Bottom line:
Iowa must capitalize on the reforms contained in the Big Beautiful Bill in order to unlock a once-in-a-generation opportunity to reimagine welfare for the better.
Download a PDF of the full report.
Iowa’s welfare system is at a crossroads. What were once temporary safety-net programs designed to protect the truly vulnerable have steadily expanded into sprawling systems that now touch nearly every corner of state government—and consume an ever-growing share of taxpayer resources. Nowhere is this more evident than in Medicaid and food assistance, which together represent the largest, fastest-growing components of Iowa’s welfare state.
For years, policymakers have warned that this trajectory is unsustainable. Rising enrollment, mounting costs, weak oversight, and declining labor-force participation are not abstract concerns—they directly threaten Iowa’s ability to maintain a healthy, growing economy.
That is why this report is being released now.
Recent federal reforms enacted through the One Big Beautiful Bill Act mark the most significant overhaul of welfare policy in a generation. For the first time in decades, work requirements, cost sharing, and stronger program-integrity standards are becoming the law of the land. These changes create a rare opportunity for states to restore balance between compassion and accountability.
This study unpacks Iowa’s welfare dependency problem, explains how federal reforms will reshape the system, and outlines eight concrete steps Iowa policymakers can take to ensure these changes deliver real results. The goal is simple: protect taxpayers, preserve resources for those in genuine need, and reorient Iowa’s welfare system toward work, dignity, and opportunity.
Iowa’s welfare system is in need of a dramatic overhaul—and Iowans need look no further than Medicaid, by far Iowa’s largest and most expensive welfare program, as a glaring example: this program, originally intended to provide basic medical coverage for the truly vulnerable, now ensnares nearly one in five Iowans and consumes one out of every four dollars the state spends.[1]–[2]
But Iowa does not find itself in this crisis for no reason: Much of this growth has been driven by the state’s regrettable decision to massively expand Medicaid through the Affordable Care Act in 2014. From 2013–the year before Medicaid expansion was adopted–to 2024, Medicaid dependency exploded by roughly 50 percent in Iowa.[3] This growth of Medicaid and Iowa’s welfare rolls generally threaten the state budget, the viability of future tax reform, and the long-term health of Iowa overall.
As the safety net is more and more strained, fewer resources are available to help Iowans who truly need help. Able-bodied adults who should be working are instead trapped in dependency, robbed of opportunity and better lives. Local employers struggle to find workers as Iowans are more enticed by endless government benefits than a paycheck. Even state government itself suffers as suppressed labor force engagement results in lower tax revenue and fewer available resources for core functions of government like education, public safety, and infrastructure.
In an effort to “help everyone,” state government has done just the opposite. Iowa’s Medicaid program is on an unsustainable path and the time has come for major reform.
Thankfully, Congress and President Donald J. Trump recognized the threat that long-term government dependency poses to the nation as a whole and recently addressed many systemic welfare problems through federal legislation. These reforms were not only desperately needed but many of them were only possible through an act of Congress (given the programs’ federal nature). The changes will dramatically reduce dependency and provide relief to taxpayers.
But despite this positive progress, the work is far from over. As big and as beautiful as the federal welfare reforms will be, Iowa policymakers have a critical role to play to ensure they are implemented effectively and efficiently.
In addition, while Congress and President Trump took the country several major steps in the right direction, America’s welfare crisis is far too deep and wide to be addressed by a single piece of legislation. There is much more to be done and while these federal programs often leave little flexibility for state innovation—and are often void of any incentive for states to care at all, thanks to an endless spigot of “federal money”—that dynamic is also starting to shift, for the first time in a generation.
Now Iowa must rise to the challenge.
Iowa’s welfare dependency crisis is primarily constrained to two programs: Medicaid and food stamps. They are the largest, most expensive, and most expansive welfare programs in the state of Iowa, by far.
Iowa Medicaid’s program has exploded, squeezing taxpayers and fueling a dependency crisis
Medicaid, originally created in the 1960s to provide health coverage for low-income parents and disabled Americans, has now become a catch-all welfare system that increasingly serves able-bodied, working-age, childless adults. Its growth in recent years has been fueled by the state’s unwise decision to accept the Affordable Care Act’s Medicaid expansion to childless, able-bodied adults, ages 19-64 with incomes below 138 percent of the federal poverty line. Iowa Medicaid now traps nearly one in five Iowans.[4]
Today, Iowa’s Medicaid program is on an unsustainable trajectory. At the end of 2024, just over 602,000 Iowans were dependent on this government-run healthcare program, to the tune of $8.4 billion.[5]–[6] And while a quick glance at the trendline might give the impression that enrollment is heading in the right direction, the full picture is quite different.
Sources: Centers for Medicare and Medicaid Services, Iowa Legislature
COVID-19-era eligibility restrictions that prevented the state from removing ineligible enrollees drove Iowa’s Medicaid enrollment to a record peak of 812,000 in April of 2023.[7] Iowa’s Medicaid program is only just now recovering from the damage caused by that policy, with enrollment finally returning to pre-pandemic levels.
