Richard Tallent’s occasional blog

Welfare Cliffs are Amusing, but Useless

In a recent post, Philip Greenspun tries to make the case that the ACA is just one more situation where people will suck on the government teat rather than doing something productive, because they actually do better on assistance programs.

While such “cliff” maths are interesting for academic trivia, they are practically useless.

The vast majority of families making $50k a year or more (73%) have private health insurance (mostly employer-paid), and that goes up to 90% for families making around $100k/year. (Source: Kaiser Family Foundation study released in October).

The number of New Hampshire families making $100k a year and NOT being eligible for an employer-provided plan would be a statistical anomaly (if you are *eligible* for such a plan, it would be almost impossible to obtain any sort of subsidy).

As for the AEI’s ridiculous class-baiting chart and accompanying article, most single mothers with two children don’t get “job opportunities” to jump $30k a year in wages (in the same city at least). This hypothesized Sophie’s Choice of gub-ment help versus a doubling of take-home pay is ludicrous on its face, and such an extreme edge case should not be used to determine overall economic policy.

The real situation for an average a single mother in America is much bleaker than the AEI’s fantasy charts. It is just silly to think that people are “gaming” the government by refusing a $30k job promotion because they’ll lose CHIP or Medicaid benefits. And even in such a ridiculous scenario, again, it is highly likely that such a job will come with employer-provided healthcare, which isn’t shown on their chart as income but handily replaces (and greatly improves on) the key government benefit they would lose with the new job.

Sure, we could use tapering formulas instead of cut-offs when determining eligibility for various entitlements and assistance, and thus avoid these statistical cliffs.

But let’s not kid ourselves by imagining that there’s some horde of single moms who are refusing lotto-winning-level job raises because they’ll lose some much-needed help that they now receive. These fictions are not based in reality and are intended to serve one purpose: to demonize the poor in our country by creating bugaboo stereotypes of “welfare-queens” who would rather benefit from government largess than having the dignity of supporting their families on their own.


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