Creating a One-Stop Shop for U.S. Aid Programs
Why do so few Americans take advantage of more than one benefits program? That’s the question Aparna Mathur tries to answer in a recent blog post for Forbes. Mathur, a Senior Fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School, and a Visiting Scholar at Foundation for Research on Equal Opportunity, proposes a “one-stop shop” for overall benefits access as well as short-term cash emergency cash assistance. She writes: “If COVID-19 taught us anything, it is that we need to be much better prepared to handle not only the next big crisis, but also the crises that play out in people’s lives every day. We owe it to ourselves to work towards a better and more robust U.S. social safety net.” Mathur recently answered emailed questions from Spotlight about her article.
Why does the U.S. safety net so badly need to be fixed?
We need to fix the U.S. Social Safety net for many reasons. The safety net is comprised of multiple different programs (SNAP, TANF, Unemployment Insurance, etc.) that are supposed to provide people with a backstop level of support when they face hard economic times due to job loss or other reasons. However, in many cases, accessing these programs is not easy due to burdensome application requirements, strict eligibility criteria, and other reasons. We saw some of this play out during the pandemic, when millions of people had to file for unemployment insurance, and the system could not keep up with the surge. But even in non-crisis times, we find that participation rates across these programs vary a lot, either because eligibility rules vary a lot across states or access to the program is not easy. It’s also possible that the hurdles that people have to cross in order to claim a few hundred dollars in benefits may not feel worth it. In the aggregate, SNAP has a participation rate of 82% while TANF has a participation rate of 27%. So, we need to understand how to structure these programs better to actually provide help to people when they need it.
My analysis with the SIPP household survey, shown below, shows that very few people receive support from multiple programs at the same time, which makes the idea of a “safety net” questionable. The 2019 Survey of Income and Program Participation shows that only 31 percent of households at or below 130% of the federal poverty receive multiple social safety net benefits. Moreover, 46 percent of households in this group receive no benefits at all. The other 23 percent of households in this group receive a single benefit (often Medicaid or SNAP). So, we should try to understand what is leading to such low participation rates and how to fix it.
Why aren’t more eligible Americans using multiple aid programs?
There is relatively little existing research on participation in multiple benefits programs. A 2014 analysis from the Urban Institute found that 57 percent of households at or below 200% of the federal poverty level receive multiple benefits. The discrepancy between my analysis and the Urban Institute’s may be due in part to under-reporting of benefits in the SIPP and changes in participation rates over time. The Urban Institute research finds that families receiving the multiple benefits tend to have lower incomes, lower levels of employment, and lower levels of education. We find similar results with the SIPP data.
Why is this the case? Why don’t more people access multiple benefit programs? There are several possibilities.
- Measurement issues: Academic research shows that people often underreport benefit receipt in household surveys, so the lower numbers observed in household surveys may be a result of this. Currently, there isn’t one administrative dataset that can be used to construct multiple benefit usage.
- Stigma: Stigma refers to entrenched negative (and racist) stereotypes about how people who receive social safety net benefits are lazy or fail to contribute to society. Research consistently links these negative stereotypes to lower uptake rates. For example, a recent study from Elizabeth Linos found that using de-stigmatizing language in outreach materials for a rental assistance program increased program interest by 36%.
- Time Tax: Annie Lowery has documented how government programs that support the poor are more burdensome and time-consuming than programs that support the wealthy or middle class.
- Compliance Costs: State and local governments — who administer most social safety net programs — make it very hard for eligible populations to benefit from programs, given cliffs, strict eligibility requirements, burdensome documentation requirements, and more. For example, as of 2019, 33 states lack online applications for at least two key social safety net programs, and 19 states do not allow people to claim SNAP and Medicaid benefits at the same time, despite similar eligibility criteria across programs. Preliminary analysis using SIPP data shows that states that have online applications have fewer people responding that they did not receive any benefits.
- Politically, there is a rift between those who consider easy access a problem since it may reduce incentives to work, while others advocate for Universal Basic Income as a replacement for the current patchwork of safety net programs.
How does support for cash assistance, such as UBI, intersect with efforts to make the existing safety net system more accessible?
