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It used to be considered radical. But the idea that a society could ease poverty and increase productivity by giving every one of its citizens a monthly or annual stipend, no strings attached, is no longer a far-fetched one in other parts of the world. And now some progressive leaders in the U.S. are pointing to the economic model’s alleged success in Europe in the hope that the notion takes root here, too.
The concept, known as a universal basic income (or UBI for short), is simple enough: Give citizens enough money every year, gratis, so that they can pay for necessary living expenses, like housing and food. In return, people will have the bandwidth to flex their creativity, become more productive and enjoy a better quality of life.
Not surprisingly, fiscal hawks and critics of entitlement programs are not on board.
“Unfortunately, a welfare state by any other name is still a welfare state. And a [UBI] is just replacing one pricey system for another,” writes Brittany Hunter, an editor with the Foundation for Economic Education. “Unlike the current welfare state, which has standards for determining who qualifies for certain aid, a UBI would be given to everyone. This would dramatically increase the pool of citizens receiving benefits from the state and inflict massive expenses across the board.”
Hunter’s critique came on the heels of a study conducted by the left-leaning Roosevelt Institute, which found that providing $12,000 each year to Americans would increase jobs by 2 percent and grow the economy by $2.5 trillion by 2025.
Though the idea of a universal basic income in the U.S. has been tossed around for decades, the rise in automation has put the idea at the forefront of current economic arguments in developed countries, where robots are poised to take over more jobs and provide less opportunities in the future.

THE VIEW ACROSS THE POND

In mid-September, the University of Bath’s Institute for Policy Research found that nearly half of Britons would welcome a basic level of income to cover essential needs, with only 26 percent of those surveyed opposing its introduction. The reactions aren’t necessarily surprising, as the Scottish government recently announced plans to test a UBI system by giving citizens £150, or about $200, per week.
Though the move is revolutionary in the United Kingdom, it’s not unheard of in other parts of Europe. Last year, several European countries introduced the idea of trying out basic income, ranging from giving a modest €560 a month to 2,000 unemployed adults in Finland (the equivalent of about $660) to doling out 2,500 Swiss francs ($2,573) each month in Switzerland.
The Swiss held a vote for the monthly stipend in June 2016 — the first time a country has ever put the proposal on a ballot — but it was overwhelmingly voted against by nearly 3 to 1. Opposition groups claimed that the country’s high living standard, combined with its open borders, would make for complications.
Finland, meanwhile, has boasted anecdotal evidence of success, with residents reporting that the basic income has allowed them to start their own businesses and has reduced stress. But some economists argue that the Finnish program, which was implemented to replace unemployment benefits (though recipients are still awarded the monthly stipend even after they secure work), has only pushed people to lower-paying jobs with lower productivity.
“Universal basic income can only succeed if the effort is sustained and widespread — and not available only to the unemployed,” wrote economists Antti Jauhiainen and Joona-Hermanni Mäkinen in The New York Times. “The program should not be intended to force people into low-paying jobs.”

ONE NATION, UNDER UBI

So can a UBI model work in America?
In a way, it’s already here, to some extent. Alaskan residents have gotten a portion of the state’s $55 billion oil fund each year for the past four decades. Last year, the dividend from the fund was $2,052 each for 643,000 Alaskans, before Gov. Bill Walker axed that amount by half.
Farther south in Silicon Valley, the tech incubator Y Combinator has launched a UBl study that aims to provide roughly 1,000 Oakland families with up to $2,000 a month.
“I think it’s good to start studying this early,” wrote Y Combinator President Sam Altman in a blog post. “I’m fairly confident that at some point in the future, as technology continues to eliminate traditional jobs and massive new wealth gets created, we’re going to see some version of this at a national scale.”
The reality is that automation in America will reduce jobs for low- and even middle-wage workers by close to 50 percent, according to some estimates, and there is a worry that cashiers who are put out of work won’t exactly be in the position to become engineers overnight. The U.S. has already started to feel the squeeze, with about 5 million jobs lost as a result of automation.
American business leaders and progressive politicians have taken notice. Vermont Sen. Bernie Sanders and Facebook CEO Mark Zuckerberg, among others, have all endorsed the idea of a UBI.
“There will be fewer and fewer jobs that a robot cannot do better,” echoed Elon Musk, CEO of Tesla and SpaceX, earlier this year. “And if my assessment is correct and [jobs are lost to automation], then we have to think about: What are we going to do about it? I think some kind of universal basic income is going to be necessary.”
Continue reading “Is the U.S. Ready for Universal Basic Income?”

