The Welfare State
By Paul Nyden
West Virginia gets more money per person from federal government programs than any other state in the country, with more than a quarter of the income in the Mountain State coming from federal benefits, according to a new study from George Washington University.
West Virginia gets 26.2 percent of its annual income from federal government programs, while people in the rest of the nation get, on average, 16.7 percent of their income from government programs.
In 2012, West Virginia and South Carolina tied for having the lowest per capita annual incomes of any states, incomes that were only 80.2 percent of the national per capita income.
The Milken Institute School of Public Health at GWU, in Washington, D.C. recently published a new study with detailed statistics about the impact federal programs have had throughout the country for 60 years, between 1952 and 2012.
The biggest federal programs include Social Security and Medicare -- programs which give benefits to elderly people regardless of their wealth.
The list also includes programs to help poorer Americans, such as Medicaid and the Supplemental Nutrition Assistance Program, or SNAP, formerly known as the Food Stamp program.
Federal income also comes from six other categories, including veterans benefits, military medical benefits, unemployment insurance and federal education programs, as well the Supplemental Security Income program, which helps low-income Americans who are 65 or older, blind or disabled.
In 2012, 75 percent of all government transfers came from just three of these programs: Social Security (33.2 percent), Medicare (24.2 percent) and Medicaid (18.2 percent), the study points out.
Southern states dominate the list of who benefits most from federal programs.
After West Virginia, the rest of the top five recipients of federal money are: Mississippi, 24.0 percent; Arkansas, 22.8 percent; Kentucky, 22.4 percent; and Alabama, 21.8 percent. Residents of Washington, D.C., collected the lowest percentage of government benefits, with only 11.7 percent of their total income coming from government programs.
The five states with the lowest percentages of government benefits as part of their annual incomes are: North Dakota, 11.8 percent; Wyoming, 12.1 percent; Colorado, 12.3 percent; Maryland, 12.4 percent; and Virginia, 12.6 percent.
Ironically, states whose residents receive the most help from federal government programs often are the most likely to elect conservative representatives who routinely favor cutting federal government programs. The five states receiving the most federal money, West Virginia included, have all been won by the Republican candidate in recent presidential elections.
One reason that states like West Virginia receive a higher percentage of their income from federal programs is that those states have more older citizens, eligible for Social Security and Medicare benefits.
West Virginia has the second-highest percentage of residents over age 65, according to the 2010 Census.
West Virginia ranked first in the percentage of annual income that Social Security provided to its residents, the new study points out.
Nationally, 5.6 percent of all personal income in 2012 came from Social Security benefits. In West Virginia, 9.6 percent of all personal income came from Social Security, almost twice as much.
The next highest states were: Alabama, 8.1 percent; South Carolina and Michigan, both at 8.0 percent; and Mississippi, 7.9 percent. West Virginia also topped the list in Medicare benefits as a share of personal income. Nationally, Medicare payments were 4.1 percent of all personal income. In West Virginia, Medicare benefits were 6.3 percent.
Reduction in Income Disparities
The study stresses how geographic income disparities have been reduced over the past 60 years through government programs, based on statistics collected by the federal Bureau of Economic Analysis.
Historically, the Southeast -- including states from Louisiana to Virginia -- has been the nation's poorest region. However, this region "has experienced sustained growth in personal income over the past 60 years," the study says. "A substantial share of the income growth can be traced back to government insurance or public assistance programs."
The study points out that federal benefits also have helped other areas facing economic downturns, such as the Great Lakes region. Government transfers as a percentage of all personal income range from 19 percent in the Southeast to 13.7 percent in the Rocky Mountain states.
"The public programs have been extremely effective in reducing income disparities across the nation," Vic Miller, one of the study's authors, said.
However, income disparities could increase again in the near future, the authors warn.
"Many poor Southern states are opting against the Medicaid expansion, despite the economic benefits of expansion. This may lead them to fall further behind as income disparities widen again," Leighton Ku, the study's other author said.
When the U.S. Supreme Court, in a 5-4 decision, ruled the Affordable Care Act constitutional, it also gave states the option of whether or not they wanted to expand the Medicaid program to give more people health insurance.
"Many poorer Southern states are opting against Medicaid expansions," the report points out. At the same time, "wealthier Northern and Western states that are expanding Medicaid will experience greater income growth."
Miller and Ku also stress that hospitals in states not expanding Medicaid will lose hundreds of millions of dollars in federal money.
"A number of studies have indicated that state Medicaid expansions will generally have positive impacts on state economies, increasing both economic growth and employment," the report says. Today, about half of all states, all with Republican governors, have chosen not to expand Medicaid.
Miller and Ku point out that the growth, or shrinking, of particular industries are major factors in employment and income statistics.
Over the past 60 years, per capita income expanded more in the Southeast than in any other region, from 70.6 percent of the national average in 1952 to 89.5 percent in 2012.
North Dakota, which has experienced an oil and gas boom, did the best, seeing per capita personal income grow from 76.5 percent of the national average in 1952 to 125.5 percent of the national average in 2012.
Per capita income rose in most farm states over the past 60 years, while it fell in areas like the Great Lakes states, which have suffered major declines in the automobile and other manufacturing industries.
Income in most energy-producing states grew, the new study points out, while the experiences of some of those states, such as Wyoming, "reflect both booms and busts."
The study is available on the Milken Institute School of Public Health website.
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