A Tale of Two Policies

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.

We were reminded of this often-quoted passage from Dicken’s A Tale of Two Cities today while reading about the significant changes the Trump Administration is proposing to make to the Supplemental Nutrition Assistance Program (SNAP). These changes would include among other things eliminating states’ option to use broad-based categorical eligibility resulting in the loss of SNAP benefits (food assistance) for a projected 3.6 million people nationwide, including children, seniors, and people with disabilities. This is just one of the many proposed rules that have been promulgated by federal agencies as a result of President Trump’s Executive Order which seeks to “reduce poverty by promoting opportunity and economic mobility.”

It is unclear how this policy change—taking away federal assistance ($) that enables low-income families to feed their children— and others that seek to limit aid to low-income Americans will increase work opportunities and improve self-sufficiency. And what is more perplexing is that these changes are occurring at the same time the Trump Administration is promoting changes through programs administered by the Centers for Medicare and Medicaid Services (CMS) (discussed in more detail below) that increase access to services and supports to address issues that arise as a result of the social determinants of health (SDOH), including home-delivered meals for those who are identified as food insecure.

Why this dichotomy in policymaking? Is it that the end justifies the means? What is the end game? We decided to break down these policy changes with the hope of better understanding just that.

SNAP is a federally funded program administered by the states that generally operate under a consistent set of federal eligibility rules. Federal law currently sets a gross income cap of 130% of the poverty line for SNAP recipients—about $33,000 for a family of four. But one policy area that results in differences in income and eligibility rules across states is Broad-Based Categorical Eligibility (BBCE), which enables states to raise SNAP income eligibility limits and adopt less restrictive asset tests.

As a result of this two-decade-old policy, 40 states and the District of Columbia effectively use less restrictive income and asset tests in SNAP. Using this option, states can allow families getting other assistance (non-cash benefits and services funded by Temporary Assistance for Needy Families (TANF), such as child care assistance and work supports, along with Medicaid in some states) to receive some SNAP benefits even if their incomes are around 200% of the poverty level, as long as they have other expenses that cut their net incomes below a certain level. This flexibility helps states support working low-income families that have fluctuating incomes and still have trouble buying food due to high expenses (i.e., housing, medical, or child/dependent care) that represent a large share of their income.

About 90% of the SNAP benefits paid out under the BBCE option go to working families with children. According to the Urban Institute’s analysis of the proposed rule changes, households losing eligibility under the proposed rule change would lose an average of $105/month, with the highest average losses among households with children ($166). The degree of loss varies by income level and family size.

Medicaid in some states) to receive some SNAP benefits even if their incomes are around 200% of the poverty level, as long as they have other expenses that cut their net incomes below a certain level. This flexibility helps states support working low-income families that have fluctuating incomes and still have trouble buying food due to high expenses (i.e., housing, medical, or child/dependent care) that represent a large share of their income.

About 90% of the SNAP benefits paid out under the BBCE option go to working families with children. According to the Urban Institute’s analysis of the proposed rule changes, households losing eligibility under the proposed rule change would lose an average of $105/month, with the highest average losses among households with children ($166). The degree of loss varies by income level and family size.

BBCE PROMOTES FINANCIAL SUSTAINABILITY

States can also use BBCE to increase or eliminate SNAP’s asset test ($2,250 for most households and $3,500 for households with members who are elderly or have a disability). Having savings to protect one’s household in the event of unexpected emergencies (e.g., job loss, car repair, medical expenses) is important for all households. The challenge of saving enough money in the event of such an emergency is difficult for many Americans (4 in 10 adults). Households on SNAP are reported to have even lower assets; however, in states that have raised the asset limit for BBCE, households are more likely to have greater assets and a bank account than those that have not adopted BBCE. Based on these reports, experts at the Urban Institute believe that “changes to reinstate federal SNAP asset limits will harm family financial stability and security.”

