FACULTY OF SOCIAL SCIENCES

SSP 2054 PUBLIC POLICY

ARTICLE REVIEW: Health and Welfare the search for a

Rational strategy..

By Thomas R.Dye

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GROUP MEMBERS

NO NAME MATRIX NUM

1. Asma Enny Patola 35528

2. Divyaa A/P Letchmanan 35893

3. Katherin Suda Ak Masthy 36456

4. Lourdes Gabriel A/L Subramaniam

36799

5. Patricia Augustie Ak John 38370

6. Siti Amirah Binti Mohamad Pauzi

38739

7. Zamzulaika Binti Jupri 39467

8. Yugasshini A/P Sukumaran 40239

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INTRODUCTIONPoverty in America.A rational approach to policy making requires a clear definition of the problem. But political conflict over the nature and extend of poverty in America is a major obstacle to a rational approach to social welfare policy.

1.) Liberal Criticism.This official definition of poverty has many critics. Some liberal critics believe poverty is underestimated because: The official definition does not take into account regional differences in the cost of living, climate or accepted style of living.The ‘thrifty’ food budget on which the poverty level is based is too law for good nutrition & health.The official definition includes cash income from welfare & social security and without government assistance, the number of poverty would be much higher.The official definition does not count the many ‘near poor’.The official definition does not consider what people think they need to live.

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2.) Conservative Criticism.Some conservative critics also challenge the official definition of poverty.

It does not consider the value of family assets.Many families & individual who are officially counted as poor but who did not think themselves as poor.Many persons (poor & nonpoor) underreport their real income.Poverty excludes ‘in-kind’ (noncash) benefits given to the poor by governments. 3.) Latent PovertyHow many people would be poor if we did not have government social security & welfare programs?Charles Murray: Latent poverty figures as “the most damning statistics”. Because it counts the number of people in our society who are economically dependent cannot stand on their own.

INTRODUCTION

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1.) Family Structure.Poverty is most common among female-headed families.

2.)Race.Blacks experience poverty in much greater proportions than whites. Poverty among Hispanics is also significantly greater among whites.

3.)Age.The aged in US experience less poverty than the non-aged. The aged are more wealthier than the non-aged.

4.)Wealth.Wealth- the net worth of all one’s possessions.Example: Home value minus mortgage, auto value minus loan, business value minus debts, money in bank accounts and so on. 

Who Are The Poor?

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1.) Poverty as Inequality.Defined as “a state of mind”.Defining poverty as “relative deprivation” really defines it as inequality in society.

2.) Recent Increase In Equality.Recent increases in inequality in US are a product of several social & economics trends:

The decline of the manufacturing sector of the economy with its relatively high-paying blue collar jobs & the ascendancy of the communications, information & service sectors of the economy with the combination of high-paying & low-paying jobs.A rise in the number of two-wage families, making single-wage female-headed household relatively less affluent.Demographic trends, which include larger proportions of aged and female-headed families.

Poor As Inequality

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1.) Low Productivity.The lack of human capital in the market (knowledge, skills, training).Lack of labor skills led into unemployment.

2.) Economic Stagnation.Results from inadequate aggregate demand.Serious recession and wide-spread unemployment occurs.

3.)Discrimination.Can occur in many form; whether it was the racial backgrounds, gender and sexuality and others.Example: Person with illness or disease / disabled people.

4.) Family Structure Disintegration.Poverty is greatest among female-headed households.

Why Are The Poor?

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5.)Culture of Poverty.

The ‘Way of Life’ of certain group of individuals due to their background, discrimination issues, alienation, apathy, irresponsibility.Reason behind was for them to cope with the feelings of discriminated, hopelessness together and to feel relieved to stand together with another individuals with familiarities (Oscar, 1966) .

6.) Capitalist Exploitations. Constraints on their work forces while distributing a rather low wages and treatments, the laborer had no choice in decision making and wealth because they had to work to gain as much as they can to survive in industrial areas.

Why Are The Poor?

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1.) Losing the war on Poverty.With the progress the eliminate poverty, government provides welfare programs. For example in America, there was welfare program for a woman with children who lived alone. However, authority official set some restrictions before they can help the poor.Welfare role are modest; very few people receive the benefits.

2.) Policy Induced PovertyCivil right laws enacted in 1960s.Giving opportunities to the black skinned.However, policies can be changed over time, new welfare programs, expanded benefits, relaxed eligibility requirements contribute to poverty.

Public Policy as a Cause of Poverty

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3.) Welfare Disincentives.

The effect of generous welfare benefits and relaxed eligibility requirements on employment has been debated for centuries.Survey show that the poor prefer to be more depend towards welfare benefits, but welfare payments producing subtle effects on the behavior of the poor.Welfare may help to create a dependent subculture, lowering personal self-esteem and contributing further to joblessness, illegitimacy and broken families.

