Social Insurance: America's Neglected Heritage and Contested Future

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Theodore R. Marmor, Jerry L. Mashaw & John Pakutka

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    Figures and Tables

    Figures

    Series Foreword

    So much of politics is about individual threads. Public policy is about how the threads weave a fabric. Across the vast landscape of American politics, there is an enormous amount of writing about the individual threads of social welfare policy. It is impossible to scratch the surface of public debate and not have an avalanche of books and articles on programs such as Social Security Medicare, and Medicaid come tumbling out. Until this lively and insightful book by an exceptionally insightful team of writers, however, there has been almost nothing on how these threads knit the fabric of America's broad policy on social insurance—what role society, and its government, ought to play in supporting citizens who encounter risks and threats in their personal lives. If there ever was an area where the whole is more than the sum of its parts, it is this hugely important, but remarkably unexplored, puzzle: How does this collection of individual programs work as a whole? And just as important but even less explored: What does this intricate fabric tell us about ourselves, as a country, and about our values?

    This great book begins with two building blocks. It starts with stories that make the abstract notion of “social insurance” jump to life. From the heartbreaking accounts of nightclub patrons injured in a fire to the struggles of the unemployed to make ends meet, Marmor, Mashaw, and Pakutka frame the basic question sharply: Just what have we as a nation done to help those in need by creating programs through our government? They then frame the story by painting a rich tableau of history. Our public programs are not only reactions to the problems of individuals and the political pressures of those seeking to solve individual social problems. They are also reflections of the times and values that gave birth to them. Looking closely at each individual thread thus tells us a great deal about the underlying goals the programs' creators were seeking to accomplish.

    But social insurance is about much more than creating a series of programs to protect citizens from troubles and to help them through difficult times. Woven together, the fabric of social insurance tells us about ourselves as a nation. We are, after all, a country of self-evident truths, including the right to “Life, Liberty and the pursuit of Happiness,” as the Declaration of Independence puts it. “We the People,” the Constitution says, seek “to form a more perfect Union” and “promote the general Welfare,” all the better to “secure the Blessings of Liberty to ourselves and our Posterity.” Here we sit, as the posterity, trying to understand how best to pursue happiness and achieve the general welfare. Part of the story is making possible limitless possibility, but that also raises the issue of the collective actions we take on behalf of individual citizens who are—or might be—in need.

    The “Blessings of Liberty” play an especially strong role in this debate. We Americans have always cherished liberty—so much so, in fact, that a flag with the word emblazoned on it was a banner held high during the Revolutionary War. It is impossible to imagine the pursuit of happiness without liberty, and a huge part of America's remarkable economic growth and global success has come through the unleashed entrepreneurial energy of its citizens. Competitive markets are at the center of this national entrepreneurship, and perhaps only restraints on gun ownership rival restraints on markets in getting the national blood boiling. Competitive markets, though, can bring a high price. The risks that come with becoming a big winner in the market economy can also cause serious problems for those who lose, who become collateral damage along the way, or who suffer serious problems through no fault of their own. What about children whose providers suffer an early death? Wage earners who become ill and cannot work? Hard workers who are laid off because the economy stalls? Or earnest, careful individuals, blessed with good health and great health care, who outlive their savings? One answer is for private markets to provide for those who suffer these threats, but sometimes market competition causes these threats. At other times, private markets cannot or will not compensate, and voluntary contributions often fall short.

    And that frames the question of social insurance as a national Rorschach test. To what degree are we, as a nation, willing to tolerate hunger, poverty, and suffering in our midst? To what degree do we want to pool our resources to help those in need? At what point do we—indeed, must we—say that we cannot afford to solve every social problem, because costs mount to crippling levels? How we frame and answer these questions tells us a great deal about who we are, what we value, and how the individual threads of the fabric of social insurance shape the fabric of our national politics. One of this book's great contributions is the way it lays that fabric out, describes how it works, and explains how it came to be. In typical American fashion, we never set out to design and build a sophisticated social insurance system. We cobbled it together one program at a time, in response to the needs of different times and varying motivations. But build it we did, and the authors do us a great service by holding a mirror up to our national selves.

    Lying underneath that fabric, however, is a tough set of questions. Fierce debate is now rocking the social insurance system that we once took for granted. It has become very expensive, and some reformers contend we can no longer afford the benefits the government provides—or that the effort to provide them risks undermining the security of our children and grandchildren. Our social insurance system has also created a strong and interlocking set of incentives and disincentives, and other reformers argue that the growth of this system risks eroding the very entrepreneurial spirit that made the country great. Critics advancing both lines of argument point to a single solution: turn much of the system back to the private sector and use market-based reforms to enhance America's protection against big social threats.

    At its core, of course, that is as fundamental a question about the role of government as we can ask. It shapes the debate over the balance between public authority and market forces, between individual choice and collective responsibility, between freedom and the pursuit of happiness. This book is an important one because it helps us understand all the levels of the puzzle: what social insurance is, how its pieces fit together, how the fabric came into being and what it now looks like, what role it plays in shaping the general welfare, and what the role of government ought to look like in the twenty-first century. The authors, not surprisingly, have a very strong point of view about the answers to these questions. Many readers are sure to disagree with them. But they will soon discover that Marmor, Mashaw, and Pakutka have led them to considering the right questions, and they will find themselves vastly better informed in trying to answer those questions. And perhaps the authors will even change some readers' minds.

    Regardless of where the reader comes down in the debate, the authors have done We the People an enormous service. With this book's rich and unique framing of the not-so-self-evident truths that weave the fabric of social policy debate today, they help us understand the individual threads that make that fabric so rich and the questions so enduring.

    Donald F. KettlAnnapolis, Maryland

    Preface

    This book's title—Social Insurance: America's Neglected Heritage and Contested Future—accurately describes its subject. Social insurance programs—from Medicare to Social Security pensions, from disability coverage to unemployment insurance—are central to the economic life of the United States. But, while broadly supported by Americans of all stripes, these programs are not well understood. The purposes, processes, and predictable effects of protecting American families against economic risks are no longer common subjects of either American higher education or public policy commentary. Indeed, the term social insurance itself has almost disappeared from discussions of American social policy.

    This faded understanding is what we refer to as our neglected heritage. To address that, our book first portrays the financial threats that social insurance programs were historically meant to cushion: birth into a poor family, early death of a family breadwinner, ill health, involuntary unemployment, disability, and outliving one's retirement savings. Chapters 2 through 4 then discuss the history, politics, economics, and conceptual bases of social insurance.

    The middle chapters of the book turn to describing the size and character of each of America's social insurance and related programs. The chapters present the expenditures and beneficiaries of the programs and evaluate the programs' performance in providing a decent level of economic security from the predictable threats to family economic security in modern economies.

    The economic risks that social insurance programs address, their conceptual, economic, and political underpinnings, and their programmatic expression together anticipate the third part of the book. The chapters in Part III focus on evaluating contemporary debate about these programs, their benefits, their affordability and their durability. Much of that debate features the view that modernizing American social insurance should take the form of making it more like commercial insurance, and that using market forces and market incentives is the key to improvement. This book challenges that view.

    Indeed, we were motivated to write the book by our belief that American social insurance is little understood and that contemporary discussions of discrete programs suffer from persistent myths and serious misunderstandings. The antidote we suggest here has three parts, the first of which is to see social insurance whole. That means understanding social insurance as a set of interventions designed to reduce the impacts of common threats across each person's life cycle, threats that simply cannot be countered effectively by individual prudence and private markets. Second is to understand in detail exactly what various programs of social insurance have and have not done, and third is to bring that understanding to bear on contemporary debates that often portray a mythical, threatened world of social insurance.

    This approach is to be found nowhere else in the literature on American social provision. Books and articles abound on Social Security, Medicare, workers' compensation, public assistance, and unemployment insurance. There is no lack of scholarly attention to the history of the American “welfare state” or dearth of broadsides popularizing the idea of a looming “entitlements crisis.” Problems of “moral hazard” and “adverse selection” in insurance markets have hardly escaped the notice of the economics profession—or the insurance industry. But nowhere else, to our knowledge, can a student or concerned citizen learn about the historical bases and unifying vision of American social insurance, along with the institutional details and successes and failures of discrete social insurance programs, and simultaneously be invited to deploy those understandings in analyzing contemporary political debates concerning social insurance. The closest analogues are perhaps Marmor, Mashaw, and Harvey's America's Misunderstood Welfare State and Graetz and Mashaw's True Security. This book is greatly indebted to both of those earlier efforts.

    We are also indebted to a host of others. Donald F. Kettl, the editor of the series of which this book is a part, was an early and firm advocate, seeing the promise of a book in an article on social insurance two of us wrote for Health Affairs some years ago. His colleagues at CQ Press—especially Charisse Kiino and Olivia Weber-Stenis—supported the publishing process with admirable professionalism.

    An effort of this sort requires a team. Ours has been a fine one. Corey Deixler, Eleesa Marnagh, Megan Cole, and Kimberly Kushner painstakingly supported the extensive data collection and analysis efforts. The Yale Law School provided the funds to hire two of its gifted students, Kate Hadley and Travis Silva, to check the reliability of our factual claims and the plausibility of our inferences. Camille Costelli and Patti Page provided administrative and personal support with extraordinary devotion. All of these teammates' contributions have been very substantial and much appreciated. Any errors are the authors' own.

    Others read the manuscript at various stages of the process and offered a range of encouragement, critical commentary, and suggestions that vastly improved the final product. They include Dan Meyer, Steven LaVoie, David Boyum, Sudhakar Kosaraju, Kieke Okma, Peter Gundy, Pete Spain, Carlos Cano, John Foggle, Lawrence Levenson, Mae and Ron Pakutka, Ruth Brinkley, Peter Bernard, Michael Spine, and Christine Pakutka. (John is especially thankful to Chris for her generous love and patient support for the project during its lengthy period of gestation.)

    We also thank the reviewers CQ Press commissioned: Matthew Eshbaugh-Soha, University of North Texas; Melissa Bass, University of Mississippi; Krista Perreira, University of North Carolina; Susan Tolchin, George Mason University; Pavel Terpelets, University at Albany, SUNY; Leah J. Wilds, University of Nevada, Reno; Leslie Baker, Mississippi State University; Andrea Mayo, Arizona State University; Paul Quirk, University of British Columbia; and John Portz, Northeastern University.

    There is a broader set of colleagues who, while they have not contributed directly by reading chapters, have nonetheless importantly stimulated our thinking about social insurance and American politics over many years. This group includes the late Brian Barry, Michael Graetz, Jacob Hacker, Philip Harvey, Rogan Kersh, Rudolf Klein, Jim Morone, Jon Oberlander, Virginia Reno, Carolyn Tuohy, Albert Weale, Robert Reich, Jim Wareck, Kevin Wheeler, Stefan Pryor, Andy Quinn, Congressman Bruce Morrison, Senator Tom Daschle, the late Senator Paul Wellstone, and Vice President Walter Mondale.

    The book owes a great deal to the intellectual legacy of American social insurance's greatest figure in the decades after World War II, the late Robert Ball, to whose memory this book is dedicated. Bob Ball was commissioner of Social Security in both Democratic and Republican administrations, the organizing force behind the founding of the National Academy of Social Insurance, and a tireless advocate for the preservation and improvement of social insurance programs.

    August 2013, New Haven, Connecticut

    About the Authors

    Theodore R. Marmor, Professor Emeritus of Yale University, taught politics, management, and law there from 1979 to 2009. From 1992 to 2003 he directed the Robert Wood Johnson Foundation's postdoctoral program in health policy and social science. Professor Marmor's scholarship has concentrated on the modern welfare state. The author (or coauthor) of thirteen books, he has also published more than two hundred articles in a wide range of scholarly journals. His opinion essays have appeared in major U.S. newspapers. The second edition of The Politics of Medicare appeared in 2000; the first edition of this book became something of a political science classic and launched his career in health politics, policy, and law. His best-known other works include Understanding Health Care Reform (1994), Why Are Some People Healthy and Others Not? (1994), and America's Misunderstood Welfare State (1990), coauthored with Yale colleagues Jerry L. Mashaw and Philip Harvey. A collection of his recent articles appeared in 2007: Fads, Fallacies and Foolishness in Medical Care Management and Policy.

    A member of President Carter's Commission on the 1980s Agenda and a senior social policy adviser to Walter Mondale in the presidential campaign of 1984, Professor Marmor has testified before Congress about medical care reform, social security, and welfare issues and has been a consultant to governmental and nonprofit agencies as well as private firms. He has served recently as an expert witness in cases involving asbestos liability, pharmaceutical pricing fraud, and health financing controversies. An emeritus fellow of the Canadian Institute for Advanced Research, he is a member of the Institute of Medicine of the National Academy of Sciences and the National Academy of Social Insurance, and since 2009 a corresponding fellow of the British Academy.

    Jerry L. Mashaw is Sterling Professor of Law at Yale Law School, where he teaches courses in administrative law, social welfare policy, regulation, legislation, and the design of public institutions. His prizewinning books include Bureaucratic Justice (1983), awarded Harvard University's Gerard Henderson Memorial Prize in 1993; The Struggle for Auto Safety (with David Harfst, 1990), awarded the Sixth Annual Scholarship Prize of the American Bar Association's Section on Administrative Law and Regulatory Policy in 1992; and Greed, Chaos, and Governance: Using Public Choice to Improve Public Law (1997), awarded the Section's Twelfth Annual Scholarship Prize in 1998 and the Order of the Coif Triennial Book Award in 2002 for books published between 1997 and 1999. He is a frequent contributor to legal and public policy journals and to newspapers and newsmagazines. Professor Mashaw is a founding member and past president of the National Academy of Social Insurance. He is a fellow of the National Academy of Arts and Sciences and was founding coeditor (with O. E. Williamson) of the Journal of Law, Economics, and Organization. He has served as a consultant for a number of U.S. government agencies and private foundations and to the governments of Peru, Argentina, and the People's Republic of China.

    Professor Mashaw and his wife, Anne MacClintock, are enthusiastic sailors and together contribute articles to sailing periodicals. Their book Seasoned by Salt: A Voyage in Search of the Caribbean (2003) received the 2007 John Southam Award for excellence in sailing journalism.

    John Pakutka is managing director of The Crescent Group, an advisory services firm with expertise in health care management, policy, and litigation. Firm clients have included Fortune 500 companies, Global 100 law firms, health systems, investment banks, state governments, and the U.S. Department of Justice. Prior to founding The Crescent Group, he completed employment stints at Exxon/Reliance Electric, the U.S. Government Accountability Office, Yale University, and APM/Computer Sciences Corporation. He has served on numerous public and nonprofit boards and commissions, most recently the Connecticut State Legislature's Task Force on Small Business Health Costs and the Citizenship Fund of the Connecticut Secretary of the State. He holds a B.S. in electrical engineering from Cornell and a master's in public and private management from Yale, where he lectures annually in the product planning class at the School of Management. He is a member of the Sorin Society of the University of Notre Dame and Fleur-de-Lis Society of Bon Secours. A native of Duryea, Pennsylvania, and longtime resident of Vestal, New York, he now lives on the Connecticut shoreline with his wife and partner, Christine, and three wild, wonderful children, Noah, Elaina, and Isabella. John blogs about social insurance protections at www.sixthreats.com and can be followed on twitter @sixthreats.

