Chapter 19: Domestic Policy Tuesday, April 12, 2011 6:41 PM

Key Terms:

Term

Definition

Public Policy

General plan of action adopted by government to solve social problem, counter threat, or pursue objective

Welfare State

Nation in which government assumes responsibility for welfare of citizens via income redistribution

Social Welfare Programs

Government programs that provide minimum living standards necessary for all citizens

Social Insurance Government-backed guarantee against loss by individuals, irrespective of need Social Security

Social insurance providing economic assistance to unemployed, disabled, and elderly

Public Assistance Government aid to individuals who demonstrate need for aid Medicare

Health insurance program serving primarily persons 65+ in age

Medicaid

Need-based comprehensive medical and hospitalization program

State Children's Health insurance program designed to provide children in families with low incomes access to Health Insurance medical care Program (SCHIP) Means-Tested Benefits

Conditional benefits provided by government to individuals whose income falls below designated threshold

Non-MeansTested Benefits

Benefits provided by government to all citizens, regardless of income

Notes: The Development of the American Welfare State • Public Policy: general plan of action adopted by government to solve social problem, counter threat, or pursue objective • Welfare State: nation in which government assumes responsibility for welfare of citizens via income redistribution ○ Social Welfare Programs: government programs that provide minimum living standards necessary for all citizens • Great Depression became catalyst for expansion of welfare state ○ Unemployment due to closed factories, surplus crops, idle workers, and trade-crippling tariff ○ Franklin D. Roosevelt offered New Deal:  Phase 1: Boost prices and lower unemployment through government programs/short-term employment  Phase 2: Aid the poor, elderly, unorganized workers, farmers, etc.  social security program!   Precursor to trend of government expansion to provide services ○ Lyndon B. Johnson offered Great Society:  Designed for long-term relief to target social, political, and economic inequality  War on Poverty  Economic Opportunity Act (1964) promised to eradicate poverty within 10 years  Established Office of Economic Opportunity (OEO)  channeled funds to local community action programs (bypass state and local bureaucrats)  "Hand up rather than a handout"  offered programs to train people for employment   Empowered poor, who realized their political power ○ Reagan proposed cutbacks (blocked by Democrat Congress) Social Security • Governments increasingly offer social insurance: government-backed guarantee against loss by individuals, irrespective of need (national entitlements for all) • Social Security: social insurance providing economic assistance to unemployed, disabled, and elderly ○ Provided to all individuals who meet age and employment duration requirements ○ 6.2% tax on first $87,900 of wages (2004 rate) • Great Depression = States/local charities could not handle elderly/unemployment support services • Established by Social Security Act (1935): law providing three approaches to problem of dependence i) Provide regular income for retired workers and temporary benefits for unemployed ii) Provide grants-in-aid to states to serve needy aged, needy families with dependents, blind, disabled, etc. Unit 5 Public Policy Page 1

ii) Provide grants-in-aid to states to serve needy aged, needy families with dependents, blind, disabled, etc. iii) Provide health/welfare services through federal aid to states • How It Works: ○ Tax revenue put into trust fund administered by Social Security Administration (independent agency as of 1995) ○ Social security tax paid by today's workers go directly to fund today's retiree benefits  Surplus stored to pay future retirement expenses ○ Problem: what if income base (for tax) and/or population decreases?  can't support retirees… • Approaches to Social Security Reform (slated to bankrupt by 2040): ○ Republicans  offer choice to stay with current system or switch to private investment program (invest payroll tax to fund own retirement); stresses freedom ○ Democrats  offer private investment program (with government matching) in addition to current program; stresses equality Public Assistance • Public Assistance: government aid to individuals who demonstrate need for aid (≠ social insurance!) ○ Primarily areas of social security act outside of retirement funds: i) Old-age assistance for needy elderly not covered by pensions ii) Aid to needy blind iii) Aid to needy families with dependents iv) Aid to permanently disabled ○ Administered by states, but largely funded by national government  State receives funds based on proportion of population below poverty level: minimum cash income that will provide for family's basic needs; calculated as 3x cost of food □ Does not include assets, food stamps, and other aid; solely determined by cash  Trends: □ Feminization of poverty  increasing percentage of households headed by single women in poverty □ More young in poverty  social security took care of the old  Focus on introducing equality by setting minimum living standard ○ Reform: Temporary Assistance for Needy Families Act (TANF): 1996 law which abolished Aid for Families with Dependent Children (AFDC), giving states more control over welfare policy and limiting length of welfare for unemployed  Allowed states to experiment with approaches to reduce welfare caseload  no single national policy!  Decreased number of people on welfare  Increased number of former welfare recipients receiving jobs with minimal wages, no benefits, and long commutes Health Care • Three services: (all others must rely on private insurance) ○ Medicare: health insurance program serving primarily patients 65+ (and disabled)  healthcare for the elderly  Provided compulsory hospitalization insurance plan for elderly (1965; Part A of Medicare)  Provided voluntary government-subsidized insurance to cover physician fees (1965; Part B of Medicare) □ Participants pay premium of max 25% of social security check (rest paid for by government)  Medigap provides additional healthcare needs at cost (operated by private insurance companies)  Hospitals paid by case instead of length of stay  gives hospitals incentive to discharge patients quicker (does this jeopardize quality of treatment?) ○ Medicaid: need-based comprehensive medical and hospitalization program  healthcare for the qualifying poor  Jointly administered by state and national government  national government determines basic services required; states determine income level cutoffs/eligibility  Four groups: (i) Children (under 21), (ii) Adults, (iii) Blind/disabled, and (iv) Elderly (65+) ○ State Children's Health Insurance Program (SCHIP): health insurance program to provide children in families with low incomes access to medical care  healthcare for children in needy families  Jointly funded/managed by states and national government  states determine eligibility; national government specifies minimum benefits  States have flexibility in administration  either stand-alone program or incorporated with Medicaid • Problems with healthcare: ○ Cost  prescription drugs/treatments cost a lot ○ Access  15.2% of population have no health insurance; few rural doctors available to serve segment • Two types of insurance: (evolved from former policy of catastrophic care insurance, which paid for hospital visits only) Health Maintenance Organizations (HMOs)

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○ Health Maintenance Organizations (HMOs) ○ Preferred Provider Organizations (PPOs) Elementary and Secondary Education • Primarily administered/funded by local and state governments • Equity of educational opportunity dealt with through Elementary and Secondary Education Act of 1965 (ESEA) to assist local school districts in improving educational opportunities for the poor with national aid ○ Reauthorized via No Child Left Behind Act of 2001 (NCLB) • Concern over quality of education prompting government attention  must keep education standards up to allow American students to compete against other students worldwide • American system stresses equality of opportunity  each child should have access to public education • Americans want freedom to control what children will be taught in school  would introduce competition in education ○ Charter Schools  public schools freed from state/local regulations ○ School Voucher Programs  students should be able to attend any school they want… Benefits and Fairness • Two kinds of benefits: cash (ex. Social security check) vs. noncash (ex. Food stamps) • Two types of conditions: ○ Means-Tested Benefits: conditional benefits provided by government to individuals based on income threshold ○ Non-Means-Tested Benefits: conditional benefits provided by government to all citizens

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