Medicaid and the Safety Net

Oren Cass argues in this paper that too much of what the government spends on low-income Americans is spent on health care. He also explains why that is, and offers some suggestions for spending these dollars more wisely. From the executive summary:

Since the Lyndon Johnson administration launched the War on Poverty in 1965, government social spending has increased from less than $100 billion per year to more than $1 trillion per year. The growth was initially broad-based, expanding services from education to nutrition to housing. Increased spending in recent decades, however, has gone almost entirely to health care generally and Medicaid specifically.

Does this allocation of resources most effectively help people escape poverty or prevent them from falling into poverty? Does it align with the needs or preferences of low-income Americans? This paper presents evidence that it does not. Medicaid’s growth has been, in many respects, unintentional; it reflects skewed incentives built in to the program; and it does not represent the best antipoverty strategy—or even the best way to improve health in low-income households.