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?

Question

roll*

In: Economics

Answer 1

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.