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Electronic Welfare Payments
THE FIGHT BACK! BY DAVID HOROWITZ
Electronic Welfare Payments
The public's perception of our national welfare system is that
it is inefficient and riddled with fraud. Food stamps have become a
devalued underground currency, redeemable on the street for cash, drugs
or almost anything else a recipient wants to buy, usually at 50 to 60
cents on the dollar. The Clinton administration is trying to clean up
the system (and improve its public image) by converting welfare
payments and benefits from paper to plastic.
Vice President Al Gore proposed a plan for a nationwide
Electronic Benefits Transfer system (EBT) to replace food stamps,
public assistance and Social Security payments. Later, it could be
expanded to include Medicare, Medicaid, student loans, unemployment
compensation and even government pensions.
Instead of receiving a monthly check or food stamps in the
mail, recipients would be issued an EBT card that they can use like a
bank or credit card at stores and ATM machines. Each card would be
connected to an individual account, into which benefit payments would
be transferred each month. This would be a major improvement for
welfare clients who often don't have their own bank accounts and must
pay stiff fees to cash their benefits checks at commercial
check-cashing stores.
The government would save millions of dollars on the cost of
printing, mailing and accounting for paper checks and food stamps,
while cutting down on fraud and waste within the system. Every payment
and every transaction would leave an electronic audit trail that would
make it easier to detect and prosecute fraud. According to Gore, "We
can deliver services quicker, cheaper, more accurately and with
significantly less vulnerability to fraud."
Maryland is already using a system called the Independence Card
to distribute state and federal welfare benefits. Within two years,
nine more states will come online as part of an expanded test program.
By Gore's timetable, a nationwide EBT system should be in place by
1999, capable of distributing $111 billion a year in government
benefits. The estimated cost of the system is $83 million. Its
projected savings is $195 million a year.
But, will such a system really eliminate welfare fraud?
Probably not. Experience in Maryland has shown that some retailers are
still managing to launder food stamp benefits and convert them to cash,
even with the Independence Card. It's not a computer problem, it's
follow-up. The U.S. Department of Agriculture, which administers the
food stamp program, lacks the manpower and resources to investigate and
prosecute such cases, even when the system provides the evidence needed
for a conviction. That's a problem state and local authorities will
have to address.
But there is an even more basic limitation to what this new
system can achieve, and it has to do with expectations and how we
measure its success or failure. The EBT is still basically a debit
card, and clever thieves will always find a way to rip it off. If we
expect EBT to wipe out welfare fraud, then it will fail. But, if the
goal is to increase efficiency, lower operating costs and significantly
reduce fraud, then this new program could be a very real improvement
over the current system.
If you have any questions or comments, please write to David
Horowitz in the Consumer Forum+ (go FIGHTBACK). COPYRIGHT 1995 CREATORS
SYNDICATE, INC.
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