Old age and the Welfare State

Origins of the Welfare State

"Welfare" refers to all Government-financed programs that provides benefits for Income, Health, and other social needs. Before 1935 the United States had no national social welfare programs--only a few poorly funded state old-age pensions and workers compensation programs Older people who were unable to work had to depend on their families or on local charity

Problems with LTC insurance

*Lack of regulation to insure that the programs are secure and provide benefits *Some fraud, overcharging, and failure to provide benefits *People who have serious health problems have issues being accepted for long term care coverage

Arguments for a needs based policy

-age-based policies tend to aggravate intergenerational tensions -promoting programs for one age group seems biased -stigmatizes an entire age group as being poor, lonely, depressed.

Housing policy consists of three components

1. tax expenditure component of housing policy: a policy that allows home owners to deduct mortgage interest from taxable income 2. modest housing subsidy program: increases the housing supply for the poor by encouraging developers to construct low income housing and by subsidizing rents for poor people. 3. long term care services provided in community based housing

Medigap policies

Because so many policies are not covered by medicare, many people purchase medigap policies -Nearly 3/4ths of people who are 65 and older have some form of Medigap policies

Amendments to the Social Security act of 1935

Disability insurance--for those who were unable to work because of a disability (1972) Medicare--A health insurance program for those 65 and older (1965) Medicaid--a health insurance benefit to the poor that also pays for nursing home care (1965)

Supplemental security income

In 1972 Old Age Assistance became a fully funded program called "supplemental security income" SSI is a means-tested public assistance program for those 65 and older for the aged, blind, and disabled

Private long term insurance

Long term care insurance policies cover everything from home and community based care to home-based care The cost of private long term insurance varies based on the type of policy purchased, the age at the time its purchased, and the person's health.

Medicare

Medicare is a national health insurance program for those 65 and older who are eligible for social security. Medicare is funded by payroll taxes MEDICARE PART A: for hospital insurance MEDICARE PART B: for physician office visits MEDICARE PART C: private insurance option MEDICARE PART D: covers prescription drugs.

Disability Insurance (DI)

Part of the social security system. Insures people against the loss of income should they become physically or mentally disabled

Replacement rate

Replacement rate--the amount of preretirement pay that is replaced by social security benefit. People with higher lifetime earnings have lower replacement rates Benefit levels are also calculated by determining the AGE at retirement

Older americans act (OAA)

Services to enhance independent living, including meals, personal care, day care, chore services, meals on wheels

SSI Disability

Similar to disability insurance, except that it covers people who have not worked long enough to qualify for DI

Social security

Social security has become the single most important source of income for older people. All people who contribute to social security will receive benefits as a right Benefit levels are calculated by a formula that reflects the length of time worked and the amount of wages earned (using replacement rates)

The Social Security act of 1935

The social security act of 1935 created two programs for the elderly, insurance and assistance. ->social security was a form of old age insurance (OAI) for retired workers 65 and older -> Old age assistance (OAA) for the aged poor

Definition of the Welfare State

The term "welfare" refer to all programs that protect people from the risks of loss of income due to unemployment, disability, retirement, poor health Welfare is not only cash assistance to the poor but also any social program that enhances well-being and provides some financial security. Three types of Welfare benefits: 1. PUBLIC ASSISTANCE--Provides minimal benefits, mostly paid out of income taxes, subject to a means test 2. SOCIAL INSURANCE--Provides economic security, earned entitlement, common pool, paid with payroll taxes (can be taken out of paycheck, 401k) 3. FISCAL WELFARE--taken out of your paycheck, employer related health insurance for retirement

Long term care

a range of services that helps elderly people and the disabled to live independently

Senior centers

community based facilities that provide meals and social activities

Work disencentives in disability programs

most people who enter the disability program never really leave 2/3rds of aging people who have disabilities want to work People who remain on disability remain on it because they fear losing their jobs

arguments for a age based policy

social security and medicare enjoy strong public support they have been successful in reducing poverty and improving health care