But enrollment consistently increased leading up to the pandemic as well, as did expenditures—and the Affordable Care Act expansion is largely to blame.
In fact, when Iowa expanded Medicaid to able-bodied, working-age, childless adults in 2014, the program immediately began to explode. Total Medicaid spending attributable to the expansion population reached more than half a billion dollars in just the first year–and by the end of year one, more than 112,000 newly-eligible able-bodied adult Iowans were ensnared in government dependency.[8]–[9]
More than a decade later, the picture is even more jarring: Iowa’s Medicaid program now costs taxpayers $8.4 billion annually (2024).[10] This represents an increase of 116 percent since 2013, the year before the Affordable Care Act expansion began.[11] In other words, Iowa’s Medicaid cost has more than doubled since the state expanded eligibility.
Sources: Centers for Medicare and Medicaid Services, National Association of State Budget Officers
With federal dollars factored in, Iowa now spends more on Medicaid annually than on K-12 education and corrections combined.[12]
Iowa’s Medicaid explosion is fueling increased federal government dependency
Arguably, if all of these funds were being spent to help Iowa’s aging population and individuals with disabilities–Iowans in true need–perhaps it would be a worthwhile investment. Unfortunately, that is far from the case.
Indeed, as of 2024, more than a third (34 percent or roughly $2 billion) of Iowa’s Medicaid expenditures goes to finance the Affordable Care Act expansion population of able-bodied adults.[13] This does not even account for other able-bodied adults who are in the state’s traditional Medicaid program, such as those eligible through the traditional parent/caretaker pathway.
In addition to increasing Iowans’ dependency on government benefits, the Affordable Care Act expansion has also significantly increased the state of Iowa’s federal government dependency.
For example, pre-expansion, less than $2.2 billion of Iowa’s Medicaid program was funded by the federal budget. In practical terms, this meant federal taxpayers picked up about 55 percent of all of Iowa’s Medicaid costs.[14]
This has now dramatically shifted as well: as of 2024, federal taxpayers picked up a staggering 70 percent (nearly $5.9 billion) of Iowa’s Medicaid expenses.[15] Overall, this fifteen-percentage-point swing in hardly a decade represents a massive increase in Iowa’s federal dependency.
Sources: National Association of State Budget Officers, Centers for Medicare and Medicaid Services
Iowa policymakers may be quick to see this as a “bargain,” grateful to draw down as many “free” federal dollars as possible. But Iowa taxpayers know there is no such thing as federal dollars or state dollars—only taxpayer dollars—and Iowa’s reliance on Washington D.C. has reached unhealthy levels.
Iowa’s Medicaid growth is out-of-control
Iowa policymakers should also be aware of Medicaid’s unsustainable growth within the context of the broader state budget—especially because Medicaid is beginning to consume it.
In 2013, the last year before Iowa’s fateful decision to expand Medicaid, fewer than 20 percent of all state spending went to Medicaid.[16] By 2024, more than 25 percent of state spending was consumed by Medicaid.[17] This means that over the same timeframe, the share of state spending devoted to the other core functions of government dropped, as Medicaid crowded out other priorities.[18]
Practically speaking, this shift in Iowa’s budget priorities means that now one out of every four dollars Iowa spends must go to feed the Medicaid budget.[19]
This dramatic growth and consumption of taxpayer resources should be seen for the very real danger that it is. The Medicaid behemoth not only jeopardizes funding for core functions of government like education, infrastructure, and public safety but, if left unaddressed, it will make it significantly more difficult for Iowa policymakers to prioritize tax relief or meaningful reductions in state spending.
Iowa’s labor force is not growing fast enough to support its Medicaid growth
Iowa ultimately needs more workers to support its gargantuan Medicaid program, particularly given how significantly the Medicaid budget has exploded. But unfortunately, Iowa’s labor force is not keeping pace.
Iowa’s labor force has grown since 2013 (pre-expansion), with the total number of workers increasing from 1.69 million to 1.72 million in 2024.[20] But Iowa’s labor force participation rate–the share of workers in the labor force who are actually actively looking for work or working–has dropped by roughly 3 percentage points over the same timeframe, similar to national trends.[21]
Even worse, Iowa has been adding welfare enrollees faster than it is adding workers: specifically, from 2013 to 2024, Medicaid enrollment grew by 50 percent while the size of the labor force grew by less than two percent.[22]–[23]
This lopsided growth now means that Iowa has significantly fewer workers per welfare enrollee than they did just over a decade ago, with just 2.85 workers per Medicaid enrollee now compared to 4.19 workers pre-expansion.[24]
Sources: Centers for Medicare and Medicaid Services, Bureau of Labor Statistics
A compounding problem, Iowa now has a welfare system that rewards able-bodied adults for not working which takes them out of the labor force, costing the state revenue, hurting Iowa’s economy, and driving up state spending—which then increases the need for more revenue to help pay for these increases in dependency.
