States can fix welfare fraud — here’s how some are doing it already

A silver lining in the Minnesota welfare scandal is that we’re finally paying attention to a system that rarely gets the scrutiny it deserves.

At the federal level, welfare has taken a backseat to other policy priorities. The Working Families Tax Cut Act represents Congress’s first major reform since the 1990s. But states are starting to act, since the spotlight has revealed the many problems inherent in a system upon which nearly one in three Americans now relies for some form of assistance.

The usual criticisms are that the system has grown too large to manage; that the federal funding formula creates a lack of accountability and oversight; and that safety net programs, with their steep benefit-cliffs, discourage recipients from marrying, working, and even taking higher-paying jobs.

What is missing from these conversations is what policymakers can do about it.

These programs have existed for decades, millions of people rely on them, and entire agencies exist to run them. Reforming such an entrenched system is no small feat. The longer a program exists, the more it falls prey to special interests and self-preservation. As Jonathan Rauch observed in “Government’s End,” public assistance programs evolve into a “large, incoherent, often incomprehensible mass that is solicitous of its clients but impervious to any broad, coherent program of reform.”

Since President Lyndon Johnson created Medicaid and food stamps under the Great Society programs of the 1960s, the safety net has evolved into a mass of more than 80 programs, each with its own requirements, reporting systems, and eligibility rules. It is no longer a temporary support system to help the poor and people with disabilities but rather an engine that perpetuates long-term dependency and cycles of poverty. 

A single mother trying to move off government assistance can lose her housing subsidy for a promotion she receives at work. If she gets married, she no longer qualifies for childcare support. And if she wants to find work but can’t, safety net programs do not connect her to job opportunities.

In Minnesota, blatant fraud was exposed. But the deeper scandal is what is perfectly legal: a system so fragmented that billions flow through dozens of agencies and programs with no one tracking whether any of it actually works.

It may be a lost cause to expect Washington to initiate welfare overhaul, but states have always been laboratories for innovation. The Minnesota fraud scandal has opened a political window that didn’t exist before. Some states are leading the way.

Utah passed a “One Door” reform that consolidates these programs, so that a recipient enters the system through a single point of entry. Instead of interacting with multiple programs, disparate offices, and various caseworkers — such as Medicaid for healthcare, SNAP for food support, and Workforce Innovation and Opportunity Act One Stop Career Centers for workforce training — struggling Americans would only need to go through one door to get the help they need, including a path to work.

Eighty separate programs offer bad actors multiple opportunities to take advantage and defraud the system without state authorities noticing — exactly what happened in Minnesota. This single point of entry, in contrast, reduces the opportunity for fraud and abuse. Unnecessary complexity leads to gamesmanship and fraud. One door makes that far harder.

And at its core, One Door isn’t just about consolidating programs — it is about reorienting the entire system to be user-friendly and focused on work and opportunity. Instead of managing dependency, caseworkers’ primary focus is on helping recipients build skills, find jobs, and move toward self-reliance. It is a shift from a system designed around programs and bureaucracies to one designed around people.

Louisiana, Mississippi, and Arkansas are taking steps to adopt the One Door approach, starting with setting up a task force or study committee to audit what programs their state provides, who is enrolled, and whether workforce development and safety net programs are achieving their stated goals. 

Minnesota’s scandal revealed what happens when no one is paying attention. Some states, however, are making sure they know exactly what’s happening in their own systems.

Perhaps the fraud scandal in Minnesota will light a fire under state legislatures during their sessions this spring. They have an opportunity not only to criticize the fraud but also to reform the broken incentives that allowed it to fester. In doing so, they can also empower struggling Americans to lift themselves out of poverty and into a fulfilling, independent life.

Eric Cochling is the chief program officer and general counsel at the Georgia Center for Opportunity.

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