How Feds Think Data Can Buy Time for People Suffering a Financial Shock

Two federal projects are looking at using data and automation to shorten the time it takes for people in need to qualify for government benefits, in the hopes of staving off more painful consequences caused by delays.

A sudden, unexpected, unpayable expense can derail an entire life—or lives, in the case of families. Federal, state and local governments all have programs to help bridge the gaps during a financial shock, but the slow pace of due diligence can render these lifelines untimely and ineffectual.

“When families and individuals experience a financial shock—things like a car breaking down or receiving an unexpected medical bill—they’re in a moment where they need access to benefits quickly,” Alicia Rouault, a program lead from the U.S. Digital Service, told Nextgov. “The difference between getting benefits in a week versus a month really, really matters.”

When government assistance doesn’t come fast enough, people are forced to take help from other avenues, including some that could make matters worse, like predatory payday loans.

Two projects within the Biden administration’s major customer experience—or CX—improvement program are trying to fix the timeliness issue by tapping new databases to speed income verification and setting up a place for benefits administrators to share best practices.

The projects aimed at improving financial shock assistance are part of a broader effort to improve Americans’ experience with government services. The nine Life Experience projects span a diverse set of benefits programs—helping families with newborns, veterans, retiring workers—but all focus on improving customer experience by bringing multiple federal agencies together.

The financial shock projects are trying to “figure out how we can help clarify the policies and privacy rules and data sharing practices that are allowed so states can adopt best practices that are already in use or new best practices that we might develop,” said Saray Esty, senior advisor for technology and delivery with the Health and Human Services Department.

But before the team can help state and federal programs with best practices, they first must identify existing datasets, as well as the policies that govern them.

“It is seeing where there is federal data that might be helpful,” Esty said. “It is also about helping states improve their own data ecosystem—so where there might be state data sources that don’t make it up to the federal government but where we might be able to help states consistently use some of their own data in more effective and integrated ways.”

The end goal will be to automate as much of the process as possible, so when a person in need of financial assistance applies for a government program, the backend IT systems can quickly—and accurately—confirm their income status and get the process moving.

“A major factor in how long this takes—to actually get approved for benefits—stems from how long it takes states to review and verify all the information and the data that people submit in their application,” Rouault said. “If we can automate more verifications behind the scenes, we can get more people their benefits faster.”

But programs need data before they can automate the process.

Most of the needed data already exists, often within governmental systems that don’t currently speak to each other. The first financial shock program will look at opportunities to break down those siloes to increase the amount of datasets any one benefits program can access—including data held by sister programs as well as in the private sector.

Some of this will also be about expanding use of existing federal data. Officials noted most state benefits programs already tap federal data from agencies like the IRS and Social Security Administration, though there are opportunities to expand.

For instance, data collected and maintained by the Centers for Medicare and Medicaid Services, CMS, is only used for those services. Program leads are looking at whether that data can be used to approve applications for state-level benefits like the Supplemental Nutrition Assistance Program, or SNAP.

If policy and privacy barriers can be dealt with, benefits programs could even share the results of income verification checks, allowing citizens to apply for a suite of relevant assistant programs through a single application.

The financial shock team is currently working with state benefits programs to create a strategic roadmap for how all this would work, which could, at some point, include developing APIs or other technologies to facilitate data sharing.

Figuring out those barriers—and ensuring they are broken down or bypassed while keeping privacy and other important, unintended consequences in mind—will be part of the second project: The Accelerator.

“In the first year, the Accelerator will focus on two areas: providing tools for improving procurement or development of state benefits technology systems, and providing clear guidance to states on best practice multi-program delivery methods,” according to a project breakdown on Performance.gov.

For 2023, that will include producing:

• 1-3 state-validated solutions—toolkit, resource, best practices—to support IT or procurement barriers.
• Develop initial 1-3 elements of the “one-day delivery toolkit” for states.
• Develop multi-program text messaging guidance and templates in collaboration with other Life Experience projects.

All of these products come with the goal of getting assistance to people in need before their situation gets worse.

Getting time on your side

Alan Balch, CEO of the Patient Advocate Foundation, said his organization has reaped significant benefits from automating their income verification process. Shortening the time to get a determination on whether someone qualifies has allowed the foundation to help more people, faster; keep costs down; and get people assistance in a timely manner, which makes all the difference, he said.

“If someone is in financial difficulty, they need help now,” Balch said. “The sooner you can tell them ‘yes’ or ‘no,’ or at least start that process and give them a decision as quickly as possible, it both relieves the pressure—let’s them know what they can expect—but then also stops the bleeding, so to speak, so they don’t have to keep building debt.”

For someone applying for assistance benefits, the costs of waiting are two-fold:

“The penalty to the person applying is both actual costs,” in fees, transportation costs, etc., “and it’s opportunity costs,” such as missed wages while waiting in line or going to an in-person appointment, Balch said. “So that’s part of the moral imperative to try to do this better.”

For the Patient Advocate Foundation, that meant automating as much of the early stages of the process as possible.

“It took quite a bit of investment and time to get there,” Balch said.