Iowa is putting people in the wagon faster than they are adding workers to help support the wagon.
Iowa’s food stamp program shows room for improvement
Food stamps constitute Iowa’s second largest welfare program. This program, technically called the “Supplemental Nutrition Assistance Program” (or SNAP), is a voucher-style system for purchasing taxpayer-funded food. Benefit amounts are determined based on household size, income, and other factors and then pre-loaded onto Electronic Benefit Transfer (EBT) cards. Food stamp enrollees can use the cash-equivalent benefits—on average, roughly $200 per recipient per month—to purchase a wide variety of food, courtesy of the American taxpayers.[25]
While Iowa’s food stamp enrollment has largely trended down since its peak in the Obama era, consistent with the experience of much of the country, enrollment is no longer declining.[26]
Source: Food and Nutrition Service
As of June 2025, nearly 267,000 Iowans are dependent on taxpayer-funded food stamp benefits.[27] In 2024, taxpayers spent nearly $530 million on the Iowa food stamp program.[28]
Source: Food and Nutrition Service. Data for 2019 is omitted due to missing months from USDA.
Iowa’s food stamp program has also been subject to a significant improper payment rate, resulting in serious waste. In 2024, the error rate Iowa reported to the U.S. Department of Agriculture which oversees the food stamp program was 6.14 percent.[29] The bulk of these payment errors were for overpayments, at the expense of taxpayers. Overpayments are defined by USDA as “when a household receives more benefits than they are entitled.”[30] This was also a significant, nearly full-point jump from Iowa’s 2023 error rate of 5.19 percent.[31] While these error rates are currently below the national average, they remain unacceptably high.
Food stamp benefits have traditionally been fully funded by federal taxpayers, giving state policymakers little reason to care about the proper management of the food stamp program for decades. But thanks to President Donald Trump and conservative leaders in Washington, that, and much more, is about to change.
The One Big Beautiful Bill Act (H.R.1 or OBBBA), signed by President Trump on July 4, 2025, contains the most significant reforms to major federal welfare programs in U.S. history, surpassing even the historic 1990s welfare reforms.[32]
For the first time, able-bodied adults on Medicaid will be subject to commonsense work requirements nationwide; states will be required to share in the cost of food stamp benefits; program integrity provisions will be federally mandated; and much more.
Cumulatively, these federal changes will help move able-bodied adults from welfare to work, root out waste, fraud, and abuse, and preserve scarce resources for the most vulnerable.
The implications of these sweeping changes will have a dramatic, positive impact on Iowa’s welfare systems.
Medicaid work requirements
Medicaid work requirements had previously been tried with great success in limited state experiences (such as Arkansas). The Iowa legislature also recently passed legislation to pursue a Medicaid work requirement via an Section 1115 waiver (Iowa SF 615). And now, after years of litigation and stalling tactics by left-wing opponents, Medicaid work requirements are part of federal law.[33]–[34]
This is vitally important, considering that more than 60 percent of able-bodied adults on Medicaid nationally do not work at all.[35] In Iowa, that equates to an estimated 108,000 Affordable Care Act expansion enrollees alone who report zero income.[36]
As part of the new federally-mandated community engagement requirements, able-bodied adults enrolled via Medicaid expansion will have to work, train, volunteer, or receive an education part time (80 hours per month/20 hours per week).[37] Alternatively, if an individual has an income equal to the federal minimum wage times 80 hours per month (approximately $580 per month), they will also satisfy the requirement. Therefore, as a result, an individual receiving actual market wages will be required to work considerably less than 80 hours per month.[38]
For example, an individual working $14.50 per hour would only have to work 40 hours per month–or 10 hours per week–to meet the work requirement.
Many individuals will also be exempt from the work requirements, including but not limited to:
As a result, the work requirements will only apply to a subsection of highly work-capable, able-bodied expansion enrollees who can satisfy the requirements in a number of ways.
States will also be able to apply for geographic-based exemptions if a “short-term hardship” event is triggered. To qualify for this type of short-term hardship, a state can request that individuals be exempt if they reside in an area with a declared emergency, or where 1) the unemployment rate is 8 percent or higher or 2) the unemployment rate is 50 percent above the national average or higher.[40]
States must engage in outreach to affected individuals in advance. In the event that an eligible enrollee is non-compliant with the work requirement, they are given a 30-day grace period to demonstrate compliance before they are disenrolled.[41]
These work requirements will take effect on 12/31/2026, although states can request a “good faith” effort determination from the U.S Department of Health and Human Services (HHS) to delay implementation or request a waiver from HHS to implement the work requirements sooner.[42] Guidance is due from the Centers for Medicare and Medicaid Services (CMS) by no later than 6/1/2026.[43] Additionally, significant federal funding will be available to states to help implement the requirements.[44]
The main policy decisions for Iowa policymakers are:
Once CMS guidance is released, additional clarity around states’ options will become more apparent.