Public Policy As A Cause of Poverty

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Most of the Poverty: a) not a long term.

b) welfare dependency lasting less than 3 years. 1.) Temporary Poverty.25% have fallen to poverty line; decrease to 6% that persistence for over 5 years. Most of the people who experience only short period of poverty.

2.) Persistence Poverty.Minority of the people who ever experience poverty. ½ of the people on welfare rolls remain getting welfare for (8 or more years), 73% black children getting welfare for (10 years), 43% black children getting welfare for (a decade). Welfare payment actually for short-period of time but for others they took it as a permanent payment for their entire live.

Welfare Dynamics: How Persistent is Poverty?

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3.) Events Leading to Poverty.

Divorce or separation is the dominant factor and it associated with going onto welfare rolls. Second factor is a child born to an unmarried woman. Other factors: job loss, illness or disability or other misfortune.

4.) Policy Implications.

The welfare system itself is the cause of persistence poverty. Due to this matter the poor people tend to take advantages by making welfare payment as way to support their living for a long-period of time.

Welfare Dynamics: How Persistent is Poverty?

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1/3 of US population received some of the government benefits.Government benefits: Social Security, Medicare/Medicaid, Disability Insurance, Veterans’ Benefits, Food Stamps or Welfare Payments.Many of these programs overlaps - impossible to know the exact total number of people that received government benefits.The “welfare state”, now encompasses a very large segment of US society.Social welfare is the largest function in US.Rising of social welfare is due to Democratic and Republican administrations and also during the US largest war (Vietnam).Social welfare & health grew still increasing even though the spending for defense is rising and falling. The important part, social welfare & health grew have NO relationship with the defense spending; it is just for the illustration of the resource allocation.

Rationality & Irrationality in theWelfare State.

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The Preventive Strategy: SocialSecurity.

The administration of President Franklin D. Roosevelt brought conscious attempts by the federal government to develop rational programs to achieve societal goals.In the most important piece of legislation of the New Deal is the Social Security Act 1935.

1.) Social Insurance.

It was designed to prevent poverty resulting from uncontrollable forces.Social Insurance was not to be charity or public assistance but it was to be preventive and it relied upon the individuals compulsory contribution to his or her own protection. Social insurance would eventually abolish the need for any public assistance program because individuals would be compelled to protect themselves against poverty.

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The Preventive Strategy: SocialSecurity.

2.) OASDI ( Old Age Survivor’s Disability and Insurance)OASDI is based on the private insurance principle: sharing the risk of the loss of income and it is a government program and compulsory for all workers. Both employees and employers must pay equal amounts toward the employees OASDI insurance.The money is paid into three federal “trust funds” which is old age and survivor’s disability and Medicare.

3.) Retirement Benefits. Upon retirements, an insured worker receive monthly benefit payments based upon age at retirement and the amount earned during working years. The average monthly amount for a retired workers in 1985, age sixty-five, with a spouse it was about 950 dollars.

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The Preventive Strategy: SocialSecurity.

4.)Unemployment Compensation.

Unemployment Compensation programs conducted through the imposition of the payroll tax on all employers. The unemployed workers must report in person and show that they are willing and able to work in order to receive unemployment compensation benefits. Example: The unemployment workers must register with the U.S Employment Service as a condition of receiving their unemployment checks.

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Evaluation: Consequences of Social Security.

1.) The “Trust Fund”. Now, the income from all social insurance premiums pays for current Social Security benefits.This generation of workers is paying for the benefits of the last generation and its hoped that this generation benefits will be financed by the next generation of workers. Social security “trust fund” revenues are now lumped together with general tax revenues in the federal budget.

2.) The “Generation Compact”. Taxing current workers to pay benefits to current retirees may be viewed as a compact between generations.Each generation of workers in effect agrees to pay benefits to an earlier generation of retirees, in hope that the next generation will pay for their own retirements.

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Evaluation: Consequences of Social Security.

3.) The “Dependency Ratio”.Current workers must pay for the benefits of current retirees and other beneficiaries. The “dependency ratio” for Social Security is the number of recipients as a percentage of the number of contributing workers.

4.) Tax Burdens. Social security tax is the second largest source of federal revenue and its also the fastest growing source of federal revenue. Social Insurance and welfare payments are now the largest expenditure of the federal government, surpassing expenditure for national defense.

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Evaluation: Consequences of Social Security.

5.)Regressive Taxes.The Social security tax is the regressive because it takes a much larger share of the income of middle and low- income workers than wealthy investors and others whose income is from sources other than wages.

