roll*
In: Economics
It’s a low-income benefit given to people who do not have other forms of insurance because they either can’t afford it or aren’t getting it through their employer, possibly because they don’t *have* an employer.
The cutoff happens because at a certain income, the assumption is made you can buy terrible insurance from the market or your employer can give you “insurance” so you don’t need the assistance. It wouldn’t make sense to give you both Medicaid and that insurance because usually you can’t combine multiple kinds of coverage.
The main reason here is what I said above: it’s meant to be given to people who aren’t even contributing to taxes in a significant way. It’s effectively *free*. Our philosophy in this country is we need to be VERY careful about giving away free benefits and make sure we don’t accidentally give it to someone who doesn’t deserve it. That income level is where someone decided people stop deserving free healthcare.
This is why Medi*care* is a little less picky: people DO pay into that via taxes so we’re philosophically less concerned because it isn’t “free”. If you’re eligible at all it’s because you paid. As long as you paid something, you deserve as much healthcare as you paid for.
To be clear because people seem to misunderstand what I’m saying:
* You have it or you don’t. If you “can afford” other healthcare you don’t have it. That’s how the law is written.
* Someone had to decide when you can afford other healthcare. That someone is why the cutoff is where it is, they and some other people had to decide what “low enough income” meant and balance that with how much money they knew the program could afford.
* There’s not a law of Physics that prevents it from giving partial benefits at higher income levels and having the approach you asked for. But there’d need to be a new law of the United States to make it so, and there might have to be more taxes to cover the extra burden. Doing that is a very popular campaign speech but an extraordinarily rare proposal from elected politicians.
Because means testing is the only way that any kind of social welfare programs get political support. Even though the administrative costs of doing so often significantly outweigh the money saved by doing it like what you’re proposing. The other issue is that this was a program passed in the 1960s that has a lot of rickety and frankly outdated formulas for what’s considered “poverty”.
In short, it is hard to manage benefits, especially medical benefits in the US’s complex system, without making the program more expensive.
While it varies by state, EBT (food assistance, aka SNAP) benefits are adjusted based on income.
Also, it is worth noting it is not only an income limit, but an asset limit as well. Federal limits are $10,000 for medical and $5,000 for food assistance, but will vary by state. This generally excludes your home and one car, but varies by state.
While each program has a hard cutoff (based on an inflation-based target called the Federal Poverty Line/Guideline) the programs typically overlap. For instance in Michigan, the FPL and asset test for food assistance are lower than those for medical care, and those for medical care for ages 0-19 are higher than those for people aged 20+. There are also medical assistance programs that cover more basic needs that have yet higher limits than Medicaid, or involve the patients paying some small co-pay for some services.
Example: Michigan’s Food assistance cuts off at 200% of the FPL, and FPL for 2024 for a family of 4 is $31,200. Benefit amounts are calculated based on net income (income less deductions for certain expenses) [FOOD ASSISTANCE ISSUANCE TABLE (michigan.gov)](https://dhhs.michigan.gov/olmweb/ex/RF/Public/RFT/260.pdf)
EDIT: Again using Michigan as the example (since I know more about this state) Medical program eligibility shifts based on income level: [Programs (michigan.gov)](https://www.michigan.gov/mdhhs/assistance-programs/medicaid/portalhome/beneficiaries/programs)
Note that other states can opt in or out of federal programs like Medicaid expansion (10 states opted out [Status of State Medicaid Expansion Decisions: Interactive Map | KFF](https://www.kff.org/affordable-care-act/issue-brief/status-of-state-medicaid-expansion-decisions-interactive-map/)) and therefore will be more or less restrictive in their benefits for those with low incomes in other states. Also, state funds can be used to supplement these programs.
Government operates on two general ideas
1: A calculator: You put in x money through your life, you are now entitled to y each month
or 2: ‘one size fits all’. Cost of living changes substantially even within relatively short distances and it would be a bureaucratic nightmare to constantly have to reassess this general plot against the surrounding ones then determining overall how much of the pie they should be entitled to. You’d constantly have people arguing that ‘this side of the street’ is worse off than that side based on little things like it being a one way street so they should receive 3% more because the taxi costs that much more to take them to the grocery store. But that of course can change as well because what if there is a new grocery store on this side of town that saves 5% vs the previous amount
Essentially you would end up with endless litigation/public hearings over every single change. ‘Well HE got a raise, now he makes 12.25 instead of 12.20″ which would be insanely costly to taxpayers to have to have an army of accountants and lawyers whose entire job is to argue why someone shouldn’t be entitled to another 14 dollars a month. Add in that government offices are already incredibly understaffed means it is more likely that other departments would lose staff to accommodate this waste of money one broadly making everything even less efficient
Tbf with the affordable healthcare act the subsidized silver plans that you break into right after being DQd from Medicaid are much better allowing for better care and only tiny $50 premiums.
a better question is why they aren’t just extended to everyone, and then taxed on the other side? If I made $100,000 last year, but lost my job in June, I can’t afford the thing that is the benefit, but I can’t get it until I file my taxes next year.
Giving it to everyone, and then just taxing away the difference at the end of the year makes it cheaper to administer, and since everyone gets it they’ll demand it is actually good , rather than (because we don’t benefit) demanding it be cheap
Oddly, not one answer I see actually listened to OP’s question.
The answer, OP, is that conservatives use a hard cliff cutoff both to lower the amount of people getting any aid, and to maximize that line where people are making just a tiny bit over and get massively penalized, which then fuels resentment those same politicians campaign on to keep lowering that threshold.
In other words, what you’re proposing would be the rational and correct way to do these programs, as you slowly exceed the cutoff, there would be a window where aid would be reduced so as to not create a cliff.
For example, if you make $50 too much to qualify for Medicaid, you lost $6-10K instantly because they throw you off any assistance for your medical care, currently.
Rationally, it would ‘you make $50 over the line, we pay $50 less of your Medicaid, and so on, up to that 6-10k where it would be breaking even for you if you no longer got the aid.’
There is what the data research and experience says works. Then there is what is popular and what people feel works.
There have been many attempts to make it work this way. But many politicians, mostly of one party) believe that Medicaid is a bad thing and encourages bad behavior or subsidies bad choices. Also many have opinions of how economics work because there belief system has said so, and will contort all reality to fit their paradigm. So a compromise had to be reached with and that compromise is what we see today.
Basically, it’s easier for the government to administer and budget for a hard cut off than to constantly adjust benefits base on income changes. It also helps prevent fraud and ensures that those with the greatest need receive the most assistance.
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