In 1996, Congress passed the Personal Responsibility and Work Opportunity Act (PRWOA), commonly known as welfare reform. PRWOA was designed to alter the structure of welfare to shift it from a program designed for long-term assistance to one designed for short-term help. This was in response to decades of criticisms of the program by conservatives who took issue with what they saw as work disincentives baked into the program. While these work disincentives did exist, the reforms that PRWOA put in place weren’t aimed at addressing them; instead, the law chose to act primarily to cut back on the number of people enrolled in the program. In other words, it wasn’t a reform of welfare so much as an attempt to destroy the program itself.
One of the chief mechanisms PROWA used to reduce enrollees was turning over administrative control of the program to the states by block-granting it. This gave states an amount of money to spend on administering welfare every year, which they could then use to fund transfer payments to the poor or other interventions to help those in need. The law also included work requirements for enrollees aimed at assuring that those receiving benefits were either working or looking for work. These requirements were notoriously lax, though, allowing states to count those who had dropped out of welfare as working persons for the purposes of fulfilling the law’s work requirements. As a result, states were incentivized to drop as many people as possible from welfare rolls.
At the time, there was significant concern about the effect PROWA would have on those dependent on the existing program. The Urban Institute released a study that estimated that welfare reform would push more than a million children into poverty. Senior officials inside of the Department of Health and Human Services took this analysis seriously, and it appears that then-President Bill Clinton had been briefed on it. However, the bill was passed by Congress and signed by President Clinton. Twenty years on, we know reform was a failure. It likely increased extreme poverty significantly, left many families without a consistent source of cash income, and was left without the resources to protect the extremely poor during recessions. For the first time, a major American entitlement was dismantled.
Unfortunately, the methods used to destroy welfare have proved applicable to a wide range of programs. On Thursday, Senate Republicans released their plan to overhaul America’s health care system and repeal the Affordable Care Act (ACA). It contains an overhaul of Medicaid, our health insurance program for the poor, that seems eerily similar to welfare reform. It would set a per-person cap on payments to states to fund the program, and would increase that cap at a rate below what would be necessary to maintain the program at current levels. This would force states to either offer inferior coverage or offer existing levels of coverage to fewer people. This change to the structure of the program would occur on top of an elimination of the ACA’s medicaid expansion, which provides insurance to millions of Americans. It would decimate the program, locking it into a cost-cutting death spiral.
To contextualize these cuts, it’s important to emphasize the profound good Medicaid does. Medicaid provides health insurance to 20% of Americans, or about 60 million people. It covers 39% of children and 60% of disabled kids. It pays for the care of 64% of nursing home residents, many of whom used up their life’s savings paying for care. It covers 30% of all adults with disabilities, allowing many of them the dignity of being cared for in their own homes. It is absolutely essential to the well-being of many of the most vulnerable Americans.
This is not to say that Medicaid is perfect. As with welfare, the program has problems. However, it is foolish to believe that the best way to solve those problems is to dramatically cut the program. The past has taught us that much, at least. Cutting medicaid would harm too many people and cause tens of thousands of preventable deaths, all for very little benefit other than an ideological victory for conservatives. In other words, we shouldn’t repeat the mistakes we made in welfare reform with people’s health insurance on the line.