An Economic Analysis of SSI Cashout Policy


Students are required to complete a term paper that analyzes and evaluates a policy, program, or decision using economic principles. These papers will use the criteria such as economic efficiency, effectiveness, and social equity to make judgments and provide recommendations on a pressing problem facing public managers in Los Angeles today. The paper should be 8 full pages of content/analysis. The paper should consist of the following elements:

  • Abstract: describe the problem under investigation and key findings in one paragraph (150-250 words).
  • Introduction:briefly introduce the public issue of your choice, what economic principles relate to it, and how you organize the paper for your analysis (suggested length: 1 pages).
  • Economic analysis:discuss your issue through the lens of economic principles (2 pages).
  • Policy, program or decision analysis: discuss your issue with respect to criteria such as economic efficiency, effectiveness, and social equity (4 pages).
  • Conclusion: offer recommendations for the organization based on the evaluations you made in previous sections. Also indicate the limitations of the study and provide suggestions for future work (suggested length: 1 pages).
  • References: PLEASE NOTE MY OUTLINE PROVIDES 2 RESOURCES ALREADY. I am thus requesting 6 additional resources that are from government reports, peer-reviewed journals, credible resources, etc., expecting you to utilize the two that I already provided. I have also included some links to potentially pertinent resources.









Supplemental Security Income (SSI) Cash-out policy has had several impacts on the economy. This program was enacted to help the elderly and the disabled in society. It provides this category of people with funds to meet their basic wants. Those who qualify for the benefit receive funds monthly to pay for their needs. Moreover, the program has had several advantages as it has improved people’s living standards in California. Collaboration between the government officials and an economist can analyse the effectiveness and social equity of the SSI Cash-out policy. Economically, the approach should facilitate more consumption and production. In a socially equitable environment, there are no discriminations in the eligibility standards.

Ending the Cash-out policy will affect different households in various ways. In 2015, data analysis indicated that completing the program would make more families qualify for the Cal Fresh benefits (Stephen, 2018). The SSI/SSP recipients are not eligible for Cal Fresh, resulting in increased poverty in society. Some households will get more food benefits. Therefore, the state governments can adopt specific measures to ensure that those eligible per the guidelines get the help they need. Furthermore, the eligibility standards should not be restrictive so that more people can receive the benefits. Thus, the state government needs to review the impacts of ending the policy and the new program, Cal Fresh, before its termination.









Background Information


The SSI program can be defined as a federally funded program that gives income support to qualified people above 65 or older, disabled or blind ( The program’s benefits are also available to eligible blind or disabled children. The SSP program is the state program that supplements SSI.  The Social Security Administration administers both programs. Supplemental Nutritional Assistance Program (SNAP)/ Cal Fresh is a program that gives food benefits to people and families with low-income and gives economic benefits to communities. Cal Fresh is the leading food program in California and offers an essential hunger safety net. The SSI cash-out was a strategy to give SSI/SSP beneficiaries cash assistance that was approximately equivalent to the food support during that time, while evading the administrative expenses of giving benefits using the Cal Fresh program.

Those eligible for SSI benefits get cash to pay for their basic wants every month.  For most individuals, the highest possible amount of SSI benefit, including SSP, is $954.72 for one person and $ 1,598.14 for a couple. Those who are blind can get a maximum of $1,011.23 for one person and $1 749.19 for a couple (Arnold, & Marinacci, 2003). Furthermore, the SSI program is managed by the Social Security Administration. In California, individuals who receive the SSI also receive some assistance from the State Supplemental Program (SSP) together with their SSI benefit.

The program has several benefits in society. SSI is an effective program for both people with disabilities as it helps them meet their basic needs (Barocio, 2018). Furthermore, the plans also benefit children, especially those with various forms of disabilities. It also boosts the income of numerous families and encourages them to work. Additionally, the program has helped to reduce the aggregate poverty gap in society.

The applicable economic principles to SSI Cash out policy are social, financial aspects, and government intervention. The government often interferes with the program as it can enact laws that ultimately affect the procedure. Furthermore, it is funded by the government, and it can at times stop the funding. Moreover, social-economic factors such as employment, social equity, income, and community safety can affect the policy. This paper will evaluate the program, economic principles, and how it is linked to social equity.

Economic Analysis

Government Intervention

The government has the aptitude to regulate the economy depending on the strategies it embraces to engage fairness and effectiveness. Moreover, it can enforce the intervention procedures by implementing polices and acts that are meant to control, and direct crucial procedures and undertakings in the market. The established guidelines can be encouraging or restraining. The SSI Cash-out policy in California is restraining and hinders the SSI/SSP recipients from getting the Cal Fresh benefits.  Therefore, by embracing the policy, the government does not contribute to the reduction of poverty in the country. If the government terminates the policy more people will receive the Cal Fresh benefits. Furthermore, SNAP program provides benefits to people and has been effective in supporting their needs. Nonetheless, the “cash-out policy” affected the effectiveness of SNAP for individuals on SSI and did not promote social equality.

