What is the welfare state America wants, and what is the one it can afford? This is not a question Americans are ready to discuss — so much so that their elected officials have shut down the government to avoid it.
Since the 1960s, the US welfare state has grown to cover not just the poor but, increasingly, the middle class. When there is a temporary economic hardship, it tends to be used as an excuse for a permanent expansion of social insurance programs. In the broadest terms, this phenomenon explains the current shutdown.
In 2021, during the pandemic, the American Rescue Plan increased the subsidies available to people to buy health insurance on the exchanges created by the Affordable Care Act. Designed to ensure that their premiums did not exceed a certain percentage of their income, the original subsidies were available only to those who earned less than 400% of the federal poverty level. The 2021 law eliminated the 400% requirement and lowered those income percentages significantly. The more generous package was presented as an emergency measure to ensure everyone had insurance during a health crisis, and is set to expire at the end of this year.
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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