How Social Security and Medicare Reduce Inequality
Income inequality has become a major discussion topic in the United States as the discrepancy in financial resources between rich and poor has grown. For people age 65 and over, the gap is substantial but less pronounced than it would otherwise be thanks to Social Security and Medicare, which mitigate disparities in income distribution. Without these programs, the financial status of older Americans would look very different.
To provide some sense of how these programs help reduce inequality, this brief looks at what the distribution of financial resources would be without Social Security and Medicare. The authors contend that Social Security and Medicare are doing what the programs’ creators intended (provide a disproportionate level of support to older persons with the fewest resources) and assert that analyses of any proposed changes should include an assessment of the extent to which the progressivity of benefits—a primary aim of these programs from their inception—would be reduced.