SNAP SSI Cash-out policy ensures significant nutritional support for Low-wage working families, individuals with disabilities, and low-income seniors who live on fixed incomes. The policy’s subsidy formula targets benefits depending on wants: the poor households get greater benefits than families close to the poverty mark as they necessitate more funds to meet the expenses of a sufficient diet. Furthermore, apart from protecting low-income families, persons with disabilities, and the aged, the policy protects families from hardship and hunger. Additionally, it helps families bridge short-term periods of joblessness or a family crisis.

The SNAP program benefits protect the entire economy. The benefits are one of the fastest and most effective economic stimulus types since they quickly generate money into the economy when there is a recession. SNAP also focuses more on the poor and is an influential tool for lessening the extent, severity, and hardship.  The program supports and encourages work. It is intended to supplement the incomes of low-wage employees. Besides, SNAP serves as a first responder when a disaster occurs by providing critical food assistance to susceptible households.


Social Economic Factors

Assessing the general socio-economic influence of a social security policy can be challenging. However, the SSI Cash-out policy can have much impact on consumption and production. In a situation where there is increased production, individuals tend to consume more. Furthermore, high consumption leads to increased production, which results in improved living standards.  The SSI Cash-out aids may support the entire country as well as the individual states. Once people purchase goods and services with their SSI benefits, they upsurge the business sales. Thus, this assists the corporations which supply them. Ultimately, this leads to increased employment and income for companies and employees throughout the country.

Under the Cash-out policy, most qualified aged people and those with disabilities were denied access to the benefits that would have enhanced their living standards. Thus, this led to reduced consumption by the targeted individuals and increased poverty in the country (Neumark & Powers, 2003).  Moreover, there was less production of goods in companies as consumption had significantly reduced. Additionally, under the policy, there was more harm to the low-income people of all ages and reduced their aptitude to purchase goods, affecting their living standards and production. The low-income earners could not receive the same food aid as available to most low-income individuals in California. However, terminating the Cash out policy will have numerous benefits on many households. Those affected by ending the policy will experience an upsurge in Cal Fresh benefits. Instead of getting the initial $10 payment, they will receive more Cal Fresh aids, enhancing their living standards and increasing consumption and production (Cunnyngham, 2010).



Policy Analysis


When the SSI Cash policy out was implemented in 1974, states could decide whether to make recipients eligible for food stamps or “Cash out” these advantages to supplement SSI. Several states first implemented the Cash out option but later changed to automatic Supplemental Nutrition Assistance (SNAP) eligibility. The program was at first efficient in eliminating poverty in California.   It maintained the grant approach’s simplicity and focused on providing incentives to children and the elderly to boost them economically (Daly & Burkhauser, 2003). Moreover, the program has currently developed significantly in terms of the recipients and the expenditures since it was implemented.  The program’s growth has varied, and within the first eight years of establishment, the federal spending was reduced substantially.

Even though the social programs’ economic analysis often considers the program’s objective as provided, with SSI, the program’s drive is a significant determining factor of how individuals view the policy’s behavioural responses. SSI was developed out of a failed effort to offer an assured income floor under every Americans-FAP. Thus, while the drive for providing an income floor to the subset of the grownups that are blind, disabled and aged, was mainly distributional, it was apparent that they were also not expected to work. Certain social expectations regarding employment were changed. People had to work longer, and the usual retirement age for social security benefits was raised. Besides, individuals with various forms of disabilities were given a lawful right to equal employment opportunities.

The SSI program for the non-elderly adults gave an income transfer directed towards the disabled people who were considered to have restricted aptitude to get financial security through their own paid work. Furthermore, the SSI program for children gave a transfer of income to families who had to struggle with the burden of taking care of disabled children (Burns & Dague, 2017). However, despite the work incentive to motivate the disabled to become independent, the number of disabled SSI recipients continued to grow in California

Economically, the SSI Cash-outs may have led to negative impacts. Initially, the policy was established to help the aged and the disabled in society. Nevertheless, the program was economically inefficient. Currently, numerous California families are more disadvantaged than they would be if the policy did not exist. However, some families are better than they would be if the program was not in place. The pure SSI Households are economically disadvantaged under the SSI Cash-out. Households that are negatively affected by the policy are mainly made up of SSI and SSP recipients, also known as pure SSI households. Under the program, the pure families cannot get Cal Fresh advantages even if their income is insufficient to meet the Cal Fresh eligibility requirements. Additionally, in most instances, the pure SSI household would be eligible to get more Cal Fresh gains than the earlier $10 payment given to the SSI/SSP recipients instead of the federal food aids (Cunnyngham, 2010).

The policy disregarded the Federal Food Stamp Program’s function as a nutrition security net for low-income individuals of all ages. As a result of the policy, the SSI/SSP recipients were unentitled to food stamps (Neumark & Powers, 2003).  Moreover, under the policy majority of the SSI and SSP recipients could not get the same national help available to many other low-income individuals in California and the entire U.S. Under the program, California significantly lost its value, making it hard for the SS/SSP recipients to meet their basic wants. The program could not lift people who live independently out of poverty.  Generally, it failed to eradicate poverty, especially among the elderly and low-income earners. Nevertheless, the policy had a direct advantage for families with an elderly or disabled household member who received SS/SSP.

