Do Medicaid and SNAP Reach Those Who Most Need Them?

September 30, 2014 at 12:30 pm

Millions of low-income people qualify for both Medicaid and SNAP (formerly food stamps), but the federal government doesn’t regularly assess how many of them actually receive both.  That’s a significant omission: Medicaid and SNAP address the most basic needs of our poorest citizens, and health care and nutrition assistance likely produce more powerful results when provided together.  A new Urban Institute paper examining joint participation among eligible children and non-elderly adults in five states — something the federal government could do for all states every year — suggests there is substantial room for improvement.

Urban Institute researchers calculated joint participation rates for 2011 in Colorado, Idaho, Illinois, North Carolina, and South Carolina.  (These states participate in the Work Support Strategies initiative, which is developing and testing better ways to deliver key supports for low-income working families.)  They found significant gaps in joint enrollment: in four of the states, only about two-thirds of non-elderly adults and children who were eligible for both Medicaid and SNAP actually received both (see graph).

The findings are consistent with our 2011 report’s finding that a large share of poor children — who are very likely eligible for both Medicaid and SNAP — aren’t enrolled in both.

(To be sure, both findings predate health reform implementation, so they don’t reflect participation of many newly eligible low-income adults in states that expanded Medicaid.  Nor do they reflect the major changes in Medicaid application and enrollment systems that health reform requires in order to improve participation.)

Over 40 states co-administer Medicaid and SNAP for low-income families, often using joint forms, the same computer systems, and the same eligibility workers, so one program’s performance often depends on the other’s.  Yet the federal agencies that oversee the two programs issue program policy, oversee operations, and assess state performance on the two programs separately.

States are key partners in delivering the safety net, so it’s important to take a holistic view of their performance, not just a program-by-program approach.  An annual federal assessment of the share of Medicaid- and SNAP-eligible people in each state who actually receive both would better inform federal and state officials on how well we serve our poorest families and individuals.

Tax Incentives for Retirement Savings Need Reform

September 29, 2014 at 2:18 pm

“We need to hear facts and serious policy proposals, not political slogans” like “upside-down tax incentives,” the Senate Finance Committee’s top Republican, Orrin Hatch, said at a recent committee hearing on retirement savings.  But tax incentives for retirement plans like 401(k)s and individual retirement accounts (IRAs)are indeed “upside down,” providing the largest subsidies to high-income taxpayers while benefiting low-income households the least (see chart).  As we’ve written, tax incentives for retirement savings are expensive, inefficient, and inequitable, making them ripe for reform.

New studies, including one highlighted at the September 16 Senate hearing, show how some very high-income taxpayers are accumulating enormousbalances using tax-preferred accounts — well beyond the accounts’ intended purposes.  Roughly 9,000 taxpayers have IRAs with balances that top $5 million, a Government Accountability Office (GAO) study found.  Despite contribution limits to tax-advantaged retirement accounts, such balances are possible because some executives buy shares of stock for their IRAs at extremely low valuations — sometimes less than a penny each.  Those balances then swell when the stocks are valued at market price — and the gain is tax-free.  Senate Finance Committee Chairman Ron Wyden (D-OR) termed this abuse of IRAs an unintentional “tax shelter for millionaires.”

The GAO study complements research published in the Journal of Retirement, which estimated that about 85,000 households each held over $3 million in certain tax-preferred plans, including IRAs.

Retirement savings tax incentives are among the largest federal category of “tax expenditures,” in terms of federal revenue losses.  While lavishing large tax benefits on very wealthy filers, they do little to encourage new saving among a broad segment of lower- and middle-income Americans.

The need for reform is clear.

VA Governor Lauds Community Eligibility

September 29, 2014 at 12:01 pm

Virginia Governor Terry McAuliffe has good things to say about the Community Eligibility Provision (CEP), which allows high-poverty schools to provide breakfast and lunch to all students at no charge.  Speaking recently about how to improve education, he said in part:

It will surprise no one here to learn that studies show poverty is the number one predictor that a student will face educational challenges. . . .  Nor will it surprise anyone that the number of students here in Petersburg impacted by the local economy is high. . . .  This doesn’t excuse failure – in fact it makes it all the more important that we help these children succeed. . . .

[Local] educational leaders are ensuring that students get the nutritional support they need through the Community Eligibility Provision.  This important program allows school divisions to offer free breakfast and lunch to every student if the division meets certain criteria. Richmond and Petersburg have implemented this program division wide, and Norfolk has opened the program to its eight eligible schools.

[School nutrition] programs work and we need to ensure that every single Virginia school division is taking maximum advantage of federal and state resources to get students the nutrition they need to fulfill their potential. . . .