    Acknowledgements

    To the memory of Robert M. Ball

  • Epilogue

    REMEMBER WHAT HAS GONE BEFORE. Chapter 1's stories of human disaster remind us of what we prefer to forget: every life faces multiple threats to economic security. The Rhode Island nightclub fire should remind anyone not only of the danger of accidental death, but also of the costs of accidents like fires and the income lost to those injured by such unexpected events. Enron's collapse not only put its former chief executive in jail but also, more consequentially, devastated the retirement savings of many of the company's workers. The cost of autism provides but another introductory example of how unexpected, unwelcome, and devastating events can threaten—or indeed unravel—a family's economic security.

    Those stories further illustrate that such threats span the whole of the life cycle of each individual and, while individually incurred, are common to us all. Chapter 2 shifts from stories to data to provide a macro picture of just how serious these threats are by examining their occurrence in the population as a whole. What to do about them has engaged policy makers, analysts, and the public at large in continuous debates among competing visions of the role of collective provision of assistance to those for whom these six threats have been realized. The competing visions portrayed in Chapter 3 inhabit the long history of policy innovation, revision, and reform described in Chapter 4's thumbnail sketch of the singular American version of social insurance. The whole of Part I, then, is meant to identify the six most prominent threats to economic security and to introduce the ideas that are central to the development of the threat-cushioning role of American social insurance.

    Part II's six chapters then shift to more granular description and analysis of American protections against the six economic threats identified in Part I. These chapters are largely descriptive portraits, with few calls to action where protections seem anemic or complaints about excessive spending. No description can hope to be free of the authors’ beliefs and commitments, but our intent in these chapters is to inform, not to argue.

    Part III—the discussion of how to think wisely about income security programs and their reform—shifts from description to policy evaluation. Our aim here is first to acknowledge that “everyone thinks about public policy on the basis of some political preconceptions,” and that means, as two of us wrote more than two decades ago in America's Misunderstood Welfare State, the critical observer needs to examine all social welfare “talk” for its ideological perspectives.1 That premise shapes the chapters evaluating both the troubled state of America's unemployment insurance system and contemporary calls for substantial reforms in the rules of American medical care and Social Security's retirement policies. For example, Chapter 11's portrait of our long-troubled program of state-based unemployment insurance ends up as a call for reform. Chapter 12's review of pro-market ideas for American medical care and Social Security reform concentrates on which reform ideas rest on bogus arguments and which hold out the prospect for defensible adjustment in our medical and retirement programs.

    In both chapters we acknowledge our social insurance commitments without presuming that this is all that need be said. Chapter 11 makes clear that programmatic complexity is often the result of inevitable compromises among differing visions of social welfare provision. Means-testing is sometimes essential, as is in-kind provision and local administration. But there are better and worse designs for programs having these features. Chapter 12 does not for a moment deny the fiscal challenges that face Social Security or Medicare. Its call is for realism about the extent and location of the fiscal challenges and clearheadedness about the implications of reform proposals.

    Over time, the facts of American life and the details of policy arguments will change. The details of proposals and the complexity of the underlying social realities, combined with the predictably inflated rhetoric of champions and opponents, will challenge both policy makers and ordinary citizens as they attempt to make sense of this or that policy debate. Our hope is that the readers of this book will be better prepared to sift the wheat from the chaff—to see how particular proposals (always described as reforms) do or do not advance a reasonable response to our common threats to family income security. We do not presume that readers will share fully our view that protecting social insurance and ensuring equality of opportunity are the crucial criteria by which any change should be evaluated and simultaneously the values about which Americans most often agree—at least in the abstract. But we would be delighted if, for example, when thinking about future claims made for market-like reforms to social programs, readers would recall the philosophical, historical, and comparative evidence this book brings together. Social insurance is without a doubt a crucial support for market economies. Making social insurance programs more “market-like” is seldom a reform that supports family economic security or, in the long run, the market itself.

    Throughout this book we have viewed “universal” social insurance through the lens of a peculiarly American approach to public provision. For Americans, “universal” has generally meant all “workers” or “contributors,” not all citizens or residents. We should not leave this discussion, therefore, without underscoring the profoundly traditional, indeed conservative, and work-oriented vision that American universal-ism embraces. It says not that you are entitled because you are a part of the nation, although that is surely a plausible vision of universality, but that you are entitled because of your contribution to the nation. Funding is linked to earnings, and entitlement is defined largely by years of work. Hence for Americans, universalistic entitlement has always been a concept tied to, supported by and supporting, a market economy. That the protection of social insurance—and the demand for its expansion—should be thought to be the distinctive position of “liberals” is, to say the least, ironic. That the reform of social insurance should be thought to be best accomplished by moving in the direction of market-like devices that shift risks onto individuals and families already buffeted by the staggering economic uncertainties of a rapidly globalizing economy is, in our view, a serious mistake. “Modernization” in this form misunderstands what social insurance is about.

    Notes

    Chapter 1

    1. Tom Mooney, “The Station Nightclub Disaster—How the Fund Has Helped,” Providence Journal-Bulletin, May 13, 2003, A-01.

    2. Michael Mello, “For Many, Time Hasn't Healed Emotional Scars from Deadly Nightclub Fire,” The Day, November 30, 2003, D8.

    3. Abby Goodnough, “5 Years after a Nightclub Fire, Survivors Struggle to Remake Their Lives,” New York Times, February 17, 2008, A18.

    4. Associated Press, “The Station Nightclub Disaster—Last Fire Survivor Leaves Hospital,” Providence Journal-Bulletin, July 24, 2003, B-03.

    5. Rick Massimo, “Station Family Fund Is Doing What It Can for Fire Survivors,” Providence Journal, February 20, 2008, E-06.

    6. National Center on Birth Defects and Development Disabilities, Division of Birth Defects and Development Disabilities, Community Report from the Autism and Development Disability Monitoring (ADDM) Network (Atlanta: Centers for Disease Control and Prevention, 2012), 6, http://www.cdc.gov/ncbddd/autism/documents/ADDM-2012-Community-Report.pdf.

    7. Amy Lennard Goehner, “A Generation of Autism, Coming of Age,” New York Times, April 13, 2011, http://www.nytimes.com/ref/health/healthguide/esn-autism-reporters.html.

    8. See Michael L. Ganz, “The Costs of Autism,” in Understanding Autism: From Basic Neuroscience to Treatment, ed. Steven O. Molden and John L. R. Rubenstein (Boca Raton, FL: CRC Press, 2006).

    9. Milt Freudenheim, “Battling Insurers over Autism Treatment; Most Resist Big Payments, Challenging Therapists and Disorder's Nature,” New York Times, December 21, 2004, C1.

    10. Julie Appleby, “Who's Uninsured in 2007? It's More than Just the Poor,” USA Today, March 14, 2007.

    11. “Fortune 500, 2001,” CNNMoney.com, accessed October 18, 2012, http://money.cnn.com/magazines/fortune/fortune500_archive/full/2001.

    12. Kurt Eichenwald and Diana B. Henriques, “Enron Buffed Image to a Shine Even as It Rotted from Within,” New York Times, February 10, 2002.

    13. Quoted in “The Energetic Messiah,” Economist, June 1, 2000.

    14. Brian O'Reilly, “The Power Merchant [ENRON, No. 18] Once a Dull-as-Methane Utility Enron Has Grown Rich Making Markets Where Markets Were Never Made Before,” Fortune, April 17, 2000.

    15. Eichenwald and Henriques, “Enron Buffed Image.”

    16. Statement of Jan Fleetham, former Enron employee, in “Protecting the Pensions of Working Americans: Lessons from the Enron Debacle,” hearing before the Senate Committee on Health, Education, Labor, and Pensions, 107th Congress (2002), 64–65.

    17. Ibid., 65.

    18. Interview on Anderson Cooper 360 Degrees, CNN, May 25, 2006.

    19. David U. Himmelstein, Deborah Thorne, Elizabeth Warren, and Steffie Woolhandler, “Medical Bankruptcy in the United States, 2007: Results of a National Study,” American Journal of Medicine 122, no. 8 (2009): 742, doi: 10.10l6/j.amjmed.2009.04.012.

    20. See Center on Budget and Policy Priorities, “Policy Basics: Where Do Our Federal Tax Dollars Go?,” August 13, 2012, http://www.cbpp.org/cms/index.cfm?fa=view&id=1258.

    Chapter 2

    1. U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements (Washington, DC: Government Printing Office, 2012), Table F-2.

    2. Ibid., Table F-6.

    3. Elizabeth Warren and Amelia Warren Tyagi, The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke (New York: Basic Books, 2003).

    4. See “Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin 98 (June 2012): 4.

    5. Ibid., 30.

    6. Ibid., 47–49.

    7. Ibid., 63.

    8. U.S. Census Bureau, Statistical Abstract of the United States: 2012 (Washington, DC: Government Printing Office, 2012), 469, Table 721.

    9. Ibid., 72, Table 94.

    10. U.S. Department of the Treasury, Income Mobility in the U.S. from 1996 to 2005 (Washington, DC: Government Printing Office, 2008), 7.

    11. One might argue that ten years is not a long enough period to allow us to draw any significant conclusions, but research that has examined longer periods suggests similar conclusions. According to a study by the Pew Charitable Trusts, 30% of children from the poorest fifth of families, as compared to 71% from the richest fifth, will achieve incomes in the top three quintiles as adults. See Pew Charitable Trusts Economic Mobility Project, Pursuing the American Dream: Economic Mobility across Generations (Washington, DC: Pew Charitable Trusts, 2012), 6.

    12. U.S. Census Bureau, Educational Attainment in the United States: 2009 (Washington, DC: Government Printing Office, 2012), 13, Table 3.

    13. Annie E. Casey Foundation, Kids Count Data Center, “Data across States: Infant Mortality—2009,” August 2012, http://datacenter.kidscount.org/data/acrossstates/Rankings.aspx?ind=6051.

    14. Centers for Disease Control and Prevention, “Deaths and Mortality,” last revised March 29, 2012, http://www.cdc.gov/nchs/fastats/deaths.htm.

    15. Kenneth D. Kochanek, Jiaquan Xu, Sherry L. Murphy, Arialdi M. Miniño, and Hsiang-Ching Kung, “Deaths: Final Data for 2009,” National Vital Statistics Report 60, no. 3 (December 29, 2011): 88–92.

    16. U.S. Census Bureau, 2010 CensusPeople and Households (Washington, DC: Government Printing Office, 2010), Table 1.

    17. See U.S. Census Bureau, Statistical Abstract of the United States2012 Update (Washington, DC: Government Printing Office, 2012), Table 699.

    18. National Cancer Institute, “Costs of Cancer Care,” in “Cancer Trends Progress Report—2007 Update,” last revised November 16, 2007, http://progressreport.cancer.gov/2007/doc_detail.asp?pid=1&did=2007&chid=75&coid=726&mid. For a typical anecdote, see also Katharine Stoel Gammon, “Women Struggle with Breast Cancer Expenses,” ABCNews.com, October 16, 2007, http://abcnews.go.com/Health/OnCallPlus/story?id=3736060&page=1#.UGhK7qTyb3o.

    19. American Heart Association, “Heart Disease and Stroke Statistics—2012 Update at a Glance,” Circulation 189 (2012).

    20. American Heart Association, “Heart Disease and Stroke Statistics—2012 Update,” Circulation 125 (2012): e-3; American Heart Association, “Heart Disease and Stroke Statistics—2011 Update,” Circulation 123 (2011): Table 3-1.

    21. U.S. Bureau of Labor Statistics, “Labor Force Statistics from the Current Population, Household Data Annual Averages,” accessed October 10, 2012, http://www.bls.gov/cps/#tables.

    22. See Dan Beucke, “June Jobs: Five Things You Need to Know,” Bloomberg Businessweek, July 6, 2012, http://www.businessweek.com/articles/2012-07-06/june-jobs-five-things-you-need-to-know.

    23.See Dylan Matthews, “The Jobs Report in Five—Nay, Six!—Charts,” Washington Post, September 7, 2012, http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/07/the-jobs-report-in-five-charts-2.

    24. U.S. Bureau of Labor Statistics, “Labor Force Statistics from the Current Population Survey, Table A-12,” last revised February 5, 2010, http://www.bls.gov/cps/cpsatabs.htm.

    25. See U.S. Bureau of Labor Statistics, “Changes to Data Collected on Unemployment Duration,” last revised July 8, 2011, http://www.bls.gov/cps/duration.htm.

    26. See Michael A. Fletcher, “Extended Jobless Benefits Cut in Eight States,” Washington Post, May 11, 2012, http://www.washingtonpost.com/business/economy/extended-jobless-benefits-cut-in-eight-states/2012/05/10/gIQAX8X4GU_story.html.

    27. U.S. Bureau of Labor Statistics, “Labor Force Statistics from the Current Population Survey, Table A-12,” accessed October 1, 2012, http://www.bls.gov/cps/cpsatabs.htm.

    28. William Erickson, Sarah von Schrader, and Camille Lee, 2010 Disability Status Report, United States (Ithaca, NY: Cornell University, 2012), 9.

    29. Social Security Administration, “Fact Sheet,” March 18, 2011.

    30. Society of Actuaries, 2011 Risks and Process of Retirement Survey Report, Key Findings and Issues: Longevity (Schaumburg, IL: Society of Actuaries, 2011), 5.

    31. Jack VanDerhei and Craig Copeland, The EBRI Retirement Readiness Rating: Retirement Income Preparation and Future Prospects, Issue Brief 344 (Washington, DC: Employee Benefit Research Institute, 2010), 6.

    32. Ibid., 12–13.

    33. See ibid., 15–17.

    34. See Thomas Day, “Guide to Long Term Care Planning: About Nursing Homes,” National Care Planning Council, accessed October 1, 2012, http://www.longtermcarelink.net/eldercare/nursing_home.htm.

    Chapter 3

    1. For a history of the early poor law, see Paul A. Fideler, Social Welfare in Pre-industrial England: The Old Poor Law Tradition (New York: Palgrave Macmillan, 2006). The later poor law is discussed in David R. Green, Pauper Capital: London and the Poor Law, 1790–1870 (Burlington, VT: Ashgate, 2010). For a brief discussion of the poor law in the United States, see Gerald L. Neuman, “The Lost Century of American Immigration Law (1776–1875),” Columbia Law Review 93, no. 8 (1993): 1833, 1846–59.

