The safety net plays a critical role in alleviating poverty and strengthening the Commonwealth, lifting approximately 810,000 Kentuckians above the poverty line each year through federal and state funded programs, according to a recent fact sheet by the Center on Budget and Policy Priorities (CBPP).
For the nation, the federal poverty rate is reduced from 30 percent to 11.2 percent once these supports are factored into income (for a family of 4, the federal poverty threshold is $24,300).
The safety net includes both social insurance programs that are “universal” – their benefits are not limited to people with low-income – and public assistance programs that are “means-tested,” meaning individuals or families who are eligible earn less than a specified amount.
Important aspects of the safety net include the following:
Social Security is the leading program for alleviating poverty through retirement, disability and deceased survivors’ benefits. In Kentucky, Social Security raises approximately 450,000 mostly elderly recipients out of poverty, and whereas 58.4 percent of the elderly would fall below the poverty line without Social Security, with Social Security that amount is reduced to 12.1 percent.
SNAP (Supplemental Nutrition Assistance Program) – formerly known as food stamps – is a public assistance program that provides food assistance for low-income individuals and families. SNAP is administered at the state and local levels and issued through a debit-like Electronic Benefits Transfer (EBT) card which is then used to purchase eligible food items. SNAP allows approximately 160,000 Kentuckians to live above the poverty line, and provides food assistance for many more in poverty. In total, an average of 770,000 individuals in Kentucky receive SNAP benefits per month, including approximately 310,000 children.
Tax credits known as the Earned Income Tax Credit (EITC) and Child Tax Credit also provide key support to working families. The EITC is a tax benefit available to moderate and low income earners that reduces the amount of income taxes owed or, in the case that no income taxes are owed, provides a refund. The Child Tax Credit allows for parents or caregivers to receive a reduction or refund in their taxes for each dependent child. These tax credits assist in lifting an estimated 160,000 Kentuckians out of poverty, with the combined impact of 1.2 million beneficiaries – including 660,000 children.
Supplemental Security Income (SSI) is a public assistance program created for the elderly, blind or disabled who have little to no income. Eligible participants receive cash for basic necessities such as food, clothing and shelter. In Kentucky, SSI raises approximately 110,000 people above the federal poverty line.
Federal Rental Assistance helps to create affordable housing choices for the elderly, disabled and low-income tenants. Assistance is offered through privately owned subsidized housing, public housing units and rental assistance vouchers (Section 8). These programs provide 160,000 Kentuckians the ability to afford the cost of housing.
Medicare is the social insurance program that provides health coverage to people 65 years and older – and in special circumstances, some younger than 65.
Medicaid provides health coverage to means-tested individuals and families, with an estimated 1.4 million Kentuckians covered through Medicaid or Kentucky Children’s Health Insurance Program (KCHIP) today. In fact in Kentucky, over half of all insured children are covered through public health insurance programs. With the implementation of Medicaid expansion which increased the income threshold up to 138 percent of the federal poverty level ($16,394 for an individual) Kentucky has become a national leader in the reduction of uninsured citizens – in 2013, 20.4 percent of Kentuckians were uninsured and that declined to 7.5 percent in 2015.
Benefits of the safety net are not just short-term; Children living in families that receive income supports such as the EITC and SNAP, for instance, have better health and educational outcomes, work more and have better earnings later in life. Similarly, health coverage provides long-term gains for families, with less absenteeism and lower dropout rates in school leading to better educational outcomes and more productive, educated workers.
These gains represent progress that Kentucky individuals and families benefit from, but are also part of the path forward for our state as a whole. Proposals to weaken and cut the safety net would impose hardship on the people and communities of Kentucky. For example, the proposed Medicaid demonstration waiver would move Kentucky backwards on the significant strides that are being made with increased health care coverage, which evidence suggests are beginning to contribute to better health.