I want to stress the importance of running these programs in a way that eliminates the stigma about free and reduced [price] meals. There should be no special lines or unique treatment for these students, so that they can get the nutrition they need without embarrassment.

The option became available to high-poverty schools nationwide this year for the first time, and preliminary data show that 86 Virginia schools have adopted it, reaching almost 43,000 students.  Officials in other states have described the difference that it’s making in terms of student attendance and academic performance.

Educators and policymakers have long recognized that hungry students are not well-positioned to learn.   CEP is a proven tool to ensure that all students at high-poverty schools have two nutritious meals daily, which helps them succeed in the classroom.

School districts interested in adopting community eligibility for the current school year can reach out to their state nutrition director for further information.

In Case You Missed It…

September 26, 2014 at 3:22 pm

This week on Off the Charts, we focused on the new Census data on poverty, inequality, and health coverage; the federal budget and taxes; state budgets and taxes; and housing.

  • On the new Census data, we listed five key takeaways from the data.  Arloc Sherman explained why the data strengthen the case for doing more to help low-income childless workers and pointed out that the decline in the official poverty rate follows a decade and a half of mostly rising or stagnant poverty rates.  Matt Broaddus highlighted our analysis of the health coverage data, which show a slight improvement.
  • On the federal budget and taxes, Chuck Marr commended the Obama Administration’s important first step against corporate “inversions.”  Paul Van de Water explained why “fair-value accounting” would make federal loan and loan guarantee programs look more expensive than they really are.
  • On state budgets and taxes, Elizabeth McNichol noted that Kansas’ financial troubles highlight the need for well-designed state rainy day reserve funds.
  • On housing, Will Fischer explained that a House bill would raise rents on some of the nation’s poorest families while lowering rents for better-off households.

We released reports analyzing the new Census data and taking a closer look at the health coverage figures.  We also released an analysis of the Republican Study Committee’s health plan and updated our backgrounder on the number of weeks of unemployment compensation available.

CBPP’s Chart of the Week:

A variety of news outlets featured CBPP’s work and experts recently. Here are some highlights:

Bad Policy Is Stalling Economic Recovery
US News and World Report
September 26, 2014

Census data on poverty show results of economic policy gone wrong
Los Angeles Times
September 20, 2014

Don’t miss any of our posts, papers, or charts — follow us on Twitter and Instagram.

Reassessing a View on Federal Accounting

September 26, 2014 at 1:55 pm

So-called “fair-value accounting” is misguided because it would make federal loan and loan guarantee programs look more expensive than they really are, as my colleague Richard Kogan and I have explained.  Jason Delisle and Jason Richwine, writing in the latest issue of National Affairs, correctly note that the logic of our argument is inconsistent with a 2005 CBPP analysis of proposals to invest part of the Social Security trust funds in stocks instead of Treasury bonds.  We concur.  We have re-analyzed our assessment of investing a portion of the Social Security trust fund in equities and now come to a different conclusion than we did in 2005.

The current method of accounting for federal credit programs fully records — on a present-value basis — all the cash flowing into and out of the Treasury.  In contrast, fair-value accounting would add an extra amount to the budgetary cost, based on the fact that loan assets are somewhat less valuable to the private sector than to the government for several reasons: businesses must make a profit; they can’t put themselves at the head of the line when collecting a debt; they borrow at higher interest rates; and private-sector investors are risk-averse — they dislike losses (in this case, higher-than-expected loan defaults) more than they like equal, and equally likely, gains (lower defaults).  None of these factors represents an actual cost that the government incurs when it makes loans.

Including in the budget a cost that the government does not actually pay would overstate spending, deficits, and debt, making the federal budget a less accurate depiction of the nation’s fiscal position.  It would also treat different federal programs inconsistently, because it would not make a similar adjustment for non-credit programs whose costs are also uncertain and variable.  In a recent article, New York University law professor David Kamin thoroughly explains why “including the cost of risk would skew budget estimates.”

Proposals to invest the Social Security trust funds in the stock market raise similar issues.  Stocks produce higher returns than Treasury bonds on average over the years, but they also entail a greater risk of losing money.  That risk is an important consideration in assessing the pros and cons of a proposal, but it’s not an actual cost to the government and therefore doesn’t belong in the budget.  This conclusion differs from the one CBPP reached in 2005, which, upon further consideration, we now believe was mistaken.

(Proposals to replace Social Security with private accounts are very different, since individuals, rather than the government, would bear the risk of holding their retirement savings in stocks.  Individuals are rightly risk-averse.  As a result, any analysis of their well-being — as distinguished from analysis of the impact on government finances — should account for the variability of the stock market.)