We Need a Department of Benefits
Not enough people receive benefits they qualify for
America has a host of welfare programs to help those most in need. The Supplemental Nutrition Assistance Program (SNAP) provides money for food. Medicaid and the Children’s Health Insurance Program (CHIP) provide access to health care. The Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) provide financial assistance.
Each of these is an entitlement program, meaning if you meet the program’s eligibility criteria, then you can receive the benefit. By contrast, programs like housing vouchers have limited resources. Only a quarter of families that qualify for housing vouchers receive them, and the waiting list to get a voucher is, on average, 2.5 years.1
The problem is millions of families who qualify for benefits aren’t receiving them:
SNAP: 18% of eligible people—or 8 million people—don’t receive SNAP benefits.
Medicaid & CHIP: 25% of eligible nonelderly people—4.2 million adults and 2.2 million children—remain uninsured.
CTC: 7% of eligible people—or 2.4 million people— don’t receive the tax credit.2
EITC: 19% of eligible people—or over 5 million people—don’t receive their tax credit.
There’s a host of reasons academics point to for why these numbers aren’t 100%.
First, there’s stigma. Some people may not get SNAP because they don’t want to feel judged at the grocery store or be the targets of negative political rhetoric around welfare.
Second, there’s a lack of information, especially for newer and less-well-known programs. For example, the participation rate for Supplemental Security Income, which provides a guaranteed income for the elderly, is under 50%, largely because people don’t know about it.
The third—and most pronounced barrier to participation—is transaction costs. It takes a lot of effort, time, and frustration to sign up for programs. People are often confused about rules, deadlines, and incentives, which is understandable because it’s incredibly complex.
Think about what it’s like if you want to try to sign up for all of these programs. You have to navigate a host of federal and state agencies. Often that means taking time out of work to travel to a new agency and figuring out transportation to get there if you don’t have a car. Each agency will ask for new paperwork—annoying both when they ask for the same thing and when they demand something new.
Once you’ve gone through that rigamarole, no one can give you a simple answer on which programs you qualify for. Take SNAP. My friend (and loyal WGP subscriber) created an as-simple-as-possible calculator to help families see if they qualify. You’ll see it’s a lot more complicated than just putting in your income. And using this handy calculator, say you figure out that under SNAP rules you have four people in your household. You’d assume you have a four-person household for all other programs, right? Nope. Technical definitions vary from program to program. For example, in SNAP, a household is generally defined as the people with whom you buy and prepare food. In Medicaid a household is generally defined as an applicant, their spouse, and any dependents they claim on their tax return.
This process is insane. We can do better by those most in need of assistance. Here are three ways to do so:
The Department of Benefits
Congress should create a new agency, the Department of Benefits (DOB), that can act as a one-stop-shop for people looking to access their benefits. By consolidating the determination of eligibility, the federal government can get participation rates to 100%.
Instead of navigating a slew of paperwork from different bureaucrats, people would have to submit one form to this agency with all of the information needed to know if they are eligible for any welfare program. You wouldn’t need to know what are all the requirements of each program, you just need to give your information once and a case worker will tell you what programs you are eligible for and enroll you in them. To speed things up, other federal agencies—like the IRS and Social Security Administration—should share relevant information with DOB so that it already has access to data like your income. In turn, DOB would tell relevant agencies—both federal and state—which individuals qualify for their programs.
This approach would boost participation rates because it enables what Susan Tahk calls “automatic notification.” A random person probably doesn’t know all the federal programs that exist, let alone which ones they qualify for. Staff at the DOB, though, should. When they receive an individual’s information, they can automatically notify them about other programs they may be eligible for and request additional information as needed to enroll them. This takes away one of the major transaction costs for people—a lack of information.
You might be thinking that this proposal is unnecessarily complex. Why not have a single agency both determine eligibility and actually administer the programs? The actual administration of much of these programs is very complicated. Current federal social programs vary in how they are administered. Tax credits go through the IRS and the SSA handles other direct financial assistance. Other programs, like SNAP and Medicaid, are administered through state agencies with varying and changing rules. In my opinion, it would not be worth the uphill climb to have a new agency involve itself with the tax process or manage massive, federalized programs. DOB will be best served if it specializes in determining eligibility and being a messenger for people between the web of federal and state agencies.
Expand the Social Security Administration
A second option would be to nestle this work into the SSA. There are a few reasons why this could be preferable. First, the SSA already has expertise in determining eligibility for Social Security. You could imagine building on that functionality to incorporate other social programs. Second, the SSA could more easily actually administer some of the programs, such as the direct financial assistance programs. Again, it has a track record of doing so. Third, SSA already has about 1,230 field offices. This would be important since many people would need to meet with agency representatives in person to discuss their eligibility. Lastly, the SSA has a high approval rating as an agency and for its customer services at an individual level.3 It would be important that Americans trust the agency in charge of this work, which is why I think the SSA would be better suited to take this on than the IRS, which people don’t love.
