Reforming the American Welfare State

by Henry Farrell on February 12, 2013 · 6 comments

in Comparative Politics

Kimberly Morgan (GWU) has a new Foreign Affairs article that draws on the comparative welfare state literature to present two novel propositions to American policy makers – that the modern American welfare state currently helps the well off much more than the poor, and that making it better would involve learning from other countries.

. The United States does tax less and spend less on social programs than most of the rich democracies with which it is usually compared. But even so, the country has developed a large and complex system of social protection, one that involves a mix of government spending, tax-based subsidies, and private social spending. In its own way, the U.S. welfare system delivers many of the same benefits as the systems in other developed countries, including health insurance, pensions, housing support, and child care. And when added together, the amount of resources the public and private sectors commit to all these forms of welfare is massive: as a percentage of GDP, for example, spending on the health and welfare of citizens is greater in the United States than in most advanced industrial economies. … Yet the American way of distributing welfare is lopsided and incomplete. … In essence, Washington’s reliance on private social benefits and services—often provided by businesses to their employees rather than by the government to everybody—ensures good coverage for some but poor coverage for others. Those with well-paying jobs usually get the best benefits, and those with low-paying or no jobs get worse ones. … many other countries rely on a diverse mix of public and private welfare and tax subsidies, often leading to more equality and efficiency. The difference is that their systems consciously strive for those goals and are deliberately designed to ensure broad public access to benefits. It is time for Washington to take those models seriously in figuring out how to fix its own.
…only about seven percent of direct public spending goes to means-tested benefit programs. … Indirect benefits in the United States flow disproportionately to those in the middle and at the top of the income ladder. … Private social benefits in the United States, finally, also tend to accrue to middle- and upper-income people, since better-paying jobs usually come with more extensive benefit packages. … Since U.S. social welfare spending is not directed primarily at the poor, it does little to reduce the country’s rate of poverty or inequality. … social welfare spending is comparatively high but only minimally redistributive.
Most other rich nations not only spend less than the United States does on health care; they also achieve better outcomes in both coverage and quality. … Americans like to tell horror stories about waiting lists for medical procedures in other nations, and some of those stories are true, especially when it comes to elective procedures, such as hip replacements. … But the United States falls short when it comes to access to basic care … only 43 percent of American adults could get a same- or next-day appointment to see a doctor about a medical condition, compared with 80 percent in the Netherlands, 62 percent in France, and 61 percent in the United Kingdom. … Several OECD countries have found ways to ensure widespread access to benefits and services without “socializing” the sectors in question. … in Canada, Japan, and much of continental Europe, although the government mostly pays for public health care, it is private actors and organizations that provide the health care itself. And in the continental European countries, private insurance either supplements a public insurance system … or is the dominant source of coverage. … rather than leaving it up to employers and individuals to take care of pension benefits, the government could mandate their provision, making them a required supplement on top of existing Social Security benefits. Washington might also consider requiring all employers to provide three months of paid family leave, with the benefits paid for by a combination of employer and employee contributions. A similar measure could mandate that employers offer paid sick days to all employees.

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