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Misleading numbers about the social safety net

The far right's latest ill-informed complaint about human services spending

Raleigh's News & Observer ran a "Point of View" column [1] this past week by a staffer over at the state Republican Party annex known as the J.W. Pope Civitas Institute. According to the author, North Carolina social "safety net" spending is out of control. Here's the gist of his flawed reasoning:

According to the author's research and calculations, North Carolina's Department of Health and Human Services (DHHS) spent $14.2 billion in 2007 (about $10 billion of this figure came from the federal government). When the author divided this number up by the number of people that by his count received some sort of assistance, it came out to a figure of around $5,500 per person. The author then multiplied this number by four to reach his shocking (shocking!) conclusion that North Carolina spends $22,000 per year for every "recipient family of four." This is more, he notes, than the federal poverty level for such a family.

Setting the record straight

Let's examine the conclusions that the author seems to hope his readers will draw from his back-of-the-envelope math.

1. Is HHS over-funded? Let's assume for the moment that the $22,000 ($5,500 per person) figure is accurate. At first blush, it does catch one's eye. Now, however, let's dig a little deeper. Where exactly does that money go?

Well, first and foremost it goes to pay for Medicaid – the public health insurance system for low-income North Carolinians. At least two-thirds of the DHHS budget goes to this program. This system provides healthcare for 1.7 million people – more than one out of every six North Carolinians. According to the legislature's Fiscal Research Division [2],  more than two-thirds of Medicaid funding is spent on just over a quarter of the Medicaid recipients – the aged, blind and disabled – that is to say the least healthy, most needy, most expensive people to cover. In 2006, the average annual cost per disabled Medicaid recipient was $14,219. For the elderly, the cost was $10,305 per person. Has Civitas checked out the cost of an emergency room visit, nursing home costs [3], or typical end-of-life expenses [4] lately?  

In short, it's expensive to pay for the care of elderly and disabled people in long-term care. One-third of Medicaid goes to long-term care expenses. More than a sixth of all Medicaid spending (roughly 10% of the entire HHS budget!) goes to pay for prescription drugs. Yes, health care is expensive – incredibly so – but that's true for private health care too. Indeed, Medicaid is actually doing a better job of keeping costs under control than the private health care system. Moreover, real national healthcare reform that puts care and service ahead of profits for drug companies and doctors could go a very long way to reducing Medicaid expenditures. That has been the experience in other western democracies [5].

But, of course, there is a lot more to HHS than just Medicaid [6]. The Department maintains a vast mental health system, childcare programs, public health programs, adoption services, substance abuse services, nutrition programs, child support enforcement programs, vocational rehabilitation and a host of other services. And, as waiting lists and overworked social workers can attest, many of these systems are under-funded.

In short, yes, DHHS spends a sizable chunk of change, but it's clear that the lion's share of it goes toward care of society's most vulnerable citizens – the elderly and disabled. If Civitas wants to complain about such spending, they ought to specify plainly and specifically which of such services they propose to end.

2. Is DHHS a "Cadillac" program? One of the tried and true tactics of the far right is to claim that North Carolina has an overly generous safety net – that somehow those of low-income who get assistance are the recipients of some kind of enormous windfall – hence, the "$22,000 for a family of four" figure. But, of course, we've already seen how most of these dollars do not go to "families of four." Most go toward the care of elderly and disabled – in long-term care facilities and in hospitals.

Perhaps the next time a Civitas staffer visits one of his or her elderly relatives in a Medicaid supported nursing home, he or she can make a list of all of the specific ways in which that facility should reduce the level of services. What'll it be, guys? Should we start bunking people six to a room? How about upping the nurse-to-patient ratios? No more name-brand raisin bran?

As Chris Fitzsimon noted earlier this year [7]:

"The attack on Medicaid by the Bush Administration is not new. Politicians love to bash the program and complain about its rising costs. In North Carolina that often includes parroting the misleading claims of the market fundamentalist crowd that the state's Medicaid program is overly generous and includes too many optional benefits that the state does not have to provide.

Those benefits include services like include eye care, prosthetics, prescription drugs, speech therapy, and ambulance service, which are hardly optional for people who need them."

3. Providing cash in lieu of benefits – Should we just scrap all safety net programs and guarantee every individual $5,500 per year? Richard Nixon actually suggested something akin to this [8] during his first term and while the $22,000 figure is actually only about half of the actual poverty line [9], there is a certain superficial appeal to the idea. But, again dig a little deeper, and it's obvious why the idea is absurd.

First of all, North Carolina has just devoted the last 10-plus years to eliminating traditional cash assistance "welfare" at the insistence of political conservatives. Although it was never as big as the right wing made it out to be, "welfare" (or Temporary Assistance to Needy Families as it's now known) is today comparatively tiny – with only around 10,000 adults and 45,000 children [10] receiving such assistance. Moreover, benefits are paltry – $272 per month for a family of three. In 2006, the whole program only cost $94 million or a little over 0.6% of the HHS budget.

More to the point, as was discussed above, North Carolina's modern social safety net isn't evenly distributed amongst those who need assistance. The vast majority goes to a relatively small group of very needy people for relatively expensive services like hospitalization and long-term care. What good would it do to provide a developmentally disabled adult or senior with dementia $5,500 per year or $450 per month? How exactly would they purchase a place to live and private health insurance on the open market with such a tiny subsidy? Again, the superficial appeal of the right-wing argument falls apart under real world scrutiny.

The bottom line

None of this is to say that the modern safety net is ideal – far from it. In addition to being threadbare and inadequate in many places, many social programs are unnecessarily bureaucratic and wasteful.

Ironically, however, much of this problem is the direct result of attempts to appease conservative politicians who have demanded: a) that government go to extraordinary lengths to ensure no ineligible person ever receive benefits to which they are not entitled (hence, much of burdensome paperwork and recordkeeping), and b) that private, for-profit companies be brought in as contractors to provide essential services (hence, much of the fraud and abuse that was so evident in the recent mental health system meltdown).

In short, try as they might to conquer facts with simplistic rhetoric and fuzzy math, the far right's safety net critique falls short because of its failure to acknowledge two basic facts:

First, it costs money to help and care for the needy and the vulnerable. We need to do more to cut waste and bureaucracy but ultimately, there's no free lunch. 

Second, the safety net does not exist just for the poor and needy anymore than the public schools exist only for schoolchildren. It exists for all of us – for ourselves, our loved ones and for the human family of which we are all a part. Sure, North Carolina could move back toward the "every man for himself" model that it employed 100 years ago and cut spending and taxes. But it would also dramatically diminish the overall quality of our society. In this sense, even at a price tag of $14 billion (about 3 or 4% of the state's gross domestic product [11]), North Carolina's social safety net remains a bargain for everyone.