6.) Early Retirement. Generous benefits also encourage early retirements thereby can reducing the number of tax-paying workers and increasing the number of Social Security beneficiaries.

7.)COLAs.Currently social security COLAs are based upon the Consumer Price Index, which estimates the cost of all consumer items each years. This cost include home buying, mortgage interest, child rearing and other costs which many retirees do not confront.

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Social Security Act of 1935 to help the states in providing public assistance payments to certain needy persons.The notion was to provide a minimum level of subsistence to certain categories of needy adults (the aged, blind and disabled).

1.) Cash Programs: SSI & AFDC.Supplemental Security Income (SSI) .• 3 categories of welfare recipients (the aged, the blind and the disabled

persons).Aid to Families with Dependent Children (AFDC).• Program in term of the amounts of money appropriated, benefits to be

paid to recepients, rules of eligibility and rules of the programs.

The Alleviative Strategy:Public Assistance.

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2.) General Assistance. General assistance programs are entirely state-financed and state administered.Without Federal participation, these program differ radically in terms of the persons aided, the criteria for eligibility, the amount and nature of benefits, and administration of financing.

3.) In-Kind Programs. Medicaid is the costliest of these in kind programs, providing federally assisted medical care for the poor.Over 23 million people or 10% of the population of the US receive Medicaid Benefits.

The Alleviative Strategy:Public Assistance.

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4.) Housing Assistance.

6 million people live in two million low-income public housing units.Poor get more benefits from various federal housing subsidies.

5.) Other Assistance.

Public assistance recipients are generally eligible for participation in a variety of other social program.Include school lunches and milk, job trainning, educational and childcare programs and services, special food programs for women, infants and children (WIC).

The Alleviative Strategy:Public Assistance.

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Evaluation: The Welfare Mess.

1.) Social Dependency.1965 & 1978 the number of welfare recipients more than tripled. It was the Aid to Families with Dependent Children (AFDC) and the Medicaid & Food Stamp programs, that became the most expensive of all welfare programs.

2.) The Working Poor.Many of the nation’s poor do not receive public assistance. Many of poor are working poor, who are ineligible for welfare benefits.

3.) Disparities Among States.State administration of welfare has resulted in wide disparities among the states in eligibility requirements and benefits level.In term of welfare payments, it is far better to be poor in a wealthy high-tax state than in a poor low-tax one.

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Evaluation: The Welfare Mess.

4.) Cash Versus In-Kind Assistance.

Cash payments are ineffective in alleviating poverty.Recipients are often unable to manage household money.They fall prey to advertising which encourages them to spend money for nonessential items.

5.) Welfare for Middle Class.

Social Security and Medicare goes to the nonpoor. Over $ 100 Billion per year combined Federal & State spending for SSI, AFDC, Food Stamps, Medicaid and public housing often finds its way to the nonpoor.The middle classes are the major beneficiaries of the nation’s social welfare system.

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The Curative Strategy: The WarOn Poverty.

President Lyndon B.Johnson made this declaration in his 1964 State of the Union message and followed with a range of Great Society Programs.

The curative strategy was supposed to break the cycle of poverty & provide escape routes : Poor could become self-supporting & capable of earning adequate incomes.

1.) Job Training. These programs were designed to increase the skills and employment opportunities of the poor. Example: Comprehensive Employment and Training Act (CETA) provided federal funds to both private and governmental employers to train low-skilled persons to fill regular job vacancies.

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2.) Measuring Employment.The official unemployment rate is determined by a national survey by Bureau of Labor Statistics (BLS).Previously unemployment include heads of households with no other source of income.But, today unemployment include teenagers, second and third wage earners in the same household, and individuals who sign up for jobs at the U.S Employment Service.

3.) Legal Services.The Legal Services Corporation is a nonprofit corporation which is financed by Congress.To provide free legal services to the poor about rent disputes, contracts, welfare rules and so on.

The Curative Strategy: The WarOn Poverty.

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The Curative Strategy: The WarOn Poverty.

4.) Community Action.

A Federal Office of Economic Opportunity (OEO) gave financial support to anti-poverty programs devised by the local community action agency.Example: literacy training, health services, home maker services, neighborhood service centers, vocational training and so on.

5.) Head Start.

This is a program for disadvantaged preschool children to provide them special preparations before they enter kindergarten on first grade.Popular among parents and in the Congress. Show differences in achievement levels after several years.

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HOMELESSNESS AND PUBLICPOLICY

1.) Who are the Homeless?Previous Studies: Half of the street homeless are chronic alcoholic and drug abusers and one-fourth to one-third are mentally ill.

2.) Public Policy as a Cause of Homelessness.Homeless is result of various “reforms” in public policy notably the “deinstitutionalization” of care for the mentally ill, the “decriminalization” of vagrancy and public intoxication.

