Welfare state and health care in the USA

1. Welfare state and healthcare in the USA Ing. Tomáš Dudáš, PhD.

4. AmericanWelfare State • An outline of the American welfare state • Social welfare in the United States is provided by a complex mix of programs. • The programs are diverse and generally supported by the public, though some remain controversial and unpopular.

5. American Welfare State • Types of programs • Distinctions can be made based on methods of dispensing benefits. • Social insurance programs • Means-tested programs • Some welfare state programs are entitlement programs. • Payments made automatically to people who meet eligibility requirements • Debate about controlling entitlements as the way to gain control over the federal budget.

6. Welfare in the colonial era • Treatment of the poor in colonial America was based on the principles set forth in the Elizabethan poor law of 1601 • Each town or parish was responsible for the care of its own needy • those who were unable to work due to sickness or age, who were to be given material aid • the able-bodied who were unable to find jobs, who were to be provided with work • the able-bodied but unwilling to work, who were to be instilled with the work ethic

7. Nineteenth Century America • The state governments provided little in terms of social welfare programs; the federal government provided none at all. • Industrialization causes a reduction in self-sufficiency. • Political pressure to establish government programs - the Progressive Era • Real change would come as a result of the Great Depression during the 1930s.

8. Social Security Act of 1935 • The beginning of the permanent welfare state in America. • The act consisted of three main components: • 1). Old-age insurance • 2). Public assistance for the needy, aged, blind, and families with dependant children (other disabilities added later). • 3). Unemployment insurance and compensation.

9. Old-age insurance - Social Security. • Originally funded by a payroll tax, collected from the employer, equal to one percent from both employee and employer (higher tax rate now). • Benefits were paid to retirees from the beginning of the program; to recipients who had not contributed. • OASDI : Old Age, Survivors, and Disability Insurance. • FICA : Federal Insurance Contributions Act

10. Assistance for the needy, adult blind, and adult disabled. • The Social Security Act provided federal matching funds to assist state programs to assist these groups. • A 1974 law established the Supplemental Security Income program. • SSI is administered by the Social Security Administration but is funded by general revenues. • It does not limit blind and disabled assistance to adults.

11. Unemployment Insurance • The Social Security Act established a three percent payroll tax charged to employers to fund the unemployment insurance program. • While receiving benefits unemployed workers must actively seek employment (yeah, right). • Benefits the laid-off worker and the economy as a whole. The unemployed still have some spending power.

12. Healthcare in the USA

14. United States: Health Insurance Coverage of Total Population, U.S. (2007) Kaiser Family Foundation, statehealthfacts.org - “Health Insurance Coverage of the Total Population, U.S. (2007)”

15. Employer-Based and Individual • 53% - Employer-based, 5% individual-purchased • Dependants/spouses • Government employees included • Most will have DIFFERENT plan in 2 years • Little incentive to care for individual’s long-term health since will probably be insured by someone different in near future. • Avg. monthly premium – geographic variation • Single - $~150.00 • Family - $~280.00 “Update on Individual Health Coverage - Updated” (#7133-02), The Henry J. Kaiser Family Foundation, Aug 2004

16. Medicare: Health Care for the Aged • Medicare covers persons receiving Social Security and has two components: • Part A covers everyone when they reach age 65; covers hospitalization, some skilled nursing and home health services. Recipients must pay for the first $700 in costs. • Part B is optional; it covers additional services with the costs shared by the system and the recipient. • A prescription drug program was added in 2004. • Costs of Medicare have increased from $2.5 billion in 1965 to $250 billion in 2004. • Financed now by a 1.45 percent payroll tax; employer matched.

17. Medicaid: Health Care for the Poor • Provides hospitalization, prescription drugs, long-term nursing home care (unlike Medicare) to all who qualify for TANF (more on that later) and SSI • Eligibility has been broadened several times since the program began. • Jointly financed by state and national governments.

18. The Uninsured • Over 45 million in 2007 • Coverage = services. No coverage = no services. • “But can’t they just buy insurance?” ?? • Employer size as predictor – Large firm – 98% offer coverage, small firm – 59% • 8/10 come from working families • Price sensitive to premiums AND utilization • When price goes up, people decreasingly use that resource. People get sicker and sicker before their medical problems are addressed.

19. Health Care and Education Reconciliation Act of 2010 • First year • Insurance companies will be barred from dropping people from coverage when they get sick. Lifetime coverage limits will be eliminated and annual limits are to be restricted. • Insurers will be barred from excluding children for coverage because of pre-existing conditions. • Young adults will be able to stay on their parents' health plans until the age of 26. Many health plans currently drop dependents from coverage when they turn 19 or finish college. • Uninsured adults with pre-existing conditions will be able to obtain health coverage through a new program that will expire once new insurance exchanges begin operating in 2014. • A temporary reinsurance program is created to help companies maintain health coverage for early retirees between the ages of 55 and 64. This also expires in 2014.

20. Health Care and Education Reconciliation Act of 2010 • In 2014: • State health insurance exchanges for small businesses and individuals open. • Most people will be required to obtain health insurance coverage or pay a fine if they don't. Healthcare tax credits become available to help people with incomes up to 400 per cent of poverty purchase coverage on the exchange. • Health plans no longer can exclude people from coverage due to pre-existing conditions. • Employers with 50 or more workers who do not offer coverage face a fine of $2,000 for each employee if any worker receives subsidized insurance on the exchange. The first 30 employees aren't counted for the fine.