ACA avoids welfare cliff, but not in Alabama

A common theme in American politics is that the nation is overly generous with those living in poverty. U.S. Rep. Paul Ryan, R-Wis., famously called the safety net a “hammock” for the poor. The CATO Institute recently published a report claiming the safety net is so comfy that people routinely spurn work, preferring the comparative luxury of tax-funded welfare programs.

It’s a sad attempt to reject the reality that structural changes in the U.S. economy have destroyed income mobility. People who are born poor generally stay that way. They need money to get advanced education. They need money to get and maintain a car that will get them to work on time. They need money for health care so minor ailments don’t turn into illnesses that prevent them from keeping a job. They need money for day care, so they can work while their children receive adequate care.

A few decades ago a hard-working person with no skills could find a job that allowed them to accumulate savings, which they could use to increase their income level.

Today, a hard-working person without unique skills is fortunate to get a job that pays enough for them to hover near the federal poverty level. Since the recession, the job they find is more likely to be a part-time position with no benefits. If they get sick, they lose their job and go into debt. If their car breaks down, they lose their job. Accumulating enough savings to obtain post-secondary education or buy a home — to participate in the American Dream — is, for most, impossible.

While the claim that the safety net has transformed the stressful misery of poverty into a luxurious refuge is both false and cruel, it does point to a national problem. The jobs available to those relying on the safety net are so inadequate that many — especially parents — suffer a setback if they get a job. For a person who is barely surviving, setbacks are not an option.

This problem, sometimes called the “welfare cliff,” is bad for everyone. People who desperately want a job and who hate receiving welfare too often cannot afford to take the jobs available. Taxpayers continue paying full benefits, and the recipient must forego the opportunity to demonstrate her value in the workplace.

One of the few programs that manages this problem effectively is the Affordable Care Act. By expanding Medicaid access to those with incomes up to 133 percent of the poverty level, it allows people to take a no-benefit job without losing their access to health care.

Everybody wins, because a major disincentive to employment disappears. Because they can take a low-paying job without losing access to health care, their dependence on other tax-funded welfare programs decreases.

But not in Alabama. Despite one of the highest poverty rates in the nation and one of the highest percentages of citizens without health insurance, Alabama offers such skeletal Medicaid access that even the lowest-paying job prevents enrollment.

By joining other states in opting to expand Medicaid under the Affordable Care Act — at a cost handled almost entirely by the federal government — Alabama could eliminate a major obstacle for those seeking to enter the job market.


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Filed under Alabama politics, Income inequality, Obamacare, Poverty

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