Antipoverty Effectiveness of Social Insurance Programs by suchenfz

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									Antipoverty Effectiveness of
Social Insurance Programs

               Today’s Reading
 Schiller Ch. 13-Social Insurance Programs
 DeParle, Ch. 18: A Shot at the American
 Dream: Milwaukee, Fall 1999
       Today’s Questions
• How do social insurance programs differ from
  means-tested programs?
• What are the most important social insurance
  programs by number of beneficiaries and
  total benefits?
• What is a social contract and how does this
  concept relate to Social Security?
• How important are social insurance programs
  in the fight against poverty?
  How do social insurance programs
 differ from means-tested programs?

• Entitlement
• Eligibility conditioned on work in
  covered employment, not on income
  and assets
• Benefits are not determined by need
• Absence of work incentive rules (offset
  rates and disregards) by and large
 What are the most important social
 insurance programs by number of
  beneficiaries and total benefits?


• See the Annual Statistical Supplement,
  2008
  – http://www.ssa.gov/policy/docs/statcomps/s
    upplement/2008/highlights.pdf
  – Especially appendix D—Calculating Social
    Security Retirement Benfefit
Social Insurance Programs, 2007
               Coverage     Beneficiaries   Benefits
   Program     (millions)    (millions)     (billions)
OASDI           162.5          49.9         $585.0
Medicare         43.3          36.3         $425.3
Unemployment    133.6       Avg 2.6/wk      $32.3
Insurance
Workers’        130.3            ?           $54.7
Compensation
(2006)
Black Lung                      0.04          $0.6
Benefits
Veterans’                       3.5             --
Benefits
Total                                       $1097.9
 Major Means-tested Programs
                Participants                  Benefits
   Program
                (mo. avg. millions)           (billions)
TANF (FY2008)              4.7                  $5.7

SSI (2007)                7.4                  $41.2
Food Stamps
                         28.4                  $34.6
(FY2008)
Medicaid                 57.7                  $268.5
(2006)          (annual unduplicated count)


Total                                          $323.0
          Links to sources
• TANF
  – http://www.acf.hhs.gov/programs/ofs/data/
    2008/tanf_2008.html
• SSI and Medicaid
  – http://www.ssa.gov/policy/docs/statcomps/s
    upplement/2008/highlights.pdf
• Food Stamps (SNAP)
  – http://www.fns.usda.gov/pd/snapmain.htm
What is a social contract and how does this
    concept relate to Social Security?

• Do you think you will receive a Social
  Security benefit that resembles today’s
  benefit when you retire? Why or why
  not?
 How important are social insurance
programs in the fight against poverty?

• OASI
  – ―Social Security is still a highly effective
    antipoverty mechanism. Its antipoverty
    effectiveness results from the massive
    amount of income that is transferred and
    from the fact that virtually all older people
    receive Social Security benefits.‖ (Schiller,
    p. 241)
 Antipoverty Effectiveness, cont.

• Medicare
  – ―Because Medicare is an in-kind benefit, it
    does not directly affect the official poverty
    count. Medicare reduces the expenses of
    the aged and allows them to stay above
    the poverty living standards even if their
    cash income falls short of official poverty
    thresholds.‖ (Schiller p. 245)
 Antipoverty Effectiveness, cont.

• Unemployment Insurance
  – ―Most UI benefits are not paid to poor
    people or even to people who are at high
    risk of becoming poor.‖ (Schiller, p. 247)
Antipoverty Effectiveness of
      Social Security
• To what extent does Social Security
  decrease poverty among
  – the elderly?
  – children?
Source: “Social Security and Elderly Poverty,
http://www.nber.org/aginghealth/summer04/w10466.html
  Antipoverty Effectiveness of
     Social Security, cont.

• Nearly half of all elderly persons had
  income below the poverty line before
  receipt of Social Security benefits. After
  receiving Social Security, only 1 in 9
  remained poor.
  – Source: House Ways and Means Committee 2004 Green
    Book, http://www.gpoaccess.gov/wmprints/green/2004.html
        Antipoverty Effectiveness
       of Social Insurance, 65 yr. +

                     2002             Poverty rate (%)
Cash income before transfers                49.9

Plus Social Insurance                       11.5

Plus means-tested cash transfers            10.4

Plus means-tested noncash transfers          9.0

Plus EITC and less Federal payroll
                                             9.0
and income taxes
Total reduction in poverty rate         40.9 % points

Source: 2004 Green Book
  Antipoverty Effectiveness of
     Social Security, cont.
• Is the antipoverty effectiveness of Social
  Security overstated?
  – Order sensitive problem
  – Behavioral effects
  Antipoverty Effectiveness of
     Social Security, cont.
• What factors other than Social Security
  might explain the decline in poverty
  among the elderly?
     •   Demographic trends
     •   Labor force participation
     •   Saving
     •   Living arrangements
Source: H. Boushey, “Social Security: The Most Important Anti-Poverty Program for Children,
Center for Economic and Policy Research, March 28, 2005.
http://www.cepr.net/index.php/publications/reports/social-security-the-most-important-anti-poverty-
program-for-children/
        Antipoverty Effectiveness
       of Social Insurance, < 18 yr.

                     2002             Poverty rate (%)
Cash income before transfers                19.7

Plus Social Insurance                       17.4

Plus means-tested cash transfers            16.7

Plus means-tested noncash transfers         14.8

Plus EITC and less Federal payroll
                                            12.6
and income taxes
Total reduction in poverty rate          7.1 % points

Source: 2004 Green Book

								
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