Social Programs Can Sometimes Turn a Profit for Taxpayers

Authored by nytimes.com and submitted by smurfyjenkins

But the biggest indirect effects were not apparent until children born to the Medicaid-covered women became adults. As shown in a study by Sarah Miller at the University of Michigan and Laura Wherry at the University of California, Los Angeles, those second-generation beneficiaries were healthier in adulthood, with fewer hospitalizations. The government saved money because it would have paid for part of those hospital bills. The now-adult beneficiaries had more education and earned more money than people in similar situations whose mothers did not get Medicaid benefits. That meant higher tax revenue.

It’s not surprising that the children of women who had better health care grew up to be healthier adults and higher earners. It just required a few decades before researchers could measure how big those effects were.

When Mr. Hendren and Mr. Sprung-Keyser added up all of the numbers, they calculated that Medicaid expansion more than paid for itself, even after accounting for the fact that benefits that come in the future are worth less today.

This means that even from the narrowest perspective — one that simply measures financial costs and returns to taxpayers — the program is a good deal, aside from how much it changed the lives of its beneficiaries.

But of course it is crucially important that the program helped them quite a bit. The gains were especially large for Black people, who, as a group, are poorer and less healthy than white people in the United States.

Mr. Hendren and Mr. Sprung-Keyser found similar net financial gains for the government in other ventures, including the Head Start prekindergarten program and federally funded increases in government spending on pre-college education. Over all, 16 social policies that Mr. Hendren and Mr. Sprung-Keyser examined broke even or did even better. Almost all of them focused on children and young adults.

Young people have more years to pay into the tax system, and government safety net programs generally seem to do a better job at raising the earning ability of children and young adults than they do for older people.

PolecatEZ on July 11st, 2020 at 03:01 UTC »

I can tell you right now they got their money's worth and then some out of me in just 10 years. I signed up for every alphabet program after I lost my job in the 2008 thing and between state aid and the GI Bill managed to get a college degree and a nursing license. I also used the last $6000 remaining to start my own business. In the last 3 years, I've paid more in taxes every year than I used that entire time I was in school.

whimsically_dismal on July 11st, 2020 at 02:37 UTC »

The University of Chicago also concluded that early intervention programs can reap a six-fold return on investment.

sunny_in_phila on July 11st, 2020 at 02:04 UTC »

The Head Start program has shown for years that investing in early childhood education for kids in the lower income brackets greatly decreases their likelihood to rely on public assistance as adults. Imagine if we funded after-school programs for school-age kids and increased public school funding, not to mention provided public post-secondary options.