More frequent eligibility checks for Medicaid
Prior to 2014, states could conduct eligibility redeterminations of individuals on the Medicaid program as frequently as they wanted to. But a 2012 Obama administration rule limited this to a maximum of one time per year for able-bodied adults and a 2024 Biden rule further limited redeterminations to a maximum of one time per year for elderly and disabled enrollees.[45]–[46]
H.R.1 both places a moratorium on the Biden rule limiting states’ ability to conduct more frequent redeterminations for elderly and disabled enrollees and requires all Affordable Care Act expansion enrollees to undergo a redetermination at least twice per year (once every six months).[47] This proposal makes sense considering nationwide Medicaid improper payments were in excess of 20 percent in the years in which full audits were conducted–with eligibility errors accounting for between 70 and 80 percent of these improper expenditures.[48]–[49]
Implementation funding is made available to states to implement this policy, which takes effect on December 31, 2026.[50]
Addressing deceased and duplicate enrollees
A 2025 release by CMS found that, in 2024, an average of 1.2 million Medicaid enrollees were enrolled in multiple states at once.[51] To address this issue, beginning no later than January 1, 2027, states must establish a process to regularly obtain address information for Medicaid enrollees.[52] And beginning no later than January 1, 2029, states must engage with a federal system on at least a monthly basis to share information to reduce multi-state enrollment.[53]
Similarly, past Government Accountability Office (GAO) audits have found numerous deceased enrollees on the Medicaid program.[54] Beginning no later than January 1, 2027, states must at least quarterly cross check enrollment against the Social Security Administration’s Death Master File.[55]
States have the policy discretion to begin crosschecks for both multi-state enrollees and deceased enrollees prior to the dates required by the legislation and can conduct other related activities, such as cross checking Medicaid enrollment against state vital health statistics on a monthly basis. Several related requirements already exist as enacted by Iowa SF494 of 2023, An Act Relating to Public Assistance Program Oversight.[56]
Reining-in provider taxes and state directed payments
Provider taxes allow states to draw down additional federal Medicaid dollars by imposing a tax or fee on health care providers. States use the revenue generated by the tax to make up the state’s share of Medicaid spending; then when the federal share is drawn down, the taxed providers are often made whole.[57] As a result, the state is off the hook, the providers are off the hook, but federal taxpayers are left to foot the bill. It is of no surprise that provider taxes have both drawn bipartisan criticism and have caused Medicaid spending to dramatically increase in recent decades.[58]
Prior to H.R.1, the “safe harbor threshold” (e.g. the threshold that states could tax providers before becoming ineligible to draw down the federal match) was 6 percent of net patient revenue. Under the provisions of H.R.1, all states are prevented from enacting new or raising existing provider taxes to receive a federal match.[59] Additionally, Medicaid expansion states like Iowa must phase down their safe harbor thresholds for most provider taxes from 6 percent to 3.5 percent over the period from FY2028 to FY2032 for most provider taxes (with certain exceptions).[60] However, because Iowa’s provider taxes are already below the new 3.5 percent threshold, the state does not need to make any substantive policy changes.[61]
Relatedly, State Directed Payments (SDPs) are supplemental payments that states can direct to politically-connected health care providers, like specific hospitals, to increase their reimbursement rates.[62] Under the Biden administration, SDPs–which are often funded by provider taxes–could be used to supplement hospitals up to average commercial rates.[63]
Under the provisions of H.R.1, SDPs in expansion states (like Iowa) cannot exceed average Medicare rates.[64] Existing SDPs that are above average Medicare rates have to be phased down by 10 percentage points per year until they reach average Medicare rates.[65] This is relevant for Iowa, which recently had an SDPs that exceeds the new threshold and, if this SDP is/was extended, will need to phase it down to the new permitted limits.[66]
Cost sharing for Affordable Care Act expansion enrollees
Prior to H.R.1, Medicaid expansion enrollees did not need to contribute anything to the cost of their health care. However, beginning October 1, 2028, expansion enrollees earning above the federal poverty level (FPL) will be charged a cost sharing requirement for each medical service incurred of up to $35 per service.[67] Total cost sharing expenses are also capped in the aggregate at 5 percent of household income.[68]
Medicaid eligibility restrictions for illegal aliens
H.R.1) imposes a stricter eligibility definition to prevent more non-citizens from receiving Medicaid coverage, 2) changes expansion states’ Federal Medical Assistance Percentage (FMAP) for emergency care offered to illegal aliens from 90 percent to that state’s traditional FMAP, and 3) enacts a moratorium on the Biden administration’s ban on states’ capping the number of Reasonable Opportunity Periods (ROPs) granted to individuals whose citizenship or lawful residency cannot be immediately verified.[69]
Other miscellaneous changes
Other Medicaid-related changes included in H.R.1 include, but are not limited to, the following:
Requiring state food stamp cost sharing
Currently, states pay nothing towards the costs of food stamp benefits and only pay 50 percent of administrative expenses in the food stamp program. As a result, states have virtually no skin in the game to efficiently and effectively administer their food stamp programs. Food stamp error rates remain at nearly 11 percent nationwide as states have little incentive to address waste, fraud, and abuse.[71]
Beginning in FY2027, states must pay 75 percent of administrative food stamp expenses.[72] And beginning in FY2028 (for most states, except certain states with exceptionally high error rates), states must cost-share in food stamp benefit expenditures based on the following criteria:[73]
If Iowa’s current error rate of 6.14 percent persists, it would be required to pay 5 percent of its food stamp benefit costs (equal to nearly $26.5 million in FY2024) plus an extra 25 percent of its administrative expenses regardless of its error rate.[74] However, Iowa’s error rate may change between FY2024 (the most recent error rate year) and when the new cost sharing requirements take effect.
