Social Service Funding Decisions Ahead

By Monica E. Oss, Chief Executive Officer, OPEN MINDS

The U.S. spent $379 billion on social service programs in 2021—on income assistance, housing, and nutrition programs. Adjusted for inflation, that was a 13% increase since 2009. On a per capita basis, the U.S. spends $1,142 per citizen per year on social services ($922 on an inflation-adjusted basis, an increase of 4% in the same period). That was the big picture takeaway from our new analysis, The U.S. Social Services Market Spending, 2009-2021 An OPEN MINDS Market Intelligence Report.

Taking a closer look at the data, 47% of the social service budget was spent on income assistance, 14% on housing, and 39% on nutrition programs. On an inflation-adjusted basis, nutrition spending increased the most since 2009 (56%)—followed by housing assistance at 8% and income assistance, which decreased by 7%. One important note—the 2021 numbers include $84.9 billion in additional pandemic-related spending that will not be part of the equation in future budgets.

The numbers look big. Big enough or too big depends on your perspective. The future “trend” in spending on these social supports will be determined in the negotiations in Washington that happen in the months ahead around the debt ceiling. In short, the Federal government will exhaust its ability to borrow money to pay current obligations sometime between July and September 2023. Right now, Republicans want reductions in Federal spending in exchange for a vote in favor of increasing the debt ceiling, but large portions of the budget are off limits to these cuts. Medicaid, Medicare, and other health spending are 25% of the budget. Social Security 21%, Defense 13%, and interest on the debt 7%.

That leaves 35% of the budget for everything else—including social service spending. And the ideas being floated are part of this social service spending. Mentioned in recent discussions—more stringent work requirements for the Supplemental Nutrition Assistance Program (food stamps) and reductions in Temporary Assistance for Needy Families. At this point, it is too early to make any predictions—but it is likely that these social service programs will be affected in some way.

In contrast, the Biden Administration is forwarding proposed increases in the budgets for social services. On the income assistance program, the Administration has introduced a number of initiatives including lowering energy costs for low-and moderate-income families; $1.1 billion in grants to assist low-income families with paying for water and waste water bills; an investment to lower housing and rent costs and expand housing supply; and a new strategy to address hunger, nutrition, and access to assistance.

At the same time, the hard line between health care spending and social service spending is no longer definitive. Earlier this year, the Centers for Medicare and Medicaid Services (CMS) changed the rules for Medicaid health plans, allowing them to spend health care premiums on social service programs. For a look at how one state, North Carolina, is using this new flexibility, check out the presentation, Connecting The Dots: How North Carolina Is Creating A Statewide Coordinated Network For Whole Person Health, by Elizabeth Cuervo Tilson, M.D., MPH State Health Director and Chief Medical Officer for North Carolina Department of Health and Human Services, which took place at The 2022 OPEN MINDS Technology & Analytics Institute.

And Medicare Advantage plans can now include coverage for services related to “daily maintenance,” which may include devices and services that keep frail people healthy but which may not be a direct medical cost. For more on this expansion in Medicare, check out the keynote presentation by Stephanie Franklin, the Director of Population Health for Humana, What, When & How To Share Data – Innovating For Social Needs & Population Health Strategies, that took place at The 2022 OPEN MINDS Technology & Analytics Institute.

The next six months will set the path for U.S. social service funding for the next few years, so stay tuned. Regardless of what happens in Washington, a constant will be that health plans will be more focused on the health/social needs interface. And, it is not out of the question that health plans could continue to expand on these policy changes and manage more of the state social service budget. Provider organization executive teams will need more market intelligence on the organizations that make social service spending decisions and deliver those social services in their market areas, with an eye on how to develop relationships that leverage those available resources for the consumers they serve.