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POLITICS: PennAve

Paul Ryan releases new report criticizing the federal safety net

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Paul Ryan,House Budget Committee,Health Care,Entitlements,PennAve,Joseph Lawler,Economy,Budgets and Deficits

The House Budget Committee under Chairman Rep. Paul Ryan released an assessment of the federal safety net Monday that casts skepticism on many of its features and sets the stage for the Wisconsin Republican to offer plans for major changes.

The report, titled “The War on Poverty: 50 Years Later,” does not include new proposals or address some of the recent attempts by members of the GOP to chart out a new course on anti-poverty policy in the wake of the recession that has driven millions of Americans into poverty, but instead criticizes existing federal policy.

Ryan, who is perhaps the most influential Republican on matters of domestic policy, said in a message accompanying the 204-page document that he hoped it would “help start the conversation” about taking a “hard look” at the government’s welfare efforts.

The report is highly critical of much of the existing safety net, noting at the outset that it comprises 92 programs that are “duplicative and complex” that accounted for $799 billion in spending in 2012.

“In some cases, these programs have helped. But in others, they have been counterproductive,” the report claims.

The report notes that the poverty rate has been stuck near 15 percent, the “highest in a generation,” following the recession, although it acknowledges elsewhere that the official poverty measure isn’t always the best indicator of hardship.

And, citing a number of academic, think tank and government experts, it blames three factors for increasing poverty: Family breakdown, the decline of work and the lack affordable education.

In particular, the report singles out the disincentives to work created by the patchwork of safety net programs.

Because there’s “little to no coordination” among the many programs intended to alleviate poverty, they can create high implicit marginal tax rates for low-income workers. That is, workers can lose benefits as they earn more, reducing the reward to work.

The report cites estimates from Eugene Steuerle of the Urban Institute and the Congressional Budget Office in stating that those implicit marginal tax rates can range from 80 to 100 percent for Americans near the poverty line.

The bulk of the document, however, is dedicated to assessing the effectiveness of each program constituting the welfare state.

Notably, the Republicans on the House Budget Committee call into question the single largest means-tested program, Medicaid.

“Those enrolled in Medicaid and the CHIP generally report having poorer health and using more services than people who have other health insurance or who lack insurance altogether,” the report says of the low-income health insurance program, which accounted for $265 billion, or one-third of welfare spending, in 2013.

The authors assemble a range of studies to indicate the program’s unfavorable effects on access to health care utilization, patient outcomes, private insurance coverage, welfare participation, and more. While they do note evidence suggesting that Medicaid reduces mortality, they also state that “Medicaid coverage has little effect on patients’ health,” citing the results of a recent major quasi-experimental study of a Medicaid expansion lottery in Oregon.

The implied suggestion that Medicaid does not improve outcomes for its recipients is sure to renew debate over the program. White House officials have cited the results of the Oregon health experiment to the opposite effect, noting its benefits for the mental health and self-reported physical health of enrollees. The study also found that the Medicaid expansion helped beneficiaries avoid bankruptcy.

The House Budget Committee report casts other programs in a poor light, including food stamps and the Head Start program, which it says “is failing to prepare children for school,” while also noting that other early education programs have shown more promise.

But it also includes a strong defense of welfare reform, claiming that work rules and time limits for cash assistance have helped reduce poverty. The report notes that the poverty rate for children in female-headed households, at 47 percent, is still below the pre-reform rate of 55 percent, despite the recession.

The report was released the day before President Obama’s fiscal 2015 budget was due. A Ryan aide told the Washington Examiner that it “challenges critics of reform to defend the status quo.”

The report doesn't outline any new directions for anti-poverty programs or assess proposals offered by other Republicans such as Sens. Mike Lee of Utah or Rand Paul of Kentucky. The aide said, “I would expect Paul Ryan to have more to say in this area in the year ahead.”

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