    2. See Charles Murray, Losing Ground: American Social Policy, 1950–1980 (New York: Basic Books, 1984). 24% is the percentage of respondents who chose “too much welfare” as the main cause for the persistence of poverty; Charles M. Blow, “A Town Without Pity,” New York Times, August 9, 2013.

    3. For a description of the 1996 reform and a preliminary analysis of the impact of the legislation, see Greg J. Duncan and Gretchen Caspary, “Welfare Dynamics and the 1996 Welfare Reform,” Notre Dame Journal of Law, Ethics, and Public Policy 11 (1997): 605-32.

    4. An example of a relevant constitutional protection is the “one person, one vote” principle required by the U.S. Supreme Court in Baker v. Carr, 369 U.S. 186 (1962). (Previously states could draw legislative districts that differed—sometimes widely—by size.) Although that principle remains widely debated among scholars, it surely promotes the egalitarian principle that all persons’ votes should be counted equally. An example of an egalitarian governmental program is Head Start, a controversial federal program that provides additional educational services for low-income children.

    5. Even during the Great Recession, the American public strongly supported Social Security and Medicare and opposed cuts to those programs. See Harris Interactive, Cutting Government Spending May Be Popular but Majorities of the Public Oppose Cuts in Many Big Ticket Items in the Budget, (New York: Harris Interactive, March 1, 2012), http://www.harrisinteractive.com/vault/Harris%20Poll%2024%20-Federal%20spending_3.1.12.pdf; Pew Research Center, GOP Divided over Benefit Reductions: Public Wants Change in Entitlements, Not Changes in Benefits (Washington, DC: Pew Research Center, July 7, 2011), http://www.people-press.org/files/legacy-pdf/7-7-11%20Entitlements%20Release.pdf. In each of these polls, strong majorities of Americans opposed cuts to Social Security and government health care programs such as Medicare.

    6. In 2003, before the current controversy over the Affordable Care Act, a Washington Post-ABC News public opinion poll found that 62% of Americans preferred a universal health care system to the then-current ad hoc insurance system. See Washington Post-ABC News Poll, “Health Care,” October 20, 2003, question 47, http://www.washingtonpost.com/wp-srv/politics/polls/vault/stories/data102003.html. The issue is a partisan one—during the 2008 election campaign, with health care a critical issue, 79% of Democrats but only 44% of Republicans favored a universal health care system based on an individual mandate of the sort eventually adopted by the Affordable Care Act. See Robert J. Blendon, Drew E. Altman, Claudia Deane, John M Benson, Mollyann Brodie, and Tami Buhr, “Health Care in the 2008 Presidential Primaries,” New England Journal of Medicine 358 (2008): 417.

    7. Federal expenditures for veterans’ medical care (including research funding) totaled $48 billion in 2009. Congressional Budget Office, Potential Costs of Veterans’ Health Care (Washington, DC: Congressional Budget Office, October 2010), viii. According to the Kaiser Family Foundation, state expenditures on health care totaled more than $2 trillion in 2009. See Kaiser Family Foundation, “State Health Facts: Health Care Expenditures by State of Residence (in millions),” 2009, http://www.statehealthfacts.org/comparemaptable.jsp?ind=592&cat=5. The states spent more than $11 billion funding workers’ compensation liabilities in 2004. See Ishita Sengupta and Virginia Reno, “Recent Trends in Workers’ Compensation,” Social Security Bulletin 67 (2007): 17.

    8. See Jeffrey L. Barnett and Phillip M. Vidal, State and Local Government Finances Summary: 2010 (Washington, DC: U.S. Census Bureau, September 2012), 4, Figure 3, http://www2.census.gov/govs/estimate/summary_report.pdf.

    9. See U.S. Census Bureau, “Federal Budget Outlays by Detailed Function: 1990 to 2011,” Table 473 in Statistical Abstract of the United States: 2012 (Washington, DC: Government Printing Office, 2012), http://www.census.gov/compendia/statab/2012/tables/12s0473.pdf.

    10. U.S. Congress, Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2011–2015, prepared for the House Committee on Ways and Means and the Senate Committee on Finance, January 17, 2012, https://www.jct.gov/publications.html?-func=startdown&id=4385.

    Chapter 4

    1. Franklin Delano Roosevelt, “Inaugural Address,” March 4, 1933.

    2. Franklin Delano Roosevelt, “Message to the Congress on the Objectives and Accomplishments of the Administration,” June 8, 1934.

    3. Ibid.

    4. Ibid.

    5. Ibid.

    6. Charles R. Henderson, “State Must Compel Insurance,” Chicago Daily Tribune, October 28, 1906.

    7. Ibid.

    8. Theodore Roosevelt, “Speech before the Convention of the National Progressive Party,” August 6, 1912.

    9. Quoted in “Experts to Study Social Insurance,” New York Times, December 19, 1915.

    10. Ibid.

    11. Franklin D. Roosevelt, “Fireside Chat 5: On Addressing the Critics,” June 28, 1934.

    12. Committee on Economic Security, Social Security in America: The Factual Background of the Social Security Act as Summarized from Staff Reports to the Committee on Economic Security (Washington, DC: Social Security Board, 1937), 515.

    13. For the following quotations, see Committee on Economic Security, Report of the Committee on Economic Security (unpublished report, January 15, 1935), http://www.ssa.gov/history/reports/ces5.html.

    14. Ibid. On unemployment, the Committee on Economic Security reported: “The unprecedented extent and duration of unemployment in the United States since 1930 has left no one who is dependent upon a wage or salary untouched by the dread of loss of work. Unemployment relief distributed as a form of public charity, though necessary to prevent starvation, is not a solution of the problem. It is expensive to distribute and demoralizing to both donor and recipient. A device is needed which mil assure those who are involuntarily unemployed a small steady income for a limited period.” Committee on Economic Security Social Security in America, Part 1: Unemployment Compensation (unpublished report, 1935), emphasis added, http://www.ssa.gov/history/reports/ces/cesbookc1.html.

    15. See Franklin D. Roosevelt, “Message Transmitting to the Congress a Report of the Social Security Board Recommending Certain Improvements in the Law,” January 16, 1939, http://www.ssa.gov/history/fdrstmts.html#1939.

    16. See “The President's Security Plan,” Hartford Courant, January 18, 1935; “Bills Backed by President under Fire,” Washington Post, February 4, 1935; “Votes to Separate FERA and AGE Fund, Ways and Means Committee Would Give Handling of Fund to Social Insurance Board,” New York Times, February 15, 1935; “Pool Plan Is Urged on Job Insurance,” New York Times, March 3, 1935.

    17. Carmen D. Solomon, Major Decisions in the House and Senate Chambers on Social Security: 19364985 (Washington, DC: Congressional Research Service, 1986), 9.

    18. Ibid., 11.

    19. “Social Security Bill Voted; Will Benefit 30,000,000,” New York Times, August 10, 1935.

    20. Franklin D. Roosevelt, “1938 Advisory Council Report—President's Letter of Transmittal to Congress,” http://www.ssa.gov/history/reports/38advisepres.html.

    21. Ibid.

    22. According to a New York Times report, “One small amendment to the proposal was passed, an increase from $15 to $20 per month in the maximum amount of federal matching funds for states to help the blind.” “House Passes Bill to Widen Security,” New York Times, June 11, 1939.

    23. “Increased Pensions for the Aged,” Washington Post, August 6, 1939.

    24. “Amendments Signed by President,” Washington Post, August 13, 1939.

    25. “Seeks to Put All Social Insurance in a Federal Pool,” New York Times, October 5, 1941.

    26. Harry S. Truman, “Special Message to the Congress Recommending a Comprehensive Health Program,” November 19, 1945, http://www.trumanlibrary.org/publicpapers/index.php?pid=483.

    27. Ibid.

    28. Quoted in “Fishbein Assails New Health Plan, Truman's National Program Condemned as ‘Socialized Medicine’ at Its Worst,” New York Times, November 27, 1945.

    29. See Solomon, Major Decisions in the House and Senate, 34.

    30. Dwight D. Eisenhower, “Special Message to the Congress on Old Age and Survivors Insurance and of Federal Grants-in-Aid for Public Assistance Programs,” January 14, 1954, http://www.ssa.gov/history/ikestmts.html#pubasst.

    31. “Backing Given to Social Aid,” Baltimore Sun, May 23, 1954. Arthur Larson served as undersecretary of labor, head of the United States Information Agency, and special assistant to the president during the Eisenhower administration.

    32. Quoted in ibid.

    33. Solomon, Major Decisions in the House and Senate, 36–37.

    34. Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, Income, Poverty, and Health Insurance Coverage in the United States: 2011 (Washington, DC: Government Printing Office, 2012), 66.

    35. Ibid., 71–73.

    36. Lyndon B. Johnson, “Remarks with President Truman at the Signing in Independence of the Medicare Bill,” July 30, 1965, http://www.lbjlib.utexas.edu/johnson/archives.hom/speeches.hom/650730.asp.

    37. Ibid.

    38. Theodore A. Marmor, The Politics of Medicare, 2nd ed. (Hawthorne, NY: Aldine de Gruyter, 2000), 10–17.

    39.Ibid., 17–23.

    40. See “The Average Cost of Nursing Home Care Moves Upward in 2012,” Elder Law Answers, last revised November 9, 2012, http://www.elderlawanswers.com/the-average-cost-of-nursing-home-care-moves-upward-in-2012–10021.

    41. See National Federation of Independent Business v. Sebelius, 132 S. Ct. 603 (2011).

    42. Scott Clement, “Six Charts to Explain Health-Care Polling,” Washington Post, June 28, 2012, http://www.washingtonpost.com/blogs/the-fix/post/six-charts-to-explain-health-care-polling/2012/06/28/gJQAlBrn8V_blog.html.

    43. Richard M. Nixon, “Statement on Signing the Social Security Amendments of 1972,” October 30, 1972, http://www.ssa.gOv/history/nixstmts.html#1972.

    44. Ronald Reagan, “Remarks on Signing the Social Security Amendments of 1983,” April 20, 1983, http://www.ssa.gOv/history/reaganstmts.html#1983.

    45. George H. W. Bush, “Address before a Joint Session of Congress on the State of the Union,” January 31, 1991, http://www.ssa.gov/history/bushstmts.html.

    46. George W. Bush, “Statement on Signing the Medicare Prescription Drug and Modernization Act of 2003,” December 8, 2003.

    47. See, for example, Michael Tanner, Still a Better Deal: Private Investment vs. Social Security, Policy Analysis No. 692 (Washington, DC: Cato Institute, February 13, 2012), http://www.cato.org/sites/cato.org/files/pubs/pdf/PA692.pdf.

    Part Notes

    1. See Michael J. Graetz and Jerry L. Mashaw, True Security: Rethinking American Social Insurance (New Haven, CT: Yale University Press, 1999).

    Chapter 5

    1. Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, Income, Poverty, and Health Insurance Coverage in the United States: 2011 (Washington, DC: Government Printing Office, 2012), 14.

    2. Katharine Bradbury, Trends in U.S. Family Income Mobility, 1969–2006, Working Paper 11–10 (Boston: Federal Reserve Bank of Boston, October 20, 2011), 38–40, http://www.bos.frb.org/economic/wp/wp2011/wp1110.pdf.

    3. Robert Rector and Rachel Sheffield, Understanding Poverty in the United States: Surprising Facts about America's Poor, Executive Summary Backgrounder No. 2607 (Washington, DC: Heritage Foundation, September 13, 2011), 1, http://thf_media.s3.amazonaws.com/2011/pdf/bg2607.pdf. The authors go much further, arguing that “real material hardship … is limited in scope and severity.” To support their case, they present a wide range of data on the lives of the American poor—the absence of malnutrition and stunting, high average size of living space, and wide ownership of modern amenities. In doing so, they tend to gloss over the issue of quality: a ten-year-old desktop computer is not an iPad, an old jalopy is not a new car, and a living space in a poor inner-city neighborhood is much different in character from a suburban home of the same size. They ignore other data we present on the consequences of birth into a poor family and vastly overstate their argument.

    4. Julia B. Isaacs, Tracy Vericker, Jennifer Macomber, and Adam Kent, Kids’ Share: An Analysis of Federal Expenditures on Children through 2008 (Washington, DC: Urban Institute and Brookings Institution, 2009), 16, http://www.brookings.edu/~/media/research/files/reports/2009/12/09%20kids%20share%20isaacs/1209_kids_share_isaacs.pdf.

    5. Connie F. Citro and Robert T. Michael, Measuring Poverty: A New Approach (Washington, DC: National Academy Press, 1995), 3–7.

    6. Kathleen Short, The Research Supplemental Poverty Measure: 2010, Current Population Reports P60-241 (Washington, DC: U.S. Census Bureau, November 2011), http://www.census.gov/prod/2011pubs/p60-241.pdf.

    7. Ibid., 10, Figure 4.

    8. U.S. Census Bureau, “Income, Poverty and Health Insurance in the United States: 2011—Tables & Figures,” Current Population Survey: 2012, Table 5, accessed November 8, 2012, http://www.census.gov/hhes/www/poverty/data/incpovhlth/2011/tables.html.

    9. U.S. Department of Health and Human Services, “Indicators of Welfare Dependence: Annual Report to Congress, 2003,” Appendix A, Table TANF 1, accessed November 8, 2012, http://aspe.hhs.gov/HSP/indicators03/index.htm.

    10. Ibid., Appendix A, Table TANF 6.

    11. Ibid., Appendix A, Tables TANF 8 and 9.

    12. Center on Budget and Policy Priorities, Policy Basics: An Introduction to TANF (Washington, DC: Center on Budget and Policy Priorities, July 22, 2010), 1, http://www.cbpp.org/files/7-22-10tanf2.pdf.

    13. Ibid., 3.

    14. Liz Schott, LaDonna Pavetti, and Ife Finch, How States Have Spent Federal and State Funds under the TANF Block Grant (Washington, DC: Center on Budget and Policy Priorities, August 7, 2012), 3, http://www.cbpp.org/files/8-7-12tanf.pdf.

    15. Pamela J. Loprest, How Has the TANF Caseload Changed over Time?, Brief 08 (Washington, DC: Urban Institute, March 2012), 2, http://www.acf.hhs.gov/sites/default/files/opre/change_time_1.pdf.

    16. U.S. Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance, Temporary Assistance for Needy Families Program: Ninth Report to Congress (Washington, DC: Government Printing Office, 2012), 75, http://www.acf.hhs.gov/sites/default/files/ofa/9th_report_to_congress_3_26_12.pdf.

    17. Center on Budget and Policy Priorities, Chart Book: TANF at 16 (Washington, DC: Center on Budget and Policy Priorities, August 22, 2012), 3, http://www.cbpp.org/files/8-22-12tanf.pdf.

