Public Policy Theories Institutions and Processes of Government Institutions and Processes of Politi

1
Public PolicyTheories Institutions and
Processes of Government Institutions and
Processes of Politics How all of these work
together to address issues of concern to society.
2
Next Week

• Lecture topic Foreign Policy
• Class evaluation, probably at beginning of class
  (please be on time if you want to participate)
• Exam review outline given out
• Exam review discussion

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Economic PolicySocial Policy
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Fiscal Policy

• Fiscal policy (Welch, p. 575-577) Decisions on
  taxation and spending which are made each year by
  the President and Congress how much money to
  raise in taxes, what kinds of taxes to impose,
  how much to spend and what to spend it on. How
  the money is raised (how much, and from whom and
  where), and how it is spent (how much and on
  what), significantly affect the U.S. economy.

5
Budget and Appropriations

• This takes place through the appropriations
  process covered in the unit on Congress.
• President submits a budget to Congress early in
  the year.
• Congress considers 12 annual appropriations
  bills
• Supposed to be enacted by Oct. 1, beginning of
  fiscal year.
• Rarely happens (regardless of which party is in
  control).
• If appropriations bills are not passed in time,
  government is funded through a continuing
  resolution (CR), allowing spending to continue
  at current levels for a set period of time
• CR may be as short as one day (if an agreement on
  passing the bill is imminent) or as long as the
  rest of the fiscal year if agreement cannot be
  reached.
• This is where Members of Congress can insert
  earmarks for specific projects (such as the
  Bridge to Nowhere, whose funding was finally
  cancelled in the fall of 2007).

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Control Spending?

• The appropriations process makes it very
  difficult to control spending. Members of
  Congress frequently cooperate in supporting in
  each others projects (logrolling) in order to
  make sure that their own projects are funded.
  Members who try to cut spending on given projects
  find it difficult to obtain funding for their own
  projects, no matter how worthy. The President
  can only sign or veto entire bills, not line-item
  veto them.

7
Revenues

• Revenues are the money which the Government takes
  in, through taxes and other sources.
• Major sources of revenue
• Individual income tax
• Corporate income tax
• Social insurance (payroll tax, etc.)

8
Expenditures

• Expenditures money Government spends.
• Discretionary spending Government can control
  (whether to spend, and how much, on a particular
  program.
• Most fed. discretionary spending is
  defense-related.
• Entitlement spending is determined by formulas
  and is legally required to be spent according to
  the formula.
• Biggest categories
• Social Security
• Medicare
• Medicaid

9
Surplus and Deficit

• Surplus and deficit
• Annual revenues expenditures surplus
• Amount taken in exceeds amount spent
• Annual expenditures revenues deficit
• Amount spent exceeds amount taken in
• Annual revenues expenditures balanced budget
• A deficit requires the government to either cut
  spending (politically unpopular), raise taxes
  (politically very unpopular) or borrow money
  (primarily from foreign banks).

10
Running a Deficit

• Borrowing requires that the money be paid back
  later, with interest. Since 1969, the only years
  in which the budget has been balanced were 1998
  to 2001, as a result of the Clinton tax increases
  of 1993 (very unpopular at the time). As a
  result of the economic damage from 9/11, the
  costs of the wars in Afghanistan and Iraq, and
  the Bush Administrations tax cuts, the deficit
  in 2005 was over 426 Billion.

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Fiscal Year 2007 (10/1/06-10/1/07)

• Revenues 2.568 Trillion
• Spending 2.731 Trillion
• Deficit 163 Billion
• 344 Billion if Social Security surplus is
  excluded
• Discretionary spending
• Defense 547 Billion
• 20 of all federal spending
• Non-Defense 495 Billion (18)
• Source House Budget Committee

12
Entitlement Spending FY 2007

• Social Security 581 Billion (21)
• Medicare 436 Billion (16)
• Medicaid 192 Billion (7 of federal funds only,
  doesnt include state)
• Other 445 Billion (18 including interest)

13
National Debt

• Total amount of money owed by the U.S.
  Government, primarily the result of previous
  annual deficits plus the interest associated with
  them. The national debt as of November 14, 2007,
  is 9,115,735,781,408.93, or a little over
  30,000 for each individual American citizen.
  The annual interest on the national debt for
  2007 is an estimated 235 Billion.

