Question

A) why is Medicaid considered a "safety net" for low-income families? what does this mean? Use your own words in your explanation

B) explain the concept of the "poverty trap" and how this impacts low-income families in the U.S.

Answer 1

a) Safety net is a list of various programs by the US government that aim at providing assistance to poverty stricken people and the protection to people who find themselves without job or income so that they be assured of atleast the minimum health and public facilities available to them that is agreed upon by the society so that no one lags behind. It is of various types and Medicaid is a type of safety net program by the government.

In short Medicaid can be understood as a jointly funded program by the Federal and state governments which aims to provide health coverage or nursing home coverage to children, pregnant women, parents of eligible children, people with disabilities.It provides assistance to the below poverty line people along with those who have an income 138 to 145% of the poverty line income and this varies from state to state.

However Medicaid has resulted in a poverty trap for many people and the economy is suffering as people fear losing their health benefits if their income increases by a certain level resulting them in ignoring brighter opportunities and making it a load on the government as it has to provide for million of adults who are quite able to work and earn.

b) Poverty trap is an economic system where people find it difficult or are not willing enough to aquire money and as a result depend on the government for their own needs to be fulfilled making it a load on the government's part to pay for their assistance.

Most of the programs of the US government have led to poverty traps for many people mostly the low income group ones as people intentionally tend to be poor as they recieve assistance from the government.

Working and earning above the prescribed levels of income will result in all these benefits being taken off and risk in social and financial security.

Hence many people avoid earning much and lose on opportunities available to them as they are unsure whether there new job will be enough or permanent for their sustenance.Also many people substitute the grant provided to them for other things rather than in food, education, investments which will lift them out of poverty which has resulted in a culture of dependancy.

Various other reasons which contribute to this are-

Unemployment or less employment opportunities

No presence of pull out programs which might take away benefits from people who are not willing to improve and get out of this viscous cycle.

The higher rates of employment wage which demand higher skills which is mostly absent among the low income group families leading to poverty.