Exclusive–Kentucky Seeks to Transform Welfare by Hiring Private Contractors

Welfare Recipients
Mark Ralston/AFP/Getty Images

Adam Meier, deputy chief of staff to Kentucky Gov. Matt Bevin, called for greater state flexibility in an exclusive interview with Breitbart News to hire private contractors to better service entitlement programs and benefit Kentucky taxpayers.

Kentucky serves at the vanguard of the conservative movement to reform welfare and entitlement programs. Now, the state has proposed contracting out their welfare services to private contractors to provide better service at a lower cost.


In January, Kentucky became the first state to implement work requirements for Medicaid recipients.

Kentucky Gov. Matt Bevin said during the announcement:

With federal approval of our Medicaid waiver, Kentucky will lead the nation in constructive changes to Medicaid. This marks the first significant change to a federal entitlement program in more than 20 years. The result will be a transformational improvement in the overall health of our people and will provide a model for other states to follow.

Aides to Gov. Bevin estimated that roughly half of 350,000 Kentucky Medicaid recipients already meet the new Medicaid requirements to work at least 80 hours per month, volunteer, or commit to job training. Under the waiver, Kentucky Medicaid recipients will have to submit documentation proving that they comply with the Medicaid work rules. The Kentucky government suggested that with the Medicaid work requirements, they will save roughly $2 billion federal and state dollars over the next five years.

The Medicaid work requirements would only apply to able-bodied working-age adults. Americans with disabilities, older Americans, children, and pregnant women would not have to comply with potential Medicaid work stipulations.

One Bevin staffer suggested that the state’s Medicaid rolls will be reduced by roughly 95,000 within the next five years because of the work requirements.

Bevin added at a press conference in January, “Why should a working-age person not be expected to do something in exchange for what they are provided?”

Not satisfied with Kentucky’s Medicaid work requirements, Gov. Bevin’s deputy chief of staff, Adam Meier, argued in an interview with Breitbart News that they would like to implement more reforms to their entitlement programs.


Meier testified during a House Education and Workforce Development hearing on March 15.

In his testimony, Meier called for states to have greater flexibility for “state and local partners to leverage the private sector workforce.”

Meier’s proposal would allow for states to use contractors to service welfare and entitlement programs.

Breitbart News asked Meier in an exclusive interview how contracting out services such as the Temporary Assistance for Needy Families (TANF), the Children’s Health Insurance Program (CHIP), Supplemental Nutrition Assistance Program (SNAP), or food stamps to private contractors would benefit Kentucky entitlement program recipients and taxpayers.

Meier told Breitbart News, “States are in the best position to determine how to staff their own workforces. There are several scenarios in which this flexibility can help a state. First, contracting can be a more cost-effective way to deliver services. With pensions and other legacy costs, it can be significantly more expensive to hire a state worker to do the same service. Second, contracts can include service level agreements that require certain milestones to be met, such as call line wait times or the number of applications processed. Often, contractors can achieve targets that a state workforce cannot with the same funding. Third, it would allow the same private contractors who are already conducting eligibility service for one program to do it for all programs in one application—something our technology allows for, but federal policy does not.”

The Kentucky deputy chief of staff continued, “Finally, contracting allows more flexibility to quickly augment state staff when there may be a workload surge—something state governments cannot do because of burdensome hiring requirements. An example of this is when Kentucky launched a new eligibility IT system and a backlog was created in our offices and online tasks. Had we been able to leverage private contractors, we could have worked through the backlog much more quickly, and more effectively served program recipients who were at risk of losing critical services. Ultimately, properly managed private contractors could deliver better services in a more cost-effective manner, benefiting taxpayers and program beneficiaries.”

Meier explained that through performance-based contracts, private workers can drive better outcomes compared to state bureaucrats.

Bevin’s deputy chief of staff suggested, “Both can be effective if properly managed, and it would depend upon specific circumstances. Private contractors can be most effective in an environment where the state can use performance-based contracts.  In other words, when the state is paying for “outcomes” rather than just people or processes, then the state is paying for a desired result—a result that can be harder to obtain in a state workforce, where there is little flexibility to provide monetary incentives (carrots or sticks) to drive performance.  However, state staff knowledge of policy and processes will continue to be key in helping monitor compliance with federal requirements.”

