Welfare Digest | California's Home Care Program Loses Billions to Fraud Every Year
Links & Benefits Breakdowns
Here are this week’s links and benefits breakdowns:
California's Home Care Program Loses Billions to Fraud Every Year. As Chris Rufo and Kenneth Schrupp write for City Journal, California spent nearly $30 billion last year on the In-Home Supportive Services (IHSS) Program, which uses federal and state Medicaid dollars to pay family members and other individuals to provide home-based care for the elderly and disabled. However, as they point out, “a growing number of experts and critics argue that the program is rife with fraud, losing roughly an estimated $6 billion to $12 billion yearly to scammers.” The program, they say, “operates largely on trust,” with providers self-reporting timecards and check-in records, lax county-level fraud controls, and an investigative process too slow to deter bad actors. As Rufo and Schrupp put it, “the system itself seems designed to prevent accountability.” This, as Cato scholar Dominik Lett and the Debt Dispatch have pointed out, is a consequence of Medicaid’s open-ended financing structure, which incentivizes states to “maximize enrollment over program integrity to capture as many federal dollars as possible.”
Drawing a Line Between Immigration and Housing Benefits. Rep. Arrington (R-TX) recently highlighted the lack of guardrails to prevent undocumented immigrants from receiving benefits through the Low-Income Housing Tax Credit (LIHTC). As Cato scholars Adam Michel and David Bier point out, the LIHTC, along with many grant-based housing and homelessness programs, “do not condition tenant eligibility on immigration status at all.” This has contributed to noncitizens receiving “$62 billion in federal housing and rent assistance over the last 30 years.” Michel and Bier argue that the next reconciliation package should… finish construction on the wall around the welfare state by drawing a clearer line between immigration and access to public benefits.” As the Debt Dispatch has previously highlighted, Rep. Grothman (R-WI)’s Safeguarding Benefits for Americans Act (H.R. 7213) would exclude noncitizens from federal welfare and entitlement benefits.
Improving Subsidized Housing Programs with Time Limits and Work Requirements. “Despite more than $60 billion in annual federal spending on rental assistance,” says AEI scholar Kevin Corinth, “only one in four eligible families actually receives it.” This is partly because the lack of time limits allows tenants to “remain on the program for over a decade… even as other low-income families are turned away." This “fosters dependency” among families who receive subsidies, while other families “can linger on waiting lists for years, or… have no realistic prospect of ever accessing assistance.” However, a newly proposed rule from HUD would help address this by allowing localities to establish work requirements for non-disabled working-age adults receiving rental assistance and to set time limits on their benefits, with a minimum duration of two years. This rule, Corinth argues, “would make rental housing assistance fairer, allow it to serve more families in the long-run, and encourage upward mobility.”
How States are Using TANF as a Slush Fund. The share of state and federal Temporary Assistance for Needy Families (TANF) spending on basic assistance (mostly direct cash aid) has declined sharply in recent years, with states redirecting funds to alternative services, such as job training and childcare. As Cameron McWhirter, Dan Frosch, and Scott Calvert write for The Wall Street Journal, states have also used TANF funds to “plug budget shortfalls” and “[direct] hundreds of millions of dollars with tenuous—or no—connections to TANF’s goals” with little federal oversight. This includes college scholarships for upper-income families, a volleyball stadium, job-training funds used for employees' vacations, and, as the Debt Dispatch has previously covered, brochures to enroll otherwise ineligible households in the food stamp program. Most notably, at least $77 million in Mississippi TANF funds were misspent from 2017 to 2020. The full scope of mismanagement is unknown because the HHS “does not have the authority to obtain information to estimate or report improper payment amounts for TANF,” according to the GAO. As the Debt Dispatch has highlighted, Rep. Arrington (R-TX)’s Eliminating Fraud and Improper Payments in TANF Act (H.R. 2242) would require states to track and report improper TANF payments.
School Lunch Programs Have Expanded Beyond Low-Income Kids. As Cato scholar Chris Edwards highlights, rules like the Community Eligibility Provision (CEP) have expanded eligibility for the National School Lunch Program (NSLP) well beyond low-income children. If a certain threshold of students is enrolled in programs like food stamps, then all students, regardless of household income, may receive subsidized lunches. This has “opened the door to millions of children from middle- and higher-income households receiving meals at taxpayer expense.” The Biden administration further exacerbated this trend by reducing the CEP threshold from 40 percent to 25 percent in 2023. In 2024, the Foundation for Government Accountability estimated that “nearly three-quarters of public school students are now eligible for taxpayer-funded meals” after the rule change. According to the Congressional Research Service, the share of participating schools using the CEP more than tripled between the 2014-15 and the 2023-24 school year. The Republican Study Committee’s 2025 budget proposed taking steps to ensure that school food subsidies “go to needy families by eliminating the [CEP] from the School Lunch Program.”