14
Current National Debt (as of Apr. 11, 2008)

• 9

15
Current National Debt (as of Apr. 11, 2008)

• 9,442

16
Current National Debt (as of Apr. 11, 2008)

• 9,442,757

17
Current National Debt (as of Apr. 11, 2008)

• 9,442,757,563

18
Current National Debt (as of Apr. 11, 2008)

• 9,442,757,563,045

19
Current National Debt (as of Apr. 11, 2008)

• 9,442,757,563,045.54

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Current National Debt (as of Apr. 11, 2008)

• 9,442,757,563,045.54
• 9 trillion,
• 442 billion,
• 757 million,
• 563 thousand,
• 45 dollars
• and 54 cents.

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Keynesian economics (Welch, p. 576)

• An economic theory developed by the British
  economist John Maynard Keynes
• Introduced to US by Franklin D. Roosevelt
  Administration.
• Borrow money (run a deficit), and invest the
  money in a way which stimulates the economy for
  example, hiring unemployed persons during the
  Depression to build Byrnes Music Conservatory at
  Winthrop. The newly-employed people will earn an
  income and thus pay taxes, which theoretically
  will pay back the money which the Government
  borrowed initially.

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Supply-Side Economics(Welch, pp. 576-577)

• Economic theory developed during the 1970s
• Introduced during the Administration of Ronald
  Reagan, also pursued by G.W. Bush (tax cuts of
  2001 and recent tax rebates)
• Cut taxes. People will keep more of their own
  money and thus invest more of it in the economy
  (hiring more employees at ones business,
  building new facilities, etc.) This will
  theoretically stimulate the economy in a way
  which will produce enough new tax revenue to make
  up for the tax cuts, and thus balance the budget.

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Two economic theories

• Neither Keynesian economics nor supply-side
  economics is entirely successful in practice.
  The Great Depression was ended by the U.S.
  mobilization in World War II (not by Roosevelts
  domestic spending), and the annual deficits and
  national debt tripled under Reagans supply-side
  economics (similar pattern occurring under G. W.
  Bush).

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Supply-Side Economics Since 2001

• Since 2001, increased revenues from economic
  growth have not eliminated the deficit.
• Economic downturn resulting from 9/11
• Cost of wars in Afghanistan (post-9/11) and Iraq
  (since 2003)
• Other spending hasnt been cut.

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Taxation
Progressive taxation A system, used in the U.S.,
where higher incomes are taxed at higher rates
than lower income. 100,000 income _at_ 33 tax
rate 33,000 in taxes 7,000 income _at_ 10 tax
rate 700 in taxes 14x the income 47x the
amount paid in taxes Currently, there are six
brackets
Highest 35 for those making 174,850 Lowest
10 for those making (not counting exemptions, deductions, credits,
etc.)
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Taxation Alternatives

• Flat tax A tax system, advocated by some
  economists and some (primarily Republicans) in
  Congress, in which all incomes are taxed at the
  same rate.
• Much easier to understand and compute.
• Fairer, according to some (this is a
  philosophical debate)
• 100,000 _at_ 18 tax rate 18,000 in taxes
• vs. 33,000 under current system
• 7000 _at_ 18 tax rate 1260 in taxes
• vs. 700 under current system
• Progressive taxation imposes a greater share of
  the tax burden on the wealthy.
• Flat taxation imposes a relatively greater share
  on the poor.

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National Sales Tax?

• Sales taxes, which are the primary source of
  revenues for state governments, are flat taxes.
• The group fairtax.org proposes replacing the
  federal income tax with a national sales tax a
  23 sales tax would take in as much revenue as
  the existing income tax and other sources.

