What Rauner can do to reform social services in Illinois

What Rauner can do to reform social services in Illinois

There is clearly no lack of commitment aimed at supporting those in need here in Illinois. The question is how to do a better job of it.

In an interview with the Chicago Tribune, Illinois Governor-elect Bruce Rauner said, “… I believe we should have a good social services safety net for our neediest citizens.”

There is, perhaps, no more important area where the incoming governor can immediately and positively make a huge impact on Illinois’ most vulnerable citizens than addressing the state’s welfare system.

That is because the current system is dysfunctional. The moral price of this dysfunction is horrific, to say nothing of the fiscal costs.

According to an Illinois Policy Institute study on the safety net in Illinois, the combination of welfare and tax benefits embedded in a hodgepodge of federal, state and local programs can heavily penalize additional work – punishing the very activity that should be rewarded. Rather than providing support in moving families up the economic ladder, the system could be trapping low-wage welfare recipients in long-term welfare dependency.

The Institute study finds that for some households in Illinois, there is a significant welfare “cliff” where the household may become worse off financially as they work more hours or as their wages increase. That is because the available welfare benefits decline by a greater amount than the increase in earned income.

The study analyzed a potential welfare-benefits package for single- and two-parent households, both with two young children, in Cook, Lake and St. Clair counties. The potential means-tested benefits included tax credits, cash assistance, food assistance, housing assistance, child-care subsidies and health care.

For example, a single mother with two young children in Cook County could lose about one-third of her total resources if she were to get a raise or find a higher-paying job that increased her pay to $18 an hour from $12 an hour. In order to make her work “pay,” she would need a raise to $38 an hour to be better off financially. As it turns out, when the value of the total welfare benefits package that some families receive drops much faster than income is increasing, a “cliff” is created.

What should be a welcome increase in income leaves the family in a worse financial position than they would face with a lower-wage income. She is, essentially, punished for seeking more economic opportunity.

This unintended consequence is the result of a complex and duplicative social safety net. Take the state’s health-care safety net, for example.

While Medicaid is, by far, the largest of the health-care safety net programs operating in the state, it is far from the only one. There are more than 300 programs, initiatives and line-item appropriations aimed at providing health care in Illinois at an annual cost of almost $27 billion in combined federal and state funds.

Yet the state’s uninsured rate remains above 12 percent for working-age adults in Illinois, even though the president’s signature health-insurance overhaul has already been implemented. Absent comprehensive reform, this situation will only persist.

That is why the governor-elect should make social service a top priority. Building upon the Institute’s work, the new administration should conduct a comprehensive needs-gap audit for the state’s entire social-welfare safety net. The long-term goal of this project should be to redirect resources to better serve the state’ s neediest patients, as well as identify and craft innovative solutions to those who have limited access to care.

This audit should include state-administered programs and line items from both federal and state funds. The analysis shall also include the value of property- and sales-tax exemptions for nonprofit hospitals and income-tax credits for for-profit hospitals by geographic area.

The audit should primarily do the following:

* Identify target populations for each program

* Identify duplication of effort between programs

* Identify coverage gaps both economically and geographically

* Assess where funds are being spent – administration, providers, patients, etc.

* Assess the cost of administering programs through multiple bureaucracies

This audit will allow state policymakers and analysts to more effectively evaluate whether there are gaps in health services. It would also assist in identifying opportunities for program consolidation or elimination of duplicative programs – and potential budget savings.

After this first step, the new administration should seek more flexibility from the federal government in operating federal programs. That would then allow the state to move forward with truly transformative and innovative approaches to better target the neediest and most vulnerable Illinoisans.

There is clearly no lack of commitment aimed at supporting those in need here in Illinois. The question is how to do a better job of it.

It is time for Illinois to re-evaluate and overhaul the entire safety-net infrastructure. While the welfare system is often portrayed as a helping hand, it is currently functioning as an immoral trap; robbing some families of new economic opportunities and self-sufficiency while imposing an unnecessarily large burden on those who are footing the bill for these programs.

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