The Price Tag

The package of cash-assistance reforms proposed here would cost about $2.6 billion in new spending in the first year. This total is heavily dominated by the proposed increase in ssi benefits. The estimate of $2.5 billion for this new step represents the cost of closing about one-half of the gap between the Federal poverty line and the current level of ssi benefits. It would be possible to recommend a larger increase that would close the gap completely. However, as we noted in our discussion of expanding benefits for children, it is important to recognize fiscal constraints and the need to meet our long-term goals in stages. It is worth noting that the additional $0.1 billion recommended for easing the ssi asset test would permit more than a doubling of the very low asset limits that now screen many low-income senior citizens out of ssi.

Estimates of the cost of greater government involvement in long-term care for the elderly are highly sensitive to assumptions about several program parameters. For example, adding long-term-care coverage to Medicare will cost much more if the coverage becomes available immediately, considerably less if the elderly must spend their own resources for a substantial period of time before qualifying. Obviously, the greater the degree of asset protection under a public program, the greater the government cost. The cost estimate provided here—about $7 billion—is that of a program with a three-year waiting period. This estimate also includes a small amount of funding to begin a program that helps lower-income people purchase private long-term-care insurance. If the waiting period were reduced to two years, the cost would rise to about $15 billion. A program with a rather short waiting period of a few months would cost from $30 billion to $40 billion.