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Monetary Policy The Other Half of the Puzzle

• Control of the money supply and interest rates,
  as carried out by the Federal Reserve Board.
• A seven-member group, appointed by the President
  and confirmed by the Senate. They serve 14-year
  terms, with one members term expiring every two
  years. One of the members of the board is
  appointed as Chairman for a four-year term the
  current chairman of the Federal Reserve Board is
  Ben Bernanke (who is originally from Dillon, SC).
  

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How the Federal ReserveAffects the Economy
The Federal Reserve loans money to banks (at the
discount rate), who then loan it to their
customers. The FRB determines the interest rate
which it will charge the bank, which determines
the rate which the bank must charge the customer
in order to make a profit.
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Interest Rates and the Economy

• Lower interest rates mean that consumers will be
  more likely to borrow money.
• More on hand Higher demand
• 
  for consumer products.
• (Youre more likely to buy a car when you have
  more money.)
• Higher demand higher prices.
  
• Inflation occurs when prices and other factors in
  the cost of living increase faster than wages.
  Therefore, lower interest rates eventually lead
  to inflation. (Prices always go up over time
  only in a depression do we have actual
  deflation.)

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Interest Rates and the Economy

• Higher interest rates mean that consumers will be
  less likely to borrow money. This keeps costs
  under control, but lowers demand for products. A
  business will be less likely to hire or retain
  workers if there is less demand for its product
  therefore, higher interest rates eventually lead
  to unemployment.

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Tradeoff Inflation vs. Unemployment

• The Federal Reserve Board tries to adjust
  interest rates to prevent either inflation or
  unemployment from occurring. Historically, it's
  been a choice between the two when we had high
  unemployment, we had low inflation when we had
  high inflation, we had low unemployment.
  However, both inflation and unemployment were
  high during the late 1970's (Carter
  Administration) and both were low during the
  mid-1990's (Clinton Administration).

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Cost-Benefit Analysis

• Comparing the costs of imposing a particular
  regulation to the benefits which will be derived
  from it. Congressional Republicans, and many
  others, argue that the government should not
  impose regulations on business which cost more
  than the value of the benefits which would be
  derived from the regulation (dont spend 3 on a
  1 problem, and don't spend 3 to solve a problem
  if another solution would cost 2.)

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Cost-Benefit Analysis

• Steps in CBA
• Identify your alternatives. This usually
  involves choosing among a series of imperfect
  alternatives.
• Is this the most efficient way to solve the
  problem?
• What else could you do with the money that you're
  giving up the chance to do? (Opportunity costs)
• Could you save more lives by investing the money
  in another way? (cancer research vs. reducing
  pollution)
• Whose benefits and costs count?
• Can you fairly compensate the losers for their
  losses?

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Cost-Benefit Analysis

• Identify the impacts of what you're doing
• Perform an economic analysis to quantifiably
  predict impacts
• Attach dollar values to impacts
• Here's where you have to assign a value to a
  human life. In economics, the value of a life is
  how much you're willing to pay to reduce the risk
  of death in a way that results in one less death
  in a population (statistical life).
• Future costs and benefits count less than present
  costs and benefits
• Do the net benefits outweigh the net costs?
• Which alternatives maximize the net benefits?
• Limitation you can't know the dollar value of
  everything
• Abuse Sometimes the right thing to do is not the
  most cost-effective.

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CBA Gone Bad

• You own an automobile company.
• You produce a small, cheap, popular compact car.
• For sales and marketing reasons, you limit the
  design to a particular weight and retail price.
• Your engineers identify a problem with the
  placement of the gas tank.
• The problem may result in increased risk of death
  or injury to drivers and passengers.
• Fixing the problem would add between 5 and 11
  to the production cost of each car.

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CBA Gone Bad

• Cost of fixing problem
• 5 per vehicle 60 million
• 11 per vehicle 137 million
• Benefit of fixing problem
• 200,000 per death lawsuit avoided
• 67,500 per injury lawsuit avoided
• 700 per auto repair bill avoided
• 49.5 million
• Cost-benefit analysis says

38
CBA Gone Bad

• Cost of fixing problem
• 5 per vehicle 60 million
• 11 per vehicle 137 million
• Benefit of fixing problem
• 200,000 per death lawsuit avoided
• 67,500 per injury lawsuit avoided
• 700 per auto repair bill avoided
• 49.5 million
• Cost-benefit analysis saysdont fix the problem!
  