    18. U.S. Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance, Temporary Assistance for Needy Families Program: Eighth Annual Report to Congress (Washington, DC: Government Printing Office, 2009), v, http://archive.acf.hhs.gov/programs/ofa/data-reports/annualreport8/TANF_8th_Report_111908.pdf.

    19. Ibid., vii.

    20. Ibid.

    21. Ibid., x.

    22. U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Information on Poverty and Income Statistics: A Summary of 2011 Current Population Survey Data, ASPE Issue Brief (Washington, DC: U.S. Department of Health and Human Services, September 13, 2011), 4, http://aspe.hhs.gov/poverty/11/ib.pdf.

    23. U.S. Department of Health and Human Services, Ninth Report to Congress, VIII-63.

    24. Peter Edelman and Barbara Ehrenreich, “Why Welfare Reform Has Failed,” Washington Post, December 6, 2009.

    25. U.S. Department of the Treasury, Agency Financial Report: Fiscal Year 2011 (Washington, DC: Government Printing Office, November 15, 2011), 33, http://www.treasury.gov/about/budget-performance/annual-performance-plan/Documents/FY%202011%20AFR-Final%20Version.pdf. Department auditors argue that $14–$17 billion of the total are overclaims. Ibid.

    26. Jimmy Charite, Indivar Dutta-Gupta, and Chuck Marr, Studies Show Earned Income Tax Credit Encourages Work and Success in School and Reduces Poverty (Washington, DC: Center on Budget and Policy Priorities, June 26, 2012), 1, http://www.cbpp.org/files/6-26-12tax.pdf.

    27. Ibid.

    28. Tax Policy Center, Urban Institute and Brookings Institution, The Tax Policy Briefing Book: A Citizens’ Guide for the 2012 Election and Beyond (Washington, DC: Tax Policy Center, 2012), II-1-4, http://www.taxpolicycenter.org/briefing-book/TPC_briefingbook_full.pdf.

    29. Center on Budget and Policy Priorities, Policy Basics: The Child Tax Credit (Washington, DC: Center on Budget and Policy Priorities, 2012), 1–2, http://www.cbpp.org/files/policybasics-ctc.pdf.

    30. Elaine Maag, “Who Benefits from the Dependent Exemption?,” Tax Notes (Tax Policy Center, Urban Institute and Brookings Institution), December 20, 2010, 1, http://www.taxpolicycenter.org/UploadedPDF/100l478-Tax-Facts-Dependent-Exemption-Maag.pdf.

    31. These rates are for a married couple filing jointly. Tax Rate Schedule Y-2, Internal Revenue Code section 1(d) (2013).

    32. Trip Gabriel, “Gingrich Campaign Defends Remarks on Food Stamps,” New York Times, January 6, 2012.

    33. Kathleen FitzGerald, Emily Holcombe, Molly Dahl, and Jonathan Schwabish, “An Overview of the Supplemental Nutrition Assistance Program,” Congressional Budget Office, April 19, 2012, http://www.cbo.gov/publication/43175.

    34. U.S. Bureau of Labor Statistics, “Employment, Hours, and Earnings from the Current Employment Statistics Survey (National): 2008–2009,” accessed November 14, 2012, http://data.bls.gov/pdq/SurveyOutputServlet.

    35. U.S. Department of Agriculture, Economic Research Service, The 2002 Farm Bill: Provisions and Economic Implications (Washington, DC: Government Printing Office, April 2002), 3, http://www.ers.usda.gov/media/264043/ap022_4_.pdf.

    36. U.S. Department of Agriculture, Food and Nutrition Service, Office of Research and Analysis, Building a Healthy America: A Profile of the Supplemental Nutrition Assistance Program (Alexandria, VA: U.S. Department of Agriculture, April 2012), 13, http://www.fns.usda.gov/ora/MENU/Published/snap/FILES/Other/BuildingHealthyAmerica.pdf.

    37. President Obama certainly bears responsibility for the 13.6% SNAP benefit increase included in the American Recovery and Reinvestment Act of 2009. This likely explains $9 billion of the FY 2011 $72 billion cost, or a quarter of the increase from FY 2007. President Bush, for his part, did veto the Farm Bill of 2008. The Democratic Congress overrode him. That bill loosened some eligibility requirements and increased the minimum benefit.

    38. U.S. Department of Agriculture, Building a Healthy America, 2.

    39. Ibid., 25.

    40. Ibid., 8.

    41. U.S. Department of Agriculture, Food and Nutrition Service, “WIC Program Participation and Costs (Data as of November 9, 2012),” accessed November 14, 2012, http://www.fns.usda.gov/pd/wisummary.htm.

    42. U.S. Department of Agriculture, Food and Nutrition Service, “Women, Infants, and Children: Frequently Asked Questions about WIC,” last revised July 13, 2012, http://www.fns.usda.gov/wic/faqs/faq.htm.

    43. Ibid.

    44. U.S. Department of Agriculture, “WIC Program Participation and Costs.”

    45. Marianne Bitler, Janet Curie, and John Karl Scholz, “WIC Eligibility and Participation,” Journal of Human Resources 38, supplement (2003): 1139–79.

    46. U.S. Department of Agriculture, Food and Nutrition Service, “The School Breakfast Program,” last revised August 2012, http://www.fns.usda.gov/cnd/Breakfast/AboutBFast/SBPFactSheet.pdf; U.S. Department of Agriculture, Food and Nutrition Service, “National School Lunch Program,” last revised August 2012, http://www.fns.usda.gov/cnd/Lunch/AboutLunch/NSLPFactSheet.pdf.

    47. Ibid.

    48. Ibid.

    49. For information on states’ particular standards for Medicaid and CHIP eligibility, see Kaiser Commission on Medicaid and the Uninsured, Where Are States Today? Medicaid and CHIP Eligibility Levels for Children and Non-disabled Adults (Washington, DC: Kaiser Family Foundation, March 2013), http://www.kff.org/medicaid/upload/7993-03.pdf. One would be forgiven for believing that CHIP is financed entirely by the federal government. The Affordable Care Act of 2010 maintains the CHIP eligibility standards in place through 2019. In 2015, the enhanced CHIP federal matching rate will be increased by 23 percentage points, bringing the average federal matching rate for CHIP to 93%. Centers for Medicare and Medicaid Services, “Children's Health Insurance Program Financing,” accessed November 14, 2012, http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Financing-and-Reimbursement/Childrens-Health-Insurance-Program-Financing.html.

    50. DeNavas-Walt et al., Income, Poverty, and Health Insurance Coverage, 70.

    51. Michael E. Martinez and Robin A. Cohen, Health Insurance Coverage: Early Release of Estimates from the National Health Interview Survey, January–September 2011 (Hyattsville, MD: National Center for Health Statistics, March 2012), http://www.cdc.gov/nchs/data/nhis/earlyrelease/Insur201203.pdf.

    52. DeNavas-Walt et al., Income, Poverty, and Health Insurance Coverage, 70.

    53. Estes et al., Health Policy: Crisis and Reform, 6th ed. (Burlington, MA: Jones & Bartlett, 2012), 631.

    54. Analysis of the Urban Institute Health Policy Center's ACS Medicaid/CHIP Eligibility Simulation Model based on data from the Integrated Public Use Microdata Series, as reported in Genevieve M. Kenney, Victoria Lynch, Jennifer Haley, Michael Huntress, Dean Resnick, and Christine Coyer, Gains for Children: Increased Participation in Medicaid and CHIP in 2009 (Washington, DC: Urban Institute, August 2011), 19, http://www.urban.org/UploadedPDF/412379-Gains-for-Children.pdf.

    55. Kaiser Family Foundation, “Medicaid Payments per Enrollee, FY 2009,” accessed November 15, 2012, http://www.statehealthfacts.org/comparemaptable.jsp?ind=183&cat=4.

    56. Karen E. Lynch, The Child Care and Development Block Grant: Background and Funding, CRS Report RL30785 (Washington, DC: Congressional Research Service, January 28, 2010), 1, http://www.policyarchive.org/handle/10207/bitstreams/19845.pdf.

    57. National Child Care Information and Technical Assistance Center, Child Care and Development Fund: Report of State and Territory Plans FY 2010–2011 (Washington, DC: U.S. Department of Health and Human Services, 2011), 27, http://occ-archive.org/files/resources/sp1011full-report.pdf.

    58. U.S. Department of Health and Human Services, Office of Child Care, “Table 1, 2010 CCDF Data Tables (Preliminary Estimates),” last revised December 1, 2011, http://www.acf.hhs.gov/programs/occ/resource/ccdf-data-10acf800-preliminary.

    59. Administration for Children and Families, “Child Care and Development Fund Fact Sheet,” November 2009, http://www.acf.hhs.gov/programs/ccb/ccdf/factsheet.htm.

    60. U.S. Department of Health and Human Services, Administration for Children and Families, Fiscal Year 2012: Justification of Estimates for Appropriations Committees (Washington, DC: Government Printing Office, 2012), 55, http://www.acf.hhs.gov/sites/default/files/olab/2012_all.pdf.

    61. Census Bureau data suggest that about 5 million children under 5 years of age are living in families with incomes below the FPL. The program subsidizes only 1.7 million children monthly.

    62. Office of Head Start, “Head Start Services,” accessed November 15, 2012, http://www.acf.hhs.gov/programs/ohs/about/head-start.

    63. U.S. Department of Health and Human Services, Administration for Children and Families, Office of Head Start, Biennial Report to Congress: The Status of Children in Head Start Programs (Arlington, VA: Head Start Resource Center, 2007), 132–33.

    64. Ibid., 5–7.

    65. Michael L. Anderson, “Multiple Inference and Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects,” Journal of the American Statistical Association 103 (2008): 1481–95; Janet Currie. “Early Childhood Education Programs,” Journal of Economic Perspectives 15, no. 2 (2001): 213–38, cited in David Deming, “Early Childhood Intervention and Life-Cycle Skill Development: Evidence from Head Start,” American Economic Journal: Applied Economics 1, no. 3 (2009): 111–34.

    66. See Deming, “Early Childhood Intervention,” 130. At least one significant study with short-term results to the contrary exists and has found its way into the popular press. In 2011, Time magazine ran an article stating: “There is indisputable evidence about the program's effectiveness, provided by the Department of Health and Human Services: Head Start simply does not work” (Joe Klein, “Time to Ax Public Programs That Don't Yield Results,” Time, July 7, 2011). This conclusion, like the more positive results reported in the text, remains highly controversial. In fact most studies find positive results, but often measure different outcomes, using different methodologies and different time frames. For a review of the literature see Chloe Gibbs et al., Does Head Start Do Any Lasting Good?, No. W17452, National Bureau of Economic Research, 2011, forthcoming in The War on Poverty: A 50-Year Retrospective (Martha Bailey and Sheldon Danziger, eds.).

    67. See Child Trends DataBank, “Percentage of Children Ages Three to Four Currently Attending a Head Start Program, 1991–2005,” accessed May 30, 2013, http://www.childtrendsdatabank.org/sites/default/files/97_Tab01.pdf.

    68. Statement of Gregory D. Kutz, managing director, Forensic Audits and Special Investigations, U.S. Government Accountability Office, “Head Start—Undercover Testing Finds Fraud and Abuse at Selected Head Start Centers,” testimony before the House Committee on Education and Labor (2010), 11–12, http://www.gao.gov/assets/130/124660.pdf.

    69. National Center for Education Statistics, Institute of Education Sciences, “Fast Facts,” accessed November 15, 2012, http://nces.ed.gov/fastfacts.

    70. U.S. Department of Education, “The Federal Role in Education,” accessed November 15, 2012, http://www2.ed.gov/about/overview/fed/role.html.

    71. Mark Dixon, Public Education Finances: 2010, U.S. Census Bureau Publication G10-ASPEF (Washington, DC: Government Printing Office, 2012), 8, Table 8.

    72. U.S. Department of Education, National Center for Homeless Education, Education for Homeless Children and Youth Program: Data Collection Summary (Washington, DC: National Center for Homeless Education, June 2011), 4, http://center.serve.org/nche/downloads/data_comp_0708-0910.pdf.

    73. U.S. Department of Housing and Urban Development, Office of Community Planning and Development, The 2010 Annual Homeless Assessment Report to Congress (Washington, DC: Department of Housing and Urban Development, 2011), 5–10.

    74. U.S. Department of Housing and Urban Development, “An Overview of the HUD Budget: How HUD Funding Furthers Our Mission,” accessed November 15, 2012, http://portal.hud.gov/hudportal/documents/huddoc?id=2012BudgetOverview032011.pdf.

    75. See U.S. Department of Housing and Urban Development, Fiscal Year 2013 Program and Budget Initiatives: Affordable Housing Rental Assistance, 43–44, accessed November 18, 2012, http://portal.hud.gov/hudportal/documents/huddoc?id=CombBudget2013.pdf (calculations by the authors).

    76. U.S. Department of Housing and Urban Development, “Overview of the HUD Budget.”

    77. Ibid.

    78. U.S. Department of Housing and Urban Development, “Housing Choice Vouchers Fact Sheet,” accessed November 18, 2012, http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/hcv/about/fact_sheet.

    79. See U.S. Department of Housing and Urban Development, Fiscal Year 2013 Program and Budget Initiatives, 43 (calculations by the authors).

    80. See ibid., 44.

    81. Yonah Freemark and Lawrence J. Vale, “Illogical Housing Aid,” New York Times, October 30, 2012.

    82. See Arloc Sherman, “Poverty and Financial Distress Would Have Been Substantially Worse in 2010 without Government Action, New Census Data Show,” Center for Budget and Policy Priorities, November 7, 2011, http://www.cbpp.org/cms/?fa=view&id=3610.

    83. DeNavas-Walt et al., Income, Poverty, and Health Insurance Coverage, 14, Table 3.

    84. Jason DeParle, “Harder for Americans to Rise from Lower Rungs,” New York Times, January 4, 2012.

    Chapter 6

    1. Geoff Earle, “Swing Conservative: The Perilous Bipartisanship of Lindsey Graham,” Washington Monthly, April 2005, http://www.washingtonmonthly.com/features/2005/0504.earle.html.

    2. Lloyd Grove, “Lindsey Graham, a Twang of Moderation,” Washington Post, October 7, 1998, D01.

    3. Earle, “Swing Conservative.”

    4. Ibid.

    5. Susan Page, “Six Men Who'll Shape the Future,” USA Today, March 10, 2005, http://usatoday30.usatoday.com/news/washington/2005-03-09-social-security-six_x.htm.

    6. Earle, “Swing Conservative.”

    7. Charles Babington and Jim VandeHei, “Republicans Float Ideas for Social Security,” Washington Post, March 6, 2005, A06.