If 90% of those who are receiving benefits under the BBCE option are in working households, how does eliminating this eligibility option achieve the President’s order to reduce poverty and promote economic mobility? Could it be there is another interest at play here?

In his announcement of the proposed rule, the U.S. Department of Agriculture (USDA) Secretary Sonny Perdue did not speak of reducing poverty or promoting work. Rather he said the change gives the USDA the ability to save billions of dollars (projections indicate $2.5 billion annually). Additionally, he remarked closing this “loophole” will protect the integrity of SNAP against abuse to ensure that “those who need food assistance the most are the only ones who receive it.” The Administration contends that participants determined eligible under BBCE have not been properly screened and, therefore, may not be eligible households. But rather than proposing stronger screening practices, the USDA’s rule would simply eliminate the option altogether. Proponents of BBCE maintain that categorical eligibility is not a loophole, but a legitimate pathway granted under regulation. States must undertake a rigorous process that includes income verification, interviews and uphold mandatory policies like time limits for childless adults.

What Secretary Perdue’s numbers do not consider are the long-term costs that will arise in other federally funded programs as a result of these policy changes. This is not to say that the information doesn’t exist; in fact, the USDA’s sister agency Health and Human Services (HHS) has data on the potential health and financial impacts of food insecurity. In November 2018, HHS Secretary Alex Azar spoke about social determinants as the “Root of the [healthcare spending] Problem” citing data from the HHS Agency for Health Research and Quality which found that Americans with malnutrition are twice as costly to treat at the hospital as those who come in well-nourished. Specifically, malnutrition was found to be involved in 12 percent of non-maternal, non-neonatal hospital stays’ resulting in $42 billion in annual healthcare spending.

It seems that there is an insufficient cross-agency discussion about policy changes and the impact across the federal government. Let’s look at a few more data points to understand why we believe it would be beneficial for Sectary Azar and Secretary Purdue to talk about the overall impact of proposed policy changes on the federal budget.

• According to a recent study published in Health Affairs, SNAP participation lead to an overall reduction of 1–2 percentage points in mortality from all causes and reduced the likelihood of death from alcoholic liver disease, poisoning, or suicide among Americans ages 40–64.
• There is a significant overlap between SNAP recipients and Medicaid recipients with nearly 60 percent of children and a quarter of nonelderly adults eligible for these programs in 2013. And with the expansion of Medicaid in many states since 2013 we know that even more, nonelderly adults are both SNAP and Medicaid eligible.
• Additionally, there were over 4.7 million seniors receiving SNAP in 2015, most of whom would have also been receiving Medicare benefits.
• The Medicare and Medicaid programs fund more than 37 percent of national health expenditures in the United States.

Expanding Healthcare to Address Social Determinants

For these reasons, in the U.S. Department of Health and Human Services, we find a very different perspective on the importance of federal programs funding solutions that address issues such as food insecurity and more broadly the social determinants of health.

In his November 2018 speech, Secretary Azar said, “Social determinants of health is an abstract term, but for millions of Americans, it is a very tangible, frightening challenge: How can someone manage diabetes if they are constantly worrying about how they’re going to afford their meals each week? We believe we could spend less money on healthcare—and, most importantly, help Americans live healthier lives—if we did a better job of aligning federal health investments with our investments in non-healthcare needs.”

As we have shared in previous posts, this policy stance has made its way into the Medicare program as CMS has expanded its coverage policies to allow Medicare Advantage (MA) plans to provide an expanded array of supplemental benefits. The new interpretation allows MA plans to provide coverage for items and services that are non-medical but can play a role in increasing health and improving the quality of life. Air conditioners for people with asthma, groceries for people on medically prescribed diets, home-delivered meals for people who are immunocompromised, and rides to medical appointments for people without transportation all could fall under CMS’ new criteria.