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Could this really happen?
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The Ford Pinto
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Social Policy Pt. 1

• Mandatory spending Funds which the Federal
  Government is legally required to spend. Social
  Security is an example of mandatory spending.
  The Government establishes eligibility
  requirements, and anyone who meets those
  requirements is legally entitled to receive
  benefits
• Entitlement program The amount of money to which
  you are entitled is determined by a formula, and
  based on how much you paid in through payroll
  taxes. The Government is legally required to
  spend however much money is required to provide
  you with the benefits according to the above
  criteria.

42
Social Policy

• Income redistribution is taking from some (in the
  form of taxes) and giving to others (in the form
  of benefits).
• Social insurance is a system in which people pay
  into the system and then collect benefits in
  recognition of their contributions.

43
Social Security

• Established 1935 (Franklin D. Roosevelt).
• A program to provide financial assistance to
  senior citizens and other needy persons
  (including those with disabilities which prevent
  them from working, or children whose wage-earning
  parents have died.
• Partial Social Security benefits are available to
  persons age 62 and older full benefits are
  available to those 65 and older. 54 million
  people will collect some benefit from the Social
  Security program in 2008, totaling over 581
  Billion.
• In 2007, the average monthly benefit to retirees
  is 1050, which represents 41 of the average
  seniors income (not including spending of their
  savings). (Social Security Administration at
  ssa.gov.) The official name of the program is
  Federal Old Age, Survivors and Disability
  Insurance (OASDI).

44
Social Security

• Social Security is made available to all who have
  paid into the system (and the others mentioned
  above), regardless of their actual need for this
  source of income.
• Why require it? Otherwise, people might not plan
  and save appropriately for retirement.
• Social Security is paid for by a payroll tax
  6.2 of every wage-earners salary (up to 97,500
  in 2007) is withheld, matched with an employer
  contribution and placed into the Social Security
  trust fund. (If you are self-employed, you must
  pay the entire 12.4 on your own.)

45
Social Security

• The percentage and wage cap are adjusted annually
  to account for inflation, and potentially to
  increase the revenue coming into the system.
  Benefits to current recipients are paid out of
  this trust fund.
• The trust fund is currently running a surplus
  During FY 2007 (which ended Sept. 30, 2007), the
  total surplus taken in was 186 Billion the
  trust fund now totals 2.1 Trillion. This is
  called pay-as-you-go financing (current workers
  pay for current beneficiaries).
• Payroll taxes provided 626 Billion of revenue
  for the trust fund in 2006.
• Your Social Security benefit is calculated as a
  percentage of your average income over the span
  of your working career thus, higher wage earners
  pay in more and receive more in benefits.

46
Social Security

• The Social Security Administration is also
  responsible for the Supplemental Security Income
  (SSI) program
• Established 1972
• Benefits to the aged, blind and disabled
• Financed through regular tax revenues.
• Funds borrowed from the trust fund have been used
  to pay for other government programs (rather than
  cutting spending or raising taxes). This has
  made the annual deficit look smaller than it
  actually is (and, when there has been a surplus,
  it has made the surplus look larger). Some
  members of Congress want to take Social Security
  off-budget, not having its revenues and
  expenditures counted as part of the Federal
  budget, so that this practice cannot continue.

47
Social Security

• Baby boomers 76 million Americans born between
  1946 and 1964, who are currently at the peak of
  their earning capacity, and thus paying large
  amounts into the Social Security trust fund.
• It is estimated that the Social Security trust
  fund will eventually stop running a surplus and
  begin to run a deficit (paying out more than it
  takes in).
• Currently estimated that in 2018, when the first
  of the baby boomers have retired, the system will
  begin to pay out more than it takes in (unless
  somethings done).
• By 2042, the trust funds resources will be gone
  and benefits will have to be cut significantly.
• Currently 38 million Americans over 65 in 2032,
  it is estimated that there will be 72 million.

