Social Safety Nets in the US - Case Study Example

29 April 2016

Abstract

The paper discussed different elements of social safety nets in the US and their significance to the general populace. It was noted that there are mainly two broad categories of safety nets in the US namely: Social Protection and Medicaid/Medicare. Millions of people have benefited from these programs and they have been complemented by the promulgation of the Affordable Care Act (ACA) which has widened the safety net in the US. The study has also noted that other industrialized countries such as the UK take a different approach towards the issue of safety nets. This country takes a proactive approach and emphasizes employment creation in a bid to encourage people to work rather than rely government sponsored social safety programs. Overall, it has been noted that these programs are very effective in as far as poverty alleviation among people with limited income resources is concerned.

Key words: Social safety nets, Social Protection, Medicaid, Medicare

Governments around the globe have traditionally provided some form of a social safety net (SSN) for its citizens and in the U. S., the two big programs in place are the Social Security Program and Medicare/Medicaid. However, these two entitlements now consume one-third of our federal budget given that health costs have significantly increased over the decades. This has led to some people believing that these safety programs are unsustainable under the current funding mechanism. As such this paper seeks to discuss the significance of these safety programs as well as their relevance especially in capitalist economies. The paper also discusses some of the measures that can be taken in order to strengthen these programs especially in the US against the background of spiraling costs of funding them.

SSN is a term that is generally related to community or public programs that are mainly intended for the less privileged and more defenseless people (Paitoonpong, Abe and Puopongsakorn, 2008 as cited in Pradhan, Mohd and Sulaiman, 2013). The SSN programs are specifically meant to provide assistance to the less privileged members in the society through provision of basic services and amenities such as access to schooling and affordable healthcare (Pradhan1, Mohd and Sulaiman, 2013). In some instances, these targeted groups are also provided with grants and food handouts with the major aim of alleviating the levels of poverty often experienced by disadvantaged people. Essentially, safety nets are run by government through implementation of public programs that are aimed at poverty reduction among the vulnerable members of the society (Barrientos, 2011). The other goals of SSNs include the following; reduce inequalities among the citizens, to assist the targeted members to be able to manage risks that may be cause by natural disasters as well as to help the government to create meaningful economic policies (Grosh et al., 2008). The government plays a major role in implementing social safety net programs since it is also mandated with the responsibility to ensure that the citizens have access to basic services such as healthcare such that their welfare can be improved.

As noted above, social safety nets in the US include Medicare/Medicaid and Social Program. “Medicaid is a joint federal and state program that helps with medical costs for some people with limited income and resources,” (Center for Medicare and Medicaid services, 2015). It covers the following groups; people over 65 pregnant women, children below 19, people living with disabilities as well as parents caring for children. On the other hand, Medicare is health insurance for people above 65 years, people less than 65 years with certain disabilities or other people with renal kidney failure such that they require dialysis (Centers for Medicare and Medicaid services, 2015). The main benefit for these two programs is that they help to lower prescription drug costs and help protect individuals against higher costs in the future. People who feel that they have limited income resources qualify to apply for coverage under these programs and will be entitled to access healthcare. These governmental programs are run by the Centers for Medicare and Medicaid which falls under the US Department of Health and Human Services. According to Medical News Today (2016), Medicare serves more than 44 million people as of 2008 and costs about $432 billion, or 3.2% of GDP, in 2007 while Medicaid serves about 40 million people (as of 2007) and costs about $330 billion, or 2.4% of GDP, in 2007. Combined, both Medicare and Medicaid represent 21% of the budget of the US federal government. On the other hand, the Social Security Program is also intended to provide income security to families. The program specifically addresses the issues that are related to protecting the citizens in the event that they are out of work and no longer have reliable sources of income.

Apart from the Social Security and Medicaid, the safety net has also been expanded in the US. It can be seen that the Affordable Care Act (ACA) is perhaps the largest expansion of the safety net after the two mentioned above and this was primarily tailored to benefit the near poor (Porter, 2015). The gap between the rich and the poor is quite significant in the US and the less privileged people often find it difficult to afford healthcare services since some of them do not have health care insurances. All the same, these people also have a right to access quality healthcare services since they are bona fide Americans who are entitled to be protected by the elected government of the day as this is one of the core mandates of a democratically elected government. It should be noted that the enactment of the ACA should not necessarily be seen as intended to override the other social safety net programs such as the Social Security and Medicaid. However, this should be seen as a positive towards enhancing the improvement of quality healthcare among the Americans. In actual fact, if possible, these programs need to be expanded since they are beneficial to many people in the US even including those people who are seen as better off in financial terms compared to others. Safety social net programs should in fact complement each other and they should be administered in a transparent manner.

Even in capitalist economies, it can be seen that social safety nets are necessary. One thing is apparently clear is that the distribution of wealth is not uniform in these capitalist economies. In fact, the capitalist economies are characterised by class structures based on financial resources such as level of income and other wealth that include immovable property such as houses. On the other hand, it can be seen that there are also some people who are less privileged in these societies and they often live in abject poverty. The issue is more about the capability to sustain their own life or the less privilege people will find themselves in a precarious position where they would seek the intervention of the state and other well-wishers to assist them with basic needs such as medical assistance that may be beyond their reach. This state of affairs imply that social safety nets are essential even in capitalist societies since the rich cannot take it to be their duty to look after the less privileged members in their communities. It is the role of the state and government in the country to ensure that all the citizens are cushioned against harsh forces of life that can be a result of financial challenges being experienced in the country. The needy citizens in a particular country deserve the assistance of their respective governments which entails that safety needs are essential even in capitalist economies since the distribution of wealth among all citizens is not uniform.

