<< Chapter < Page Chapter >> Page >

The safety net includes a number of other programs: government-subsidized school lunches and breakfasts for children from low-income families; the Special Supplemental Food Program for Women, Infants and Children (WIC) , which provides food assistance for pregnant women and newborns; the Low Income Home Energy Assistance Program, which provides help with home heating bills; housing assistance, which helps pay the rent; and Supplemental Security Income, which provides cash support for the disabled and the elderly poor.

Medicaid

Medicaid    was created by Congress in 1965 and is a joint health insurance program entered into by both the states and the federal government. The federal government helps fund Medicaid, but each state is responsible for administering the program, determining the level of benefits, and determining eligibility. It provides medical insurance for certain low-income people, including those below the poverty line, with a focus on families with children, the elderly, and the disabled. About one-third of Medicaid spending is for low-income mothers with children. While an increasing share of the program funding in recent years has gone to pay for nursing home costs for the elderly poor. The program ensures that a basic level of benefits is provided to Medicaid participants, but because each state sets eligibility requirements and provides varying levels of service, the program differs from state to state.

In the past, a common problem has been that many low-paying jobs pay enough to a breadwinner so that a family could lose its eligibility for Medicaid, yet the job does not offer health insurance benefits. A poor parent considering such a job might choose not to work rather than lose health insurance for his or her children. In this way, health insurance can become a part of the poverty trap. Many states recognized this problem in the 1980s and 1990s and expanded their Medicaid coverage to include not just the poor, but the near-poor earning up to 135% or even 185% of the poverty line. Some states also guaranteed that children would not lose coverage if their parents worked.

These expanded guarantees cost the government money, of course, but they also helped to encourage those on welfare to enter the labor force. As of 2014, approximately 69.7 million people participated in Medicaid. Of those enrolled, almost half are children. Healthcare expenditures, however, are highest for the elderly population, which comprises approximately 25% of participants. As [link] (a) indicates, the largest number of households that enroll in Medicaid are those with children. Lower-income adults are the next largest group enrolled in Medicaid at 28%. The blind and disabled are 16% of those enrolled, and seniors are 9% of those enrolled. [link] (b) shows how much actual Medicaid dollars are spent for each group. Out of total Medicaid spending, more is spent on seniors (20%) and the blind and disabled (44%). So, 64% of all Medicaid spending goes to seniors, the blind, and disabled. Children receive 21% of all Medicaid spending, followed by adults at 15%.

Medicaid enrollment and spending

The graph on the left shows that the majority of those enrolled in Medicaid are children (47%). The graph on the right shows that the majority of Medicaid spending takes place by people who are blind and disabled (44%).
Part (a) shows the Medicaid enrollment by different populations, with children comprising the largest percentage at 47%, followed by adults at 28%, and the blind and disabled at 16%. Part (b) shows that Medicaid spending is principally for the blind and disabled, followed by the elderly. Although children are the largest population covered by Medicaid, expenditures on children are only at 21%.

Key concepts and summary

The group of government programs that assist the poor are called the safety net. In the United States, prominent safety net programs include Temporary Assistance to Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), the earned income tax credit (EITC), Medicaid, and the Special Supplemental Food Program for Women, Infants, and Children (WIC).

References

Congressional Budget Office. 2015. “The Effects of Potential Cuts in SNAP Spending on Households With Different Amounts of Income.” Accessed April 13, 2015. https://www.cbo.gov/publication/49978.

Falk, Gene. Congressional Research Service. “The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions.” Last modified October 17, 2013. http://www.fas.org/sgp/crs/misc/RL32760.pdf.

Library of Congress. “Congressional Research Service.” http://www.loc.gov/crsinfo/about/.

Office of Management and Budget. “Fiscal Year 2013 Historical Tables: Budget of the U.S. Government.” http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist.pdf.

Tax Policy Center: Urban Institute and Brookings Institution. “The Tax Policy Briefing Book: Taxation and the Family: What is the Earned Income Tax Credit?” http://www.taxpolicycenter.org/briefing-book/key-elements/family/eitc.cfm.

Questions & Answers

what is the difference between perfectly elastic supply and fairly elastic supply
Adaeze Reply
difference between perfectly elastic supply and fairly elastic supply
Adaeze
I need a explanation of capitalism
Victoria Reply
the various economic systems;
King Reply
what is consumer surplus
Amara Reply
Consumer Surplus is the difference between the price that consumers pay and the price that they are willing to pay. On a supply and demand curve, it is the area between the equilibrium price and the demand curve.
stedford
hi to all members
Abdul
i love economics
Neolskae
me too I love economic very much
Kakay
hi everybody
stedford
I love economic
adam
economic is a daily life
Idd
What is economics
Lekan Reply
economic is a social science that studies human behaviour as a relationship between
Kakay
economics is the study of how people allocate their limited resources to provide for their wants
Caliphonia
what causes demand curve shift to left
Richard Reply
When the price of a good rise rapidly
Daniella
what are the disadvantages of dumping
Edwin Reply
what isa microeconomics use for
Favour Reply
what causes demand curve shifted to the left?
Richard
what is demand
John Reply
demand is amount of goods and services that a consumer is willing and able to purchase at a giving price over a period of time
roy
demand is some specific thing thats needed by consumer at a certain time
Melat
demand is the willingness and ability to demand a particular product at a particular price and at a particular time
Rahul
demand is an ability and willingness of a consumer to purchase a particular commodity at a given price over a period of time
adebiyi
What does the 45-degree line show
Hassan Reply
the supply line
Neolskae
been unemployed mean s u don't have work whilst been out of labour for means you are not in age of working or you are above the working age (aged)
roy Reply
no, only the working age
roy
Please briefly explain the relationship between the scarcity, choice and opportunity costs
Thandokazi Reply
What is the effect of raising in price to revenue
Michael Reply
yes
Saa
what is the difference between inflation and deflation?
nebye
price effect
Hez
when you increase price, you increase revenue
Hez
What are the types of price elasticity of supply
jamilu Reply
What's are the types of elasticity
jamilu
what is effect of riaising in price to revenue
Shiyghan Reply
consumer consumption will reduce, as well as demand will fall.
kuntu

Get the best Principles of economics course in your pocket!





Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Principles of economics' conversation and receive update notifications?

Ask