Federal agencies and Congress hold the keys to success as states take on SNAP and Medicaid

The One Big Beautiful Bill Act (OBBA) shifts responsibility for administering key welfare programs, including SNAP and Medicaid, to states and counties. But federal agencies remain responsible for oversight, enforcing standards, and managing the operational and compliance risks that come with the transition.

The law adds both enormous new requirements on states and locales, including tougher program integrity standards, and penalties for failing to meet them. They also include new work or “community engagement” rules and semi-annual rather than annual Medicaid eligibility redeterminations, all of which adds further burdens for both applicants and administrators. Meanwhile, for SNAP, the legislation also reduces the federal contribution for administration of the program by 50%.

Whether one agrees with the policy changes or not, one thing is clear: States or counties need relief from the often arcane and parochial rules imposed by Federal agencies that constrain flexibility and innovation—at a time both are desperately needed. And that puts the programs at serious risk.

The programs are already under tremendous pressure. Antiquated technology and processes create barriers for eligible applicants to receive benefits within federally mandated time frames. Because the process can be so daunting, one in five eligible Americans never applies for SNAP, leaving roughly $30 billion in unclaimed benefits. Meanwhile, Medicaid and Medicare paid nearly $63 billion in improper payments in fiscal 2024, largely due to systemic failures in data sharing, documentation, and conflicts of interest Meanwhile, states and counties are also under tremendous workforce challenges. Matt Chase, head of the National Association of Counties, told a recent National Academy of Public Administration conference that county employee vacancy rates run 15% to 30%. And virtually all state and local governments face endemic fiscal challenges.

The legislation does little to address these challenges; instead, states and counties are accountable by federal agencies for program delivery while being given little flexibility or support. That mismatch is a recipe for disaster.

What federal agencies can do

First, federal officials should grant states and counties flexibility to administer programs in ways that match their local capabilities and needs. This could include using outside employees and private-sector expertise to bolster workforces and deploy technology, including AI, to streamline operations.

Flexibility, however, must operate within clear federal guardrails. The authority should require states to report annually on key performance metrics, including timeliness, accuracy, beneficiary satisfaction, and the elimination of systemic conflicts of interest. Proposed bipartisan legislation from Reps. Buddy Carter, R-Ga., and Don Davis, D-N.C., would also prevent states from incentivizing delays or denials of eligibility; participation must solely reflect the number of people who qualify.

Second, technology can and must be leveraged to break down silos. In today’s environment, there is simply no excuse for beneficiary databases to not be integrated, and common processes aligned. For example, 85% of children receiving free or reduced-price lunch also come from families enrolled in Medicaid. Combining SNAP and Medicaid eligibility could save time and money for both governments and applicants. It might also be extended to WIC and Temporary Assistance for Needy Families, creating a more efficient system. But none of this will happen without Federal leadership and direction. But that requires federal agencies to agree to collaborate in new and different ways.

Third, federal agencies must prioritize the creation of integrated national data clearinghouses for SNAP and Medicaid to centralize eligibility, beneficiary, and provider data. These clearinghouses are critical to preventing waste and improper payments, which most often occur when jurisdictions cannot share basic enrollee information. For example, when a beneficiary moves between states, no central system currently prevents duplicate payments being made to different Medicaid-managed care plans.

The clearinghouses are already required by law, but progress has been painfully slow. With states taking on more responsibility, federal leadership must make their implementation a top priority.

The bottom line for federal managers

State and local governments face a real crisis in administering key benefits programs, and the risk of program failure is very real. But with active, sustained federal leadership on and support for flexibility and innovation, the challenges also offer a rare opportunity to rethink old models and implement new strategies that better serve the taxpayer and beneficiary alike. That’s the path that would serve us all best. And there’s no time to waste.

Stan Soloway is the Chair and a Fellow of the National Academy of Public Administration. He also chairs the Center for Accountability, Modernization and Innovation, which advocates for innovation in public benefits programs.