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Better Health, Longer LivesThats a Problem?

• Most people didnt live beyond age 70 in 1935 in
  2003, the average life expectancy was 74.7 years
  for men and 80 years for women (Source Centers
  for Disease Control).
• Many explanations for the increase in life
  expectancy
• Better nutrition
• Better health care, including cures and treatment
  of disease
• More knowledge about healthy living
  technological improvements (safer cars, safer
  consumer products)
• Fewer workplace hazards
• Generally better standards of living
• Other reasons
• Most elderly people are women, who live longer
  than men
• Social Security has dramatically decreased
  poverty among the elderly.

49
Fixing the Problem

• Two possible ways to prolong the life of the
  Social Security trust fund would be to raise
  payroll taxes (withholding a larger portion of
  each workers income, which would be politically
  very unpopular) or raising the age at which
  workers may begin to draw benefits.
• Born before 1938 Partial benefits at 62, full at
  65
• Beginning with those who turned 65 in 2003, these
  ages are gradually increasing
• Those born in 1960 or later will have to wait
  until they are 67 to receive full benefits.
• It is estimated that people born in the 1970s
  and 1980s will not be able to receive full
  benefits until they reach age 70 (but youll
  probably have a longer life than your
  grandparents!)

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Paying Back the Trust Fund

• At some point, the government must also pay back
  into the trust fund the money (plus interest)
  which has been borrowed for other programs. This
  will also prolong the life of the trust fund (but
  may require raising taxes or cutting spending on
  other things).

51
Privatization?

• Privatization of Social Security would repeal the
  requirement that payroll taxes go into the Social
  Security trust fund.
• President Bush has called for partial
  privatization, in the form of expanded tax
  credits for privately held Individual Retirement
  Accounts (IRAs), which would make people less
  dependent on Social Security as a source of
  retirement income.
• People would also be allowed to invest some of
  their Social Security payments in IRAs, which
  might be invested in the stock market for a
  higher potential return than Social Security
  currently pays.

52
Privatization?

• Some in Congress would like to make it possible
  for the trust fund itself to be invested in the
  stock market, which might also make a great deal
  of money for the system but what happens if the
  stock market goes down
• Private accounts are potentially more profitable
  but also riskier. There is also currently a
  debate among economists whether privatization
  would result in cutoffs of benefits to current
  recipients.
• One estimate Transition costs of 5 Trillion

53
Curbing the Cost of Social Security

• Cost-of-living adjustment (COLA) The amount of
  money which each individual receives from Social
  Security and some other benefit programs
  automatically increases every year to account for
  inflation and other increases in the cost of
  living. In 2008, this increase is 2.3.
• An additional way to prolong the life of the
  Social Security trust fund would be to grant
  smaller COLAs.

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Cost-of-Living AdjustmentApproximate Average
Monthly Social Security Benefit in Dollars
55
Cost-of-Living AdjustmentApproximate Average
Monthly Social Security Benefit in Dollars
56
Cost-of-Living AdjustmentApproximate Average
Monthly Social Security Benefit in Dollars
57
Political Problem

• Senior citizens vote in great numbers, and this
  would be very politically unpopular with them.
  While slowing the programs growth is not an
  actual cut in benefits, its easy to portray it
  that way (and thus politically controversial).

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Solving the Problem

• What do you think?
• Its your generations problem.
• Theres good news and bad news
• The bad news is, todays politicians wont take a
  risk to solve tomorrows problem. Its easier to
  pass it on to you. So its up to you to figure
  out how to solve the problem.
• The good news is, you have about 30 years to do
  it.