Expanding food stamp work requirements
Prior to H.R.1, the primary work requirement for the food stamp program–known as the able-bodied adults without dependents (ABAWDs) work requirement–applied to able-bodied adults without dependents aged 18 to 54 who met certain criteria.
H.R.1 substantially improved this work requirement by:
While roughly 18.5 million able-bodied adults are covered by the food stamp program, most do not work at all.[76] But when food stamp work requirements have been strengthened at the state level, individuals move from welfare to work, see their incomes double, and find employment in meaningful occupations.[77]
As a result of the changes in H.R.1, millions of additional Americans will now be subject to food stamp work requirements which reasonably require individuals to work, train, volunteer, or obtain an education part-time.
Other miscellaneous food stamp changes
Other food stamp-related changes in H.R.1 include but are not limited to:
H.R.1 contains generational welfare reforms that will immediately overhaul Iowa’s welfare system and move Iowans from welfare to work. But that does not mean the job is fully done. In fact, there are still several pro-taxpayer, anti-dependency reforms Iowa lawmakers can and should pursue to supercharge the impact of H.R.1 and make Iowa a national leader in welfare reform.
1. Codify all relevant provisions of H.R.1 into state law.
Iowa should ensure that the welfare components of H.R.1 are codified into state statute. This simple step would reduce confusion in areas of statutory conflict which could otherwise lead to disruptive litigation and delayed implementation from opponents of commonsense welfare reform.
It would also help introduce state accountability for some of the less-visible components of H.R.1, such as creating legislative clarity that Medicaid waivers must be budget neutral, that Medicaid retroactive eligibility is limited to the terms specified in H.R.1, that state directed payments must not be above specified thresholds, that certain expansion enrollees must cost share in their services, that illegal aliens are limited from enrolling in Medicaid and food stamps per the H.R.1 standards, and more.
All relevant provisions–from work requirements to more frequent eligibility checks to restrictions on illegal aliens using program benefits and more–should also be enshrined in state law.
2. Allow Medicaid work requirements to take effect without delay.
Iowa should not, under any circumstances, request a delayed implementation of the Medicaid work requirements. While requesting an early implementation would be somewhat difficult given the timing of the CMS guidance deadline, it is certainly not impossible. Iowa’s neighbor Nebraska has done precisely that.[79]
At the bare minimum, however, Iowa should commit to implementing the work requirements on-schedule in accordance with federal law and state lawmakers should exercise their oversight powers to ensure the Iowa Department of Health and Human Services are working now to be fully prepared for full implementation in January 2027.
3. Conduct more frequent eligibility determinations.
Iowa should not only conduct eligibility redeterminations every six months for expansion enrollees as required by H.R.1 but should also conduct more frequent eligibility determinations for other enrollees too. With the moratorium placed on Biden’s Medicaid streamlining rule, states now have the flexibility to conduct redeterminations more frequently for elderly and disabled populations, which are the most costly Medicaid enrollees on a per-person basis in Iowa.[80]
At a minimum, the state should conduct eligibility redeterminations twice per year for all non-disabled, non-elderly adult populations and once per year for elderly and disabled enrollees.
4. Continue to resist geographic waivers and require legislative approval before waivers can be submitted.
Wisely, Iowa does not currently utilize any geographic waivers for the existing food stamp ABAWD work requirement.[81] Iowa should continue this practice and expand it to the new Medicaid work requirements by not requesting any geographic waivers as part of a hardship exemption.
Specifically, the Iowa legislature should ensure that the Iowa Department of Health and Human Services is not authorized to request any geographic waivers without explicit legislative permission.
5. Implement strong verification policies for individuals claiming “medically frail” and other exemptions.
Under the new federally-mandated Medicaid work requirement, Iowans who are determined to be “medically frail” will be exempt from even training or volunteering. This is a potentially large loophole that could be abused, dramatically weakening the positive impact of the work requirement for taxpayers and for beneficiaries alike.
Iowa should not accept self-attested information for any work requirement exemptions, most notably for “medically frail” status but also as it relates to short-term hardships, household composition, and any other relevant factors that could impact eligibility.
6. Prohibit optional Medicaid exemptions without legislative approval.
Iowa lawmakers should expressly prohibit state welfare agency officials from requesting optional exemptions (e.g. hardship-related exemptions) from the Medicaid work requirement without explicit legislative authorization.