    8. See, for example, Thomas E. Nugent, “Graham Crackers,” National Review, January 4, 2005, http://www.nationalreview.com/articles/213288/graham-crackers-social-security/thomas-e-nugent.

    9. Page, “Six Men Who'll Shape the Future.”

    10. Earle, “Swing Conservative.”

    11. American Council of Life Insurers, 2011 Life Insurers Fact Book (Washington, DC: American Council of Life Insurers, 2011), 35, 61.

    12. Ibid., 73.

    13. Ibid.

    14. Employee Benefit Research Institute, Tax Expenditures and Employee Benefits: Estimates from the FY 2011 Budget, Facts from EBRI, March 2010, 2, http://www.ebri.org/pdf/publications/facts/FS-209_Mar10_Bens-Rev-Loss.pdf. Employees do pay a tax on employer premium payments for benefit value in excess of $50,000.

    15. U.S. Bureau of Labor Statistics, National Compensation Survey, March 2012, Table 16, “Life Insurance Benefits—Access, Participation, and Take-Up Rates.”

    16. See ibid., Table 19, “Life Insurance Plans—Fixed Multiple of Annual Earnings Benefit Formulas, Civilian Workers.”

    17. Ibid., Table 16.

    18. Ibid.

    19. Insurance Information Institute, The Insurance Fact Book 2012 (New York: Insurance Information Institute, 2012), 25.

    20. U.S. Department of Labor, National Compensation Survey, March 2012, Table 20, “Life Insurance Plans—Maximum Benefit Amount, Civilian Workers.”

    21. American Council of Life Insurers, 2011 Life Insurers Fact Book, 66.

    22. See ibid., 64.

    23. LIMRA LL Global, “Ownership of Individual Life Insurance Falls to 50–Year Low, LIMRA Reports,” news release, August 30, 2010, http://www.limra.com/Posts/PR/News_Releases/Ownership_of_Individual_Life_Insurance_Falls_to_50-Year_Low,_LIMRA_Reports.aspx. The figures in this paragraph come from a regular survey conducted by an industry association called LIMRA, which describes itself as “a worldwide association of insurance and financial services companies, established to help its members improve their marketing and distribution effectiveness.” LIMRA LL Global, “Facts about LIMRA,” accessed November 20, 2012, http://www.limra.com/PDFs/NewsCenter/Materials/factsabout.pdf Reporters quote LIMRA data in reputable business publications, so we will assume that whatever tendency an industry group might have to present a distorted picture of private data is held in check by the group's concern for reputation.

    24. Leslie Scism, “More Go without Life Insurance,” Wall Street Journal, August 29, 2010, http://online.wsj.com/article/SB10001424052748704342504575459232913104238.html.

    25. U.S. Social Security Administration, “Social Security Survivors Benefits: Protection You and Your Family Can Count On,” last revised April 2, 2012, http://www.ssa.gov/survivorplan/index.htm.

    26. U.S. Social Security Administration, Social Security: Understanding the Benefits (Washington, DC: Government Printing Office, 2012), 21, http://www.ssa.gov/pubs/10024.pdf.

    27. Ibid., 12.

    28. U.S. Social Security Administration, “Monthly Statistical Snapshot, October 2012,” Table 2, http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot.

    29. Ibid.

    30. U.S. Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2011 (Washington, DC: Government Printing Office, 2011), Table 4.A5, “Total Annual Benefits Paid from OASI Trust Fund, by Type of Benefit, Selected Years 1937–2010,” http://www.ssa.gov/policy/docs/statcomps/supplement/2011/4a.pdf.

    31. American Council of Life Insurers, 2011 Life Insurers Fact Book, 47.

    32. National Academy of Social Insurance, Fact Sheet: Social Security Pays Benefits in the Wake of September 11th Attacks, 1, accessed November 20, 2012, http://www.nasi.org/sites/default/files/research/Survivor_Fact_Sheet_SS_3_11_02.pdf.

    33. Ibid.

    34. The data represented in Figure 6.5 are also consistent across time. The U.S. level of 0.7% of GDP spent on survivor benefits has not changed since 2003. See American Council of Life Insurers, 2011 Life Insurers Fact Book, Table 4.5.

    35. National Funeral Directors Association, “Funeral Service Facts,” accessed November 20, 2012, http://nfda.org/media-center/statistics.html#fsfacts.

    Chapter 7

    1. This vignette is a factual account gleaned from interviews. We have changed the name of the ill woman and refrained from using the company name because of an impending legal action. Available polling data demonstrate that Robina's struggles are not unusual for a cancer patient. See Kaiser Family Foundation, “USA Today/Kaiser/Harvard Survey Highlights Problems in the Health Care System through the Experiences of People with Cancer,” November 17, 2006, http://kff.org/other/poll-finding/usa-todaykaiserharvard-survey-highlights-problems-in-the.

    2. Barack Obama, “Remarks by the President on the Affordable Care Act and the New Patients’ Bill of Rights,” Office of the Press Secretary, White House, June 22, 2010, http://www.whitehouse.gov/the-press-office/remarks-president-affordable-care-act-and-new-patients-bill-rights.

    3. Statement of Douglas W. Elmendorf, director, Congressional Budget Office, “Analysis of the Major Health Care Legislation Enacted in March 2010,” before the Subcommittee on Health Committee on Energy and Commerce, U.S. House of Representatives (March 30, 2011), 2.

    4. David U. Himmelstein, Deborah Thorne, Elizabeth Warren, and Steffie Woolhandler, “Medical Bankruptcy in the United States, 2007: Results of a National Study,” American Journal of Medicine 122, no. 8 (2009): 741–46, doi: 10.10l6/j.amjmed.2009.04.012.

    5. Theodore R. Marmor and Jonathan Oberlander, “Health Reform: The Fateful Moment,” New York Review of Books, August 13, 2009.

    6. The historic “health care case” is National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012).

    7. Congressional Budget Office, “Lessons from Medicare's Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment,” Issue Brief, January 18, 2012.

    8. U.S. National Highway Traffic Safety Administration, Traffic Safety Facts, as cited in US Census Bureau, Statistical Abstract of the United States, 2011–12 (Washington, DC: Government Printing Office, 2012), Table 1106.

    9. Berhanu Alemayehu and Kenneth E. Warner, “The Lifetime Distribution of Healthcare Costs,” Health Services Research 39, no. 3 (2004): 627–42. We adjust to current dollars the researchers’ calculation of $316,000 in year 2000 dollars.

    10. Himmelstein et al., “Medical Bankruptcy in the United States.”

    11. Institute of Medicine of the National Academies, Insuring America's Health: Principles and Recommendations (Washington, DC: National Academies Press, 2004), 22.

    12. Approximately 64% of the population had employment-based health insurance in 1999; the number had dropped to 55.1% by 2011. U.S. Census Bureau, Current Population Survey Annual Social and Economic Supplements, 2011, “Health Insurance Historical Tables,” Table HIB-1, http://www.census.gov/hhes/www/hlthins/data/historical/HIB_tables.html.

    13. U.S. Congress, Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2010–2014, prepared for the House Committee on Ways and Means and the Senate Committee on Finance, December 15, 2010, 47.

    14. David I. Auerbach and Arthur L. Kellermann, “A Decade of Health Care Cost Growth Has Wiped Out Real Income Gains for an Average US Family,” Health Affairs 30, no. 9 (2011): 1630–36.

    15. Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits: 2012 Annual Survey (Menlo Park, CA: Kaiser Family Foundation, 2012), 50, Exhibit 3.1.

    16. Ibid., 171, Exhibit 11.1. See also KPMG Survey of Employer-Sponsored Health Benefits, 1991, 1993, 1995, 1998 (information at Kaiser Family Foundation, Employer Health Benefits Annual Survey Archives, http://kff.org/health-costs/report/employer-health-benefits-annual-survey-archives).

    17. Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits: 2012 Annual Survey, 80, Exhibit 6.7; see also 75, Exhibit 6.7.

    18. Ibid., 110, Exhibit 7.6.

    19. Himmelstein et al., “Medical Bankruptcy in the United States,” 743, Table 2.

    20. David Dranove and Michael L. Millenson, “Medical Bankruptcy: Myth Versus Fact,” Health Affairs 25, no. 2 (2006): W74–W83 (published online), doi: 10.1377/hlthaff.25.w74.

    21. One of our coauthors can report that his wife was denied individual coverage in 2006 for the stated reason that “two visits to a medical specialist in the prior six month period” constituted a statistical predictor of ill health.

    22. For a description of New Jersey's struggles to regulate health care premiums without imposing a mandate, see Jonathan Cohn, “The New Jersey Experience: Do Insurance Reforms Unravel without an Individual Mandate?,” Kaiser Health News, March 2012, http://www.kaiserhealthnews.org/stories/2012/march/21/nj-ind-mandate-case-study.aspx. See also “Junk Health Insurance: Stingy Plans May be Worse than None at All,” Consumer Reports, March 2012.

    23. This is but the briefest review of Medicare's financing. In practice, Medicare recipients are still responsible for considerable out-of-pocket costs: a deductible amounting to the cost of one day of hospital care in Part A, both deductibles and coinsurance in Part B, and quite complicated cost sharing in the drug program, Part D. This helps to explain why some 75% of those participating in Medicare buy supplementary coverage, itself evidence that Americans want to avoid payments at the point of receiving care.

    24. See, for instance, the testimony of Mark E. Miller, Ph.D., executive director, Medicare Payment Advisory Commission, before the Committee on the Budget, U.S. House of Representatives, June 28, 2007. Surprisingly, despite ACA provisions intended to eliminate the gap in cost, private plans continue to cost Medicare more than the traditional program. See Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy (Washington, DC: MedPAC, March 2013), 287–89, http://www.medpac.gov/documents/Mar13_EntireReport.pdf.

    25. See statement of Peter R. Orszag, director, Congressional Budget Office, “The Overuse, Underuse, and Misuse of Health Care,” before the Committee on Finance, U.S. Senate (July 17, 2008), 3–6. See also Agency for Healthcare Research and Quality, Fact Sheet: Improving Health Care Quality, AHRQ Publication No. 02-P032 (Rockville, MD: Agency for Healthcare Research and Quality, September 2002), http://www.ahrq.gov/news/qualfact.pdf For manipulable data on regional variation in the provision of health care, see “The Dartmouth Atlas of Health Care,” http://www.dartmouthatlas.org.

    26. Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, The 2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (Washington, DC: Boards of Trustees, August 5, 2010), 78, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2010.pdf.

    27. As of mid-2013, thirteen governors were on record as saying their states will not participate in the Medicaid expansion, and six others were leaning against doing so. See Advisory Board Company, Daily Briefing, “Where Each State Stands on ACA's Medicaid Expansion,” accessed June 4, 2013, http://www.advisory.eom/Daily-Briefing/2012/11/09/MedicaidMap#lightbox/1.

    28. Julie Appleby and Christopher Weaver, “After Much Scrutiny, HHS Releases Health Insurance Exchange Rules,” Kaiser Health News, July 11, 2011, http://www.kaiserhealthnews.org/stories/2011/july/11/health-insurance-exchange-regulations-released.aspx.

    29. See Theodore Marmor and Jonathan Oberlander, “From HMOs to ACOs: The Quest for the Holy Grail in U.S. Health Policy,” Journal of General Internal Medicine 27, no. 9 (2012): 1215-18.

    30. See, for instance, Ronald A. Paulus, Karen Davis, and Glenn D. Steele, “Continuous Innovation in Health Care: Implications of the Geisinger Experience,” Health Affairs 27, no. 5 (2008): 1235–45.

    31. Theodore Marmor, Jonathan Oberlander, and Joseph White, “Medicare and the Federal Budget: Misdiagnosed Problems, Inadequate Solutions,” Journal of Policy Analysis and Management 30, no. 4 (2011): 928–34, doi: 10.1002/pam.20606; Theodore R. Marmor, Jonathan Oberlander, and Joseph White, “The Obama Administration's Options for Health Care Cost Control: Hope vs. Reality,” Annals of Internal Medicine 150 (2009): 485-89.

    32. RAND Corporation, The Health Insurance Experiment: A Classic RAND Study Speaks to the Current Health Care Reform Debate, Health Research Highlights (Santa Monica, CA: RAND Corporation, 2006), http://www.rand.org/content/dam/rand/pubs/research_briefs/2006/RAND_RB9174.pdf.

    33. In fact, they did more than ignore international experience. Paying attention to what might be learned turned out to be a disqualifier for government service. In 2010–2011, Republicans in the U.S. Senate refused to allow a confirmation vote on President Obama's choice to implement reform, Dr. Donald Berwick. According to the New York Times, “Republicans caricatured Dr. Berwick as an advocate of health care rationing because of comments he had made before coming to Washington He had, for example, lavishly praised the British health care system.” Robert Pear, “Obama's Pick to Head Medicare and Medicaid Resigns Post,” New York Times, November 23, 2011.

    34. Karen Davis, Cathy Schoen, Stephen C. Schoenbaum, Michelle M. Doty, Alyssa L Holmgren, Jennifer L. Kriss, and Katherine K. Shea, Mirror Mirror on the Wall: An International Update on the Comparative Performance of American Health Care (New York: Commonwealth Fund, May 2007), 5, Figure 2, http://www.commonwealthfund.org/usr_doc/1027_Davis_mirror_mirror_international_update_final.pdf See also Theodore R. Marmor, Richard Freeman, and Kieke G. H. Okma, eds., Comparative Studies and the Politics of Modern Medical Care (New Haven, CT: Yale University Press, 2009).

    35. In 2008, Americans averaged 3.9 physician consultations annually, compared to 5.5 in Canada and 5.9 in the United Kingdom. In 2009, the average length of hospitalization for an acute illness was 5.4 days in the United States, compared to 6.8 in the United Kingdom and 7.7 in Canada. See Organisation for Economic Co-operation and Development, OECD. StatExtracts, iLibrary, “Health Status,” 2012, http://stats.oecd.org/index.aspx?DataSetCode=HEALTH_STAT.

    36. Everyone, it seems, includes Americans. When one of our wives developed an infection while in Italy, we visited a clinic, where she saw a doctor without wait and received a prescription that we filled at the on-site pharmacy. When offered a credit card for payment, the doctor looked puzzled. We, no doubt, had similar looks on our faces when the doctor waved us away Such are the lessons we learn about cultural differences when traveling.

    37. For a comparison of American doctors’ salaries with those of their international counterparts (and a criticism of higher wages in America), see Miriam J. Laugesen and Sherry A. Glied, “Higher Fees Paid to US Physicians Drive Higher Spending for Physician Services Compared to Other Countries,” Health Affairs 30, no. 9 (2011): 1647–56, doi 10.1377.

