Potomac Fever is the blog of the Hamilton College Semester in Washington Program.
1) First, let’s talk about Medicaid, because Ferrera clearly has the equivalent of a two-year-olds knowledge about the program. Medicaid is not a welfare program- 67% of the program’s costs go to health care for the elderly and disabled. People dual enrolled in Medicare and Medicaid account for 40% of Medicaid’s costs. Who has Medicaid coverage? 70% of nursing home residents, 40% of people living with HIV/AIDS, and 20% of all people living with severe disabilities. Medicaid is not a welfare program- conservatives attempt to rope it into the discussion because they know it’s the only way they can make the “welfare state” look like its increasing. Ignoring Medicaid (driven by rising health care costs that are actually growing faster in the private sector), the “welfare” state has actually been declining. Next, Medicaid is not a credible area for cost savings that won’t have a large, detrimental effect on health insurance coverage and health outcomes. Medicaid has had slower growth than private health insurance options for a decade. Administrative costs are about 5% of Medicaid’s costs, compared to 12% for private health insurance. That figure doesn’t include profits, which have been rising for health insurers for years which explains why so many companies are scrambling to meet the medical-loss ratio requirement in PPACA of 80%, which if they can’t meet means that over 20% of the plan’s cost goes to combined administrative costs and profits. 70% of Medicaid enrollees already receive care through private, managed care. Provider payments are already so low that there are access problems in some areas in some medical fields. There is no private health insurance option which can meet this need at comparable cost. This is why many credible conservative economists and policy experts advocate that more of American health care should look like Medicaid, because it is so frugal and effective at cost-control. Any significant cuts to Medicaid will lead to increases in the ranks of the uninsured and lead to worse health outcomes, and the House Republicans’ proposal cuts federal Medicaid compared to current law by 49% for 2030. 2) Ferrera demonstrates (again) the collective stupidity of the right’s “experts,” who like to compile an overly broad definition of the cost of the “welfare state” and compare it to the poverty line, when they (should) know that the programs they are comparing have completely different compositions and enrollment populations than the population strictly under the poverty line. Either they are ignorant of the actual programs they are supposed to understand, or they willfully misrepresent the facts in attempt to deceive their readers. 3) The United States has one of the highest poverty rates of all the 30 rich countries participating in the Luxembourg Income study, whether poverty is measured using comparable absolute or relative standards for determining who is poor, and despite the fact that (with the exception of tiny Luxembourg itself), the United States is the richest nation on earth. 4) Why? It’s primarily because the U.S. actually spends far less than other countries on the “welfare state.” On cash and near-cash assistance for the nonelderly, the U.S. spends half as much as Canada or the U.K, less than 1/3 of Germany, and less than a quarter of the amount spent by Finland or Sweden. 5) As a result of these factors, is it any surprise that the U.S. has the lowest social mobility levels in the developed world? As Alan Krueger (2002) has remarked, the available data “challenge the notion that the United States is an exceptionally mobile society. If the United States stands out in comparison with other countries, it is in having a more static distribution of incomes across generations with fewer opportunities for advancement.” Conservatives pushing for retrenchment in these key areas are inevitably creating a more static society where class divides are hardened and social outcomes are determined less by merit, but more on the luck of who your parents were. Charming.
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