The OBBBA’s Entitlement Reforms and the Echo of 1996

The One, Big, Beautiful Bill Act (OBBBA) would require able-bodied adults to work, volunteer, or pursue education for 20 hours a week to qualify for Medicaid or SNAP. Exemptions apply for those who are pregnant, disabled, or caring for young children. Like the 1996 welfare reform, these modest work requirements are being met with immense outrage and hysteria.

“You shall find children sleeping on crates.” These words would not have sounded out of place among the reactions in the liberal press and on social media to the Medicaid and SNAP reforms in the One, Big, Beautiful Bill Act (OBBBA). But in fact, they were uttered decades earlier by Senator Daniel Patrick Moynihan as a dire warning about the human costs of Bill Clinton’s 1996 welfare reform, which aimed to move single mothers off cash welfare and into the workforce.

Then, as now, even modest changes to the welfare system were framed in apocalyptic terms. The effects of the 1996 reform should discredit such predictions.

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act replaced the Aid to Families with Dependent Children (AFDC) program with the Temporary Assistance for Needy Families (TANF) program. TANF imposed a lifetime limit of five years on federal welfare benefits and required most recipients to work or participate in work-related activities within two years of receiving aid.

After these reforms were implemented, welfare rolls shrank, employment among single mothers increased, and poverty rates declined. According to a 2016 analysis by Scott Winship of the Manhattan Institute, the share of female-headed families receiving welfare fell by more than half over about 15 years, dropping from 58 per 100 in 1994 to just 17 by 2008. Employment among never-married mothers, which had risen by about 10 percentage points between 1980 and 1996, surged by another 15 percentage points between 1996 and 1999 alone. Moreover, the share of single mothers living below the poverty line fell below pre-reform levels, even after accounting for the reduction in government benefits.

What the 1996 reform did for cash welfare, OBBBA aims to accomplish with Medicaid and the SNAP program. Medicaid is now the third-largest and fastest-growing item in the federal budget. Enrollment has grown dramatically since the Affordable Care Act (ACA) expanded the program to prime-age adults above the poverty line. Food stamp participation, meanwhile, has ballooned under President Biden, even though the economy has recovered from the COVID-19 recession.

To address this situation, the OBBBA requires prime-age adults on Medicaid to work, volunteer, pursue education, or participate in a work program for 20 hours a week. The work requirement excludes individuals who are disabled, pregnant, or responsible for caring for a child under 14. Similarly, the OBBBA would require prime-age adults without dependents on food stamps to work for 20 hours a week or lose benefits after three months.

Some states have already tested similar work requirements. For example, in 2005, Tennessee moved 170,000 prime-age adults off Medicaid. As a result, labor force participation, private health insurance coverage, job searches, and employment all went up. Likewise, after Arkansas implemented work requirements for able-bodied adults in 2018, “more than 9,000 went to work, and more than 14,000 left the program due to higher incomes in just the few short months the requirement was in effect… by the end of 2018, Arkansas was on track to save taxpayers at least $300 million per year.”

The experience of the Clinton-era welfare reform, along with these state-level experiments, demonstrates that work requirements reduce dependency and promote self-sufficiency without increasing deprivation.