    38. Roundtable on Evidence-Based Medicine, Institute of Medicine, “Excess Administrative Costs,” in The Healthcare Imperative: Lowering Costs and Improving OutcomesWorkshop Series Summary, ed. Pierre L. Yong, Robert S. Saunders, and LeighAnne Olsen (Washington, DC: National Academies Press, 2010). The Center for American Progress reports an even higher estimate—$361 billion spent annually on administrative costs—and characterizes at least half of those costs as unnecessary or excessive. See Elizabeth Wikler, Peter Basch, and David Cutler, Paper Cuts: Reducing Health Care Administrative Costs (Washington, DC: Center for American Progress, June 2012), 1–3, http://www.americanprogress.org/wp-content/uploads/issues/2012/06/pdf/paper-cuts_final.pdf.

    Chapter 8

    1. GDP percentage change based on chained 2005 dollars. Data from U.S. Bureau of Economic Analysis, “Percent Change from Preceding Period (Excel),” in “National Economic Accounts, Gross Domestic Product,” May 30, 2013, http://www.bea.gov/national/index.htm#gdp.

    2. Brian Moynihan, written testimony for the Financial Crisis Inquiry Commission, in “First Public Hearing of the Financial Crisis Inquiry Commission,” day 1, session 1, financial institution representatives, January 13, 2010, 20, http://groups.haas.berkeley.edu/realestate/research/rosen/FCIC_Public_Hearing_2010-0113-Transcript.pdf.

    3. Data from U.S. Bureau of Labor Statistics database, accessed June 13, 2013, http://data.bls.gov/cgi-bin/surveymost.

    4. Financial Crisis Inquiry Commission, Financial Crisis Inquiry Commission Report (Washington, DC: FCIC, November 10, 2010), 391, http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_chapter21.pdf.

    5. U.S. Department of Labor, Employment and Training Administration, “UI Program Outlay,” http://www.doleta.gov/unemploy/chartbook.cfm.

    6. Hannah Shaw and Chad Stone, Key Things to Know about Unemployment Insurance (Washington, DC: Center on Budget and Policy Priorities, December 20, 2011), 1, http://www.cbpp.org/files/12-16-11ui.pdf.

    7. “How Will the $787 Billion Stimulus Package Affect You?,” USA Today, February 17, 2009.

    8. U.S. Government Accountability Office, Unemployment Insurance: Economic Circumstances of Individuals Who Exhausted Benefits, GAO-12–408, Report to the Chairman, Committee on Finance, U.S. Senate (Washington, DC: Government Accountability Office, February 2012), http://www.gao.gov/assets/590/588680.pdf.

    9. For a discussion of the exclusion of certain workers from the UI pool, see Gillian Lester, “Unemployment Insurance and Wealth Redistribution,” UCLA Law Review 49, no. 1 (2001): 334–58, 365–69.

    10. Congressional Budget Office, “Unemployment Insurance Benefits and Family Income of the Unemployed,” November 17, 2010, http://www.cbo.gov/publication/25115.

    11. For a more detailed description of the survey methodology, see U.S. Bureau of Labor Statistics, “Where Do the Statistics Come From?,” in “Labor Force Statistics from the Current Population Survey,” http://www.bls.gov/cps/cps_htgm.htm#where.

    12. For a conservative take on this phenomenon—at least during a Democratic administration—see Aparna Mathur and Matthew H. Jensen, “Why the Real Unemployment Rate Is 15.6%,” American Enterprise Institute, January 6, 2012, http://www.aei.org/press/economics/why-the-real-unemployment-rate-is-156.

    13. There is a residual federal unemployment insurance tax, a 0.8% levy on the first $7,000 of each employee's wages. This $56 per covered worker pays for state administrative costs and helps build up the Extended Benefits program reserve. The federal government share of total UI funding was 17% in prerecession 2006.

    14. State “minimum and maximum rate” and “wages subject to tax” data are from US Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, Significant Provisions of State Unemployment Insurance Laws, Effective January 2012 (Washington, DC: U.S. Department of Labor, January 2012), http://www.ows.doleta.gov/unemploy/content/sigpros/2010–2019/January2012.pdf.

    15. U.S. Department of Labor, Employment and Training Administration, “Unemployment Insurance Chartbook,” Section B.8, http://www.doleta.gov/unemploy/chartbook.cfm.

    16. U.S. Department of Labor, Employment and Training Administration, Significant Provisions of State Unemployment Insurance Laws.

    17. December 2007 data from U.S. Department of Labor, Employment and Training Administration, “Unemployment Insurance Chartbook.”

    18. Richard Nixon, “Statement on Signing the Employment Security Amendments of 1970,” August 10, 1970. For a history of the balance between state and federal regulation of unemployment benefits, see Joseph E. Hight, “Unemployment Insurance: Changes in the Federal-State Balance,” University of Detroit Journal of Urban Law 59 (1982): 615–29.

    19. For a more detailed description of the EUC program, see Julie Tersigni, “Without Restoring Insolvent Unemployment Trust Funds and Increasing Federal Reserves, the 2007–2009 Recessions May Cause the Depletion of the Unemployment Trust Fund,” Rutgers Journal of Law and Public Policy 9 (2012): 702, 712–24. Despite its alarmist title, this article recounts the legislative and political history of the federal legislation.

    20. U.S. Government Accountability Office, Unemployment Insurance: Low-Wage and Part-Time Workers Continue to Experience Low Rates of Receipt, GAO-07-1147 (Washington. DC: Government Printing Office, September 2007), 3, http://www.gao.gov/assets/270/266500.pdf.

    21. Testimony of Martin Feldstein, professor of economics, Harvard University, to the Senate Finance Committee (January 24, 2007), http://www.finance.senate.gov/imo/media/doc/012408mftest.pdf. Professor Feldstein continued: “That would lower earnings and total spending. I think food stamps and SSI payments and TANF are therefore a preferred form of increased transfer.”

    22. Gary Solon, “Labor Supply Effects of Extended Unemployment Benefits,” Journal of Human Resources 14, no. 2 (1979): 247–55. Solon also sees a way UI might lead to higher employment: since a job search is a requirement of receiving benefits, some who might have dropped out of the workforce, possibly retiring or claiming disability, end up finding new jobs.

    23. Robert Barro, “The Folly of Subsidizing Unemployment,” Wall Street Journal, August 30, 2010.

    24. See David R. Howell and Bert M. Azizoglu, “Unemployment Benefits and Work Incentives: The U.S. Labor Market in the Great Recession,” Working Paper 257, Political Economy Research Institute, University of Massachusetts, Amherst, May 2011. See also Bhashkar Mazumder, “How Did Unemployment Insurance Extensions Affect the Unemployment Rate in 2008–10?,” Chicago Federal Letter, April 2011, 285; Rob Valletta and Katherine Kuang, “Extended Unemployment and UI Benefits,” FRBSF Economic Letter, April 19, 2010; Shigeru Fujita, “Economic Effects of the Unemployment Insurance Benefit,” Business Review (Federal Reserve Bank of Philadelphia), fourth quarter 2010; Shigeru Fujita, “Effects of Extended Unemployment Insurance Benefits: Evidence from the Monthly CPS,” Working Paper 10-35/R, Federal Reserve Bank of Philadelphia, January 2011; Jesse Rothstein, “Unemployment Insurance and Job Search in the Great Recession,” Working Paper 17534, National Bureau of Economic Research, October 2011.

    25. Alison M. Shelton, Unemployment Insurance Provisions in the American Recovery and Reinvestment Act of 2009 (Washington, DC: Congressional Research Service, March 4, 2009).

    26.Economic Report of the President (Washington, DC: Government Printing Office, 2012), 204.

    27. Katharine Abraham and Jason Furman, “Reforming Unemployment Insurance to Protect Jobs and Incomes for American Workers,” White House, Council of Economic Advisers, June 18, 2012, http://www.whitehouse.gov/blog/2012/06/18/reforming-unemployment-insurance-protect-jobs-and-incomes-american-workers. Twenty-four states already had work-sharing programs before the new incentive was offered. Economic Report of the President, 204.

    28. Andreas Crimmann, Frank Wießner, and Lutz Bellmann, The German Work-Sharing Scheme: An Instrument for the Crisis, Conditions of Work and Employment Series No. 25 (Geneva: International Labour Office, 2010).

    29. Shaw and Stone, Key Things to Know about Unemployment Insurance.

    30. Gray Rohrer, “Gov. Rick Scott Signs Unemployment Compensation Reform into Law,” Sunshine State News, June 29, 2011, http://www.sunshinestatenews.com/story/gov-rick-scott-signs-unemployment-compensation-reform-law. See also Arthur Delaney, “Rick Scott's Florida Unemployment Reform Shortchanges the Jobless: Formal Complaint,” Huffington Post, May 25, 2012, http://www.huffingtonpost.com/2012/05/25/rick-scott-florida-unemployment-reform_n_1545360.html.

    Chapter 9

    1. Z. Nazarov and C. G. Lee, “Disability Statistics from the Current Population Survey (CPS),” 2012, Cornell University Rehabilitation Research and Training Center on Disability Demographics and Statistics (StatsRRTC), accessed September 12, 2012, http:www.disabilitystatistics.org.

    2. Brian Faler, “Federal Disability Insurance Nears Collapse,” Bloomberg Businessweek, May 31, 2012.

    3. Eduardo Porter, “Disability Insurance Causes Pain,” New York Times, April 24, 2012.

    4. U.S. Congress, Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2009–2013, prepared for the House Committee on Ways and Means and the Senate Committee on Finance, January 11, 2010, 43.

    5. See U.S. Bureau of Labor Statistics, National Compensation Survey, March 2011, Table 17, “Insurance Benefits: Access, Participation, and Take-Up Rates, Civilian Workers.”

    6. Only 2% of disabled workers receive benefits greater than 67% of their previous earnings. See ibid., Table 31, “Long-Term Disability Plans: Fixed Percent of Annual Earnings, Civilian Workers.” March 2011.

    7. Ibid., Table 26, “Short-Term Disability Plans: Duration of Benefits, Civilian Workers.”

    8. Council for Disability Awareness, “The 2012 Council for Disability Awareness Long-Term Disability Claims Review,” 2012, http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2012.asp.

    9. Ann Carrns, “Most Workers Lack Disability Insurance, Survey Finds,” New York Times. May 1, 2012.

    10. Ishita Sengupta, Virginia Reno, John F. Burton Jr., and Marjorie Baldwin, Workers’ Compensation: Benefits, Coverage, and Costs, 2010 (Washington, DC: National Academy of Social Insurance, 2012), 3, 7. Separate federal programs cover federal government civilian employees and specific at-risk workers, including coal miners with black lung disease, longshoremen and harbor workers, employees of overseas U.S. government contractors, energy industry workers, and military veterans. This pushes the breadth of federal coverage to about nine in ten American workers.

    11. H. Allan Hunt, “Benefit Adequacy in State Workers’ Compensation Programs,” Social Security Bulletin 65, no. 4 (2003/2004): 24–30.

    12. David L. Durbin, Dan Corro, and Nurhan Helvacian, “Workers’ Compensation Medical Expenditures: Price vs. Quantity,” Journal of Risk and Insurance 63, no. 1 (1996): 13–33. See also Kenneth W. Schafermeyer, “A Study of the Additional Costs of Dispensing Workers’ Compensation Prescriptions,” Research in Social and Administrative Pharmacy 3, no. 1 (2007): 123–36, which notes the higher average cost of prescriptions procured by workers’ compensation patients compared to cash-paying patients.

    13. An initial goal of workers’ compensation programs was to replace litigation between injured employees and their employers with an easily administrable compensation system. For a brief history, see Price V. Fishback and Shawn Everett Kantor, “The Adoption of Workers’ Compensation in the United States, 1900–1930,” Journal of Law and Economics 41, no. 2 (1998): 305–42.

    14. Sengupta et al., Workers’ Compensation, 5.

    15. Ibid., 41.

    16. Ibid., 43.

    17. Xuguang (Steve) Guo and John F. Burton Jr., “Workers’ Compensation: Recent Developments in Moral Hazard and Benefit Payments,” Industrial and Labor Relations Review 63, no. 2 (2010): 343.

    18. 42 U.S.C. § 424a(a)(5) (2012). See also U.S. Social Security Administration, Annual Statistical Report on the Social Security Disability Insurance Program, 2011 (Washington, DC: Social Security Administration, July 2012), 80.

    19. J. Paul Leigh, Steven Markowitz, Marianne Fahs, and Philip Landrigan, Costs of Occupational Injuries and Illnesses (Ann Arbor: University of Michigan Press, 2000), 195–97.

    20. Sengupta et al., Workers’ Compensation, 9.

    21. See U.S. Bureau of Labor Statistics data, 2013, http://www.bls.gov/iif/oshwc/cfoi/cfch0010.pdf.

    22. Section 223(d)(1) of the Social Security Act, 42 U.S.C. § 423(d)(1)(A).

    23. Ibid. The wage ceiling is adjusted annually to account for inflation. The figure for 2012 was $1,010; this was increased slightly, to $1,040, in 2013. For current and historical ceiling information, see U. S. Social Security Administration, “Automatic Determination in Recent Years,” http://www.ssa.gov/OACT/COLA/autoAdj.html.

    24. See U.S. Social Security Administration, “Part III: Listing of Impairments,” in “Disability Evaluation under Social Security (Blue Book—September 2008),” http://www.ssa.gov/disability/professionals/bluebook/listing-impairments.htm.

    25. U.S. Social Security Administration, Annual Statistical Report on the Social Security Disability Insurance Program, 2011.

    26. The average processing time for a hearing before an ALJ was about one year in 2012. See U.S. Social Security Administration, “National Hearings Average Processing Time (FY 2008–FY2012),” http://ssa.gov/appeals/charts/National_Hearing_APT_FY2008-FY2012_4th_Qtr.pdf. Of course, the year an applicant spends awaiting the processing of a claim before the ALJ is tacked onto the time spent pursuing the claim through the state agency in the first instance.

    27. U.S. Social Security Administration, Annual Statistical Report on the Social Security Disability Insurance Program, 2011, 126, Table 50.

    28. U.S. Social Security Administration, “2013 Agency Budget Overview,” 2012, 13, http://www.ssa.gov/budget/2013BudgetOverview.pdf.

    29. U.S. Social Security Administration, Office of the Inspector General, “Cooperative Disability Investigations (CDI),” accessed November 20, 2012, http://oig.ssa.gov/cooperative-disability-investigations-cdi.

    30. U.S. Social Security Administration, Annual Statistical Report on the Social Security Disability Insurance Program, 2011, 131, Table 53.

    31. Ibid., 21, Table 3.

    32. Dan Black, Kermit Daniel, and Seth Sanders, “The Impact of Economic Conditions on Participation in Disability Programs: Evidence from the Coal Boom and Bust,” American Economic Review 92, no. 1 (2002): 27–50. See also David H. Autor and Mark G. Duggan, “The Rise in the Disability Rolls and the Decline in Unemployment,” Quarterly Journal of Economics 118, no. 1 (2003): 157–205.

