Posts Tagged ‘congressional budget office’

Who really benefits from the “Safety Net”

Posted on: February 15th, 2012 by

A new analysis from the Center on Budget and Policy Priorities underscores that the poor are no longer the primary beneficiaries of the government safety net.  Terms like entitlements, government benefits, and safety net often conjure images of tax dollars sliding from the hands of the wealthy into the pockets of the poor.  But as reported by The New York Times, Saturday, that image is badly outdated.  Benefits are now flow primarily to the middle class.

Eric L. Bach - CPA - Rockville, MD

The center’s study found that the poorest American households, the bottom fifth, received just 32 cents of every dollar of government benefits distributed in 2010.  The finding is broadly consistent with the data reported Sunday that the poorest households received 36 percent of benefits in 2007, down from 54 percent in 1979, numbers that came from a study published last year by the Congressional Budget Office.

While the findings are not directly comparable because of differences in methodology, the new study suggests that the recent recession did not cause any significant increase in the share of benefits flowing to the poor, as might once have been expected.  The study found that older people received slightly more than half of government benefits, while the non-elderly with disabilities  received an additional 20 percent.  These benefits are not means tested, but rather, better-paid workers get more in Social Security.

Furthermore, the study notes that politicians have shifted benefits away from the “jobless poor,” through reductions in traditional welfare, and increased benefits for working families, for example through tax credits.  The government also also expanded elegibility for benefit programs.

“The safety net became much more work-based,” wrote Arloc Sherman and his collaborators at the center, a left-leaning research group.  “In addition, the U.S. population is aging, which raises the share of benefits going to seniors and people with disabilities.”

Another finding of the study is that the distribution of benefits no longer aligns with the demography of poverty.  African-Americans, who make up 22 percent of the poor, receive 14 percent of government benefits, close to their 12 percent population share.  White non-Hispanics, who make up 42 percent of the poor, receive 69 percent of government benefits… again, much closer to their 64 percent population share.


How to fix the glitch in Obama’s health law

Posted on: July 19th, 2011 by

Eric L. Bach & AssociatesOn Monday, Republican Sen. Mike Enzi of Wyoming introduced legislation to fix a glitch that would have allowed some middle-class early retirees to get health insurance at virtually no cost by qualifying for Medicaid coverage meant for the poor.  Democratic Sen. Ben Nelson of Nebraska introduced a similar bill, signaling the fix could have bipartisan support.

The problem surfaced very recently.  The mix-up would have created unintended consequences for tax credits that Obama’s law provides to make private health insurance more affordable for people who purchase coverage individually.  An early retiree drawing Social Security would have paid much less for the same policy than someone of the same age, similar medical history, earning the same total income from work.  Tax credits and a Medicaid expansion are part of the law’s big push to cover the uninsured, which starts in 2014.

Health and Human Services spokeswoman Erin Shields welcomed Enzi’s involvement.  “We look forward to studying his proposal,” she said.  “The administration is exploring options for a fix.”

The Associated Press first reported the problem last month, after Medicare Chief Actuary Richard Foster raised concerns and said he was having trouble getting policymakers interested.  The nonpartisan actuary’s office conducts long-range cost estimates for government health care programs.  “I try to stay out of policy issues, but this is one where I think a change is in order,” Foster told the House Budget Committee last week.  Earlier, he simply said the glitch “just doesn’t make sense.”

Enzi’s legislation would reverse the health care law, requiring Social Security income to be counted as income when determining eligibility for Medicaid and for tax credits to purchase private insurance.  In a memo provided by the senator’s office, the nonpartisan Congressional Budget Office estimated the legislation would reduce the deficit by about $13 billion between 2014 and 2021, without raising the number of uninsured people.

“The change in the income definition is estimated to have a negligible effect on the number of individuals who are uninsured,” said the CBO memo.  People would still be able to get coverage, they just wouldn’t be getting it free or as heavily discounted.  The fix would affect about 500,000 to 1 million people a year, a smaller number than the 3 million Foster’s office had estimated.