Estimating the Cost

Our proposals in this chapter have been aimed at helping adults by a combination of new government spending and mandated changes in wages and employee benefits. (See Figure 4.3 for a summary of the new government spending these proposals would require.) The estimates are the approximate costs of the reforms recommended in this chapter in the first year that they are fully implemented. These figures could vary for several reasons. For example, the estimated cost of a Federal floor on cash-assistance benefits ($3.7 billion) is predicated on our recommendation to set that floor so that the sum of afdc and Food Stamp benefits equals 65 percent of the Federal poverty line (see Figure 4.3). Note that the estimated total cost of this step is a net figure that allows for the decline in Food Stamp outlays that would accompany an increase in afdc benefits. It includes about $2 billion in new outlays by state governments, which share the cost of afdc with the Federal government.

The estimated cost of Medicaid expansion—$3 billion—is predicated on the coverage of adults who are poor, who lack both Medicaid and employer-sponsored group health insurance, and who would not be covered by the proposed mandated benefits program discussed in this chapter. (The cost of covering similarly situated poor children under Medicaid was included in the budget estimate in Chapter Two.)