This is another commentary in Civic Way’s series on reconstructing American government, more specifically state government. The author, Bob Melville, is the founder of Civic Way, a nonprofit dedicated to good government, and a management consultant with over 45 years of experience improving public agencies across the US. Our earlier commentary on the need to revamp Federalism provides a useful framework for understanding our views of state government. We also suggest our commentary on restructuring state government.

Highlights

• The US has a virtual buffet of public benefit programs, but the way they are regulated and administered makes them incredibly difficult to navigate—for beneficiaries and public officials alike
• Under American federalism, most public benefit programs are administered or financed jointly by federal, state and local government, a feature that greatly contributes to their inefficiency and futility
• Despite their size, we know far too little about the costs, outcomes or value of our many federal, state and local benefit programs—or what we should do to improve them
• Some state governments have tried to streamline their public benefit programs, but these improvements have been incremental and limited by unsynchronized federal rules, regulations and practices
• States, in tandem with the federal government, should conduct a comprehensive analysis and redesign of federal-state benefit programs and implement long overdue reforms

Introduction

During the holidays, it can be easy to forget that millions of Americans are waging a daily fight for survival. Unemployed. Food insecure. Delinquent with rent or homeless. No money for gifts. Many assistance programs—public and nonprofit—exist to relieve this suffering. But, unless one has had the misfortune to need one of these programs, one cannot possibly imagine how poorly designed they are. How their schizophrenic rules make them both exorbitant for taxpayers and humiliating for enrollees.

State government is riddled with inefficiencies, mostly due to its antiquated structure. But it also is plagued by non-structural deficiencies like rigid policies and processes. Through innovation and technology, many states have made incremental improvements in spite of the structural flaws. This progress has been gradual—even imperceptible—but commendable. Still, there is much more to do.

We have recommended several structural reforms to state government, but these ideas will encounter stiff resistance. Such measures will take time, and success is anything but assured.  In the meantime, there remain several non-structural opportunities for improving state government, opportunities that can largely be attained—or at least initiated—with good leadership and smart investments. This commentary presents one such opportunity—public benefit programs administered by state governments, often in tandem with federal and local agencies.

The Endless Buffet Line

Most of us expect our government systems to be as easy to use and responsive as commercial offerings. When we order a product or seek help online, we expect—and usually get—immediate results. In contrast, our public benefit programs, among the largest, most expensive government programs, are slow and confusing. To potential beneficiaries, these programs look more and more like a buffet with an interminable wait. Finding diversions while waiting can only take us so far.

If we want to reduce state government costs or improve state government operations (or both), there is no better place to start than our state benefit programs. Most are designed to ensure compliance, not access. Many share common data (and eligibility criteria), but little else. Disjointed, siloed administration. Multiple platforms. Antiquated, cumbersome and degrading application systems for ever-dwindling benefits. Redundant steps. Inordinate paperwork. Unwarranted costs.

In the US, there is a virtual buffet of public benefit programs, some financial (cash-based) and many non-cash (e.g., food, housing, health and retirement). Some programs are run solely by federal agencies, some via federal-state partnerships under federal regulations. A partial list is presented below.

• Medicaid – federally-regulated, federal-state funded and state-administered health insurance for low-income families and individuals
• Children’s Health Insurance Program (CHIP) – federally-regulated and state-administered health insurance for dependents under age 19 whose parents earn too much to qualify for Medicaid, but not enough for private health insurance
• Supplemental Nutrition Assistance Program (SNAP) – this program, once known as food stamps, enables low-income families to supplement their food budget
• Special Supplemental Nutrition Program for Women, Infants and Children (WIC) – a federal grant program administered through 90 WIC agencies and about 47,000 WIC retailers and providing  low-income women and their young children healthy food, nutrition counseling, and referral services
• Supplemental Security Income (SSI) – federal program offering monthly cash payments for older, blind, and/or disabled Americans with limited income
• Social Security Disability Benefits (SSDI) – for those unable to work for at least one year or expected to die due to a medical condition
• Temporary Assistance to Needy Families (TANF) – federally funded, state-run and time-limited program providing cash and other benefits (e.g., food, housing, home energy, childcare and job training) to low-income families with children

