ECONOMIC

(Table 45). Medicare is chiefly designed for the aged, many of whom arenot poor. About 17 percent of the recipients of medicare benefits in fiscal1973 were in poverty on the basis of current money income.Me die aidMedicaid is a Federal-State health assistance program for welfare recipientsand the medically indigent. Medicaid is administered by the Stateson a cost-sharing basis with the Federal Government. The eligibility requirementsand the benefits differ among the States.The medically indigent are those who are not necessarily poor by theBureau of the Census poverty standard but are judged by the States to haveincomes sufficiently low or medical expenses sufficiently high to qualify forassistance. In fiscal 1973, 70 percent of the medicaid recipients were in thepoverty population. Some of the 23.5 million persons receiving medicaid infiscal 1973 were among the aged poor and were using medicaid to pay thepremium, deductibles, and coinsurance required by medicare. Medicaidbenefits are received by many persons, such as children on AFDC and theirmothers, who are not chronically ill and hence have small annual medicalexpenses, but who are nevertheless in poverty.The Growth of the ProgramsPublic expenditures for medicaid and medicare have been rising at anannual rate of 14 percent from 1970 to 1973. As knowledge of the programshas spread the number of recipients has increased. This source of increasedexpenditures is not likely to continue indefinitely. There has also been a largeincrease in the utilization of services per recipient, and in the prices chargedper unit of service. Although part of the price increase may reflect qualityimprovements, some of it derives from pure increases in price.Higher deductibles and coinsurance would reduce the growing cost ofthe programs due to the increase in services and prices per unit of service.At the same time, however, it would increase the out-of-pocket cost of medicalcare for the aged and the poor. A mechanism is needed that will provideadequate medical care for the aged and the poor and reduce the stronginflationary pressures built into medicaid and medicare, but that will do sowithout direct Government provision of medical care or extensive regulationof the medical care sector.INCOME DISTRIBUTION EFFECTS OF MONEY TRANSFER PROGRAMSThe transfer programs discussed above, as well as other government transfersaffect the incomes of families. Comparisons between these money transferpayments and the total money income of families show the income redistributioneffects of the transfers. How participation in the labor market andfamily formation are affected by money transfers is an important issue, buttoo little is known at the present time to quantify what the distribution offamily income would be if there were no transfers.176