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Health Care Policy

• Health insurance An insurance policy which
  covers the cost of treating illness,
  hospitalization, doctor visits, etc. Most
  employed Americans receive health insurance for
  themselves and their dependents as a job benefit
  however, an estimated 46.5 million Americans were
  uninsured in 2006 (Kaiser).
• 60 of businesses provide insurance as a job
  benefit, but this is down from historical levels
  many new and emerging small businesses dont
  provide these benefits. Wal-Mart, the nations
  largest private employer, insures less than half
  its employees (Welch, p. 606 in 2006 edition).

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Health Care Policy

• Lower-skilled jobs are less likely to have
  insurance as a benefit, and thus a
  disproportionate number of workers who are
  uninsured are lower-income. Employees pay part
  of the cost of the premium, along with the
  employer contribution the average employee cost
  for a family of four is 8824 per year (as of
  2007).
• Only 5 of those with private insurance buy it
  individually, outside an employer-provided plan.
  An estimated 70 of the uninsured are from
  families with at least one full-time worker.
  Two-thirds of the uninsured have family incomes
  below the federal poverty level.

61
Health Care Policy

• The uninsured report problems getting care and
  following recommended treatment this drives up
  costs when life-threatening illness occurs it
  could have been prevented or treated far more
  cheaply with earlier access to care. This
  results in 4.1 Billion (2004) in uncompensated
  care, largely reimbursed by government payments
  to providers. It also results in cost-shifting,
  assumption of the costs of unreimbursed care by
  those who have insurance (driving up their own
  costs).
• Source for most of the above Kaiser Family
  Foundation, The Uninsured A Primer (October
  2007) at http//www.kff.org/uninsured/upload/7451-
  03.pdf.

62
Health Care Policy

• Massachusetts (see the You Are There in the
  text) achieved universal coverage by offering
  subsidies for individuals not covered by employer
  insurance to buy their own employers who didnt
  insure their employees would have to pay into a
  state fund.
• This is somewhat similar to what the Clinton
  Administration proposed in 1993, which was not
  acted on in Congress.
• Requiring all employers to provide insurance to
  their workers (or else pay into a federal
  insurance fund) would have significantly reduced
  the number of uninsured Americans, but it has
  been argued that it would have drastically
  increase the costs involved in most kinds of
  businesses. This would further drive up the cost
  of consumer goods and services, which would have
  a negative effect on the U.S. economy.

63
Single-Payer Health Care

• A government program which funds health care for
  all persons in a particular country there is no
  private insurance. (The government is the
  single payer of all health care bills.)
  Single-payer exists in a number of countries
  including Canada, Australia, Norway and Iceland
  however, financing it requires extremely high tax
  rates.
• In the United Kingdom, the government is the
  health care provider (national health care).
  In other single-payer system, the government
  simply provides the insurance coverage and the
  medical system is not entirely government-run.
  The government in a single-payer system also
  subsidizes the cost of medication, which is why
  many Americans go to Canada to buy cheaper
  prescription drugs.

64
Health Savings Accounts

• Established 2003
• Tax-free accounts for individuals and families to
  take care of expenses not covered by insurance.
• The Bush Administration also proposes tax
  subsidies to allow small businesses to band
  together to insure all of their workers under the
  same plan, since the unit cost (per person)
  decreases as the number of people covered by the
  policy increases. The Administrations other
  policy proposals to reduce the number of
  uninsured are primarily market-driven rather than
  based on new or expanded government programs.

65
Some other issues

• Portability of insurance coverage from one job to
  the next is now assured as a matter of federal
  law, preventing people from losing their coverage
  for a pre-existing condition when they change
  jobs (job lock).
• Preventive care Health care which seeks to
  prevent illness from happening, rather than
  waiting for it to occur and then treating it.
  For example, it is significantly cheaper to pay
  for a check-up, which discovers a heart problem,
  and to treat the problem in its earlier stages,
  than it is to wait to treat the patient until
  after he has had a heart attack. This is
  increasingly the focus of attempts to control the
  costs of health care.

66
Medicare and Medicaid

• Medicare and Medicaid were both created as
  amendments to the Social Security Act in 1965, as
  part of the Great Society programs of President
  Lyndon B. Johnson.
• Medicare is a federally funded and administered
  program providing health care for persons 65 and
  over, and some persons under 65 with disabilities
  or kidney disease. More than 39 million people
  receive Medicare benefits.