    33. See Mark G Duggan and Scott A. Imberman, “Why Are the Disability Rolls Skyrocketing? The Contribution of Population Characteristics, Economic Conditions, and Program Generosity,” in Health at Older Ages: The Causes and Consequences of Declining Disability among the Elderly, ed. David M. Cutler and David A. Wise (Chicago: University of Chicago Press, 2009).

    34. Ibid., 339.

    35. On October 9, 1984, President Reagan signed into law H.R. 3755 (Public Law 98–460), the Social Security Disability Benefits Reform Act of 1984. The president's signing statement noted: “This legislation, which has been formulated with the support of the Administration and passed by unanimous vote in both Houses of Congress, should restore order, uniformity, and consensus in the disability program. It maintains our commitment to treat disabled American citizens fairly and humanely while fulfilling our obligation to the Congress and the American taxpayers to administer the disability program effectively.” Ronald Reagan, “Statement on Signing the Social Security Disability Benefits Reform Act of 1984,” October 9, 1984, http://www.reagan.utexas.edu/archives/speeches/1984/100984d.htm.

    36. U.S. Social Security Administration, Annual Statistical Report on the Social Security Disability Insurance Program, 2011, 25, Table 6.

    37. Congressional Budget Office, Policy Options for the Social Security Disability Program (Washington, DC: Congressional Budget Office, July 2012), 10.

    38. U.S. Social Security Administration, Supplemental Security Income Annual Statistical Report, 2011 (Washington, DC: Social Security Administration, September 2012), 22, Table 5.

    39. Medicaid beneficiaries residing in nursing homes do not qualify for SSI cash benefits beyond $30 per month. This subsidy finances “small comfort items not provided by the institution.”

    40. U.S. Social Security Administration, Supplemental Security Income Annual Statistical Report, 2011, Table 15.

    41. Ibid., 153, Table 77.

    42. Ibid., 137, Table 69.

    43. Center on Budget and Policy Priorities, “Policy Basics: Introduction to Supplemental Security Income,” January 13, 2011, http://www.cbpp.org/cms/?fa=view&id=3370.

    44. Information in this section is adapted from U.S. Social Security Administration, Office of Retirement and Disability Policy, “Annual Statistical Supplement, 2012,” accessed November 21, 2012, http://www.ssa.gov/policy/docs/statcomps/supplement/2012/tempdisability.html.

    45. Authors’ calculations from Organisation for Economic Co-operation and Development, Social Expenditure Database (SOCX), Aggregated Data, http://www.oecd.org/els/social/expenditure.

    46. See Richard V. Burkhauser and Mary C. Daly, The Declining Work and Welfare of People with Disabilities: What Went Wrong and a Strategy for Change (Washington, DC: American Enterprise Institute Press, 2011).

    47. Organisation for Economic Co-operation and Development, Directorate for Employment, Labour and Social Affairs, Sickness, Disability and Work: Keeping on Track in the Economic Downturn, background paper (Paris: OECD, 2009), 40, Table A2.11.

    48. The supercommittee failed to agree on the plan of its cochairs, Democrat Erskine Bowles and Republican Alan Simpson. See the draft document Co-chairs’ Proposal, November 2010, http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf.

    Chapter 10

    1. See Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, Income, Poverty, and Health Insurance Coverage in the United States: 2011 (Washington, DC: Government Printing Office, 2012), 15.

    2. See U.S. Social Security Administration, “Historical Background and Development of Social Security,” accessed November 20, 2012, http://www.ssa.gov/history/briefhistory3.html. The Civil War pension program provided benefits for disabilities “incurred as a direct consequence of … military duty.” This program differed from the military pensions that had existed since the American Revolution in that widows and orphans could receive pensions equal to those that would have been paid to their deceased soldier husbands/fathers had the men been disabled instead of killed In 1890, Congress severed the link with military service and made any Civil War veteran eligible to receive a pension. In 1906, Congress made old age a sufficient qualification for benefits, making the program more similar to the later Social Security program. Ibid.

    3. See Patrick W. Seburn, “Evolution of Employer-Provided Defined Benefit Provisions,” Monthly Labor Review 114 (December 1991): 17–18.

    4. Laura B. Shrestha, Life Expectancy in the United States (Washington, DC: Congressional Research Service 2006), 3.

    5. See Revenue Act of 1921, Public Law 67–98, 42 Stat. 310 (1921), as described in Seburn, “Evolution of Employer-Provided Defined Benefit Provisions,” 18.

    6. Michael J. Graetz and Jerry L. Mashaw, True Security-Rethinking American Social Insurance (New Haven, CT: Yale University Press 1999), 105–6.

    7. “Studebaker Shutdown Dims Bright Future,” New York Times, August 10, 1964.

    8. Robert Metz, “Workers Finding Pensions Empty,” New York Times, August 16, 1964, sec. 3, 1.

    9. See John W. Thompson, “Defined Benefit Plans at the Dawn of ERISA,” U.S. Bureau of Labor Statistics, March 30, 2005, http://www.bls.gov/opub/cwc/cm20050325ar01pl.htm.

    10. Pension Benefit Guaranty Corporation, 2011 PBGC Annual Report (Washington, DC: PBGC, 2011), iv, http://www.pbgc.gov/documents/2011-annual-report.pdf.

    11. Joan Gralla, “U.S. Munis Face $2 Trillion in Unfunded Pension Costs,” Reuters, July 2, 2012, http://www.reuters.com/article/2012/07/02/us-usa-municipals-moodys-idUSBRE86119220120702.

    12. Roger Lowenstein, “The End of Pensions,” New York Times, October 30, 2005, http://www.nytimes.com/2005/10/30/magazine/30pensions.html?pagewanted=print&_r=0.

    13. See Employee Benefit Research Institute, History of 401(k) Plans: An Update (Washington, DC: Employee Benefit Research Institute, February 2005), 2, http://www.ebri.org/pdf/publications/facts/0205fact.a.pdf.

    14. See Jacob S. Hacker, The Great Risk Shift (Oxford: Oxford University Press, 2006).

    15. See Zvi Bodie, Alan J. Marcus, and Robert C. Merton, “Defined Benefit versus Defined Contribution Pension Plans: What Are the Real Trade-Offs?,” in Pensions in the U.S. Economy, ed. Zvi Bodie, John B. Shoven, and David A. Wise (Chicago: University of Chicago Press 1988), 139. It is argued that the PBGC does not need to cover defined-contribution plans because, unlike defined-benefit plans, they are by definition fully funded. Ibid. That fact does not, however, address the risk that the pension fund will perform poorly, as happened in the case of Enron, for example. Ibid., 145.

    16. U.S. Congress, Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2009–2013, prepared for the House Committee on Ways and Means and the Senate Committee on Finance, January 11, 2010, 43.

    17. Leonard E. Burman, William G. Gale, Matthew Hall, and Peter R. Orszag, “Distributional Effects of Defined Contribution Plans and Individual Retirement Accounts,” National Tax Journal 57, no. 3 (2004): 2, 25–26.

    18. Investment Company Institute, “Retirement Assets Total $18.5 Trillion in Second Quarter 2012,” last revised September 26, 2012, http://www.ici.org/research/stats/retirement/ret_12_q2.

    19. Authors’ calculations based on U.S. Census Bureau, Statistical Abstract of the United States: 2012 (Washington, DC: Government Printing Office, 2012), Table 59.

    20. Craig Copeland, Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2010, EBRI Issue Brief 363 (Washington, DC: Employment Benefit Research Institute, October 2011), 8–9.

    21. IRAs come in a variety of forms—traditional, Roth, SEP, SIMPLE, self-directed—with differing provisions, rules, and benefits. For our purposes, we will collapse the varieties into one catchall category.

    22. See U.S. Department of Labor, Employee Benefits Security Administration, “What You Should Know about Your Retirement Plan,” accessed November 24, 2012, http://www.dol.gov/ebsa/publications/wyskapr.html#content.

    23. See Economic Recovery Tax Act of 1981, Public Law 97–34, 95 Stat. 172 (1981).

    24. Internal Revenue Service, “Retirement Topics—IRA Contribution Limits,” accessed November 24, 2012, http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits.

    25. “The Role of IRAs in U.S. Households’ Saving for Retirement, 2011,” ICI Research Perspective 17, no. 8 (November 2011): 3.

    26. Investment Company Institute, “Retirement Assets Total $18.5 Trillion.” Another $1.6 trillion is held in private retirement annuities. This is the domain of those with significant savings, likely the top 5% of the income-earning population. No tax subsidy exists for the purchase of annuities.

    27. “Appendix: Additional Data on IRA Ownership in 2011,” ICI Research Perspective 17, no. 8A (November 2011): 7, 9.

    28. See Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2009–2013, 43. The tax deduction for traditional IRA contributions was phased out for singles and heads of households with workplace retirement plans who had modified adjusted gross incomes between $58,000 and $68,000 in 2012 ($92,000 to $112,000 for couples). For IRA owners without retirement plans at work, the deduction was phased out if the couple's income was between $173,000 and $183,000.

    29. “Appendix: Additional Data on IRA Ownership,” 4.

    30. Investment Company Institute, 2012 Investment Company Fact Book: A Review of Trends and Activity in the U.S. Investment Company Industry, 52nd ed. (Washington, DC: ICI, 2012), 108.

    31. Ibid.

    32. See U.S. Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2011 (Washington, DC: Government Printing Office, 2011), 1, http://www.ssa.gov/policy/docs/statcomps/supplement.

    33. Ibid., Table 2.A3.

    34. Ibid., Table 4.A1.

    35. Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2009–2013, 45.

    36. U.S. Social Security Administration, Annual Statistical Supplement, Table 4.A1.

    37. Ibid., Table 5.A1.

    38. U.S. Social Security Administration, “Cost-of-Living Adjustment,” last revised October 16, 2012, http://www.ssa.gov/cola. In 2011, due to negligent inflations, the cost-of-living adjustment was 0.0%. In 2012, it crept up to 1.7%.

    39. U.S. Social Security Administration, Annual Statistical Supplement, 2.

    40. See notes 54–55 below and the accompanying discussion.

    41. U.S. Social Security Administration, “Primary Insurance Amount,” last revised October 16, 2012, http://www.ssa.gov/oact/cola/piaformula.html.

    42. See U.S. Social Security Administration, Annual Statistical Supplement, 1. Mutual fund and insurance product administrative costs are typically in the range of 3% to 15% of revenues. Their smaller pool size, large marketing and sales expenses, and need to generate profits prevent most from achieving anywhere near SSA's efficiency. An exception to this rule is Vanguard's family of index funds, which often but not always have administrative expenses below 1%.

    43. U.S. Social Security Administration, Annual Report of the Supplemental Security Income Program (Baltimore: Social Security Administration, 2012), 37–38, Table IV.B6.

    44. Ibid., 109, Table V.F1.

    45. Ibid., 27, Table IV.A2.

    46. Ibid., 45, Table IV.C1.

    47. U.S. Bureau of Labor Statistics, “The Editor's Desk: Labor Force Participation,” Current Population Survey, July 29, 2008, http://www.bls.gov/opub/ted/2008/jul/wk4/art02.htm.

    48. “Transamerica Study Reveals the New Retirement: Working,” Business Wire, May 17, 2011, http://www.businesswire.com/news/home/20110517006617/en/Transamerica-Study-Reveals-Retirement-Working.

    49. U.S. Bureau of Labor Statistics, “Older Workers,” Current Population Survey, July 2008, http://www.bls.gov/spotlight/2008/older_workers.

    50. Ibid.

    51. Paul N. Van de Water and Arloc Sherman, Social Security Keeps 21 Million Americans Out of Poverty: A State-by-State Analysis (Washington, DC: Center on Budget and Policy Priorities, October 16, 2012), 1, http://www.cbpp.org/files/10-16-12ss.pdf.

    52. U.S. Social Security Administration, Social Security Programs throughout the World: Asia and the Pacific, 2010 (Washington, DC: Government Printing Office, 2010); U.S. Social Security Administration, Social Security Programs throughout the World: Europe, 2012 (Washington, DC: Government Printing Office, 2012).

    53. Organisation for Economic Co-operation and Development, Pensions at a Glance 2011: Retirement-Income Systems in OECD and G20 Countries (Paris: OECD, 2011), 118–29.

    54. Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (Washington, DC: Government Printing Office, 2012), 12.

    55. Ibid., 3–5, 11.

    56. Ibid., 4.

    57. Congressional Budget Office, Social Security Policy Options (Washington, DC: Congressional Budget Office, July 2010), 18–19, http://www.cbo.gov/publication/21547.

    58. Board of Trustees, Annual Report of the Board, 4.

    59. Congressional Budget Office, Social Security Policy Options, 32, 38.

    60. Ibid., 31, 37.

    61. Ibid., 20–23, 35.

    Chapter 11

    1. Suzanne Mettler, Soldiers to Citizens: The G.I. Bill and the Making of the Greatest Generation (New York: Oxford University Press, 2005).

    2. In 2012, the U.S. Treasury lost just over $100 billion annually from the mortgage interest deduction. By way of comparison, the entire operating budget for the Department of Housing and Urban Development, including all tenant-assistance programs, was $43.4 billion in 2012.

    3. When tax expenditures promoting social welfare programs are factored in, the United States spends just over 30% of its GDP on “social expenditures,” a figure met or matched by only nine other OECD countries. When tax expenditures are included as social spending, the United States dedicates a larger percentage of its GDP to social spending than several countries known for their generous social safety nets, including Norway, Canada, and Spain. See Organisation for Economic Co-operation and Development, Social Spending after the Crisis (Paris: OECD, 2012), 8, Chart 7. For general discussion of the aptly named “hidden welfare state,” see Christopher Howard, The Welfare State Nobody Knows: Debunking Myths about U.S. Social Policy (Princeton, NJ: Princeton University Press, 2007); Christopher Howard, The Hidden Welfare State: Tax Expenditures and Social Policy in the United States (Princeton, NJ: Princeton University Press, 1997).

    4. Rudolf Klein and Theodore R. Marmor, “Reflections on Policy Analysis: Putting It Together Again,” in The Oxford Handbook of Political Science, ed. Robert E. Goodin (New York: Oxford University Press, 2009).

    5. The role of southern senators, who were bent on preserving existing racial stratification in the South, is discussed in Ira Katznelson, Kim Geiger, and Daniel Kryder, “Limiting Liberalism: The Southern Veto in Congress, 1933–1950,” Political Science Quarterly 108, no. 2 (1993): 283–306. See also Marc Linder, “Farm Workers and the Fair Labor Standards Act: Racial Discrimination in the New Deal,” Texas Law Review 65 (1987): 1353–80.