7. Ensure relevant SF494 crosschecks are being implemented in advance to get a head start on H.R.1 crosschecks.
Iowa’s SF494 of 2023 contained several data crosscheck requirements for Medicaid and food stamps, including for information pertaining to earned income, death records, incarceration status, new hires databases, supplemental security income, lottery winner databases, and more.[82] The state should both ensure these crosschecks are actually being conducted (with all available databases) in advance of the upcoming federal requirements in H.R.1 for duplicate and deceased enrollees–which should also be codified into state law.
This is even more important given that the Secretary of the U.S. Department of Health and Human Services can no longer waive penalties for improper payments in excess of three percent, as noted above.
Moreover, the state should not accept self-attested information for any relevant Medicaid eligibility criteria.
8. Rollback Broad-Based Categorical Eligibility (BBCE) to minimize errors and program bloat.
Iowa currently uses a federal loophole called broad-based categorical eligibility (BBCE) to enroll individuals on the food stamp program.[83] Practically, this means individuals can bypass federal asset limits for food stamps and enroll in the program if they receive a non-cash benefit for other welfare programs, such as a welfare brochure, a referral to a toll-free welfare hotline, or even if they are simply eligible to receive these types of non-cash benefits.[84] As a result, BBCE bloats the food stamp rolls to much higher levels than would otherwise be the case, with all of the extra enrollment coming from individuals whose countable assets–such as cash in the bank–would otherwise make them ineligible for the program.[85]
This Clinton-era welfare loophole, supercharged by the Obama administration, is entirely counter to the spirit of H.R.1 and an affront to taxpayers. With the new requirement for states to assume a portion of the benefit costs of the food stamp program, Iowa should roll back BBCE to minimize the state’s fiscal exposure, right-size the food stamp program, and preserve scarce resources for the truly needy.
Thanks to the Big Beautiful Bill, Iowa has a once-in-a-generation opportunity to restore the integrity of its welfare programs so they realign with their original goal: protecting the truly needy. With both new federal opportunities and requirements on the horizon, Iowa policymakers must prepare now to realize the full potential of these reforms. That will require careful planning to ensure work requirements are not watered-down, to make meaningful changes to sure-up program integrity, and to create legislative oversight to verify that the state is on track.
If Iowa policymakers adopt a commonsense approach to these welfare reforms that puts work and program integrity first, they can and will help taxpayers, the truly needy, employers, and even welfare enrollees themselves who have been languishing on the sidelines.
Iowa has the tools in its toolbox to emerge as a leader in the nation with a pro-work, anti-fraud welfare system. It is time for policymakers to roll up their sleeves and act to secure that future.
[1] Centers for Medicare and Medicaid Services, “Medicaid Enrollment Data Collected Through MBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes.
[2] National Association of State Budget Officers, “2024 State Expenditure Report,” National Association of State Budget Officers (2025), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2024_SER/2024_State_Expenditure_Report_S.pdf.
[3] Authors’ calculations comparing state-produced, pre-expansion reports to recent CMS data. See, e.g., Iowa Legislative Services Agency, “Medicaid Forecast,” State of Iowa (2014), https://www.legis.iowa.gov/publications/fiscal/medicaid?r=true&ga=85&session=1; and Centers for Medicare and Medicaid Services, “Medicaid Enrollment Data Collected Through MBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes.
[4] Centers for Medicare and Medicaid Services, “Medicaid Enrollment Data Collected Through MBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes.
[5] Ibid.
[6] Centers for Medicare and Medicaid Services, “Expenditure Reports From MBES/CBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes.
[7] Centers for Medicare and Medicaid Services, “Medicaid Enrollment Data Collected Through MBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes.
[8] Centers for Medicare and Medicaid Services, “Expenditure Reports From MBES/CBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes.
[9] Centers for Medicare and Medicaid Services, “Medicaid Enrollment Data Collected Through MBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes.
[10] Centers for Medicare and Medicaid Services, “Expenditure Reports From MBES/CBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes.
[11] Authors’ calculations comparing pre-expansion Medicaid spending reported by the National Association of State Budget Officers to more recent data reported by CMS. See, e.g., National Association of State Budget Officers, “State Expenditure Report: 2013 – 2015,” National Association of State Budget Officers (2015), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/State%20Expenditure%20Report%20(Fiscal%202013-2015)S.pdf; and Centers for Medicare and Medicaid Services, “Expenditure Reports From MBES/CBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes.
[12] National Association of State Budget Officers, “2024 State Expenditure Report,” National Association of State Budget Officers (2025), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2024_SER/2024_State_Expenditure_Report_S.pdf.
[13] Centers for Medicare and Medicaid Services, “Expenditure Reports From MBES/CBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes.
[14] National Association of State Budget Officers, “State Expenditure Report: 2013 – 2015,” National Association of State Budget Officers (2015), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/State%20Expenditure%20Report%20(Fiscal%202013-2015)S.pdf.
