Shocking Statistics about Income Growth and the Welfare State
The Congressional Budget Office (CBO) recently released a presentation exploring health insurance as it relates to income growth over a multi-decade period (1979 through 2021). The results provide a shocking, though perhaps not surprising, demonstration of how the growth of “income” at the lower end of the spectrum is directly tied to the expansion of the welfare state.
Consider these data points, copied verbatim from the presentation:
- “As a share of income, Medicaid (including CHIP) benefits among households in the lowest quintile nearly quadrupled from 1979 to 2021.”
- “Medicaid spending contributed about 34 percent of the growth in income after transfers and taxes among households in the lowest quintile over that period [i.e., 1979-2021]. Among households in the second quintile, Medicaid contributed 21 percent of the growth.”
- “The percentage of households that were enrolled in Medicaid or CHIP increased from 8.8 percent in the 1980 CPS to 33.2 percent in the 2022 CPS.”
- “Overall, expanded health insurance spending explained about 23 percent of the growth in income after transfers and taxes over that period [i.e., 1979-2021]. Among households in the lowest quintile, it accounted for 63 percent of the growth.”
Think about that last data point for a moment: Nearly two-thirds (63%) of the “income” growth for the poorest 20% of Americans over a more than four-decade period came not from the benefits of work, but from an expanded welfare state—numerous expansions of Medicaid and the State Children’s Health Insurance Program, plus the Obamacare Exchange subsidies. That’s evidence not of the American economy’s successes, but of its failure—telling a permanent underclass that they have little chance to rise in life, and that they should instead accept “free” health care from the state.
Given facts like these, it’s little wonder that we have an “affordability” problem in our country. But contra Democrat efforts to “increase affordability” by further expanding taxpayer-funded benefits, the ever-expanding welfare state is perpetuating this problem rather than fixing it.