Social Equity

Social policies should focus on equity and eliminate all forms of inequalities in providing economic and social benefits. A significant policy issue regarding every public assistance program is the extent of participation among those who qualify. The SSI Cash-out in California had insufficient involvement, and only a tiny proportion of the aged and disabled individuals received the policy benefits (Cunnyngham, 2010). The policymakers and administrators could not accurately ascertain SSI eligibility for those who had applied.  The participation rate among the poor elderly declined significantly within the first decade of its implementation. The participation rates were low during the early years of the program. Additionally, there was intense discrimination, and the majority of the elderly and children did not get the help they wanted. The Federal government also lacked an efficient strategy to assess the disabilities hence denying more people the SSI cash-out benefits.

In a society where the socially correct eligibility criteria for SSI are hard to evaluate, some people will be deprived of welfares, which is less capable of employment than is socially conventional. This was the case in California as most state offices were wren not consistently and uniformly applying the set standards to determine adult disability. For instance, in 1979, SSA published guidelines outlining who was categorized as disabled, hence tightening the qualification criteria (Cunnyngham, 2010). Furthermore, SSA also tightened its policy to benefit terminations in continuing disability reviews (CDRs), allowing benefit termination without medical progress evidence. The disabled people could not get enduring disability reviews and hindered their aptitude from getting the help they needed. Despite the restrictive program, the yearly allowance rate for adults significantly reduced, which indicated a lack of social equity in the program.


Currently, the SSI recipients in California do not qualify for Cal Fresh. Thus, it is evident that the policy lacks social equity. Until June 2019, California still barred SSI recipients from Cal Fresh eligibility (Stephen, 2018). Such actions have aggravated poverty as well as hunger among the population in the state. Most SSI recipients depend on local food banks, hot meal places, and pantries for their everyday nutrition. Therefore, this shows that the Federal government does not consider the welfare of the elderly and disabled, resulting in social inequity.

In California, one should receive and not just have made applications for SSI welfares to be regarded as unqualified for SNAP. If the State agency gives payment at least equivalent to the SSI benefits level to people who have made applications but are waiting for SSI entitlement approval, receipt of these temporary disbursements can terminate the person’s qualifications for SNPA benefits. When SSI benefits are received, the person will remain unqualified for SNAP gains even throughout months. The SSI benefits’ receipt is interfered with or deferred until they are terminated from the program.


The SSI cash-out program had several impacts.  It undermined some Californians’ aptitude to afford sufficient nutritious food. On the other hand, it provided direct benefits to other households in California.  The majority of the elderly and disabled did not qualify for the service; hence the program failed to eliminate poverty in society. Ending the cash-out policy would be advantageous to some people and harm others (Stephen, 2018). Households, where all members get SSI/SSP would newly qualify for Cal Fresh gains. They would continue to get SSI/SSP, and if they make applications for Cal Fresh, they will get more benefits.

On the other hand, specific households with members who got SSI/SSP and other members who do not would qualify for Cal Fresh or get a lower Cal Fresh benefit amount. The family would still get SSI/SSP but would have less or no Cal Fresh benefits. The Cash-out Policy has been implanted for an extended period. Thus, it is challenging to ascertain its effects and efficiency.

Several recommendations can help the Californian government in running the SSI Cash-out policy more efficiently. It should have a clear guideline for eligibility and reduce the restrictive laws that hinder most elderly and disabled people from receiving the help they need. Moreover, the SSI/SSP recipients should automatically qualify for Cal Fresh. Furthermore, the state should focus on a particular target group so that there are enough resources to support the elderly and the disabled. Additionally, the government should avoid complicated and lengthy application guidelines by integrating the latest technology. Ending the Cash-out policy should be reviewed to attain the objectives of the program efficiently. Generally, state governments should focus on reducing costs associated with the policy and eliminate excessive restrictions.




Arnold, A., & Marinacci, A. (2003). Cash-Out in California: A History of Help and Harm. San Francisco: California Food Policy Advocates.

Barocio, J. (2018, January 8). The potential effects of ending the SSI Cash-Out. LAO Report. Retrieved from

Burns, M., & Dague, L. (2017). The effect of expanding Medicaid eligibility on Supplemental Security Income program participation. Journal of Public Economics, 149, 20-34.

Cunnyngham, K. (2010). Estimated Effects on the Supplemental Nutrition Assistance Program of Eliminating California’s SSI Cash-Out Policy. Final Report to California Food Policy Advocates, February. Available at http://cfpa. net/CalFresh/CFPAPublications/CalFresh-MathematicaEffectofCashOut-2010. pdf.

Daly, M. C., & Burkhauser, R. V. (2003). Left behind: SSI in the era of welfare reform. Focus, 22(3), 35-43.

Neumark, D., & Powers, E. T. (2003). The Effect of the SSI Program on Labor Supply: Improved Evidence from Social Security Administrative Files. Social Security Bulletin, (2021). You may be eligible to get Supplemental Security Income (SSI). Retrieved from

Stephen, G. (2018). The end of SSI cash-out. LSNC Regulation Summaries. Retrieved from










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