16.5 Long-term Care . . . . . . . . . . . . . . . . . . . . . . . . . . .

475
Financing Long-term Care 475

16.6 Lessons for Health Care Reform in the United States . . . . . 476
Rising Health Care Costs 476
The Uninsured 478
National Health Insurance 479
Application: The Massachusetts Experiment with Incremental
Universalism 480
Reform Efforts in 2009 482

16.7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484

Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484

Questions and Problems . . . . . . . . . . . . . . . . . . . . . . . . . . 485

Advanced Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486

CHAPTER 17 Income Distribution and Welfare Programs . . . 489

17.1 Facts on Income Distribution in the United States . . . . . . 491
Relative Income Inequality 491
Absolute Deprivation and Poverty Rates 492
Application: Problems in Poverty Line Measurement 494
What MattersRelative or Absolute Deprivation? 496

17.2 Welfare Policy in the United States . . . . . . . . . . . . . . . 496

Cash Welfare Programs 497
In-Kind Programs 498

17.3 The Moral Hazard Costs of Welfare Policy . . . . . . . . . . . . 499

Moral Hazard Effects of a Means-Tested Transfer System 500
Solving Moral Hazard by Lowering the Benefit Reduction Rate 503
The Iron Triangle of Redistributive Programs 505

17.4 Reducing the Moral Hazard of Welfare . . . . . . . . . . . . . 505

Moving to Categorical Welfare Payments 505
Using Ordeal Mechanisms 508
Application: An Example of Ordeal Mechanisms 510
Increasing Outside Options 511
Empirical Evidence: The Canadian Self-Sufficiency Project 513

17.5 Welfare Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . 517

Changes Due to Welfare Reform 517
Effects of the 1996 Welfare Reform 517
Empirical Evidence: Estimating the Impact of Welfare Reform 518

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