Why does Medicaid and other low income benefits have a hard cut off on a specific income rather than role off proportionally as an individual makes more in the US?

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In: Economics

Answer 1

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.