The federal government offers other benefit programs. Free or low-cost food programs, such as the National School Lunch Program (NSLP) and  Senior Farmers’ Market Nutrition Program (SFMNP). Child-care subsidies. Student financial aid programs. Veterans Affairs (VA) loans. Subsidized rental housing. Home ownership vouchers. Two supplemental unemployment insurance programs for the pandemic (e.g., the Federal Pandemic Unemployment Compensation and Lost Wages Assistance programs). The US also has several social insurance programs, some of which, like Social Security and VA benefits, are solely federal.

How Federalism Undermines Public Benefit Programs

Under American federalism, most public benefit and insurance programs are administered or financed jointly by federal, state and local government. Many federal programs, like TANF, involve multiple federal and state agencies and, in some states, hundreds of counties. This feature rarely makes such programs more efficient or humane. Rather, the disjointed regulation of public benefit programs—and the involvement of so many entities—contributes significantly to their inefficiency and reputation.

Even some of the public insurance programs involve awkward partnerships. The Unemployment Insurance (UI) programs, for example, represent federalism at its worst, with federal regulations layered on disparate state eligibility, filing and benefit rules. The user experience with UI programs varies widely depending on one’s residency. Some states, like North Carolina, have draconian rules and benefits. Other state unemployment systems, like California’s, are simply obsolete or unreliable.

Some states have created their own public benefit programs without federal involvement. One example is state housing programs. Another is General Assistance (GA) programs. About half the states offer their own GA programs, cash assistance programs for poor childless adults (there is no federally-supported cash assistance program for poor adults without minor children). The monthly benefits range from a low of $79 in Delaware to a high of $797 in New Hampshire. Since 1998, inflation-adjusted GA benefits have declined in every state with a GA program (e.g., the State of Washington’s maximum monthly benefit fell from $538 to $197).

The Costs of Public Benefit Programs

While it is very hard to determine the true costs of public benefit programs, we know they account for a major share of federal, state and local budgets. The Heritage Foundation has estimated that the federal government alone spends well over $1.1 trillion per year in the aggregate on such programs. This would make public benefit programs the third most costly federal budget item, more than national defense.

State and local governments also play an important role in financing and administering public benefit programs. The Heritage Foundation estimates that about 85 percent of the costs of means-tested public benefit programs (excluding Medicaid) are funded by the federal government. But this estimate, in lieu of other information, could understate the budgetary impact of public benefit programs on state and local governments.

In 2017, 22 percent ($673 billion) of state and local government direct general spending was on public aid (including federal transfers). State governments shoulder a much higher burden than local governments. For example, in 2017, local governments accounted for less than 20 percent of total direct general expenditures on public welfare (less than 5 percent in 37 states). Medicaid represents the single most significant public benefit cost for state governments.

Given the size of public benefit program budgets, it is unfathomable that we know so little about their aggregate costs or respective outcomes, at the federal, state or local levels. The programs are financed and administered across so many different agencies, programs and budgets. There is no single, reliable source for tracking these costs, let alone assessing the costs and outcomes by program. We know far less than we should about which programs work, which don’t, which should be salvaged, merged or reformed.

The Inherent Inefficiencies of Public Benefit Programs

Designed and launched over many decades, and often with the best of intentions, our public benefit programs have become plagued by a complicated quilt of largely unsynchronized (and unnecessary) rules, regulations and rituals. The Center on Budget and Policy Priorities (CBPP) has done some invaluable work on public benefit programs and the opportunities for improving their coordination (https://www.cbpp.org/research/poverty-and-inequality/opportunities-to-streamline-enrollment-across-public-benefit).

For starters, their eligibility criteria vary, even when the policy reasons for such differences are unknown or at least murky. Many benefit programs use means-tested eligibility criteria (e.g., TANF, Medicaid, SNAP, housing and student aid). Social insurance programs typically employ other eligibility criteria (e.g., age, disability, employment status or veteran status). Some programs follow federal eligibility rules, some follow state rules and some navigate both. Stepping back and reexamining these eligibility rules in their totality—and through the eyes of potential beneficiaries—could yield invaluable insights for redesigning the programs.

