No series on budget solutions would be complete without a taking a look at the fastest growing state department, the Department of Human Services (DHS).
The Independent Fiscal Office projects spending in DHS—where welfare programs are housed—to grow by more than $1 billion in 2017-18. The increase alone nearly matches the Pennsylvania Treasury Department’s entire budget, which is the fourth largest in the state.
Calling the system unsustainable is an understatement. Reform is paramount because too often the system harms those it purportedly serves by trapping them in a cycle of poverty and dependence on political whims.
Medicaid is a prime example. It does a poor job of providing quality care and provides little flexibility for our population's diverse health needs. One solution is to seek flexibility from the federal government through a waiver or future block grant to create a program that provides patients control over their care and a smooth transition to private insurance.
If lawmakers have the flexibility to reform Medicaid, they can reduce costs and ensure able-bodied adults aren’t crowding out services for those who need them most. Florida and Rhode Island successfully improved care and reduced costs through innovative waivers.
In addition to Medicaid, SNAP (also known as food stamps) and Child Care Works should command the attention of policymakers. In our brief, Embracing Innovation in State Government, we recommend implementing stronger work requirements for both programs as a way to boost the incomes of beneficiaries to the point where they no longer require government assistance.
When Kansas implemented work requirements for SNAP incomes rose by an average of 127 percent, which led to a $1.3 million annual increase in tax collections. When Maine instituted SNAP work requirements caseloads dropped by 80 percent.
In addition to the reforms above, auditing welfare programs is yet another way to drive down costs and concentrate limited resources on truly needy Pennsylvanians. Lawmakers could authorize “recovery audits” whereby private firms review programs to determine if people are making proper use of government assistance. Any payment to these firms could be made contingent on savings realized by rooting out fraud.
Unfortunately, the Wolf administration has publicly resisted these win-win solutions. In the past week two weeks, the governor announced he is against a Medicaid block grant and lauded the addition of 700,000 Pennsylvanians to Medicaid roles in the course of two years.
Constant expansion of our welfare programs is reason for concern, not celebration. Until we commit to ending the unhealthy cycle of dependency on government benefits, we cannot solve the state’s unhealthy cycle of fiscal woes.