What struck me about the U.S. pandemic safety net response was how quickly Congress moved to sending out cash (checks) to people to provide immediate support. Three rounds of check payments were sent out. In addition, unemployment insurance was expanded significantly by $600 per week (later by $300 per week) which meant that those who lost jobs were receiving maybe $800-$900 per week in cash payments.
Research shows that these two cash supports (and later the expanded Child Tax Credit) not only compensated households but in many cases provided support that was more than 130% of what they were making on their job. So, the U.S. pandemic response, in my mind, was very much a cash response. Yes, we also expanded other safety net programs like SNAP, but that was not the main form of support. And as a result, poverty declined significantly.
I think some type of immediate cash support, that is not conditional on work, but is temporary, can certainly be part of the existing safety net. The worry about people dropping out of work or the system messing with work incentives can be addressed by providing short-term, reasonable cash support, that allows people time to recover from the shock that they are experiencing but that is not a guarantee in the long-run. So it’s not UBI because payments don’t continue month after month, but it is universal and it is cash-based. After the initial support, people can then access the traditional safety net programs that are conditional on work or searching for work.
How would your “one-stop shop” proposal work?
One issue with the current social safety net is that every program has its own eligibility rules, benefit amounts, duration for which benefits are available, application process and so on. This makes it confusing for people to understand what programs they are eligible and how to apply. It also leads to benefit cliffs where eligibility for one program may cause benefits in other programs to decline, leading to high implicit tax rates on people at the lower end of the income distribution. I think that system can and should change.
The idea of a one-stop shop is to allow people, in a state or a city, to apply for all the programs they are eligible for by putting in one application form that details their income and assets and any other information that is needed. This could be information submitted to a portal that is managed by the state, federal or local administration, or a private vendor that works in conjunction with the administration. This would save people a lot of trouble and time. All the processing happens behind the scenes, and benefits should start coming in faster than under the current system where people have to often apply for different programs separately—sometimes by showing up at an agency and sometimes by mail. My research shows that people are more likely to access multiple benefit programs in states where applications can be filed online. These online platforms can be set up across states and would require alignment across different government departments that administer different programs. We live in a world where I can read newspapers from any country around the globe and connect with people all over. I can buy cars and groceries online, and virtually visit the pyramids in Egypt. Why should it be so hard to make this process of online applications work well for someone who needs real help?
You would also add a more modest immediate cash assistance provision for the newly unemployed. How would that work?
As mentioned earlier, the idea of immediate cash assistance is to provide urgent help to those experiencing a sudden economic shock. So we could have a simple process by which someone reports their loss in income or job to an online portal, and subject to quick verification, they would receive immediate (within a week) cash help from the government. While this may be similar to how unemployment insurance works, the program would be universal, and benefits can be a fixed dollar amount. The support would be temporary, lasting a couple of months. In addition, during the period of cash support, households would not need to show that they are looking for work or meeting some other eligibility criteria to receive the support. The advantage of the fixed cash support is that it would be relatively less beneficial to higher income households (since it will be a smaller share of their income) who typically have savings to rely upon. I am working on modeling what the right amount of support could be and what the duration might be. But conceptually the idea is to provide enough support that people feel like they have time to get back on their feet, but not so much that there is no incentive to return to work when they are able to.
How would you assess the political climate in the new Congress for building support for such a proposal?
I think currently there is a divide politically on how to address the challenges with the current safety net. Or more broadly, what are the right set of supports to help people when they are down? There is a worry that if too much cash help is provided, then people may have no incentive to work and this could lead to longer run problems because attachment to the labor force is critical to having good economic outcomes. Obviously, we don’t want people to rely only on government help to make it through life. At the same time, the opposite worry is that we are doing too little, which is problematic since it means that there is unnecessary suffering for families and children, which also leads to adverse long-run outcomes.
My proposal is trying to find a middle ground. I think we should be a society that is willing to provide immediate, unconditional help when people face an economic shock, but that help is temporary and not overly large, in order to reduce reliance on government programs over time. After the immediate period of need, we can condition additional assistance on maintaining work incentives and attachment to the labor market. But even here, we need a better, streamlined system, that is efficient and allows people to easily access the different safety net programs that they are eligible for. After all, what is the point of a safety net if people have to struggle to find it?
Aparna Mathur is a Senior Fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School, and a Visiting Scholar at FREOPP.