67
Medicare

• Medicare Part A provides hospital insurance most
  eligible people are covered automatically. It
  also provides short-term nursing home or hospice
  care. The premium is up to 423 a month
• Part B is optional it covers medically necessary
  doctors office visits, outpatient hospital care
  (which you receive without being admitted to the
  hospital), and medical equipment the standard
  premium is 96.40 per month as of 2008, for
  eligible people who choose to enroll.
• Part C is an alternative to A and B. It includes
  both hospital and nursing home care (from Part A)
  and outpatient services (from Part B), provided
  by private health insurance providers.
• Beginning in 2006, Medicare Part D offers
  prescription drug coverage, which is one of the
  fastest-growing costs associated with health care
  for senior citizens. In most cases, this
  coverage requires a contribution from the
  recipient.
• (Source U.S. Department of Health and Human
  Services at http//www.medicare.gov/Publications/P
  ubs/pdf/10050.pdf)

68
Medicaid

• A federally funded, state-administered program
  providing health care for the poor, primarily
  children and pregnant women.
• Medicaid is means-tested, and the states set
  requirements for eligibility and what treatments
  or procedures will be covered.
• The federal government provides between 50 and
  85 of the funding for Medicaid in each state,
  with the remainder coming from the state. The
  percentage which the federal government pays is
  higher in states with lower per capita incomes.
• There were 42.7 million Medicaid recipients in
  June 2006 (kff.org).

69
Medicaid

• Medicaid provides coverage for some of those who
  cannot afford insurance of their own. It covers
  13 of the non-elderly population (kff.org).
• Most recipients are children and their mothers,
  senior citizens, or people with disabilities (8
  million). Low-income adults only qualify if they
  are disabled, pregnant or have children.
• Medicaid is the largest source of insurance for
  American children (one-quarter of all children
  and half of all low-income children).

70
Medicaid Eligibility

• Whos eligible Families who were eligible for
  welfare benefits at the time that welfare reform
  legislation was enacted in 1996 are automatically
  eligible for Medicaid
• Pregnant women and children under 6 from families
  whose income is 133 or less of the poverty line
  
• Children up to age 19 (and their caretakers)
  whose family income is below the poverty line
• SSI recipients
• Nursing home residents with incomes up to 300 of
  the poverty line
• States are allowed to extend coverage to other
  medically needy groups (e.g., blind, disabled,
  families with incomes slightly above the federal
  limits), and most do.
• (Source U.S. Department of Health and Human
  Services, at http//www.cms.hhs.gov/MedicaidGenInf
  o/downloads/MedicaidAtAGlance2005.pdf)

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State Childrens Health Insurance Program (SCHIP)

• Clinton Administration expansion of Medicaid in
  1997.
• Reauthorized in 2007 until March 31, 2009
  (short-term compromise).
• SCHIP currently serves 6 million children
  (kff.org).
• Designed to provide insurance coverage to
  children whose family income is too high to
  qualify for Medicaid, but for whom private
  insurance is still not affordable.
• Approximately 6.5 million children are eligible
  but not enrolled(kff.org).
• In most states, children in a family of four with
  incomes up to 36,200 (200 of the poverty level)
  are eligible for SCHIP coverage. It covers
  doctor visits, immunizations, hospitalizations
  and emergency room visits.

72
SCHIP

• SCHIP is financed by both federal and state
  funds. It is administered by the states,
  according to each states own plan. In 2006,
  states spent 2.4 Billion and the federal
  government spent 5.4 Billion.
• (Sources U.S. Department of Health and Human
  Services, at http//www.cms.hhs.gov/LowCostHealthI
  nsFamChild/02_InsureKidsNow.asp and
• http//www.cms.hhs.gov/LowCostHealthInsFamChild/07
  _PressReleases.asp
• Kaiser Family Foundation, at http//www.statehealt
  hfacts.org/comparetable.jsp?cat4ind235)