Across much of the U.S., a person who’s poor, overweight and a candidate for obesity-related diseases might not visit a doctor until they’ve already contracted diabetes — that is, if they can even find a physician who will accept Medicaid, the federal health insurance program aimed at the neediest Americans.
But in Connecticut, they’re doing things differently. There, state employees actually reach out to those at the greatest risk before they’ve exhibited any noticeable symptoms, then work diligently to connect them with the right care. Doctors are paid a bonus for getting a patient to see the appropriate specialists, and out-of-the-box arrangements are made when other solutions prove necessary; a low-income senior facing eviction, for example, might be given a “prescription” of a rental voucher so that she can remain in her own neighborhood.
In treating poverty as an ailment in and of itself, Connecticut has adopted a proactive approach to improving the health of its poorest residents — and it’s saving money in the process. After switching to a rarely used Medicaid payment model, known as fee-for-service (FFS), the state faced a daunting challenge: Keep those unable to pay out of the emergency room, or see its budget eaten up by soaring medical costs.
Here’s how it works: Using the extensive data collected from all Medicaid patients, the state’s predictive modeling identifies those most in danger of expensive, chronic ailments like diabetes. Then, says Dr. Robert Zavoski, a former pediatrician who now serves as the state’s medical director, “We make sure they’re getting preventive care so that, 10 years from now, we’re not paying for dialysis for renal dysfunction and amputations for limbs that would have been better left where they were.”
After Connecticut dropped three private companies who administered its Medicaid program and decided to run the massive entitlement on its own, other states practically took bets on when the system would implode.
“They patted us on the head and said, ‘Good luck with that,’” Kate McEvoy, who oversees all of Connecticut’s public health services, recalls of the 2010 decision.
In booting private insurance companies off the job (in Hartford, a city that’s known as the insurance capital of the world, no less), Connecticut was bucking a trend. Thirty-nine other states, representing nearly three-quarters of the nation’s enrollees, have hired managed-care organizations, or MCOs, to oversee Medicaid, with even more governors pondering following suit. Of the rest, only Alaska and Wyoming have a system like Connecticut’s.
Without relying on MCOs to set standards and manage the process, Connecticut’s been on the hook for whatever care its Medicaid population requires, which can include check-ups, specialist visits and hospital drop-ins. The looming receipts have created an incentive for Connecticut to keep its poor healthy.
The tactic has already paid off in the short term and promises to deliver even bigger dividends in the future.
According to a recent analysis of federal payment data published in the journal Health Affairs, Connecticut led the nation in reducing Medicaid costs. The state’s per-patient spending on Medicaid dropped by an average of 5.7 percent each year between 2010 and 2014. One explanation is simple. “We got rid of [the MCOs’] profit and overhead,” says Ellen Andrews, the head of Connecticut Health Policy Project, a nonpartisan analyst. But officials also believe, financially and morally, they’ll do better by paying upfront.
“The old adage went, ‘If you can predict something, you can prevent it.’ And yet as a practitioner, when we look at the population of inner-city children, a lot of stuff was happening that you could predict but nobody was preventing anything,” Zavoski says. “Standing in the capital city in the richest state in the richest country in the world, that’s not acceptable.”
Under Connecticut’s FFS system, primary care doctors are given bonuses for coordinating their Medicaid patients’ care. “They don’t just say, ‘You have a heart problem.’ They’ll make an appointment with a cardiologist and follow-up,” Andrews says.
Paying out doctor bonuses won’t break the bank, but other preventive measures do involve five-figure decisions. Previously, under managed care, insurers denied coverage of top-dollar treatments — exclusions the state has now reversed. For example, Connecticut will pay $94,500 for a prescription that cures Hepatitis C, with the confidence that it will lower costs in the long run. Zavoski reasons that a one-time course of drugs, paired with education about reinfection, might be cheaper than a lifetime supply of the older pills, which put the patient at risk of severe liver and kidney damage.
Of course, the resources might not always be there. As Connecticut’s legislature faces a massive budget deficit that could slash health programs and congressional Republicans attempt to dismantle Obamacare’s expansion, Medicaid is under constant assault. But if the Nutmeg State has one lesson for the rest of the country, it’s that deferring treatment will cost us later — in dollars and in lives.
Homepage photo courtesy of Joe Raedle/Getty Images.
Continue reading “In Connecticut, Saving Lives Comes With an Unexpected Perk: Saving Money”