In the years since the landmark 1996 welfare reform law — which marks its 30th anniversary today — policymakers have missed opportunities to apply its lessons and expand its reach to other safety net programs, notwithstanding some recent success in extending work requirements to Medicaid and food assistance. It’s time for a new round of welfare reforms that build upon the fundamental principles of the 1996 law, while adapting to the needs of a modern economy and evolving demographics.
The 1996 law replaced the nation’s former cash welfare program, Aid to Families with Dependent Children (AFDC), with the Temporary Assistance for Needy Families (TANF) program and unleashed a revolution in American social policy. However, today, TANF constitutes less than 2 percent of federal safety net dollars, with the balance funding programs that lack many of the key principles that made welfare reform successful.
While the 1996 law resulted in dramatic declines in dependence on traditional cash welfare checks, other safety net programs have grown substantially and expanded to new populations. For example, shortly after welfare reform in 2000, 54 percent of households receiving food stamps included a child; today, households with children constitute just 34 percent of cases, with the remainder being adult-only households. Similarly, 47 percent of Medicaid recipients in 2000 were children, which is down to only 33 percent today.
Recognizing these trends, Republicans have tried to expand the lessons learned from the 1996 law, including by applying work requirements more broadly, consolidating many duplicative welfare programs, and attacking fraud and abuse. Those efforts were rebuffed until last year’s One Big Beautiful Bill Act (OBBBA), which offered the first significant pro-work welfare reforms since the 1996 law.
A central purpose of the 2025 OBBBA was to extend expiring tax reforms, but the legislation also offered an opportunity to revisit some fundamental problems with major safety net programs like the Supplemental Nutrition Assistance Program (SNAP, often called food stamps) and Medicaid.
OBBBA’s safety net reforms focused on three goals:
Expanding work requirements. OBBBA significantly curtailed states’ ability to waive the existing work requirement for SNAP benefits and applied that requirement to more able-bodied individuals, including older work-capable adults and parents of high-school-age children. It also for the first time applied a similar “community engagement requirement” to the same work-capable population receiving Medicaid. Separately, the Trump administration has proposed allowing local agencies to apply similar work requirements (and time limits) to recipients of housing assistance.
Targeting fraud, waste, and abuse. Fraud, waste, and abuse ran rampant during the Covid pandemic, when taxpayers lost hundreds of billions of dollars to criminals, often operating overseas. Relaxed verification procedures allowed millions of ineligible people to receive Medicaid and SNAP during and after the pandemic, adding to longstanding concerns. OBBBA addressed some of these concerns by expanding work requirements for SNAP and Medicaid and penalizing states for high improper payment rates in SNAP more directly. OBBBA also requires more frequent Medicaid redeterminations and data matches to death records to ensure only eligible populations receive coverage.
Holding states financially accountable for results. Replacing AFDC with the new TANF block grant was far more than just a name change. The law deleted the open-ended entitlement to AFDC checks and replaced it with fixed payments to states to operate their cash welfare programs. This fundamentally changed state incentives. Rather than growing welfare caseloads to bring in more federal dollars, the block grant encouraged states to move families toward employment and marriage and away from benefit dependence. OBBBA applied this important lesson to the problem of improper payments in SNAP, requiring states to fund a portion of SNAP benefits if they fail to meet a 6 percent or lower improper payment rate target.
While these OBBBA changes reflect important progress, they remain just a small step toward broader safety net reforms needed to fulfill the promise of the 1996 law. In a chapter we authored in the 2026 AEI volume Land of Opportunity, we proposed creating an opportunity-focused safety net that stresses promoting work and marriage, reduces program complexity and duplication, and holds states financially accountable for results.
Our reforms maintain current federal tax credits paid to low-income working families, including those without federal income tax liability. But we argue that federal policymakers should eliminate or at least minimize marriage penalties in these tax programs (specifically, the Earned Income Tax Credit and Child Tax Credit) to promote stronger families, a key but increasingly threatened bulwark against poverty.
We next call for the balance of the federal safety net — today’s leviathan of more than 90 means-tested federal benefit programs — to be consolidated and turned over to the states, with appropriate federal guidance and cost sharing. States can better administer benefits and encourage alternatives to government assistance, such as employment and marriage, as the path out of poverty.
We also propose applying the successful features of welfare reform — most importantly, work requirements and time limits — to all those who can work. At a minimum, states must have strong financial incentives to help recipients move toward work.
Finally, states should be held financially accountable for achieving key outcomes for families, including employment, wage gains, educational attainment, poverty reduction, and ultimately upward mobility. This all contrasts sharply with the current incentive structure, which rewards states for increasing welfare receipt by sending them more federal money when they grow benefit caseloads.
The 1996 welfare reform law showed that these goals are reachable, albeit mostly within the bounds of a single program, TANF. OBBBA has now taken important steps to expand that agenda in Medicaid and SNAP, but much more is needed. The next stage of reform requires aligning the financial architecture of the federal safety net so states administering it are incentivized and held accountable for moving more adults toward work instead of depending on taxpayers for support.
That doesn’t mean the end of taxpayer help — just that more of it will complement instead of substitute for work and marriage. Exceptions will continue to apply for the elderly and disabled. But our opportunity-focused safety net will reinforce the social norm of personal responsibility, which starts with employment for those who are able. The 1996 law was formally called the “Personal Responsibility and Work Opportunity Reconciliation Act” for good reason. Its legacy should continue to advance that critical goal.