3.) Deinstitutionalization.A reform advanced by mental health care professionals & social welfare activists in the 1960s and 1970s : To release chronic mental patients from state-run mental hospitals.

4.) Decriminalization.Involuntary confinement has been abolished for the mentally ill and for substance abusers, unless a person is adjudged in court to be “ a danger to himself or others”.

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Health Care or Medical Care1.) Leading Causes of Death. Death rates causes by public health and lifestyle Heart disease, stroke, cirrhosis of the liver, accidents and suicides For example in United States, number of death continues decline because they

maintain a better health.

2.) Health Care for The Poor. Society should be responsibility for provide health care for poor People who are poor should not denied medical care for lack of money of

financial problem regarding food or medical care. Medical care for poor should be improved by government policies and

programs.

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Health Care or Medical Care

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3.) Medicaid: Health Care as Welfare Medicaid is federal government’s largest single welfare program for the poor. Medicaid is a welfare program designed for needy person that is no prior

contributions are required, monies come from general tax revenues, and most recipients are already on welfare roles.

States help set benefits under Medicaid by require the federal government to provide inpatient and outpatient hospital care, physicians services, family planning, laboratory services, nursing and home healthcare.

4.) Medicare: Health Care As Insurance Medicare same as Medicaid. Its provides prepaid hospital insurance for the aged and

low-cost voluntary medical insurance. Divided into two that is HI and SMI. HI is health insurance which cover hospital cost for aged and SMI is voluntary

supplemental medical insurance program that will pay 80% of “allowable” charges for physicians services and medical expenses.

Aged person are covered by Medicare requirements.

Evaluation: Health-Care Costs & Benefits.

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1) No Constraints on Costs. Each individual wants the most advanced treatment and the doctor wants

the most advanced and treatment facilities for treat the patient. So, both the patient and doctor should push up the cost of health care,

particularly when the public private insurance pays.2) “Third-Party Payers”. Health insurance which generally provided through group employment

plans, or government insurance under Medicare and Medicaid. Private insurers and government have carry out effort to control costs.3) Health Care Inflation. Cost of health rises Third party payment contribute to inflation. Advanced in medical technology and expensive equipment causes inflation

Evaluation: Health-Care Costs & Benefits.

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4.) Coping with Medical Costs. Medical care is “scares resources” and will satisfy unlimited demands of

every individual in society.

5.) Payments for Diagnosis-Related Groups. Medicare generally pay back hospitals for the total amount billed for each

patient.

1. Health Insurance Coverage.

Either government or private health insurance.Government’s pay- Medicare, Medicaid, Military & Veteran Care.Private insurance pays-nation health costs; patient payments account .For those who have no medical insurance:May postpone / denied medical care by hospitals & physicians but emergency

situations.Confronted with serious illness- obliged to impoverish- become eligible for

Medicaid.Unpaid medical bills-absorbed by hospitals / shifted to paying patients & their

insurance companies.Uninsured; self employed; unemployed .Private insurance- very expensive when purchased individually.

New Strategies: Mandated HealthInsurance.

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2. Mandated Health Insurance.

Proponents of national have altered their tactics.Shifting from support of government insurance programs to mandatingall employers provide health insurance.State level:

Additional tax on employers be used to finance a state- administered fund for the unemployed.

Burden of mandated insurance falls on small business & minimum wage workers-lose jobs-due to added cost of employment.

New Strategies: Mandated HealthInsurance.

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o Efforts to reduce deaths due to accident / preventable illness- failure.

1. Speed Limits (Failure).

To save gasoline rather than to save lives.No single action of the federal government successful

2. Occupational Safety & Health Administration (OSHA) - Failure

Tasks of drawing up safety regulations & enforce.Impose requirements on businesses without weighing the benefits against the cost of regulations.Appears as if the bureaucratic command-control approaches to safety & health ineffective.

Preventive Strategies: Successes &Failures.

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3. Smoking

Government’s success- public education approach to smoking & health.Published report; Advertising.Banned cigarette commercials.

Preventive Strategies: Successes &Failures.

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Are seemingly insurmountable problems in developing a completely “rationally policy”?

Contrasting definitions of the problem of poverty constitute one obstacle to rational policy making.

Latent poverty refers to people who fall below the poverty line in the absence of government assistance.

Contrasting explanations of poverty also make it difficult to formulate a rational policy.

Government welfare policies may be significant cause / poverty.The social insurance concept was designed as preventive strategy.The federal government pursues an alleviant strategy in assisting the

poor with a variety of direct cash & in-kind benefits programs.The paramount objective in rational health policy has never been

clearly defined.

Summary

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