During the recent Great Recession and the present economic malaise, millions of Americans have relied on the fraying “social safety net” to meet their basic needs. That phrase encompasses the federal programs of Social Security, Medicare and such federal-state partnerships as Medicaid, unemployment insurance, food stamps and Temporary Assistance for Needy Families, the basic welfare program that is run by states and funded by federal block grants.
Although Medicare faces a looming fiscal crisis and Social Security an eventual one, these bedrock programs are currently intact. The partnership and state programs, however, are under severe budgetary and political pressures that have combined with continued high unemployment and the housing crisis to create a quiet crisis for the poor.
The poor are more numerous in the United States than at any time since the Great Depression; the Census Bureau found in 2010 that 46.2 million Americans live below the poverty line. This official finding is in all likelihood an understatement. Early this month, the Census Bureau and the Bureau of Labor Statistics issued a “supplemental poverty measure” that put the number of poor at 49.1 million or 16 percent — or just under one in six Americans. The change reflected a long-overdue updating of the way poverty is calculated, taking into account the cost of housing and child care.
Soon after this report was issued, the Gallup polling organization, in a survey with the disease-management company Healthways, found that more than a fifth of Americans had at times during the past year lacked sufficient money to buy food for themselves or their families. (The precise figure was 20.2 percent, the second largest since this survey began four years ago. It is based on a large, random sample of 30,289 adults living in all 50 states and the District of Columbia.)
The increase in poverty reflects many factors, the most potent of which is continuing high unemployment. The anemic economy has also produced budget crunches in the states, which are required to balance their budgets and to do so have cut back on programs vital to the poor. Of these programs, Medicaid, the federal-state partnership that provides health care for low-income families, is by far the most costly. The American Recovery and Reinvestment Act, the Obama stimulus bill, eased pressures on the states by increasing the federal share of Medicaid. But this provision expired in mid-2011, leaving states to bear an increasing share of the costs.
“This blew a big hole in state budgets,” said Joy Wilson, the Washington-based director of health policy for the National Conference of State Legislatures. She observed that state revenues are recovering, but not quickly enough to handle the increased Medicaid caseloads.
Medicaid, the nation’s largest health-care program, serves 53 million people, many of them children, at a combined federal-state cost of $300 billion annually. During the last three years more than 30 states have tried to control Medicaid costs by reducing payments to hospitals, doctors and other providers. States are required to cover basic medical services but have discretion to cut optional services for adults, such as dental care and visits to chiropractors and podiatrists.
But what some states consider optional is disquieting to advocates for the poor. Recent examples of Medicaid cutbacks include elimination of adult day-care services in California, of adult eye examinations and eyeglasses in North Carolina, and of adult dental care in Connecticut and Pennsylvania. Many states had few optional programs to begin with and those that have options are running out of places to cut.
“To meet the legal requirements, states have had to cut in other places to meet their Medicaid obligations,” Wilson said. “Medicaid is now taking a toll on education.”
The picture is not entirely bleak. Melissa Hansen, a senior policy specialist with NCSL in Denver, observes that most of the service reductions have affected adults. Because states are generally prohibited from cutting the health-care services they provide to children, the number of children receiving Medicaid has risen. Hansen also said that states such as Kansas, Minnesota and Ohio have been innovative in cost containment and managed care, which is widely believed to be the wave of the future in the effort to control soaring health-care costs.
The Medicaid debate in Washington has often been partisan, with Democrats defending the program and Republicans viewing it as a prime example of an “unfunded mandate” that leads to runaway entitlement spending. In the more practical world of state government, fiscal considerations generally have trumped political ones. Democratic governors and legislative bodies in such states as California and New York have found it as necessary as their Republican counterparts in Ohio and Pennsylvania to cut Medicaid for budgetary reasons.
In contrast, the battle over unemployment insurance has had partisan overtones in both federal and state capitols. The three states that reduced benefits in 2011 — Florida, Michigan and Missouri — all have Republican-controlled legislatures. Unemployment benefits vary from state to state. They are based on a worker’s earnings, using a tax on employers to cover the first 26 weeks of unemployment. In 2008 the federal government began a series of extensions that pushed maximum unemployment coverage to 99 weeks in states with high joblessness. Only a score of states offer this maximum and most of them will drop this provision in 2012; in most states maximum coverage is 70 weeks.
According to the Census Bureau, extended unemployment insurance payments kept 3 million people out of poverty in 2010. It’s uncertain if these extensions will be renewed when they expire at the end of the year. President Barack Obama favors them, but the Republican-controlled House of Representatives may balk at the $49 billion annual cost.
The heaviest economic blows have fallen upon the poorest of the poor: the 700,000 low-income families, including 1.3 million children, dependent upon Temporary Assistance for Needy Families (TANF) for survival. TANF, enacted by a Republican-controlled Congress as part of a sweeping plan designed to end welfare as an entitlement, was signed into law with great fanfare in 1996 by President Bill Clinton, who proclaimed, “We are ending welfare as we know it.”
When TANF was created, however, it was assumed that the federal block grants would over time be adjusted for inflation. This hasn’t happened except for two years during the Great Recession. Looking for ways to save, states in 2011 implemented what the liberal Center on Budget and Policy Priorities called “the harshest cuts in recent history for many of the nation’s most vulnerable families.” Five states — California, New Mexico, South Carolina, Washington and Wisconsin — and the District of Columbia have cut monthly cash assistance for TANF families, who were already receiving low benefits. Other states have canceled scheduled benefit increases or reduced the number of years that anyone can receive welfare assistance.
It’s never easy to be impoverished, but the upshot of these budget cutbacks is that this is a particularly difficult time to be poor. Gallup and Healthways have been tracking Americans’ access to basic needs since January 2008 using 13 measurements, including the ability to afford food, housing and health care. This Basic Needs Index dipped to a low point last month, adding in the words of the Gallup report, to “growing evidence that more Americans are in extreme economic distress.” It’s a most discomforting finding.
“Helping more Americans to afford food, shelter and medicine on a regular basis is arguably as important as helping the jobless find jobs,” the report concluded. “Only when basic needs are met can individuals actively work to lift themselves out of poverty and maximize their full potential in society.”
— Summerland resident Lou Cannon is a longtime national political writer and acclaimed presidential biographer. His most recent book — co-authored with his son, Carl — is Reagan’s Disciple: George W. Bush’s Troubled Quest for a Presidential Legacy. Cannon also is an editorial adviser to State Net Capitol Journal, which published this column originally.