In 2013 the U.S. welfare state consisted of three huge programs (Social Security, Medicare, and Medicaid); several other fairly big programs, including Temporary Assistance for Needy Families, food stamps, and the Earned Income Tax Credit; and a number of smaller programs. The Affordable Care Act will eventually become a large program, although not as big as the “big three.” Table 18-3 shows one useful way to categorize the programs existing in 2013, along with the amount spent on each listed program. (The Affordable Care Act was implemented in 2014 so data was not available at time of writing.)

First, the table distinguishes between programs that are means-tested and those that are not. In means-tested programs, benefits are available only to families or individuals whose income and/or wealth falls below some minimum. Basically, means-tested programs are poverty programs designed to help only those with low incomes. By contrast, non-means-tested programs provide their benefits to everyone, although, as we’ll see, they tend in practice to reduce income inequality.

Second, the table distinguishes between programs that provide monetary transfers that beneficiaries can spend as they choose and those that provide in-kind benefits, which are given in the form of goods or services rather than money. As the numbers suggest, in-kind benefits are dominated by Medicare and Medicaid, which pay for health care. We’ll discuss health care in the next section of this chapter. For now, let’s examine the other major programs.