For Setting National Economic Priorities, I have been suggesting consolidating means-tested programs into a single flexible benefit. One goal is to reduce marginal tax rates. Another advantage of this approach is that the first $2000 or so of the benefit can be directed toward purchasing catastrophic health insurance.
A third advantage of this approach is that it can untangle some of the overlaps between national and state/local programs. The basic principle would be that the Federal government, with a generic flex-benefit, would offer support based on means-testing. It could leave the assessment of special household needs to state and local governments as well as charities.
Special needs would include learning-disabled children, expensive medical illness, or high-cost housing.
We can imagine the Federal government paying households flex-benefit dollars based on a simple formula–perhaps $6000 per adult and $4000 per child, minus 25 percent of the household’s (taxable income plus value of employer-provided health insurance). Those of you who have been following these posts will notice that I keep playing with different values of the parameters. Those issues are still unsettled in my mind. It only recently occurred to me that fairness in distributing the universal benefit requires including employer-provided health insurance as income for purposes of phasing out the flex-dollar benefit.
By default, this money would go into a savings account. Households would not be allowed to withdraw from the savings account until they have purchased catastrophic health insurance.
State and local governments would be able to contribute to these accounts, based on their assessment of household needs. A household with a severely disabled child might receive $5000 per year from a state. A household in an area with expensive housing might receive $4000 a year from the local government. It would be up to state and local governments to decide whether to use this mechanism for distributing benefits or use something else.
We would abolish Medicaid. Instead, we would have the Federal government pay a fixed dollar amount to states that would go toward the cost of health care for the elderly and disabled that currently are covered by Medicaid.
We would abolish the Department of Housing and Urban Development. We would get rid of Federal mortgage subsidies and instead allow households to use money from their flex-benefit savings accounts to go toward down payments.
We would abolish the Department of Education. Instead, we would retain a research department, housed in the National Science Foundation, to evaluate educational effectiveness and to fund experimental pilot programs.
“Instead, we would retain a research department, housed in the National Science Foundation, to evaluate educational effectiveness” — If you’re proposing to evaluate all educational institutions every year, then this seems like a poor fit for NSF (it’s not a research project, too big a project, etc.)
No, I meant only to evaluate the effectiveness of educational experiments, not evaluate all institutions.
I am very low income. I do not want, nor do I care one iota about catastrophic health insurance.
You write, It could leave the assessment of special household needs to state and local governments as well as charities.
And you continue State and local governments would be able to contribute to these accounts, based on their assessment of household needs.
I live in Washington state, the land of Software, and the land of Biotechnology, and the land of Aerospace, and the Land of Seaports, where Public Housing, Medicaid, Food Stamps, flows like as a River of Wealth, funded by the Blue State Voters.
Thank God, I don’t live is Mississippi, Alabama, or Georgia, where the states and local governments have no desire to provide social funding.
Your fiscal cutbacks are coming soon as a Minsky Moment is coming very soon out of the failure of speculative leverage investing.
You should. Health savings + catastrophic is one of the few things demonstrated to work which makes all of the other stuff you mention better. If you personally don’t prefer it or believe can’t partake of it that should not affect your policy position.
You are dramatically underestimating the expense burden of a developmentally disabled child. Care can easily run 10-20x your proposed stipend ($5k) and it’s not realistic to expect less than affluent families to self-finance.
Did he say special needs? Serious question.
Handling special needs and non-special needs through the exact same…whatever…seems like a problem to be fixed.
If you give $4000 per child aren’t you paying people (especially those in cost of living areas) to have more children? I think it would be better to give more to each adult citizen and none for children.
I ponder this problem regularly. I don’t know that anyone has solved it.
Maybe a tax-deferred child care savings account.
mytyrone:
I’m for more humans. Call me a speciesist. In normal circumstances,* humans produce a surplus of benefit for other humans. Nothing contributes more to my prosperity more than other people. The more, the better.
I especially feel this way given that the US population currently only grows (in net) through immigration, and the world population will begin to decline some time in the next 50 years or so. I doubt this program would actually increase the birth rate to the point that it flips shrinking population to growing population, since many forms of welfare already have the same effect, and this would simply be replacing them.
Max
* Ignoring the fairly unusual situations where they are paid to do nothing, where incentives lead to a birth rate that greatly exceeds the rate of capital formation, etc.