Additionally, in 2017 the Centers for Medicare and Medicaid Innovation (CMMI) launched the Accountable Health Communities model. Under the model, participating providers screen high utilizers of healthcare services for food insecurity, domestic violence risk, and transportation, housing, and utility needs. If needed, patients are set up with navigators, who can help determine what resources are available in the community to meet the patient’s needs. Healthcare providers addressing non-medical issues is not a new concept, accountable care organizations have been engaging in the social determinants of health for years. Providing funding to allow providers to take the risk and test these models is what is exciting about the CMMI ACH model.

And going back to the data, we find that this expanded role for healthcare providers and healthcare funders is working. One ACO in Chicago, for instance, began screening high-risk patients for malnutrition, and then supporting them after discharge from the hospital with follow-ups, referrals, and nutrition coupons. Within six months, the ACO reported significant reductions in 30-day hospital readmission rates and average lengths of stay. The healthcare utilization decreases translated to substantial cost savings of more than $3,800 per patient, resulting in $4.8 million in total savings.

We have long known the important role nutrition plays in health and wellbeing. And now we have proof that access to food has the potential to not only reduce the risk of reoccurring health issues but also to reduce costs.

Policymaking or Politics

So back to the original question… why are SNAP officials considering eliminating access to food stamps for more than 3 million Americans? And why the conflicting policies? The data tells us it cannot be about improving employment or health or a matter of dollars and cents. How can these two conflicting policies be achieving a singular goal for the Administration? We are left looking at the politics of it all.

According to The Atlantic, about 80 percent of today’s seniors are white, and Trump carried about three-fifths of white seniors in the election. He campaigned on the promise that he would not cut Medicare. Since taking office, Trump’s Medicare policies have focused heavily on policy changes that seek to make the private option, Medicare Advantage, more attractive to seniors. Or as he calls it “Putting American Seniors First.” In doing so, the administration is not only playing to his constituency but also pushing an agenda that shrinks the government (shifting risk from the federal government to the private market). As MA rolls increase, there is a smaller role for the federal government in managing the program. This agenda is in direct opposition to the democratic push for Medicare for All which would replace all healthcare with a single government-run plan.

The politics of the SNAP cuts are less clear but ultimately seek to achieve traditional GOP principles. Coupled with budget cuts to federal poverty-reducing programs, attacks on the ACA, and the addition of work requirements to Medicaid expansion, these changes are all focused on shrinking the role of the federal government.

What makes policies such as the elimination of BBCE harder to sell is that they ultimately have significant impacts on the GOP base (white blue-collar workers). A concept that challenges the frequent assumption that government anti-poverty programs primarily benefit minority communities.

The Center on Budget and Policy Priorities found that in both percentage terms and absolute numbers, federal programs (SNAP, TANF, SSI) reduced poverty among working-age whites without a college degree more than they did among non-college-educated Hispanics, African Americans, or members of other races, and far more than they did among college-educated adults of any race. These national trends are especially concentrated in the region that proved decisive in the 2016 election. An Urban Institute study found that whites without a college degree constituted a majority of those who gained coverage under the ACA in the five Rustbelt states that Trump flipped from blue to red: Iowa, Ohio, Michigan, Wisconsin, and Pennsylvania.

In short, working-age whites without a college degree would be the principal losers under various proposals to cut these programs. Such cuts and programmatic reductions seriously threaten the GOP’s stronghold on a subset of the population and underscore the difficulty Trump’s party faces in reconciling their ideological drive to shrink government spending. This is why Secretary Perdue is selling this cut as a way to increase opportunities for economic self-sufficiency and “restore the system to what Congress intended: assistance through difficult times, not a way of life.” While it may be a backhanded way of referring to people who receive federal assistance as bilkers of the system, it triggers a rallying cry among many in the Republican base.

Unfortunately, what appears to be policymaking these days often just boils down to politics. All the more reason it is incumbent upon each of us to dig into such changes and understand all the moving parts to ensure that those elected are making changes that are right for all of us.

At Atrómitos, we have the expertise to dissect complex administrative rules and policy guidance and assess it against hard data to help provide our partners with insights that will enable them to make informed decisions about their business.