Meier explains in his testimony to the House Education and Workforce Development Committee how this program would help state entitlement programs:

For example, states can generally contract out work and training activities in a variety of programs, but the ability to contract out eligibility and related services varies greatly in each, as evidenced in the chart I have provided.The chart is laid out with common programs that families or individuals may access. In some cases, they may access two or more. For example, a family with a child on CHIP could be receiving SNAP. Whereas states have full flexibility and authority to contract out for TANF and CHIP, other programs do not provide that, with SNAP being particularly limiting. If a state uses a contractor, as is done in many states to help the aforementioned family with a child in the CHIP program, and that same family wants to talk about their SNAP eligibility, the contractor must pass the family off to a state or local human services staff person.This is inefficient and poor customer service. It also does not allow for flexibility to meet workflow surges and contractions.

The following chart describes how expanding states’ flexibility to use private contractors can better service entitlement recipients in TANF, CHIP, SNAP, Medicaid, and unemployment insurance:

Kentucky Private Contractor Table

As the table details, private contractors have the largest restrictions in Medicaid, unemployment insurance, and SNAP; private contractors largely cannot determine eligibility, redetermine eligibility, and change welfare status changes in these entitlement and welfare programs.

Gov. Bevin’s deputy chief of staff then explained that through Kentucky Medicaid waiver, they have already started to utilize private contractors in some of their programs.

Meier told Breitbart News, “As part of 1115 waiver implementation, we already have moved (or are in the process of moving) the Employment and Training programs from state agency staff to local Workforce Innovation Boards (WIBs), who leverage private contractors to deliver services. We will always look for ways to deliver better services in a cost-effective manner. If the flexibility is granted to states, we will assess how and to what extent we could best use it in the eligibility space.”

In the House Education and Workforce Development hearing, Meier charges:

For that reason, I would ask that Congress provide states full flexibility and authority to contract
out services for all of these programs. We are not suggesting this be mandated, but believe it
should be an option. Governors and agencies should have the ability to determine the right mix
of state staff and contracted services to effectively and efficiently delivery services and drive
performance-based results.

Robert Doar, the Morgridge Fellow in Poverty Studies at the American Enterprise Institute (AEI), told Breitbart News in an interview that “There’s a lot of aspects of programs that have private entities help with, it’s not new.”

“There is one element in food stamps that says that only government employees can determine eligibility, ” Doar explained. “That has led to a very limited use of privatization in food stamps.”

Doar argued that the contracting entitlement program services to private workers offers “one central place” for entitlement recipients.

“He’s [Meier] saying that he would like greater flexibility with that and I don’t object to that. I think there are benefits to allowing agencies to do multiple programs in one place.”

Doar, however, did caution that privatizing entitlement program services should be combined with President Trump’s campaign promise to “get our people off of welfare and back to work.”


Rep. Buddy Carter (R-GA) told Breitbart News in a November interview how hiring private contractors to confirm eligibility for Medicaid and other entitlement programs can “cut costs through eliminating waste, fraud, and abuse.”

Rep. Carter sponsored H.R.1333, the Freedom to Use Contracted Entities Act – a bill that would allow private contractors to make eligibility determinations on behalf of State Medicaid programs – an idea that could have far-reaching implications for cutting waste, fraud, and abuse throughout federal and state bureaucracies.

Rep. Carter told Breitbart News that Illinois hired private contractors to confirm eligibility for their state Medicaid program to curb costs and fraud, and they saved millions doing so. Carter said:

Well, fortunately, Illinois had some experience with this. The state of Illinois actually had an outset group, a private contractor, to determine breach of eligibility of people in the Medicaid program and they did exceptionally well. They found that files had missing evidence some people were deceased that were applying for benefits again, and they were not verifying social security numbers, and they brought in a vendor into Illinois, and they reviewed over 5,000 cases, and they ended up canceling almost over half of them. Unfortunately, they had a union case brought against them against the state to halt the use of private contractors, and a judge ruled in their favor, and they had to end that. What we are trying to do is change the statute, so they can use private contractors.

By the end of the first year, Illinois had identified and disenrolled roughly 300,00 ineligible welfare recipients. By the second year, the state had disenrolled an additional 400,000 welfare recipients from the program. This represents more than ten percent of Illinois’ entire Medicaid program removed each year.

Based on projections from Illinois Policy, taxpayers could save between $390 and $430 million per year, with even greater savings coming over time. This figure represents nearly two percent of the state’s $20 billion Medicaid budget.

Carter then suggested that this idea to confirm eligibility through contractors for entitlement programs could also be applied to other entitlement programs such as the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) programs.

The Georgia congressman said, “There’s not a question about it. Making sure that beneficiaries get their benefits in a timely manner is very important as well. Again, these are people that need, truly need these programs, and make sure they’re not on a backlog, and make their applications are going through.”

“Giving states the flexibility to reform their programs is just common sense,” Carter added.


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