Tuesday, April 12, 2011

Decentralizing welfare?


Patrick_L said...

To make this analogy work, Ferrera & Co. needs to explain what exactly are the equivalents of the 90's economic boom and expansion of the EITC for Ryan's Medicaid block grant proposal? Is Ferrera predicting that health care costs are going to not only stop increasing at dramatically high rates, but actually start decreasing in costs...- in just a year or 2? (In the 1990's an economic boom occured) Even the Heritage Foundation couldn't find an economic simulation analyzing their dream health care reforms that could result in this outcome. It is beyond the realm of possibility- there is no overnight equivalent that can occur for health care costs that would be the equivalent for Medicaid block grants as the 1990's economic boom was for welfare reform.

Also, Ryan's plan is not providing an alternative (i.e. EITC-esque) to Medicaid for the program when it gets cut so heavily- unless the alternative is going to make beneficiaries they cut become by cutting benefits, have further restricted access to care by cutting provider payments, or even worse- beneficiaries might actually lose their Medicaid health insurance.

Ryan's plan lacks the additional factors that were included in the 1996 welfare reform, and his plan lacks any conceivable way for health care costs to literally begin decreasing overnight (because there is no way to do this). In this way Medicaid block grants are very different from welfare reform in 1996.

Also, Medicaid is not a welfare program for the poor or near-poor. It provides health care for the most disadvantaged populations, which means that two-thirds of the costs for Medicaid go to paying for health care for 16 million seniors and people with disabilities. It's a completely different type of program than AFDC (was, since it no longer exists).

Block-granting Medicaid also means that this program, like all state programs, would be forced to be much more responsive to recessions. That means states would face the greatest fiscal constraints with these types of programs at the exact moment need is increasing (Medicaid is for, depending on demographic category, children and adults at or below 133% of the federal poverty line).

Finally, I'll end by quoting Tyler Cowen, libertarian economist who serves as general director of the Mercatus Center, and his reaction to Ryan's Medicaid ideas: "Medicaid should be one of the last parts of the health care budget to cut."

Megan said...

Patrick, don't you think that de-centralizing welfare COULD have beneficial effects? Don't you think state and local governments understand the needs of their specific region better than the federal government?

PBM said...

Megan, I agree with what your saying but take a more cynical approach to what the GOP is trying to do. In a perfect world, yes, more localized welfare sounds like a good idea. But moving it to the local level in a lot of places, would be like moving civil rights legislation to a local level, and would just lead to local GOP removing benefits for the poor to give more tax cuts to the rich. The poor are not the GOP's constituency in national or local politics, so why should local GOPs care about them at all. I think it is good for the federal government to set guidelines so that local governments can't do what they want and screw the poor over even more.

PBM said...

Sorry, I meant to say local GOPs instead of local governments in the last sentence.