Very Poor in a Wealthy Country

The U.S. Census Bureau's annual report on poverty in the United States provides clear evidence that more Americans are falling upon hard times. In what is still seen by many abroad as the land of plenty, 46 million people -- 14.6 percent of the population -- are living in poverty. Hundreds of thousands of these people formerly were counted among the middle class.

Compared with other rich countries, the United States has one of the greatest numbers of people living in poverty, as well as a high risk of becoming poor. Why is that? Countries that do not have affordable health care have high rates of poverty, no matter how high their rate of economic growth or their level of wealth. By contrast, those richer countries that have the lowest poverty rates also have universal health care coverage. There is no exception.

Not coincidentally, the new census report also shows that 16.7 percent of Americans have no health insurance. The number of covered Americans dropped for the first time since record-keeping began in 1987. If we are serious about reducing poverty in the U.S., we will need to deepen and widen health care reform, rather than flee from continuing this challenging task as many politicians are now doing.

Investigations that I conducted with a total of 35,000 households in five countries, including several in rural counties of North Carolina, show how many formerly middle-class people have become persistently poor. They remain poor not from lack of effort or initiative. The vast majority is working hard to break out of poverty, but these efforts are frequently set back by adverse events, principally health shocks of different kinds.

The patterns of falling into poverty that we observed are illustrated by the example of Martin Rhysman, a resident of Beaufort County, N.C. He lost his job and with it his family's medical insurance. When his wife fell seriously ill a year later, a required surgery proved to be very expensive and they had to find the money for hospital expenses.

To make ends meet in such situations, people such as Rhysman sell precious assets. Unable to deal otherwise with ruinous hospital costs, they also take out high-interest private debts. In the long run, these strategies lead to bankruptcy for many. High health care costs are the primary reason behind the growing wave of personal bankruptcies in the United States.

Unless this high rate of descent into poverty is controlled, poverty will simply continue to grow. Yes, job creation will help lift some people out of poverty, but it is not the panacea that many make it out to be.

Rather, job creation health care reform and a suite of other cures are required simultaneously. One possible cure could be to provide health care vouchers, alongside other assistance like food stamps.

Let us, therefore, pause in our unending bickering about how the health care system should be truly reformed. The new census numbers provide a clear wake-up call: Will we simply sit by while poverty grows year after year in the United States? Or will we do something more to make our health care system function better for ordinary folks?

Anirudh Krishna is an associate professor at Duke University's Sanford School of Public Policy and author of the new book, "One Illness Away: Why People Become Poor and How They Escape Poverty." This op-ed first ran in the Herald-Sun on Sept. 21. 2010. It also ran in The Atlanta Journal-Constitution on Sept. 27, 2010.