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The Survey of Income and Program Participation (SIPP) is the premiere data source for computing poverty using the proposed alternative measurement methods. However, it does not capture household expenditures and liabilities for needed medical care or any associated reimbursements. The alternative approaches for measuring poverty acknowledge that income or benefits used to offset the cost of needed medical care should not be counted as resources available to cover other basic necessities (food, shelter, clothing). Yet, the difficulty in capturing these costs and reimbursements (so to deduct them from income) is so great, the measures cannot be integrated into the SIPP instrument within reasonable levels of cost and respondent burden. Thus, such expenses must be imputed, unlike the other components of the alternative poverty measure. Good imputation procedures for out-of-pocket medical expenses are not necessarily easy to produce because medical expenditures are highly correlated with characteristics not well measured in SIPP or other surveys focused on income. The questions addressed in this paper are: "How we can best capture deductible expenses for medical care and insurance within SIPP?" and "Does that procedure bias the resulting measures of poverty?" While ultimately one might envision imputing missing data from administrative sources, at this time the only sources available are the medical expenditure surveys conducted by the Department of Health and Human Services. In this paper, the National Medical Expenditure Survey forms the basis for the development of the imputation models examined and for the analysis of the impact of the imputation procedures on poverty rates.
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