened the Blow, Kept Millions Out of Poverty

LITTLE ROCK - New Census data show that the national poverty rate jumped in 2009 to 14.3 percent from 13.2 percent, the largest single-year increase in national poverty on record. The Census Bureau also released preliminary state-level data showing that poverty also rose in our state, with 107,000 new Arkansans joining the ranks of the poor in 2008 and 2009; the state's poverty rate rose to 17.1 percent from 15.8 percent.

The data released today on the Census Bureau's website are preliminary and include the only data available on state health insurance trends since the recession began. On Sept. 28, the Census will release estimates of state and local poverty as well as additional health insurance data from a different survey, the American Community Survey. 

"We are really concerned that child poverty, which was already close to 1 in 4 children, may have gotten worse," said Rich Huddleston, AACF Executive Director. "We are anxiously awaiting the child poverty numbers from the American Community Survey when it is released later this month." 

The poverty rate released today would have risen even further had it not been for key public benefit programs and the expansions made to them under the 2009 Recovery Act.  (The official poverty measure reflects the impact of some benefit programs that the Recovery Act temporarily expanded, such as unemployment insurance, but not other such programs, such as food stamps and tax credits.) Unemployment insurance benefits alone kept 3.3 million Americans out of poverty in 2009, according to analysis of the Census data by the Center on Budget and Policy Priorities. 

If Recovery Act assistance disappears before the job market and family incomes rebound, more people could fall below the poverty line. Stubbornly high unemployment bodes poorly for improvements to poverty and health insurance coverage in 2010 and 2011. Moreover, under a broader measure of poverty that accounts for taxes, the expiration of Recovery Act provisions like the Making Work Pay tax credit and expansions to the Earned Income and Child Tax Credits could contribute to further poverty increases in 2011.

"The new figures are further proof of how hard the recession hit the nation and Arkansas, and we aren't out of the woods yet-not even close," Huddleston said. "This is no time to let Recovery Act assistance for our residents and communities to expire."

Uninsurance rates also worsened substantially in 2009.  Roughly 526,000 Arkansans lacked health coverage in 2008 and 2009, according to the new Census Bureau data.  (The Census Bureau averages two years of survey data in order to improve the reliability of the estimates.)

Erosion of employer-sponsored health insurance is the primary cause of the lost ground in coverage. Nearly half-48.5 percent-of Arkansans had employer-provided coverage in 2008-2009, down from 52.3 in 2006 and 2007.

The steep decline in employer-sponsored insurance and the protective role of Medicaid illustrate the critical importance of the new federal health care law, through which an additional 32 million people will ultimately gain coverage under Medicaid or through health insurance exchanges. 

"The large growth in the number of uninsured Americans shows why the recent health care law is so important," said Elisabeth Wright Burak, AACF Health Policy Director. "The new health insurance exchanges and expanded Medicaid will enable many Arkansans to get coverage who now can't afford it." 

To help residents benefit from the passage of the health care law, Arkansas policymakers will need to enact legislation outlining the implementation of state health insurance exchanges and how they will be governed. States also will need to fund initial planning activities not covered by federal planning grants.

Arkansas policymakers will continue to face tough decisions about how to fill budget shortfalls in 2011 and 2012, especially after federal aid expires. Taking a balanced approach that includes revenue to fill those gaps will be crucial to maintaining education, health, and public safety programs and services.  

Arkansas has successful strategies in place to help keep working families out of poverty. With a few changes, we can help keep thousands more impacted by the recession from falling behind. A few include proceeding with the stalled 2009 expansion of ARKids First child health insurance, implementing a state Earned Income Tax Credit and immediately tapping unused federal welfare money to help thousands of parents on waiting lists for child care assistance so they can keep working.

In the long term, the Legislative Taskforce on Reducing Poverty and Increasing Economic Opportunity will send its policy recommendations to Gov. Mike Beebe in November. Over the past several months the Taskforce has hosted town hall meetings statewide, listening to activists and community leaders talk about how they would like to see their state government address poverty issues. The report will have several recommendations for the Governor to consider as part of his legislative package for the next legislative session.

This is the first commission of its kind, specifically devoted to addressing poverty-related issues in Arkansas.