July 17, 2015

When able bodied people gain access to welfare entitlements like Medicaid, it’s a powerful disincentive to work. Because higher earnings from work reduce benefits from entitlements.

We can illustrate that with dry CBO reports. Or just look at what the recipients say.

Read this letter to the editor by a South Carolina Medicaid Mom.

“My son, diagnosed with chronic asthma, received Medicaid for the first two years of his life. I was a single mom making less than $16,000 a year. While I was insured through my job, Medicaid covered fees not assumed by my private insurance, such as my deductible, co-pays and prescriptions. Then something bad happened: I received a salary increase of $2,000, and my son was immediately removed from Medicaid.

Catherine Dillon

Catherine Dillon

My small salary increase wouldn’t come close to paying the increase in medical costs, and I realized that I was actually going to become poorer. A step-down program was unavailable, and my very sympathetic case worker proposed that I lie. If I claimed that my son’s father was not paying child support, she could reinstate Medicaid. While this solution was tempting, I knew it wasn’t an option for me. My parents raised me better than that.

More than 70 million people participate in the Medicaid program nationwide. Similar situations play out for many. While Medicaid finances health care for the elderly and disabled, 33 million recipients are children of low-income, presumably able-bodied parents, and 19 million are able-bodied adults. How many of these people choose not to get a second job or refuse extra hours at work because their Medicaid eligibility is hinged upon their income? With all the good Medicaid does, it’s disheartening that it disincentivizes families from improving their economic situation.” (The State)

As she makes clear, welfare entitlements encourage people to cut work hours to keep their free benefits. In fact, North Carolina’s welfare package can amount to $28,000 a year, the equivalent of a $12 an hour job. Our welfare package tops the south. (Cato)

The Medicaid Mom’s story is proof that every welfare entitlement ought to have a work requirement.