The filing processes also vary by program and state. For example, for SNAP, some states allow online applications while others require the applicant’s physical presence. Applicants can file for Medicaid and CHIP through the ACA Health Insurance Marketplace or a state Medicaid agency. Regardless of the eligibility differences, the applications require much of the same data. And there are other federal aid programs that, while not income-based, require similar application data. Age-based programs like Social Security and Medicare. Subsidized health care insurance under the Affordable Care Act (ACA). VA healthcare.

This is not to suggest that states have not tried to streamline these processes. They have made incremental improvements. They have reengineered and automated many application and enrollment processes, enabling applicants to apply online or by phone and email documents. They have strengthened the ability to match data and identify potential fraud. In some cases, they have merged administrative duties within a single agency. However, there remain significant opportunities to improve beneficiary services and reduce operating costs.

Redesigning our Public Benefit Programs

There are several steps that states should take to improve the effectiveness and efficiency of the public benefits programs they finance or administer. First, through the National Governors Association (NGA), they should join with the federal government and launch a federal-state task force to conduct a comprehensive analysis and redesign of federal-state benefit programs—in short, to reimagine the programs. The impetus of this initiative should be to make the programs more efficient, dignified and impactful.

Federal and state legislators should enact enabling legislation that will authorize federal and state officials to modify program regulations, especially to simplify cross-program eligibility determination. For example, the laws and regulations should expand automatic cross-program eligibility (e.g., the federal government accepts Medicaid eligibility for WIC-income eligibility and 33 states accept SSI eligibility for state Medicaid eligibility).

Similarly, program administrators should be empowered by legislators to be more proactive. For instance, program administrators should have the latitude to test more efficient measures. One option could be proactive notification (i.e., use available data to offer prospective enrollees a fast-track eligibility process). Another option could be proactive eligibility (i.e., automatically initiate the application process, but make enrollment contingent on applicant action). A third option could be proactive enrollment (i.e., use available data to proactively award benefits to qualified individuals). Proactive measures would have to be coupled with rigorous post-payment audits to minimize errors and fraud.

States also should reexamine the benefit programs they manage—through state agencies or counties—to identify feasible opportunities for consolidating administrative responsibility. Instead of continuing to decentralize the administration of public benefits programs through multiple state agencies and hundreds of localities, they should promote coordinated administration (e.g., assign program management duties to single, lead agencies). They also should revisit benefit policies and process rules to ensure that state-run programs are agile enough to respond to future pandemics.

States should redesign the public benefit program application systems around users, not the bureaucratic needs of government agencies. The federal-state task force should adopt a uniform, one-stop application process for all benefit programs. If not, the task force should ensure that every system, process and form are linked or integrated to minimize redundancy and streamline the user experience. It should exploit cross-enrollment opportunities to reduce duplicative work (e.g., collecting the same data from the same family many times). It should automate data-matching algorithms to enable applicants to access multiple programs across multiple agencies without completing multiple forms.

Making Public Benefit Programs More Efficient and Humane

Our public benefit programs have always had competing objectives. They must provide aid to the least among us, when they need it, and in a respectful way. They must also promote self-reliance and provide a path to personal independence for beneficiaries and their families. Finally, they must prevent or minimize fraud and ensure the prudent use of taxpayer dollars.

By redesigning our patchwork of public benefit programs, we can fulfill these goals. We can build a broader, more accessible and more humane safety net for those who need a boost. We can institute benefits and other policies that promote self-reliance for eligible persons. And we can implement systems, processes and controls that minimize operating costs and fraud.

A new public benefit program blueprint would have many other advantages as well. It could offer enormous benefits for other sectors. For instance, it could not help reduce the alarming costs of our health care system, but advance policy enhancements like insurance exchanges. It also would make it easier for applicants and enrollees to use more efficient self-service tools. Finally, it would generate cost savings that could be used to cut taxes, bolster public benefits or both, and help restore public trust in government at all levels.