How Social Security and Medicare Reduce Inequality

Income inequality is a major public policy issue in the United States as the gap in financial resources between rich and poor grows. For people aged 65 and older, the gap—while substantial—is less pronounced because of 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, an AIR brief—How Social Security and Medicare Reduce Inequality—examines what the distribution of financial resources would be without Social Security and Medicare. The differences that these two important entitlement programs play in income distribution for older Americans and in the quality of their lives needs to be understood as part of any discussions about changes in these programs going forward.