Perhaps the gridlock in Washington over how to reform the welfare system
is a positive development, because while the members of Congress argue over
welfare reform, the states are already reforming it - with positive results.
Kind of makes a person appreciate a little gridlock.
There are five major elements of state-based welfare reform: (1) giving
states more flexibility to try innovative reforms; (2) getting welfare recipients
to work; (3) limiting the time a person can receive welfare benefits; (4)
eliminating incentives that can cause recipients to engage in disastrous
behavior (such as having more children out of wedlock) and replacing them
with positive incentives; and (5) expanding health care services.
States are trying various ways of applying these five elements of reform.
And while we are not yet sure exactly which will prove to be the best mix
of these five elements - and, indeed, the optimum mix may vary from state
to state - early indications are that all five must be part of an effective
reform.
(1) Giving states more flexibility to try innovative reforms. If Congress
doesn't do anything else at the federal level, it ought to make it easier
for states to try out new ways of solving their welfare problems. Currently,
states have to apply for federal waivers in order to try something new.
After three decades and $3.5 trillion fighting and losing the War on Poverty,
the federal government should concede defeat and turn over its sword to
the states and let them continue the battle.
(2) Getting welfare recipients to work. If there is bipartisan agreement
on anything in Washington, it's putting welfare recipients to work. But
since even bipartisan agreements don't always turn into legislation, the
states have taken the lead. Both Florida and Iowa implemented welfare-to-work
programs in 1993. According to Investor's Business Daily, Iowa saw its caseload
for Aid to Families With Dependent Children (AFDC) recipients drop from
36,404 in 1993 to 32,200 by May of 1996. In Florida, where only two counties
are involved in a pilot project, more than 60 percent of those on welfare
took a job.
What happens to the others? Many leave the welfare rolls and go back into
the workforce of their own volition. When faced with a choice between taking
a government-provided job versus finding their own job, a significant percentage
of welfare recipients will get their own. Welfare-to-work saves money, not
necessarily because it's cheaper, but because it encourages people to get
off welfare if they don't need it.
(3) Limiting the time a person can receive welfare benefits. Welfare-to-work
legislation is usually associated with some type of time limit on how long
a person can receive welfare benefits. Generally, states are imposing a
two-year time restriction, but AFDC recipients in Maryland who don't comply
with job search requirements may denied benefits after only six months.
(4) Eliminating incentives that can cause recipients to engage in disastrous
behavior and replacing them with positive incentives. Though often well-meaning,
many states have implemented incentives that have changed behavior for the
worse, incentives such as providing additional cash income for young, unmarried
mothers who have additional children.
Some states are changing such policies. For example, New Jersey removed
that incentive and imposed a "family cap." The change appears
to have caused a decrease of 134 births a month, or about 10 percent.
Other states are adopting various positive incentives, such as "earn-to-learn"
programs. California will give $100 to a welfare recipient who keeps a C
average in school, and an additional $500 for graduating.
(5) Expanding health care services. Finally, most states are experimenting
with ways to get more of their poor populations covered with health care
services. In the vast majority of cases, state legislatures are enrolling
their low-income people in managed care plans such as health maintenance
organizations (HMOs). The lure of managed care is that it claims it will
be able to provide comprehensive health care services, including preventive
care, for more people and save the state money at the same time.
While it isn't clear how well HMOs achieve their claims (and some evidence
that they don't), nevertheless, the states are turning to managed care as
a solution.
But the turn to managed care is indicative of the broader state-based attempts
at welfare reform: State legislators may not know for sure what works best,
but they know that what they have isn't working. And that's why they are
acting on their own. It would be nice to see what Washington does, but Washington
may wrangle over welfare reform for years. The states can't wait that long
- and neither can the poor.
The National Center for Policy Analysis is a public policy research institute
founded in 1983 and internationally known for its studies on public policy
issues. The NCPA is is headquartered in Dallas, Texas, with an office in
Washington, D.C.