States should set service priorities

Hundreds of state and local governments have saved taxpayer dollars while delivering needed services more efficiently by having private companies handle everything from garbage pickup to welfare administration. But an obscure amendment to the House version of the pending farm bill could hobble such efforts. House-Senate negotiators racing to beat an April 18 deadline ought to scuttle the amendment and leave states free to decide for themselves how best to provide services.

Most immediately threatened is the Food Stamp program, which is run by the states with money provided through the U.S. Department of Agriculture. Current regulations require that ultimate “certification” of a recipient’s eligibility be conducted only by a state employee. Fine. The amendment, by Rep. Joe Baca, D-San Bernardino, would extend that bureaucratic monopoly to “any official communications with a prospective applicant.” In short, states would not be free to pay private firms to administer Food Stamp services. Even nonprofits would be excluded. The Baca amendment is disguised as a quality control requirement. But it would prevent states from taking advantage of competitive bidding, more flexible labor arrangements and technological advances that are more easily implemented in the dynamic private sector than in rule-bound state bureaucracies. No wonder public employee unions are enthusiastically backing Baca.

Consider two examples. First, private companies often can stay open for more hours than unionized state employees are allowed to work, meaning they can better meet the varied schedules of people seeking aid. Second, many states are trying to implement what amounts to “one-stop shopping” for aid recipients so they can apply at one time and place for benefits rather than filling out forms multiple times at multiple state offices for, say, Medicaid, the children’s health program known as SCHIP, or the Women and Infant Children program. One private-sector worker, using modern technology, could do the work of five state employees each answering to a different bureaucratic chieftain.

If this provision passes, it could set a precedent for Medicaid and those other programs whose administrative functions already are widely performed by private firms. A new survey by Spectrum Science Communications shows that all 50 states and Washington, D.C., “outsource at least some aspect of direct beneficiary services for means-tested programs.” In toto, states outsource an astonishing 309 such programs. If provisions such as the Baca Amendment take root, those programs could be horribly disrupted, adding huge costs to state budgets while adding uncertainty and red tape for millions of beneficiaries. That’s clearly a bad bargain.

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