Mississippi Center for Public Policy

Tuesday, May 30, 2017

MCPP Commentary

Honor System for Welfare Not Working

March 07, 2017

Honor System for Welfare Not Working

Trust, but verify. Seems like commonsense. Unfortunately, government programs are often lacking in common sense. According to the Miss. Department of Human Services, self-verification is the method used to determine eligibility for Food Stamps, also called the Supplemental Nutrition Assistance Program (SNAP). The director of Fraud Investigation with the department acknowledges: "The application process for SNAP is based on an 'honor system,' trusting that applicants truthfully submit their income and number of dependents." It should come as no surprise that some people aren't telling the truth about their identity or residency or income when applying for welfare, whether it be Food Stamps or Medicaid. What is surprising, unbelievable really, is that the state is not really verifying who people are, where they live, and whether they are actually in need. The result is millions of taxpayer dollars lost to fraud, waste and abuse. This is savings that could be going to help the nearly 8,000 Mississippians with disabilities and other serious needs on a waiting list for Medicaid's Home and Community Based Services. It is savings that could be going to patch holes in our Medicaid budget, or state budget.

A bill (HB 1090) moving through the state legislature would require Miss. welfare programs to use a verification service to check for things like identity and residency. Using databases easily accessible in the private sector, this service would discover whether a Social Security number is being fraudulently used. When Illinois ran a similar audit they found 14,000 dead people on their Medicaid rolls. The eligibility review would also check things like whether someone on Mississippi Medicaid is paying property taxes in another state - a likely sign the recipient is not a Mississippi resident. It would check incarceration status and death records and immigration status - all the things any reasonable voter assumes are already being verified to protect the integrity of our welfare programs.

HB 1090 also includes commonsense reforms like expecting SNAP enrollees to cooperate with a fraud investigation. The bill would track where welfare benefits are being accessed and spent. When Maine ran such a check, they found $3.5 million worth of transactions in Florida, including hundreds of thousands of dollars in withdrawals from ATMs near Walt Disney World. When the state of Florida ran such a check, they found 3,500 of their Food Stamp recipients were also receiving Food Stamps in at least one other nearby state, including Mississippi.

Those who claim welfare fraud is not a problem in Mississippi are mistaken. It is so much of a problem that in 2015 the Mississippi Department of Human Services (DHS) was awarded a $1.9 million federal grant to help eliminate fraud. It is so much of a problem that the state auditor has found millions in questionable TANF costs and warned that the "failure to maintain supporting documentation for eligibility as well as not monitoring and reducing benefits" as required could result in the state having to repay federal funds.

Similarly, we have seen recent arrests for welfare fraud in several counties. According to news reports, DHS has been "knocking, one door at a time, looking for people who've applied for food stamp benefits that aren't entitled." Instead of going door-to-door, we can harness the power of technology to catch a good bit of that fraud with the click of a button.

It is no accident that the states most committed to a robust social safety net are also rooting out fraud most aggressively. The first state to proactively verify its Medicaid rolls was Pennsylvania, which launched its own program in 2011. They identified 160,000 ineligible welfare recipients in the first 10 months and saved the state nearly $300 million. Illinois, Minnesota, and Massachusetts soon followed. Altogether, those four states are seeing a combined savings of $1.3 billion annually. We estimate Mississippi would save $40 million annually, based on a fraud rate of 10 percent.

If we want to protect our Medicaid and other welfare programs for those who are the poorest of the poor, the disabled, the elderly, we need to eliminate fraud and waste. We owe it to all Mississippians - including those who are truly eligible to receive these benefits - to be good stewards of these programs.


Jameson Taylor, Ph.D.
Vice President for Policy, Miss. Center for Public Policy

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