SNAP, Medicaid Block Grants Would Weaken the Already-Fragile Safety Net
March 13, 2013
Once again, House Budget Committee Chairman Paul Ryan (R-WI) has put forward a budget proposal that calls for block granting of both Medicaid and the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps). Rep. Ryan justifies this proposal by citing the supposed "success" of the Temporary Assistance for Needy Families (TANF) block grant as a model.
As we have explained before, TANF has too often not been a success as either a safety net or a springboard to opportunity. The poverty reduction that Rep. Ryan cites was limited to the boom years of the 1990s; child poverty rates had begun to climb even before the recent deep recession. The funding for the block grant has been eroded over time, and state flexibility has led to a patchwork - and often flimsy - safety net. While the number of families receiving cash assistance from TANF rose somewhat during the recession, it did not climb nearly as much as the number of families who might have benefited from such help.
An important role for safety net programs is to be a countercyclical support - meaning that they automatically expand when the economy is bad. This is both essential for the individuals who need assistance, and an important way to stimulate the economy by putting money in the hands of those who will spend it quickly. However, states have much less capacity to provide countercyclical support than the federal government, as they are required to balance their budgets each year. Their revenues decline in tough economic times, and in the absence of countercyclical federal spending, they are often forced to cut benefits just when they are needed the most. This is precisely what happened under TANF. In some states, time limits for receiving support were shortened and thousands of families lost benefits even as the unemployment rate rose to historic levels. Facing revenue shortfalls, many states used the TANF block grant to take the place of state funds for a range of services for low-income families, rather than providing increased cash assistance.
However, even if you believe that TANF is a success, there are important differences between TANF and Medicaid and SNAP that would make block grants even more worrisome in those programs:
- A Medicaid block grant would not keep up with rising health care costs. Health care costs have risen faster than inflation for many years, across both private and public programs. In fact, Medicaid has been far more effective in controlling costs than most insurance providers. States would have little choice but to reduce benefits, or deny coverage. A study by the Urban Institute for the Kaiser Family Foundation estimated that last year's similar Medicaid proposal from Rep. Ryan would have caused 14 to 21 million people to lose Medicaid coverage by 2022 because of the spending caps .
- Supporters of the 1996 welfare reform sometimes mock those who expressed concerns before TANF was enacted, saying that their fears of negative consequences were overblown. However, a major reason those nightmare scenarios did not come true is that SNAP has served as a safety net for those who have no other resources. Because of the diminishing role of TANF benefits, and the limited access for low-wage workers to unemployment benefits, SNAP is increasingly the sole remaining near-cash benefit program available to the poorest households. In fiscal year 2011, more than 4 million households who received SNAP benefits --including 1.2 million households with children --had no countable income from earnings, TANF, social security or unemployment benefits or any other source. The Ryan budget calls for applying work requirements and time limits to SNAP, which could well risk harming the poorest of the poor.
- Due to the expansion of the Earned Income Tax Credits (EITC) and other work supports, TANF recipients who enter the workforce are generally better off. However, as most SNAP recipients are either already employed or are not expected to be working (due to age or disability), it is not plausible that any additional employment services provided under a SNAP block grant as envisioned in the Ryan budget could reduce the need for SNAP benefits enough to compensate for the cuts his budget includes.
The Ryan budget proposal claims to protect the safety net but would actually shred it. Congress should reject this proposal which is inconsistent with core American values of opportunity and mutual support. Instead, Congress should move forward with a realistic and shared pathway to prosperity that includes the most vulnerable among us.