In order to strengthen both systems including ACA, it is imperative for the government to ensure that the services are strictly meant for the deserving people. Indeed, social safety net programs as the ones discussed above are noble and they are commendable since they are intended to benefit the majority of people with limited income and other resources. Indeed, transparency is require in disbursing funds to the people who deserve to get them and the citizens should be encouraged to be accountable and avoid actions that are often driven by greed. The government officials running the program should make an effort to vet the applicants for the service before they register them in order to establish their authenticity if they are deserving people. It is also imperative for the responsible authorities to check for other possible loopholes and rectify them in order to stop the unnecessary loss of money being siphoned by unscrupulous people who do not deserve to get assistance from the program. According to Appelbaum and Gebeloff (2012), there is also a tendency to abuse the facility by other greed people who do not deserve to be covered. Some critics are vocal against the social safety nets but it can be seen that they also benefit from the same programs. Therefore, screening should be thorough in order to ensure that only deserving people benefit from social safety nets.

The other viable measure that can be taken to strengthen the systems including ACA is that the actions of the politicians should be checked in order to ensure that they do not use these programs to gain political mileage during campaign and election periods in the US. For instance, “Politicians have expanded the safety net without a commensurate increase in revenues, a primary reason for the government’s annual deficits and mushrooming debt,” (Appelbaum and Gebeloff, 2012). The federal and state governments spent more money on safety nets in 2000 and these were not sanctioned in accordance to the revenue generated. As fate would have it, this move was followed by a recession that impacted on almost all sectors of the economy. Therefore, the government has a role to ensure that funding for safety net programs are commensurate with the revenues generated instead of doing it for political gain since the consequences likely to be caused by such poorly calculated moves may be detrimental to the performance of the economy.

If the programs are not properly planned, they may result in budget deficits being experiences and these are not good for the performance of the economy. The viability of the social safety nets mainly depends on sound policy measures being implemented by the government to make sure that money is not wasted but used to assist the people who deserve to be covered by virtue of their limited financial resources. In the same vein, Senator Warner has suggested that he wants “the U.S. to devise new programs that would provide insurance and other employment benefits to independent contractors in the tech sector,” (McMillan, 2015). This measure will widen the safety net for other people who have little access to traditional benefits and protections such as health insurance and compliance with minimum wage and overtime laws according to the senator. This also means that the burden of overreliance on the government for social protection would be spread to other actors with independent players also taking an active role in offering safety programs that are meant to benefit the citizens. This should be every person’s responsibility instead of looking forward to government assistance only.

Other industrialized countries like the UK take a different approach to the issue issues of the social safety net though they are recognized. The approach in the UK is that the government encourages people to work so that they can sustain their lives instead of solely depending on government assistance through social programs. For instance, Doar (2016) has suggested that that “Unemployment insurance, for example, was made more generous in multiple ways. Eligibility rules for food stamps were reduced, waivers from work requirements were granted, and the monthly benefit amount was increased.” This amounts to spoon feeding since the citizens will become reluctant and look forward to the government for the provision of basic needs. Instead, in the UK the government takes a different approach where it encourages people to look for work. According to Doar (2016), the U.K.’s fiscal “stimulus” took a very different path where it can be observed that the increases to benefit programs were smaller and they involved cutting tax rates on income and consumption. Measures were also put in place to encourage more low-income individuals to work while at the same time, Work and Pensions Secretary Iain Duncan Smith reformed the disability program to ensure that accurate and frequent assessments of the recipients to work were carried. Smith also imposed benefit caps in a bid to ensure that the citizens do not solely rely on getting benefits and assistance from the government through social safety nets programs. The universal credit system was also rolled out to help unemployed people to find work and stay in their jobs for a longer period while at the same earning money to sustain their lives. This move to create employment is very important since it helps the citizens to be self-reliant instead of depending on social grants for all of their basic requirements.

Indeed, the government has the responsibility to provide for its citizens but this should not only be limited to social security nets. Other industrialized nations like Britain have gone a further step in creating employment as a measure to cut government spending on social programs like the case of the US. Incentives to work in the US remain low in some sectors of the societies as a result of the fact that many citizens feel comfortable by the social programs in place that are meant to cushion their plight against economic challenges in retirement periods. According to Doars (2016), the approach taken by the British to encourage people to work is commendable since it removes the burden from the government to finance all the social needs of the citizens in the country as a result of the fact that they have limited financial resources. Instead, all the people are encouraged to look for work so that they can pay for the services they desire on their own. The government should be seen doing less in terms of provision of social benefits but instead should be seen taking an active role in order to facilitate employment creation that would benefit the majority of people. This will go a long way in addressing the problems of poverty that are caused by high unemployment rates in different countries. Fostering employment creation is also effective since it promotes economic growth and this is very important for a country.

Over and above, it can be noted that SSNs are intended to reduce the levels of poverty among the less privileged members of the society. Research has shown that indeed, safety nets can go a long way in alleviating poverty among the vulnerable people if properly implemented by the responsible authorities (Devereux, 2002). Some people are vulnerable since they do not have sustainable sources of income and these rely on social programs from the government. In the US for example the two big programs in place are the Social Security Program and Medicare/Medicaid. These have benefited millions of people across different states. However, one notable issue of concern is that these social programs a gobbling a huge chunk of the budget and have resulted in budget deficits in the US. Some people also have a tendency of abusing these facilities which calls for action by the US government. It has also been observed that other industrialized countries like the UK take a different approach to the aspect of social security nets. The UK government instead encourages employment creation so that people can work for themselves instead of relying on government assistance for all their basic needs. This approach can go a long way in solving the problems related to social security nets since the government will be in a better position to focus on other developmental issues that are beneficial to the majority of citizens.