If you’ve been following EPIC’s work on the algorithms used in public benefits programs, you may have caught something unusual: although we talk about public welfare programs, most of the systems we’ve uncovered are developed by private companies. That isn’t a coincidence. While a few state agencies have developed their own technical systems for public benefits programs, a large and growing number of states have chosen to outsource the technological systems undergirding public benefits programs to private vendors who promise accuracy, efficiency, and cost-savings. In reality, EPIC’s research suggests the opposite: many vendor systems are costly, prone to bias and error, and developed without considering agencies’ unique needs.
Understanding the role that these private vendors play in public benefits programs is just the first step to understanding the risks and harms facing public benefits recipients. But it’s an important step. Throughout this blog post, we’ll explore how private vendors—some of the largest companies in the country—have rapidly solidified their place within our public benefits landscape using proprietary data systems and marketing gimmicks. We’ll highlight the outsized power that private systems have over public benefits—power that private vendors have used to enrich themselves while exposing our most vulnerable communities to harm. And we’ll consider existing and potential reforms meant to improve our public benefits systems and protect those who use them. For millions of Americans in need, extensive data collection, faulty vendor systems, and harmful automated decision-making are part and parcel of their daily lives.
Procurement: When and Why do State Agencies Rely on Private Contractors?
Privatizing public benefits programs isn’t the only way for public benefits programs to meet the growing needs of benefits recipients—it’s just the result of active efforts by politicians and lobbyists to defund agencies and privatize public services. State agencies can and have successfully managed their public benefits programs without relying on private vendors. For example, Oregon’s Department of Human Services, Aging & People with Disability (APD) has, since 1995, relied on its own network of digital systems to facilitate long-term care needs under Medicare and Medicaid. And while these systems have evolved over time, they have never replaced or undermined case worker decision-making; their systems do not make automate any eligibility determinations or authorizations and do not rely on third-party datasets.
So how did private vendors become such powerful players in the public benefits space? The answer is three-fold. First, many agencies are forced to rely on private vendors because state legislatures refuse to allocate enough funding for agencies to manage and update their public benefits programs internally. Powerful companies like LexisNexis and Maximus exploit this fact, spending millions of dollars to lobby state and federal legislatures for lucrative benefits privatization opportunities. When state agencies submit Requests for Proposals (RFPs) for private vendor contracts, these same companies leverage their size and data capabilities to submit highly competitive bids—bids that can include ongoing system maintenance provisions that lock agencies into long-term, exclusive vendor contracts. And once these major…