Two years into the pandemic, trends in four major
safety net programs that operate outside of the tax system reveal a mixed
picture. Participation in the Temporary Assistance for Needy Families (TANF) program
and Supplemental Security Income (SSI) programs declined during the pandemic, while
participation and costs have increased dramatically for the Supplemental
Nutrition Assistance Program (SNAP) and Medicaid. Because of the sheer size of
SNAP and Medicaid, these trends suggest an overall increase in the size and
scope of the federal safety net operating outside of the tax system in the
years to come. The costs associated with SNAP and Medicaid increases have
important implications as Congress also considers expanding the tax-based
safety net, primarily through an increased child tax credit.

TANF

Among other things, TANF provides cash assistance to very low-income parents. Officials in many states relaxed requirements to participate in TANF (such as work activity requirements) and to renew benefits (such as interviews) at the onset of the pandemic, leading to an initial spike in recipients (figure below). However, the increase was short-lived and TANF caseloads never reached the levels seen during the Great Recession. In fact, the number of TANF recipients has since plunged to record lows by 2021 and 2022. Much of this drop is attributable to expansions elsewhere in the safety net. Pandemic-related expansions to unemployment compensation likely made many families ineligible for TANF, while increases in child tax credit payments that started in July 2021 undoubtedly influenced this trend as well.

SSI

SSI provides cash assistance to low-income individuals who cannot work because of age or disability, and to parents of children with disabilities to help with caretaking. SSI differs from Social Security Disability Insurance (SSDI) in that SSI is income-tested and beneficiaries do not need a work history to qualify.

Many factors contribute to trends in the SSI caseload including disability prevalence, age profiles, and the economy. Historically, SSI caseloads have increased as the economy declines, but the relationship between economic conditions and SSI is not straightforward. During the pandemic, a decline in SSI receipts that started in 2014 accelerated. While some scholars blame office closures for the decline during the pandemic, others factors likely also played a role, such as several rounds of economic impact payments (stimulus checks) to US households, eviction moratoriums, and enhanced unemployment compensation — all making SSI less necessary.

SNAP

While TANF and SSI caseloads declined during the pandemic, SNAP caseloads increased dramatically, especially in the early pandemic months. Economic disruptions and high unemployment likely contributed to increases. However, the federal government also relaxed the rules for renewing SNAP benefits and work requirements in March 2020, contributing to a spike in caseload. The SNAP caseload has remained elevated despite a dramatically improving employment situation throughout 2020 and 2021.

Spending growth on SNAP has far outpaced enrollment increases, largely due to three major policy changes. First, Congress authorized emergency SNAP payments, which raised all households to the maximum SNAP benefit amount regardless their income. As of March 2022, 39 states or territories still had this policy in place, although these extra payments will eventually end. Congress also temporarily increased all SNAP benefits in December 2020 by 15 percent, and President Joe Biden’s administration increased it permanently in October 2021 by an average of 25 percent. The result has been an unprecedented and sustained increase in average SNAP benefits for each household and person (figure below), bumping total program expenditures above $100 billion.

Medicaid

Like SNAP, Medicaid enrollment has also ballooned during the pandemic. According to analysis of Centers for Medicare and Medicaid Services (CMS) data, the number of Medicaid enrollees increased by more than 13 million people from February 2020 to September 2021, a 19 percent increase. According to the Kaiser Family Foundation:

“Increases
in enrollment reflect changes in the economy (as more people experience income
and job loss and become eligible and enroll in Medicaid and CHIP coverage) and
provisions in the Families First Coronavirus Response Act (FFCRA) that require
states to ensure continuous enrollment to current Medicaid enrollees to access
a temporary increase in the Medicaid match rates.”

Coinciding with enrollment increases, CMS data show, “Medicaid spending grew 9.2% to $671.2 billion in 2020.” CMS expects Medicaid expenditures to continue to grow faster than the economy as a whole through 2028.

Although the SNAP and Medicaid expansions started with the pandemic, elevated participation and costs are likely to linger for years to come. These fiscal realities are important to consider as Congress also looks for ways to expand the safety net through the tax system, such as increasing the child tax credit, at a cost of approximately $100 billion per year and without a way to pay for it.

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