‘Means Tested’ Welfare Means Nothing in Practice

By Robert Doar. He is a fellow at the American Enterprise Institute and a former commissioner of the New York City Human Resources Administration. Excerpts: 

"In previous periods of rising employment and income, takeup rates in assistance programs dropped. This hasn’t been the case in the years following the Great Recession, even after accounting for ObamaCare’s expansion of Medicaid. What gives?

A recent report on Medicaid in Louisiana may provide some insight. It includes findings that Sen. John Kennedy has called “stunning” and “breathtaking.” To those of us who follow enrollment numbers in Medicaid and SNAP, it was hardly a surprise at all."

" Federal and state program administrators have consciously and significantly loosened the verification processes that once were part of enrolling applicants in SNAP, Medicaid and other programs."

"It used to be a given that before enrolling an applicant in a means-tested program, administrators would ensure that his income was low enough to qualify. We would later verify our findings using other data sources to see if the applicant had earnings he hadn’t reported on his application. And there was a required “asset test” to make sure that the public wouldn’t get stuck paying for health insurance for property owners who tried to game the system.

But over the past decade the federal government has streamlined the application process in an effort to enroll as many people as possible. Regulators have told states they no longer have to run many of these checks, and have even prohibited states from requiring certain tests. As a result, people who once would have been caught underreporting their income are now slipping through, and more people receive benefits than are truly eligible.

ObamaCare’s Medicaid expansion bears most of the blame. The new law made people earning up to 138% of the federal poverty line eligible to receive Medicaid. The Medicaid marketplace it created includes no mandatory verification processes, allowing people simply to declare their income and start receiving benefits. As described in a 2013 issue brief from the Centers for Medicare and Medicaid Services touting “simplified, real-time verification”: “Eligibility will be verified primarily through self-attestation.” Simplified indeed."

"Under the “federal matching” framework in Medicaid, the federal government reimburses states for their health spending in a way that encourages states to spend more and care little about the cost."

"ObamaCare also eliminated asset testing in Medicaid altogether"

"The same trend of minimizing verification requirements has occurred with SNAP."