[15] Centers for Medicare and Medicaid Services, “Expenditure Reports From MBES/CBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/financial-management/state-expenditure-reporting-for-medicaid-chip/expenditure-reports-mbescbes.
[16] National Association of State Budget Officers, “State Expenditure Report: 2013 – 2015,” National Association of State Budget Officers (2015), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/State%20Expenditure%20Report%20(Fiscal%202013-2015)S.pdf.
[17] National Association of State Budget Officers, “2024 State Expenditure Report,” National Association of State Budget Officers (2025), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2024_SER/2024_State_Expenditure_Report_S.pdf.
[18] Ibid.
[19] Ibid.
[20] FRED, “Civilian Labor Force in Iowa,” Federal Reserve Bank of St. Louis (2025), https://fred.stlouisfed.org/series/IALF.
[21] FRED, “Labor Force Participation Rate for Iowa,” Federal Reserve Bank of St. Louis (2025), https://fred.stlouisfed.org/series/LBSSA19.
[22] Authors’ calculations comparing state-produced, pre-expansion reports to recent CMS data. See, e.g., Iowa Legislative Services Agency, “Medicaid Forecast,” State of Iowa (2014), https://www.legis.iowa.gov/publications/fiscal/medicaid?r=true&ga=85&session=1; and Centers for Medicare and Medicaid Services, “Medicaid Enrollment Data Collected Through MBES,” U.S. Department of Health and Human Services (2025), https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/medicaid-enrollment-data-collected-through-mbes.
[23] FRED, “Civilian Labor Force in Iowa,” Federal Reserve Bank of St. Louis (2025), https://fred.stlouisfed.org/series/IALF.
[24] Authors’ calculation on the ratio of Medicaid enrollees to labor force participants.
[25] Food and Nutrition Service, “SNAP Data Tables,” U.S. Department of Agriculture (2025), https://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-snap.
[26] Ibid.
[27] Ibid.
[28] Ibid.
[29] Food and Nutrition Service, “Supplemental Nutrition Assistance Program: Payment Error Rates Fiscal Year 2024,” U.S. Department of Agriculture (2025) https://fns-prod.azureedge.us/sites/default/files/resource-files/snap-fy24QC-PER.pdf
[30] Food and Nutrition Service, “SNAP Quality Control,” U.S. Department of Agriculture (2025), https://www.fns.usda.gov/snap/qc.
[31] Food and Nutrition Service, “Supplemental Nutrition Assistance Program: Payment Error Rates Fiscal Year 2023,” U.S. Department of Agriculture (2024) https://fns-prod.azureedge.us/sites/default/files/resource-files/snap-fy23-qc-payment-error-rate.pdf.
[32] Hayden Dublois, “If Clinton’s Welfare Reform Was Big, Trump’s Is Huge,” The Wall Street Journal (2025), https://www.wsj.com/opinion/if-clintons-welfare-reform-was-big-trumps-is-huge-medicaid-afdc-gop-90b61abe?gaa_at.
[33] Nicholas Horton and Victoria Eardley, “Arkansas’ Medicaid Work Requirement Was Working,” Foundation for Government Accountability (2025), https://thefga.org/research/arkansas-medicaid-work-requirement/.
[34] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[35] Jonathan Ingram and Michael Greibrok, “Medicaid Work Requirements Would Help Move Millions of Able-Bodied Adults From Welfare to Work,” Foundation for Government Accountability (2025), https://thefga.org/research/medicaid-work-requirements-from-welfare-to-work/.
[36] 62 percent times Dec. 2024 expansion enrollment
[37] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[38] Ibid.
[39] Ibid.
[40] Ibid.
[41] Ibid.
[42] Ibid.
[43] Ibid.
[44] Ibid.
[45] Center for Medicare and Medicaid Services, “Medicaid Program; Eligibility Changes Under the Affordable Care Act of 2010,” U.S. Department of Health and Human Services (2012), https://www.federalregister.gov/documents/2012/03/23/2012-6560/medicaid-program-eligiblity-changes-under-the-affordable-care-act-of-2010.
[46] Center for Medicare and Medicaid Services, “Medicaid Program; Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes,” U.S. Department of Health adn Human Services (2024), https://www.federalregister.gov/documents/2024/04/02/2024-06566/medicaid-program-streamlining-the-medicaid-childrens-health-insurance-program-and-basic-health.
[47] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[48] Centers for Medicare and Medicaid Services, “2019 Medicaid & CHIP Supplemental Improper Payment Data,” U.S. Department of Health and Human Services (2019), https://www.cms.gov/files/document/2019-medicaid-chip-supplemental-improper-payment-data.pdf-1.
[49] Centers for Medicare and Medicaid Services, “2020 Medicaid & CHIP Supplemental Improper Payment Data,” U.S. Department of Health and Human Services (2020), https://www.cms.gov/files/document/2020-medicaid-chip-supplemental-improper-payment-data.pdf.