I still prefer the creation of a new agency because I think this would muddle the mission of SSA and potentially create a lot of turbulence at an agency millions of Americans rely upon to function smoothly!
Harmonize Eligibility Requirements
Another option, of course, is just to make the programs less complicated. Americans could figure out what they were eligible for if all of the rules and regulations were easily accessible, written in plain English, and harmonized across programs. Wherever possible, Congress should try to simplify these requirements. But, there’s often substantive reasons for the complexity and differences.
For example, the definition of a “qualifying child” varies by program. Broadly, Medicaid counts a child if they are a dependent on a tax return, SNAP counts a child if they eat meals at the applicant’s house, and EITC/CTC counts a child using a four-part test, asking questions like how many nights a child stays in a certain residency.
There are benefits to this variation. Jacob Goldin and Ariel Jurow Kleiman have a great paper all about child-claiming rules. For example, imagine a child with two divorced parents. A varying definition of “qualifying child” across programs enables the parents to have some degree of flexibility so that one parent might get benefits from one program while the other gets benefits from a different program. This would enable them to better co-parent and ensure the parent with different responsibilities for that child’s life has access to the right resources.
Beyond these technical definitions, there’s reasons for bigger substantive differences. For example, getting long-term care through Medicaid requires an asset test whereas the EITC and CTC never do. That’s because the tax credits are intended to provide a certain level of income to families. On the other hand, Medicaid provides long-term care services to families who cannot afford it. While income is important determinant of affordability, so is wealth.
Lastly, if you’re concerned about the patchwork system of our social safety net, you could argue that keeping a wide array of programs could help prevent a family from falling completely through the cracks. If there were only one welfare program, like a universal basic income, a family that misfiles their application or simply isn’t eligible would then receive nothing. The fractured delivery of benefit programs may be more inefficient, but in some ways it provides a wider safety net, albeit one with a lower floor of benefits. Eligibility requirements across programs also target different populations. The EITC targets adults who work whereas Medicaid targets those with low-incomes and little wealth. This variation can work to ensure that low-income households qualify for at least some benefits.
None of this is to say that getting each of these programs up to 100% would mean we have a flawless social safety net. Again, only a quarter of people who financially qualify for housing vouchers get them. But Congress has already passed these programs and we need to find a way to make sure that all the families who should be benefiting from them are benefiting from them.
What I’m paying attention to:
Immigration:
ICE deported 3 children who are U.S. citizens, including a “child suffering from a rare form of metastatic cancer was deported without medication or the ability to consult with their treating physicians–despite ICE being notified in advance of the child’s urgent medical needs.” No words.
The FBI arrested a Wisconsin judge for obstructing ICE.
I think the Administration’s fight with the Supreme Court will come to a head in coming days. The Administration is clearly not “facilitating” the return of Kilmar Armando Abrego Garcia like the Court instructed. Instead, the White House is trolling the Court and insisting they will bring Kilmar back.
Bond Market: The New York Times has a good summary on the craziness that happened in the bond market recently and why the bond market convinced Trump to reverse course on some tariffs. I’ll be curious to see if this is a blip (I doubt it) or a big step towards the U.S. dollar losing its preeminent status as the world’s reserve currency. Investors (and foreign countries) around the world have bought U.S. Treasury debt for decades because the U.S. economy and political system is relatively stable. That allows us to borrow money cheaply and allows the government to pursue policy objectives through the power of the dollar (e.g., using sanctions to cut bad actors off of the global financial system). If investors turn away from the dollar, there’ll be massive ramifications, including a much higher cost to our government to service our debt and higher borrowing costs throughout the U.S. economy, including for businesses and families. I’ll do a piece soon on why a strong dollar also enables the federal government to pursue other foreign policy objectives.
What I’m reading:
I had wanted to read Devika Rege’s debut Quarterlife before I went to India in February, but, alas, I just got it from the library. It follows a few characters in their 20s—an American-educated finance bro, an amateur filmmaker, a white New Englander doing a fellowship, a young political activist—navigating the rise of the BJP in India. It took me 200 pages to get invested in the characters, and the book could be hard to appreciate without a deep understanding of Indian history, politics, geography, and religion. Some of the conversations between the characters was excellent, demonstrating how people’s politics can change slowly and then all at once.
It varies a lot by location.
Note this estimate is from 2020. The Biden Admin did a “whole-of-government” effort to boost participation when the American Rescue Plan increased the Child Tax Credit from $2,000 up to $3,600 for one year and made the credit a monthly payment instead of a lump sum payment on tax returns. The participation rate should be higher now.
Pre-DOGE cuts at least.