The poverty rate would be substantially lower if the market value of in-kind transfers were added to family income. The largest in-kind transfer is Medicaid, the government health program for the poor. Let’s say the program costs $10,000 per recipient family.
a. If the government gave each recipient family a $10,000 check instead of enrolling them in the Medicaid program, do you think that most of these families would spend that money to purchase health insurance? Why? (Recall that the poverty level for a family of four is about $23,000.)
b. How does your answer to part (a) affect your view about whether we should determine the poverty rate by valuing in-kind transfers at the price the government pays for them? Explain.
The poverty rate would be substantially lower if the market value of in-kind transfers were added to family income. The largest in-kind transfer is Medicaid, the government health program for the poor. Let’s say the program costs $10,000 per recipient family.
a. If the government gave each recipient family a $10,000 check instead of enrolling them in the Medicaid program, do you think that most of these families would spend that money to purchase health insurance? Why? (Recall that the poverty level for a family of four is about $23,000.)
b. How does your answer to part (a) affect your view about whether we should determine the poverty rate by valuing in-kind transfers at the price the government pays for them? Explain.
Related textbook solutions
Related questions
The poverty threshold for a household with one person in 2010 was:
| A. |
about $25,600. |
|
| B. |
about $21,100. |
|
| C. |
about $11,300. |
|
| D. |
about $38,000. |
Compared to a generation ago, public aid programs that are likely to benefit families have received:
| A. |
less funding. |
|
| B. |
about the same level of funding. |
|
| C. |
no funding. |
|
| D. |
more funding. |
There is considerable ________ among the quintiles of the distribution of income, with many families moving from ________ and others moving from ________ quintiles.
| A. |
immobility; lower to lower; higher to higher |
|
| B. |
immobility; lower to higher; higher to lower |
|
| C. |
stability; lower to higher; higher to higher |
|
| D. |
mobility; higher to lower; lower to higher |
The ________ is widely used to measure income inequality.
| A. |
median household income |
|
| B. |
ability-to-pay principle |
|
| C. |
poverty rate |
|
| D. |
Gini coefficient |
Medicaid is funded by:
| A. |
private charities. |
|
| B. |
federal and state governments. |
|
| C. |
state governments only. |
|
| D. |
the federal government only. |
Private health insurance is funded by:
| A. |
members of a large pool of individuals, each paying a fixed premium to a private company that agrees to pay most of the medical expenses of the members. |
|
| B. |
tax contributions to Medicare. |
|
| C. |
the government. |
|
| D. |
people who are extremely ill who pay very high premiums. |
n the United States, the government pays _______ of all medical costs.
| A. |
between 70% and 80% |
|
| B. |
approximately 50% |
|
| C. |
100% |
|
| D. |
less than 20% |
Which of the following programs represents in-kind transfers?
| A. |
Medicaid |
|
| B. |
Temporary Assistance for Needy Families |
|
| C. |
the Earned Income Tax Credit |
|
| D. |
Social Security |
Children raised in poverty have a greater likelihood of living in poverty as adults than do those raised in nonpoor families, because low income is highly correlated with higher:
| A. |
high school dropout rates. |
|
| B. |
high school dropout rates, risk of mental problems and behavioral disorders, and with higher rates of illness and hospitalization. |
|
| C. |
risk of mental problems and behavioral disorders. |
|
| D. |
rates of illness and hospitalization. |