[50] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[51] Centers for Medicare and Medicaid Services, “CMS Finds 2.8 Million Americans Potentially Enrolled in Two or More Medicaid/ACA Exchange Plans,” U.S. Department of Health and Human Services (2025), https://www.cms.gov/newsroom/press-releases/cms-finds-28-million-americans-potentially-enrolled-two-or-more-medicaid/aca-exchange-plans.
[52] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[53] Ibid.
[54] Carolyn L. Yocom, “Medicaid Eligibility: Accurate Beneficiary Enrollment Requires Improvements in Oversight, Data, and Collaboration,” Government Accountability Office (2019), https://www.gao.gov/assets/710/702463.pdf.
[55] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[56] See, e.g., Iowa Senate File 494 of 2023.
[57] Brian Blase and Niklas Kleinworth, “Addressing Medicaid Money Laundering,” Paragon Health Institute (2025), https://paragoninstitute.org/medicaid/addressing-medicaid-money-laundering-the-lack-of-integrity-with-medicaid-financing-and-the-need-for-reform/.
[58] Ibid.
[59] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[60] Ibid..
[61] Iowa Code r. 441-36.10
[62] Brian Blase and Niklas Kleinworth, “Addressing Medicaid Money Laundering,” Paragon Health Institute (2025), https://paragoninstitute.org/medicaid/addressing-medicaid-money-laundering-the-lack-of-integrity-with-medicaid-financing-and-the-need-for-reform/.
[63] Centers for Medicare and Medicaid Services, “Medicaid Program; Medicaid and Children’s Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality,” U.S. Department of Health and Human Services (2024), https://www.federalregister.gov/documents/2024/05/10/2024-08085/medicaid-program-medicaid-and-childrens-health-insurance-program-chip-managed-care-access-finance.
[64] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[65] Ibid.
[66] Centers for Medicare and Medicaid Services, “ IA_Fee_IPH.OPH1_Renewal,” U.S. Department of Health and Human Services (2024), https://www.medicaid.gov/medicaid/managed-care/downloads/IA_Fee_IPH.OPH1_Renewal_20240701-20250630.pdf.
[67] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[68] Ibid.
[69] Ibid.
[70] Ibid.
[71] Food and Nutrition Service, “Supplemental Nutrition Assistance Program: Payment Error Rates Fiscal Year 2024,” U.S. Department of Agriculture (2025) https://fns-prod.azureedge.us/sites/default/files/resource-files/snap-fy24QC-PER.pdf
[72] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[73] Ibid.
[74] Food and Nutrition Service, “SNAP Data Tables,” U.S. Department of Agriculture (2025), https://www.fns.usda.gov/pd/supplemental-nutrition-assistance-program-snap.
[75] Public Law No. 119-2. See, e.g., https://www.congress.gov/bill/119th-congress/house-bill/1/text.
[76] Jonathan Bain and Jonathan Ingram, “Why Food Stamp Work Requirements Should Include More Able-Bodied Adults,” Foundation for Government Accountability (2025), https://thefga.org/research/food-stamp-work-requirements-more-able-bodied-adults/.
[77] Jonathan Bain, “Work Requirements Work: How Expanding Food Stamp Work Requirements Can Continue to Break the Cycle of Dependency,” Foundation for Government Accountability (2023), https://thefga.org/research/work-requirements-work-break-cycle-dependency/.
[78] Ibid.
[79] Governor Jim Pillen, “Gov. Pillen, Dr. Oz Announce Nebraska is First in the Nation to Pursue Medicaid Work Requirements,” State of Nebraska (2025), https://governor.nebraska.gov/gov-pillen-dr-oz-announce-nebraska-first-nation-pursue-medicaid-work-requirements,
[80] Medicaid and CHIP Access and Payment Commission, “Exhibit 22: Medicaid Benefit Spending Per Full-Year Equivalent (FYE) Enrollee by State and Eligibility Group, FY 2022,” MACPAC (2024), https://www.macpac.gov/wp-content/uploads/2024/12/EXHIBIT-22.-Medicaid-Benefit-Spending-Per-FYE-Enrollee-by-State-and-Eligibility-Group-FY-2022.pdf.
[81] Food and Nutrition Service, “ABAWD Waiver Status FY2025 Q3,” U.S. Department of Agriculture (2025), https://fns-prod.azureedge.us/sites/default/files/resource-files/snap-FY25Q33-ABAWD-WaiverStatus-040125.pdf.
[82] See, e.g., Iowa Senate File 494 of 2023.
[83] Food and Nutrition Service, “Broad-Based Categorical Eligibility (BBCE),” U.S. Department of Agriculture (2025), https://www.fns.usda.gov/snap/broad-based-categorical-eligibility.
[84] Paige Terryberry, “How Congress Can Protect the Truly Needy and Restore Program Integrity to Food Stamps by Ending Broad-Based Categorical Eligibility,” Foundation for Government Accountability (2023), https://thefga.org/research/how-congress-can-protect-needy-by-ending-bbce/.
[85] Ibid.
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