Encouraging Individual Ownership in Public Benefit Programs
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State and federal governments spend millions of dollars on benefit programs each year in an attempt to provide for the health and welfare of those most in need. One of the biggest challenges is that these programs define poverty, and therefore benefit eligibility, in terms of a household income threshold. According to 2015 U.S. Census Bureau data, more than 43 million Americans live in poverty, which means their annual income is $15,060 or less (for individuals) and under $30,750 (for a family of four). Individuals who fall below this “poverty line” qualify for thousands of dollars in benefits – mostly in the form of “non-cash” benefits that when converted to a cash value would place their incomes above the poverty line. This creates a significant challenge for government: providing the means to raise people out of poverty without creating economic disincentives for raising their income.
While the Administration is understandably focused on growing the economy to combat poverty, a strong economy will not magically solve challenges that individuals face when attempting to raise themselves out of poverty. Even in states like Colorado, which has one of the top five strongest economies in the U.S., still has about 12% of its population living in poverty.
Some may say that raising the minimum wage is the answer. Regardless of the impact of raising the minimum wage on businesses, it doesn’t always solve the problem. A minimum wage of $15 per hour means a full-time worker is only making $31,200 per year. For individuals who are the only wage earners in their households, the increase barely puts their income over the federal poverty level – and has the detriment of making them ineligible for many government programs that they would receive otherwise. In many cases, this is a self-defeating spiral where individuals cannot accept higher paying jobs because they will lose program benefits that are not replaced by wages or company benefits.
However, the numbers don’t tell the whole story for any of these Americans. It is an unfair characterization that the majority of the population that receive government benefits are lazy or unmotivated. Many individuals want to take steps to improve their situations – they just don’t have the tools or see a reasonable path to self-sufficiency. Overcoming obstacles can be very challenging for someone who is grappling with a car that won’t start, two young children, and no food to provide them.
The current process for benefit eligibility and case management does not allow people to envision what their lives could be with the right decisions. For example, when a family applies for Medicaid, their eligibility is primarily determined by household income and family size. No information is gathered about the situation in the household, what other government programs the family is enrolled in, food availability, etc. In fact, that family may be on Medicaid for several years with no other information or guidance received – until the year when their income increases even a dollar above the Medicaid eligibility threshold. Then they are on their own to find health insurance, which likely will wipe out any income gains they have achieved.
So where can states and communities focus to combat poverty and provide individuals a pathway to a better life for them and their families? A good start is a coordinated approach with two main components: identifying and removing the individual roadblocks to success, and assigning individual responsibility to the beneficiary.
Address Individual Roadblocks – In order to hold individuals accountable for improving their economic situations, we need to acknowledge the roadblocks they are experiencing and help them find ways around, over or through these roadblocks. For example, finding a job in Colorado may not be difficult, but finding childcare and transportation in order to keep that job may not be as clear-cut. The overwhelming responsibilities and stress of everyday life can blind individuals to the steps needed to improve their situations.
Approach – Create personalized pathways through conversations – not just applications – when an individual or family enters a benefit program. Understand their particular roadblocks to success and document the steps and timeframes for addressing these barriers. This may be as simple as helping them understand the public transportation routes that get them to their jobs, or as complex and long-term as identifying the education programs that can help them get jobs with medical benefits. This is not a single conversation or point-in-time approach – this has to be a true benefit coordination approach. Once one roadblock is overcome, the pathway to success has to be assessed again to make sure that each individual is on track and supported for success.
Promote Individual Responsibility – We all know that when there are goals and consequences for what we do, we are more likely to stay on the path that benefits us most. However, when an individual is dealing with the daily stress of just surviving, goals and consequences are not easily defined. Many states are considering the benefits of requiring work or volunteer hours in order for individuals to remain eligible for certain programs like Medicaid. While this is one method to introduce additional accountability, it does not necessarily encourage a pathway to get off Medicaid or other programs. States and communities need to help individuals define goals and hold them accountable for the support they are receiving.
Approach – By building a personal plan and documenting the steps for success, we can then hold individuals accountable for following this plan. While loss of benefits is an option states are exploring, as in the case of Medicaid work requirements, lesser levels of penalty and encouragement may be as effective and beneficial to both the recipient and the state. For example, if individuals complete training to get better jobs, but cannot provide health insurance for their families even with the increased wages, the state could agree to supplement their private insurance while they continue on their paths for even greater financial improvement. Similarly, we have seen programs where the state contributes to an escrow account as long as an individual stays on a path to get out of public housing, allowing the individual to eventually buy a house of his or her own.
While not every American living in poverty or on a government program is willing or able to embrace the responsibility of ownership for improving their lives, most people are looking for someone to show them the path. If we are going to stem the flow of spending in government programs and reach those individuals who are capable of improving their situations, we have to start initiating conversations to understand their circumstances and implement a coordinated approach to the solution. Additionally, states and the federal government have to be willing to break down individual silos within departments to share information and resources to create a holistic approach for the individual. This is not a simple or short-term solution. However, considering the complexity of many government programs and the decades under which that complexity was established, individual ownership is a long-term approach that states and communities need to support.