But when the Patient Advocate Foundation asked users how the program could improve customer experience, the answers were, “’I need to know fast.’ ‘I need to know sooner.’ ‘I need to know instantly whether I qualify,’” he said.

Now, “We do those eligibility requirement checks in real time,” Balch said. “It’s not super expensive but we’ve invested in the technology to make that happen.”

The Patient Advocate Foundation takes potential clients’ Social Security numbers, which are then run through a database managed by a vendor: one of the three major credit rating companies—Equifax, Experian and TransUnion.

“It can tell us whether they clearly meet the income criteria,” Balch said, making a positive determination—yes, this person qualifies for assistance—almost instantaneously.

 ‘No’ is a harder problem.

“If it kicks back a ‘no,’ we don’t stop there. We then go to manual verification and then we’ll accept a series of documents” like payroll statements and tax forms, Balch said. That process still takes time—and still has all the problems of actual and opportunity costs—but being able to move quickly on the majority of cases frees time for case managers to spend with those who got a provisional “no.”

Overall, automating the process has also allowed the foundation to dramatically cut backend costs, enabling them to put more of their grant funding toward helping people, Balch said.

The Patient Advocate Foundation also spaces out payments over time, allowing case managers to give preliminary approval to anyone who appears to meet the basic requirements, create an account with some funding, then adjust as the months go on.

“So, it’s a little easier for us to be wrong,” Balch said. “As opposed to trying to get the money back.”

Balch noted most government services operate this way, as well.

“If you have the right technology and have confidence in the technology behind [your process], you can say ‘yes’ more quickly,” he said. “But you don’t just want to say ‘no,’ either. If you say ‘no,’ it should be a soft ‘no.’”

Balch said there are several moral imperatives that support speeding up the process beyond simply helping more people and doing it faster—both worthy goals on their own.

“For many of these programs, there is an economy of scale that can be reached,” he said. “If you build the right technology, the marginal cost of serving the next patient actually goes down. That’s what we’ve seen: The more patients that we serve, per patient it actually costs less because of the investment in technology.”

Balch noted this won’t be true of every benefit program and cautioned against a blanket, speed-everything-up approach. But for many programs, being able to help more people lowers costs, allowing the programs to help even more people.

Ideally, that’s where the Accelerator comes in: sharing best practices for different types of programs and situations.

An opportunity for education to break the cycle

Vince Shorb, CEO of the National Financial Educators Council, said he hopes financial literacy education can be worked into the programs.

“It’s good that they are improving navigation and shortening that time,” he said. But “anytime somebody is searching for a solution, that gives us an opportunity to educate. And we can educate in ways that are accommodating to their needs,” using varying media like video, audio and text.

Shorb said education is important on two fronts: It helps assuage fears that can stop people from taking action, which exacerbates the problem, and makes it less likely they will end up in a compromising position again, if it’s avoidable.

“When people are going through financial shock, there’s already trauma,” he said. “When you’re adding to the trauma with these complex government forms and filling out multiple pages and worrying that it’s going to be rejected just because you missed one little thing, and you have nobody to talk to—that’s only exacerbated.”

Shorb related his own experience in college when he had built up a concerning amount of credit card debt.

“I didn’t want to open the bill. I just didn’t want to see it,” he said. “Then, I’d finally have the courage to open them all at one time and, ‘Goddamn it, I’m getting further away [from solvency.]’ That’s how most people are, especially when they don’t feel empowered to say, ‘OK, I’m in control of this situation and I know how to navigate it.’”

And when people don’t feel in control, they often make bad decisions, Shorb added, such as not focusing on work or taking predatory loans that buy time but cause more damage in the long term.

“Everybody has a different coping mechanism when it comes to dealing with their finances. Some—a lot of people—just freeze and hope; other people say, ‘Hey, let’s figure it out and get on it right now,’” Shorb said. “Or they’ll just want to talk it out with friends or get advice from people who don’t know or have experience in this area.”

Shorb cited an annual NFEC survey asking Americans who they turn to for trusted financial advice.

In 2022, 37.8% said they go to family or coworkers for financial guidance; 22.8% went to financial professionals; and an alarming 39.3% said they had no one to talk to about these issues.

“The 39% that don’t have anybody to turn to: That’s scary. An island on your own,” he said, noting that the government is often the best source of information for those people.

Having access to more personalized information from the government would be especially helpful for that segment of the population, Shorb said.

“Counseling, support—I know funding is always tight but for those people it makes a difference just knowing they have somebody they can turn to,” he said. “Even on a very low-tech level, you can help navigate people through questions.”

For instance, Shorb used the difference between gross income—such as an employee’s total salary—and net income—what workers take home after taxes and other deductions.

“If that was one of the qualifications, it would be nice to have a short video” explaining the distinction, he said.

Shorb said he hopes the Accelerator could help by creating an education ecosystem that can break people out of the cycle.

“Not just leaving them after they fix the immediate problem,” he said. “If we leave them there, it’s much easier to get back there. If we can take them to that next level: ‘Hey, we fixed the immediate problem but here’s a path forward to continue the learning and education of things you need to work toward greater financial health and wellness so you don’t have to come back here.’”