Government healthcare benefits create another welfare cliff that hurts the poor
Imagine being a worker on government assistance because your job doesn’t quite meet your bills. Then, finally, you get that raise to put you over the top and relieve some stress.
The one catch: You lose assistance needed for things like health insurance. Now, you bring home less than before.
This is called the “welfare cliff,” and it’s a situation for far too many people working to get off government assistance.
And the biggest culprit of this “welfare cliff”? Healthcare.
A practical example
Picture a single person earning the equivalent of $8.25 per hour in a full-time job with no health benefits. She would qualify for Medicaid under the Affordable Care Act’s expansion rules. But just by earning a five-cent-per-hour raise would disqualify her entirely from Medicare due to the benefit cliff.
What’s more, the welfare system is also discouraging this single mom from marrying. Only in a situation where the dad earns enough to overcome the loss in benefits would marriage be financially worthwhile.
This example shows the negative impacts of welfare cliffs in preventing people from transitioning off assistance, moving up the economic ladder, and creating better lives for themselves and their families. While well-intentioned, these welfare benefits end up trapping people in a low-income existence.
The real tragedy of welfare cliffs is that hard-working welfare recipients who are striving to get ahead find that becoming independent of public assistance is virtually impossible because of the financial hardship they will have to endure.
A practical example
Picture a single person earning the equivalent of $8.25 per hour in a full-time job with no health benefits. She would qualify for Medicaid under the Affordable Care Act’s expansion rules. But just by earning a five-cent-per-hour raise would disqualify her entirely from Medicare due to the benefit cliff.
What’s more, the welfare system is also discouraging this single mom from marrying. Only in a situation where the dad earns enough to overcome the loss in benefits would marriage be financially worthwhile.
This example shows the negative impacts of welfare cliffs in preventing people from transitioning off assistance, moving up the economic ladder, and creating better lives for themselves and their families. While well-intentioned, these welfare benefits end up trapping people in a low-income existence.
The real tragedy of welfare cliffs is that hard-working welfare recipients who are striving to get ahead find that becoming independent of public assistance is virtually impossible because of the financial hardship they will have to endure.
What’s the solution?
We all want a welfare system that truly serves as a safety net, helping those who can’t help themselves while encouraging able-bodied adults to find work, improve their lives, and form stable marriages and families.
The Georgia Center for Opportunity has proposed welfare reforms that would:
- Combine programs and reduce confusion and redundancy
- Not punish welfare recipients for earning more
- Encourage marriage and family formation
For healthcare specifically, our goal is to create a market-driven system that improves healthcare access for everyone by equalizing risk across the entire insured pool (as insurance is supposed to do), driving down prices while enhancing quality, having health insurance follow people rather than employers, and eliminating welfare cliffs and marriage penalties.
For those who are able to work, the ultimate question is this: Should the purpose of government-sponsored, means-tested healthcare programs, like Medicaid, be to get people back on their feet as they transition into the workforce? Or should the purpose be to provide perpetual benefits, with no end in sight?
Read more: A Real Solution for Health Insurance and Medical Assistance Reform
Read more: What Does an Ideal Solution to the Health Insurance Crisis Look Like?
I am sure your welfare reforms, if implemented, would be successful in achieving your stated three goals.
In the meantime, there are 500,000 lower income Georgians who would directly and immediately benefit from Medicaid expansion in our State.
I don’t understand why you are holding these individuals “hostage” while the local and national politicians who pay your consulting fees continue to delay in implementing any of your reforms.
It is reminiscent of the story told about Nero playing his fiddle while Rome burned.
I hope you and your staff have more compassion for our less fortunate neighbors and will support legislation that can actually get passed (i.e., expanding Medicaid in Georgia thru the ACA).
Yes, I am interested in your comment(s).