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Report: Government Assistance Programs Reduce Income Disparities

A report recently released by Milken Institute School of Public Health at the George Washington University (Milken Institute SPH) examines the contribution of government insurance and assistance programs to personal income in the United States. The Southeastern region of the United States (ranging from Louisiana to Virginia) has historically been the poorest part of the country but has experienced sustained growth in personal income over the past 60 years, according to the new report. A substantial share of the income growth can be traced back to government insurance or public assistance programs such as Social Security, Medicare, Medicaid, or the supplemental nutrition assistance program, formerly known as Food Stamps.

“Governmental social insurance and public assistance programs have become a key contributor to personal incomes and have been particularly important in poor parts of the country, like the Southeast, and areas that have experienced bigger economic downturns, like the Great Lakes region,” says Vic Miller, an independent economic researcher and lead report author. “The public programs have been extremely effective in reducing income disparities across the nation.”

Miller and coauthor Leighton Ku, PhD, MPH, a professor of health policy at Milken Institute SPH, analyzed data from 1952 to 2012 as reported by the Bureau of Economic Analysis, the federal economic statistics agency which tracks key economic indicators like gross domestic product. The researchers examined changes in per capita personal income levels across states and regions over the 60-year period and the impact of government transfer programs.

The report found that recent gains made by the Southeastern states had reduced income disparities and had brought incomes much closer to the national average than in the last 60 years. However, the reduction in income disparities may not last now that states have the option about whether to expand Medicaid under the Affordable Care Act, the report says.

“Many poor Southern states are opting against the Medicaid expansion, despite the economic benefits of expansion,” says Ku, who is also the director of the Center for Health Policy Research at Milken Institute SPH. “This may lead them to fall further behind as income disparities widen again,” Ku says.

Copies of the report, “The Impact of Governmental Transfer Programs on State and Regional Personal Incomes” may be accessed at go.gwu.edu/govtransfer.

— Source: George Washington University