Domestic PolicyDomestic Policy

Social Welfare and Health

3

The Evolution of Social Welfare Policies

Most of our major federal social welfare programs were developed in the 1930s as part of the New Deal’s response to the Great Depression.

Others added in the 1960s.

Library of Congress

Health Care

• Should all be entitled to health care--regardless of income?

• Two fundamental problems– Rising costs due to increased hospital costs,

doctors fees, and drugs and modern medical technology• For business

• For individuals

– Uninsured Americans• 46 million (estimated)

Problem 1: The Uninsured

Who Is Uninsured (percent)?

Problem 2: Increasing Health Care Costs (billions of dollars)

(in billions)

Centers for Medicare and Medicaid Services, 2010

Health Care Reform: Solutions

• 2010– Those with pre-existing conditions can get insurance

– Insurers can’t drop a person because of illness

– Young adults can stay on parent’s policy until 26

• 2011– Insurance plans must pay 80% of premiums on health

expenses

Health Care Reform: Basics• 2013

– Medicare tax increases for those making $200,000+ a year (1.45% to 2.35%)

• 2014

– Employer mandate

• Employers required to have health care plan for employees

• Federal subsidies to small firms

– Individual mandate

• Individuals required to have health care plan or pay penalty

• Federal subsidies to families up to $80K

– Medicare expansion to families making from $19K to $29K

– Health Care Exchanges (markets) for individuals/small businesses to find the cheapest health care policies

Financing

• Other taxes to raise money– Pharmaceutical (drug) companies

– Medical device companies

– Private insurance companies

Impact on Deficit(Billions of Dollars)

$500b Savings From:

Payments to Doctors

Medicare Advantage PlansPayments to

Hospitals

CBO Scoring

Government Health Care Medicare (1965)

Coverage: Parts A, B, and D Who is eligible; who pays? Problems

Medicaid (1965): Medical Care for the Poor• Who is eligible?

• Medicaid and the States

• State Childrens’ Health Insurance Program

Problem: Medicare going “bankrupt” by 2013

Economic PolicyEconomic Policy

40

National Business Activity, 1880–Present

Trends in Family Income

Census Bureau

Why is there a growing gap between the highest income and lower income families?

Income Mobility

• Lowest: 65% moved into higher quintile

• Middle: 50% moved into higher quintile

56

The Politics of Taxes

Currently, Americans pay taxes that total somewhat less than 30 percent of the GDP.

Federal Income Tax Rates• Loopholes and lowered taxes

• Progressive and regressive taxation

Who Pays? • Liberals tend to favor progressive taxes.

• Conservatives either favor taxes that are less progressive, or even flat or regressive.

Who Pays What in Taxes?

Spreading the Wealth. . . .

Sharing the Wealth. . .

59

What should we do about taxes?• Nothing

– System we have is pretty fair and progressive enough

What should we do about taxes?

• Flat tax

• National sales tax

• Make tax code more progressive