Recently, we’ve had no shortage of news reports about all the ways that the health and social safety net should be re-evaluated and strengthened. Most times, that translates into a push for stricter regulations for programs like WIC, SNAP, TANF, or Medicaid, making it more difficult for families in need to lead healthy lives.
As the president of a foundation devoted to improving the health and well-being of individuals and communities most in need across Missouri, I’ve been reflecting on why this country, and this state, give so much attention to the perceived weaknesses of these programs that serve poor or vulnerable families. The constant assault these programs receive put essential services at risk and have the potential to corrode the social fabric of our communities. Indeed, MFH has devoted considerable effort to documenting and communicating the vibrant, supportive social sector that is vital to our state’s health through our #TheNetBenefit campaign. We’ve highlighted the crucial role of federal and state governments, the indispensable network of nonprofit organizations, and the invaluable front-line work of people who care for others throughout our region. Most importantly, #TheNetBenefit has focused on the people – those who benefit and those who serve. We are proud of this work and humbled by the gift of engaging with people from across Missouri who have shared their stories and spoken openly about their experiences with the safety net.
But I have come to believe that we inadvertently used a common, but incomplete picture of the health and social safety net, and in so doing have reinforced a view that it benefits only low-income families. This incomplete picture, in turn, limits our public understanding and ideas for improvement that could remedy the pervasive health inequities across Missouri. It’s time to revisit how we think about our health and social safety net, understand the many ways it works, and realize it serves all of us. Let me explain.
Conventional safety net programs help an estimated one out of every six Missourians; 45 percent are children. But, the basic idea of a safety net – how we develop ways to care for each other to address basic human needs – includes more than just the programs that are regularly referred to as those only helping the poor. An additional “unseen safety net” provides benefits to middle class and higher-income families for health care, housing, and other basic needs through subsidies delivered via the tax code. The term of art for these deductions, exclusions, and other tax preferences is “tax expenditures.” In the federal budget, tax expenditures are simply another way of spending public funds, i.e., financial resources used for the public good. The largest tax expenditure is employer-sponsored health insurance, at $172 billion. This amount dwarfs the spending for SNAP, WIC, and TANF combined. But, because it’s embedded in the tax system and tied to employment, it gets scant public attention, and those struggling to make ends meet don’t see it. Workers employed by higher-paying jobs are more likely to work for companies that offer pensions and other health benefits subsidized by tax payers, while many lower-income workers are employed at small businesses that do not offer benefits. In brief, tax expenditures are a mostly invisible, unseen safety net for middle-and upper-income families.
Tax expenditures such as mortgage interest deductions and capital gains deductions for the sale of a principal residence disproportionately benefit higher-income taxpayers. These deductions are in place to encourage people to buy homes, but for those working low-wage jobs, buying a home, let alone benefiting from selling a home, is not an option. They instead depend on the help provided by programs such as Section 8. Of these main ways that housing is subsidized, Congress frequently and publicly debates and decides expenditures for low-income Americans, but not for tax expenditures like the mortgage deduction or home sale capital gains deductions, both part of the unseen safety net. The Section 8 yearly expenditure is $22 billion; the home mortgage tax expenditure is $33.9 billion; the home sale capital gains tax expenditure is $36.3 billion.
Once implemented, tax expenditures are in place forever, unless a vote from Congress overturns them. Our fraying conventional health and social safety net, on the other hand, is regularly attacked and dismantled. Efforts to change the poverty level to reduce the number of people eligible to receive SNAP, Social Security, and other benefits based on income is just the most recent example of changing the rules to undermine our health and social safety net for low-income people. Imagine the outcry if federal officials administratively changed the employment-based insurance tax expenditure to eliminate hundreds of thousands, if not millions, of middle and upper-income Americans from receiving that benefit!
Discussions of our safety net should include the benefits that all income groups receive, i.e., both the conventional safety net and the unseen safety net. When we talk about expanding Medicaid and closing the health insurance “coverage gap,” we should highlight that the country’s largest tax expenditure benefits all those with employer-based insurance and their employers. When we talk about adequate affordable housing and the funding of HUD’s Section 8 program, we should start that conversation with the reminder about tax deductions for mortgage interest and capital gains from the selling of a principal residence. When we use the phrase “safety net” we should begin with the simple fact that virtually all Americans benefit from public funding to help address health, housing, and other basic needs. Our task should be moving toward greater equity, based on the understanding that our current public safety net resources are tilted toward the wealthy, not the poor. Only then will we see progress in caring for those most in need and realize #TheNetBenefit of more thriving neighborhoods, vibrant communities, and a healthier state.