Activating H.R.1: Driving horizontal innovation in the social safety net

How can your agency get started driving horizontal innovation to improve efficiency and effectiveness of safety net programs?

In brief

• Federal funding cuts are estimated to reduce Medicaid health insurance coverage for over 10 million low-income individuals in the next decade.
• Federal funding cuts to SNAP will also result in multimillion dollar financial budget shortfalls for many states.
• RHTP grant will provide $50b in funding with 50% distributed to states that propose innovative approaches to health care services and more.

“Out of adversity comes opportunity.”¹

House Resolution 1 (H.R.1), also referred to as the One Big Beautiful Bill Act (OBBBA), will have significant impacts on access, coverage and federal funding for social safety net programs², including Medicaid and the Supplemental Nutrition Assistance Program (SNAP).³ This legislation is shifting more of the financial burden for social safety net programs to state and local governments, increasing the challenges of continually doing more with less.

The impact of these federal funding cuts will be significant. For example, reductions in health care provider taxes used by state governments to fund Medicaid, together with expanded eligibility and work requirements, are estimated to reduce Medicaid health insurance coverage for over 10 million low-income individuals in the next decade.⁴ Federal funding cuts to SNAP, including reductions in the federal share of SNAP administrative costs from 50% to 25%, along with fiscal penalties for state SNAP payment error rates that exceed 6%, will also result in multimillion dollar financial budget shortfalls for many states.⁵

Reimagining the future of social safety net programs

Going forward, state and local government leaders must simultaneously improve the efficiency and effectiveness of social safety net programs to deliver better care at a lower cost. This will require rethinking legacy operating model processes, organizational structures and ways of working. To get started, we have summarized three guiding principles for inspiring horizontal innovation and cross-agency, cross-ecosystem collaboration:

1. Reimagine agency operating model processes, technologies, and structures to bend the cost curve

Individuals pursue careers in state and local government with the desire to do meaningful work and make a positive impact on their communities. These roles offer a sense of purpose and the opportunity to make a tangible difference in people’s lives within local communities. Oftentimes, however, the siloed nature of agency processes, technologies and organizational structures can impede individuals and agencies from realizing their mission and purpose.

The financial and operational impacts of H.R.1 will exacerbate these operating model challenges. For example, the immediate expansion of mandatory SNAP work requirements may overwhelm the SNAP employment and training (E&T) capacity of many states. This additional volume, in turn, will likely impact SNAP payment error rates. Similarly, the introduction of Medicaid work and community engagement requirements risks introducing operating model redundancies with other safety net programs if state agencies fail to collectively address these work requirements.

The implementation timeline for H.R.1 represents a rapidly closing window for government agency leaders to reimagine their operating model. In the near-term, this implies modernizing business processes, exploring automation of manual tasks and experimenting with artificial intelligence (AI) and other emerging technologies to accelerate throughput and improve quality. Over the next two years, these operating model investments will be critical to reduce administrative costs, improve efficiency and increase financial viability and sustainability of social safety net programs for the future.

2. Understand the cross-constituent experience of social safety net stakeholders to integrate programs, processes, structures and capabilities

Understanding day-in-the-life customer interactions and experiences is a well-known approach to identifying unmet needs and opportunities for digital innovations. What is often overlooked, however, are the strategic interactions between ecosystem stakeholders that are critical to creating and delivering value. For social safety net programs, these ecosystem constituents and stakeholders include families and caregivers, health providers and clinics, managed care organizations (MCOs), faith and community-based organizations (CBOs), as well as other government agencies and programs, customer service organizations and operational field staff members. These cross-constituent interactions are implicitly reflected by the agency’s operational processes and codified in various enabling technology platforms.

Unfortunately, many government organizations have not had the time to systematically document these program-related processes and workflows and/or keep them updated as legislation and policy changes. Further, the technology platforms and tools intended to enable front-line staff tend to be out-of-date, resulting in inefficiencies and errors.

By understanding the end-to-end constituent experience for safety net stakeholders, state and local government leaders can begin to “shine a light” on potential upstream and downstream process efficiencies, technology improvements and cross-program operational cost savings. To inspire horizontal innovation and collaboration, H.R.1 has made it critical for state and local government leaders to deeply understand the end-to-end experience for constituents and ecosystem stakeholders of social safety net programs.

3. Proactively engage the ecosystem; “no one can do it alone”

Increasingly, state and local government agencies have begun collaborating with other public and private sector ecosystem partners to systematically address social determinants of health (SDoH), the factors beyond clinical care that have been estimated to influence approximately 80% of an individual’s health outcomes.⁹ For example, public-private collaboration and collective impact models have been launched in multiple states to address a wide-range of population health challenges ranging from obesity to opioids.¹⁰

These collective impact models are co-designed by ecosystem stakeholders, including government agencies, health care providers, MCOs and CBOs to encourage collaboration and coordination of individual efforts.¹¹ Government agency leaders should begin by identifying ecosystem stakeholders and clearly understanding their priorities and economic value drivers. H.R.1 will require a horizontal innovation mindset that aligns community partners around shared outcomes, mutually reinforcing actions and “measures that matter.”

Developing and implementing an actionable strategic roadmap for the future

Beyond these three critical elements, state and local government leaders should consider establishing a cross-agency governance structure to orchestrate implementation of horizontal innovation and collaboration initiatives. In some organizations, transformation management offices (TMOs) are being established to develop an integrated strategic roadmap to coordinate H.R.1 activities. An effective TMO structure continually monitors changes in legislation at the federal and state level to adjust priorities and deliver near-term value while building capabilities for the future. This integrated, multiyear strategic roadmap helps align leadership and consistently communicate priorities, initiatives and dependencies to the organization.

Additional contributors to this article: Brian Finney, Ernst & Young LLP; Zach Stepp, Ernst & Young LLP; Emma Rhodes, Ernst & Young LLP; Meg VanDeusen, Ernst & Young LLP; and Tamarah Wallace, Ernst & Young LLP.