    Chapter 12

    1. Critics have persisted in this language of unaffordability for years. See, for example, the claim that “federal entitlement programs, [unless restructured], will in future decades grow so large relative to our national economy that they will be patently unsustainable no matter how they are financed.” Peter Peterson and Neil Howe, On Borrowed Time: On How the Growth in Entitlement Spending Threatens America's Future (San Francisco: ICS Press, 1988), 43.

    2. For the range of commentary, see Peter J. Ferrera and Michael Tanner, A New Deal for Social Security (Washington, DC: Cato Institute, 1998); Stuart M. Butler, “Medicare Price Controls: The Wrong Perspective,” Health Affairs 17, no. 1 (1998): 72–74. For an example of a defense that is less alarmist, see Sam Beard, Jerry L. Mashaw, and Theodore Marmor, “Is There a Social Security Crisis?,” American Prospect 8, no. 30 (January 1997).

    3. The prescription drug benefit, known as Medicare Part D, is discussed in more detail in Chapter 7. The 2003 legislation touched on areas beyond Part D. See Medicare Modernization Act of 2003, Public Law 108–173, 117 Stat. 2066 (2003); and Susan Adler Channick, “The Medicare Prescription Drug, Improvement, and Modernization Act of 2003: Will It Be Good Medicine for U.S. Health Policy?,” Elder Law Journal 14 (2006): 246–56.

    4. See “Social Security Plan Hits Shoals,” Los Angeles Times, June 27, 2005, A1. For examples of President Bush's rhetoric on the subject, see George W. Bush, “Remarks in a Discussion on Strengthening Social Security in Greece, New York,” Weekly Compilation of Presidential Documents 41, no. 21 (May 30, 2005); and the New York Times transcript, “We Must Pass Reforms That Solve the Problems of Social Security,” New York Times, February 3, 2005, 22.

    5. For different treatments see Michael J. Graetz and Jerry L. Mashaw, True Security: Rethinking American Social Insurance (New Haven, CT: Yale University Press, 1999); Nancy Altman, The Battle for Social Security: From FDR's Vision to Bush's Gamble (New York: John Wiley, 2005); Timothy Stoltzfus Jost, “Private or Public Approaches to Insuring the Uninsured: Lessons from International Experience with Private Insurance,” New York University Law Review 76 (May 2001): 419–64.

    6. Graetz and Mashaw, True Security, 15–66.

    7. See, for example, James Tobin, “The Future of Social Security: One Economist's Assessment,” in Social Security: Beyond the Rhetoric of Crisis, ed. Theodore R. Marmor and Jerry L. Mashaw (Princeton, NJ: Princeton University Press, 1988). See also Theodore R Marmor, “Coping with a Creeping Crisis: Medicare at Twenty,” in Marmor and Mashaw, Social Security.

    8. The idea that benefits are “earned” through contributions links to a cultural understanding of “entitlement” programs where both beneficiaries and the wider public agree that the benefits are deserved. There is, by contrast, a budgetary conception of entitlement, where recipients are to receive benefits unless changes in legislation justify denial. These two interpretations are different, but in twenty-first-century America, the second is in wider use. See Jackie Calmes, “Misperceptions of Benefits Make Trimming Them Harder,” New York Times, April 3, 2013, A3. Calmes cites a historical expert who points out that the “term entitlement first appeared in the 1950s … and was in common use in the 1970s,” but that use was in the first sense of a culturally acceptable benefit.

    9. For illustrations, see Edward D. Berkowitz, Robert Ball and the Politics of Social Security (Madison: University of Wisconsin Press, 2003); Theodore R. Marmor, The Politics of Medicare, 2nd ed. (New York: Aldine de Gruyter, 2000); Robert M. Ball, “The Original Understanding on Social Security: Implications for Later Developments,” in Marmor and Mashaw, Social Security, 17–40; Altman, Battle for Social Security.

    10. For examples of such language, see David Durenberger, “Senator Durenberger's Crusade: Long-Term Care for All Americans,” interview by Val J. Halamandaris, Caring 18, no. 9 (September 1999): 22–28; Breaux-Thomas National Bipartisan Commission on the Future of Medicare, “Building a Better Medicare for Today and Tomorrow,” March 16, 1999, http://thomas.loc.gov/medicare/bbmtt31599.html. For a discussion, see Theodore R. Marmor, “How Not to Think about Medicare Reform,” Journal of Health Politics, Policy, and Law 26, no. 1 (February 2001): 107–17.

    11. Martin Feldstein, “Rethinking Social Insurance,” Presidential Address to the American Economic Association, January 8, 2005, http://www.nber.org/feldstein/aeajan8.pdf.

    12. Philip J. Harmelink and Janet Furman Speyrer, “Social Security: Rates of Return and the Fairness of Benefits,” Cato Journal 14, no. 1 (Spring/Summer 1994): 37–55; Martin Feldstein and Andrew Samwick, “Social Security Rules and Marginal Tax Rates,” National Tax Journal 45, no. 1 (1992): 1–22.

    13. Theodore R. Marmor and Gary J. McKissick, “Medicare's Future: Fact, Fiction and Folly,” American Journal of Law & Medicine 26, nos. 2–3 (2000): 225–53; Adam Negourney and Janet Elder, “Bush Doesn't Share Public's Priorities, New Poll Indicates,” New York Times, March 3, 2005, A6; Richard Morin and Dale Russakoff, “Social Security Problems Not a Crisis, Most Say,” Washington Post, February 10, 2005, A01.

    14. National Committee to Preserve Social Security and Medicare, “Disability Insurance and Survivors’ Benefits,” August 2011, http://www.ncpssm.Org/Document/ArticleID/740#.UM4v6XPjnvE; Greg Anrig Jr., “Ten Myths about Social Security,” Century Foundation, January 25, 2005, 3, http://old.tcf.org/publications/2005/1/pb507.

    15. U.S. Social Security Administration, Management's Discussion and Analysis (Washington, DC: Government Printing Office, 2005), http://www.ssa.gov/finance/2005/MDA.pdf.

    16. Lawrence H. Thompson, “Paying for Retirement: Sharing the Gain,” in In Search of Retirement Security: The Changing Mix of Social Insurance, Employee Benefits, and Individual Responsibility, ed. Teresa Ghilarducci, Van Doorn Ooms, John L. Palmer, and Catherine Hill (New York: Century Foundation Press, 2005), 115–25.

    17. Paul C. Light, The True Size of Government (Washington, DC: Brookings Institution, 1999). The Greenspan Commission is discussed in Chapter 9.

    18. Peter Passell, “Investing It: Can Retirees’ Safety Net be Saved?,” New York Times, February 18, 1996, sec. 3, 1.

    19. For a discussion, see Theodore R. Marmor, Jerry L. Mashaw, and Philip L. Harvey America's Misunderstood Welfare State: Persistent Myths, Enduring Realities (New York: Basic Books, 1990), especially chap. 1.

    20. David Langer, “Does the Social Security Crisis Add Up?,” New York Times, January 16, 2005. See also David Langer, testimony before the Special Committee on Aging, U.S. Senate, June 30, 1998, http://aging.senate.gov/publications/6301998.pdf.

    21. U.S. Social Security Administration, “Social Security Board of Trustees: No Change in Projected Year of Trust Fund Reserve Depletion,” press release, May 31, 2013, http://www.ssa.gov/pressoffice/pr/trustee13-pr.html. For a discussion of Social Security financing, see Robert M. Ball with Thomas N. Bethell, Straight Talk about Social Security (New York: Century Foundation Press, 1998), 2.

    22. The Social Security Advisory Board gives projections for such minor adjustments. See Social Security Advisory Board, Social Security: Why Action Should Be Taken Soon (Washington, DC: Government Printing Office, December 2010), 37–44, http://www.ssab.gov/Documents/Sooner_Later_2010.pdf.

    23. Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, The 2012 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (Washington, DC: Boards of Trustees, April 23, 2012), 28–34, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2012.pdf.

    24. For the forecast levels of the Medicare trusts, see ibid. Jonathan Oberlander discusses the political discourse surrounding Medicare in his aptly titled book The Political Life of Medicare (Chicago: University of Chicago Press, 2003); see also Marmor, “How Not to Think about Medicare Reform.”

    25. Cristina Boccuti and Marilyn Moon, “Comparing Medicare and Private Insurers: Growth Rates in Spending over Three Decades,” Health Affairs 22, no. 2 (2003): 235.

    26. See John Holahan and Stacey McMorrow, Medicare, Medicaid and the Deficit Debate (Washington, DC: Urban Institute, April 2012), 3, http://www.urban.org/UploadedPDF/4l2544-Medicare-Medicaid-and-the-Deficit-Debate.pdf; Medicare Payment Advisory Commission, Health Care Spending and the Medicare Program: A Data Book (Washington, DC: MedPAC, June 2012), 7, Figure 1–7, http://www.medpac.gov/documents/Jun12DataBookEntireReport.pdf.

    27. Theodore R. Marmor, “From the United States,” in Dutch Welfare Reform in an Expanding Europe: The Neighbours’ View, ed. Erik de Gier, Abram de Swaan, and Machteld Ooijens (Amsterdam: Het Spinhuis, 2004); David A. Squires, Explaining High Health Care Spending in the United States: An International Comparison of Supply, Utilization, Prices, and Quality, Publication 1595 (New York: Commonwealth Fund, May 2012), http://www.commonwealthfund.Org/~/media/Files/Publications/Issue%20Brief/2012/May/1595_Squires_explaining_high_hlt_care_spending_intl_brief.pdf.

    28. For some illustrations, see Stuart Butler and David B. Kendall, “Expanding Access and Choice for Health Care Consumers through Tax Reform,” Health Affairs 18, no. 6 (1999): 45–57; Henry J. Aaron and Robert D. Reischauer, “The Medicare Reform Debate: What Is the Next Step?,” Health Affairs 14, no. 4 (1995): 8–30.

    29. For a description of HSAs, see Jennifer L. Spiegel, “Employee Driven Health Care: Health Savings Accounts, More Harm than Good,” University of Pennsylvania Journal of Labor and Employment Law 8, no. 1 (2005): 221–26. See generally Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108–173.

    30. American Academy of Actuaries, Medical Savings Accounts: Cost Implications and Design Issues (Washington, DC: American Academy of Actuaries, May 1995), 2–8. See also Marilyn Moon, Len M. Nichols, and Susan Wall, “Winners and Losers under Medical Savings Accounts,” Spectrum 70, no. 1 (1997): 26–29; Len M. Nichols, Marilyn Moon, and Susan Wall, Tax-Preferred Medical Savings Accounts and Catastrophic Health Insurance Plans: A Numerical Analysis of Winners and Losers (Washington, DC: Urban Institute, April 1996), http://www.urban.org/UploadedPDF/winlose.pdf.

    31. See Holahan and McMorrow, Medicare, Medicaid and the Deficit Debate, 14; “Health Policy Brief Medicare Advantage Plans,” Health Affairs, June 15, 2011, 3, http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_48.pdf; Brian Biles, Giselle Casillas, Grace Arnold, and Stuart Guterman, The Impact of Health Reform on the Medicare Advantage Program: Realigning Payment with Performance (New York: Commonwealth Fund, October 2012), http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2012/Oct/1637_Biles_impact_hlt_reform_Medicare_Advantage_rb.pdf.

    32. See Theodore Marmor, “Deficits, Medicare, and Cost Control,” Hastings Center, Health Care Cost Monitor blog, accessed June 11, 2013, http://healthcarecostmonitor.thehastingscenter.org/theodoremarmor/deficits-medicare-and-cost-control.

    33. For discussion of the history of Medicare, see Marmor, Politics of Medicare.

    34. Ibid., 10.

    35. Medicare's Part B—the insurance against physician expenses—was a complete surprise in legislative deliberations of 1965. It was suggested by former opponents of Medicare who realized that the Democratic electoral landslide of 1964 made delay in Medicare's hospital insurance impossible and provided incentives to expand Medicare. To dissuade further expansion, Democrat Wilbur Mills, chairman of the House Ways and Means Committee, and ranking Republican John Byrnes led a strategy that produced Part B and the Medicaid program, neither of which had been anticipated by the incremental strategists in the Johnson administration. Although the American Medical Association was not part of the detailed bargaining, Congress declined to use a fee schedule, which would have allowed the government to set prices for services provided to Part B recipients. Instead, doctors remained able to charge their “usual and customary” fees so long as the fees were “reasonable,” thus they retained tremendous leeway in pricing their services. See ibid., 80–81.

    36. Aaron and Reischauer, “Medicare Reform Debate,” 20.

    37. Ibid., 15.

    38. Boccuti and Moon, “Comparing Medicare and Private Insurers,” 230–37; Marmor and McKissick, “Medicare's Future.”

    39. Henry J. Aaron, statement before the House Ways and Means Committee, April 27, 2012, 7–8, http://waysandmeans.house.gov/uploadedfiles/aaron_testimony_final_4-27-2012.pdf.

    40. For a discussion of the political context that produced the MMA, see Jonathan Oberlander, “Through the Looking Glass: The Politics of the Medicare Prescription Drug, Improvement, and Modernization Act,” Journal of Health Politics, Policy, and Law 32, no 2 (2007): 187–219; Timothy S. Jost, “The Most Important Health Care Legislation of the Millennium (So Far): The Medicare Modernization Act,” Yale Journal of Health Policy, Law, and Ethics 5, no. 1 (2005): 437–49; Jacob S. Hacker and Theodore R. Marmor, “Medicare Reform: Fact, Fiction, and Foolishness,” Public Policy and Aging Report 13 (2004): 20–23; Bruce C. Vladeck, “The Struggle for the Soul of Medicare,” Journal of Law, Medicine, and Ethics 32, no. 3 (2004): 410–15.

    41. Theodore Marmor, Jonathan Oberlander, and Joseph White, “The Obama Administration's Options for Health Care Cost Control: Hope Versus Reality,” Annals of Internal Medicine 150, no. 7 (2009): 485–89.

    42. The Supreme Court's decision in the health care cases, National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012), cast some doubt over the ACA's extension of Medicaid. It is clear that any state wishing to provide its residents the increased access to Medicaid the ACA provides will be able to do so. At the same time, states wishing to resist the expansion of Medicaid—whether for philosophical, political, or budgetary reasons—will be able to do so as a result of the Supreme Court's ruling, an outcome not contemplated by Congress when it enacted the ACA. See ibid., 2601–09.

    43. For a cautionary tale about Europe's experience with insurance exchanges, the centerpiece of the ACA, see Ewout van Ginneken and Katherine Swartz, “Implementing Insurance Exchanges—Lessons from Europe,” New England Journal of Medicine 367, no. 8 (2012): 691-93.

    Epilogue

    1. Theodore R. Marmor, Jerry L. Mashaw, and Philip Harvey, America's Misunderstood Welfare State: Persistent Myths, Enduring Realities (New York: Basic Books, 1990), 237.


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