Health care vies with elementary and secondary education as the largest destination for federal and state government spending. In fact, when I added it up in 2006 the federal, state and local governments were already paying for 75.0% to 80.0% of third party (insurance and public program) health care expenditures nationwide, which is to say expenditures other than co-payments and services people pay for themselves in cash (such as cosmetic surgery). Directly (Medicare, Medicaid, the VA Hospital system) or indirectly (health insurance purchased on behalf of civilian public employees and their families, the exclusion of employer funded health insurance from taxable income, other tax breaks).
Since then the population has aged, leading to more Medicare and Medicaid spending, Medicaid has been expanded to more working people, and Obamacare has added another form of indirect federal support for private health insurance. For all the discussion of “socialized medicine,” here in the U.S. the government share of third party health care expenditures is probably up to 85.0% or so, and as a percent of GDP it probably exceeds the cost of the entire health care system in developed countries.
Health care and social services, however, are provided by the government primarily through payments to private sector organizations, generally non-profits in New York City and throughout the Northeast. Therefore in this, the fifth post based on my tabulation of state and local government employment and payroll data from the 2017 Census of Governments, data on related private sector organizations from the Bureau of Labor Statistics will take center stage. And this analysis features the most shocking trend I have found so far.
New York City was long known as America’s welfare capital, with a large dependent poor population and extensive services for them. But one doesn’t hear much about that anymore. New York State has also had the highest Medicaid spending in the United States, but one doesn’t hear much about that anymore either. The data shows New York still spends more on aid to the needy than most other states, as a share of its residents’ personal income, but the gap between New York and the rest of the country closed between FY 2004 and FY 2014. As the gap closed, aid from the federal government to New York shifted to other places. Today, moreover, most of this “social” spending is on health care, and thus on older people, not on those with lower incomes. A discussion of these trends, with tables and charts, follows.
The 1970s were a devastating decade for New York City. The middle class and employers fled, leaving the old, poor, unemployed and troubled behind. The city lost hundreds of thousands of jobs and nearly a million people. Today, however, the population has soared. Cranes dot the skyline as tens of thousands of housing units are under construction to accommodate the hundreds of thousands of people trying to more here. Total private employment, for which the 1969 peak was a seemingly insurmountable barrier for decades, has soared past that level to previously unimaginable heights. Self-employment has soared even more. And with suburban housing increasingly occupied by retired empty nesters rather than young workers, more of those jobs are held by city residents, and the city’s employment-population ratio is at an all time high. The only problem, it seems, is that real estate values are soaring as a result of gentrification, and the poor are being pushed out of the city.
To find out to what extent, I took a spreadsheet I had produced years ago, with decennial Census of Population data on poverty in 1969, 1979, and 1989, and added 2014 American Community Survey data to it. And then compared data for 1979, near the city’s low ebb, with data for 2014, the most recent year available. I found that the number of non-poor people (for whom poverty status could be determined) had increased by over 1 million (18.6%) over 35 years. And the number of poor people, rather than decreasing or staying the same, has increased by more than 350,000 or 25.5%. An even faster gain. Are you surprised? I am.