The farm bill is scheduled to get a vote on the House floor this week, and much of the attention has focused on farm-related provisions or work requirement changes for food stamp recipients. But conflicts threaten to stifle promising apps that help recipients manage their benefits or get connected to jobs.
Congress should consider rethinking the principles regarding contracting for administration of the food stamp program, so that recipients who choose to make use of these outside applications may do so.
Even with the proliferation of the Electronic Benefits Transfer (EBT) card, the most common way for participants to check their balances is by calling a 1-800 number on the card or tracking through paper receipts. The lack of a convenient way to check balances can increase inefficiencies for recipients in planning their grocery shopping.
Enter Propel, one of the three finalists for the Wall Street Journal’s 2018 Financial Inclusion Challenge. The company’s new app, FreshEBT, allows participants to check their balances on their smartphones, along with other features. About one million people use the app, equivalent to about five percent of non-elderly adult participants.
The company says users check their balances through the app an average of seven times per month. In a study carried out with Duke University, an in-app tool showing food stamp recipients a weekly budget instead of their monthly balance reduced the time to benefit exhaustion by two days per month.
The app also offers other features that can help users get more affordable food, access to healthier recipes, or job-listings. According to a recent New York Times report, users of the app have downloaded coupons worth more than $2 million, and applied for jobs more than 10,000 times within the past six months.
However, Propel is running into resistance from Conduent, one of the major government contractors that administers the food stamp network in 25 states, accounting for 60 percent of Propel’s users. Propel, and other similar companies and apps such as Panacea Financial, rely on the databases maintained by contractors such as Conduent for people to be able to check their balances.
In states managed by Conduent users of the Propel app have had difficulty using the app, or it has not been working altogether.
Conduent told the New York Times that the app was created “without the knowledge, input or consent from Conduent,” and data requests from Propel were overloading its networks.
Propel’s difficulties are confined to the states where it has to deal with Conduent, and Propel has had no problems with FIS, the other major contractor.
Propel is not in direct competition with the core business of processing and administering EBT for the food stamp program, instead giving users more tools to manage their benefits in the existing program.
However, Conduent recently introduced its own app last year, which fulfills some of the same functions as FreshEBT, and is therefore in more direct competition. To date, Conduent’s app is only available in a handful of states, although the company says it will be available in more states eventually. It offers information about account balances and purchases, but not the other ancillary features offered by Propel’s app.
This might be the animating reason behind the recent conflicts between the contractor and Propel. If the status quo remains, incumbent contractors would be able to insulate themselves from potential competitors who might offer helpful services to food stamp recipients. If those apps and services would have otherwise helped some recipients reduce their food insecurity, or connected them with a job, this stifling of competition and new entrants would cut against some of the core principles of the food stamp program.
In its current iteration, the farm bill includes some provisions that indicate policymakers are interested in making better use of emerging technologies and leveraging efforts in the private sector.
For example, Section 4016 directs the Secretary of the United States Department of Agriculture to regularly review and modify regulations regarding Electronic Benefit Transfers in light of evolving technology. Section 4030 gives the Secretary the authority to establish up to 10 pilot projects to support public-private partnerships to address food insecurity and poverty.
Both of these provisions might lead to some improvements to the existing program. Reforms to data access regulation and contracting should complement these efforts by protecting access to food stamp data for outside parties, so food stamp recipients are free to make use of those offerings.
Such a move would encourage innovation and competition. Eventually, recipients could eventually transition out of the food stamp program by making it easier to more efficiently manage benefits and find jobs.
These benefits are only beginning to be realized. A million users for Propel are a promising start, but only a small share of non-elderly adults on food stamps. Other companies have fresh ideas that may prove even more effective in helping recipients in ways not yet imagined. This potential can only be realized if these efforts are not stifled, and new entrants and innovations are encouraged.
Charles Hughes is a policy analyst at the Manhattan Institute. Follow him on Twitter @CharlesHHughes.
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