Using Vouchers to Deliver Social Services: Learning from the Goals, Uses and Key Elements of Existing Federal Voucher Programs

Introduction

Vouchers have been a feature of federally funded programs for decades, but in recent years policymakers have given special emphasis to issues of individual choice and broad provider participation in these programs. In a variety of program areas — including nutrition, workforce development, child care, and others — funding services through vouchers has created the opportunity for clients to choose among a range of providers and allowed government agencies an alternative to direct service provision. In some cases, these providers include faith-based organizations, which face fewer restrictions on religious activities when they receive funding through vouchers. Proponents also argue that using vouchers can increase competition among providers and as a result help improve service quality and client satisfaction. These perceived advantages have encouraged continuing efforts to expand the use of vouchers in public service provision.

In the context of public services, the term "vouchers" encompasses a wide variety of practices and program arrangements. A voucher may be provided in the form of a subsidy; a coupon or electronic credit for a specific service or commodity; an account that is debited for the purchase of certain types of assistance or goods; or in other ways. Broadly speaking, vouchers provide benefits of a capped value and for a designated purpose, and they offer recipients some flexibility in choosing the provider of the good or service. The portability of vouchers ties benefits to an individual client. In this way, vouchers contrast with grants or contracts, which generally dedicate a set amount of government funding to a specific provider.

In response to growing interest among policymakers in maximizing client choice and expanding the service delivery network to include faith- and community-based organizations (FBCOs) among an array of providers, the U.S. Department of Health and Human Services (HHS), Office of the Assistant Secretary of Planning and Evaluation (ASPE) has contracted with Mathematica Policy Research, Inc. (MPR) to conduct a study of voucher use and provider choice for clients in HHS programs. The study will explore four main issues:

1. The goals and policy contexts that shape voucher strategies in human services programs;
2. The extent to which vouchers (and other indirect funding mechanisms) currently are used in select HHS programs;
3. How voucher systems are implemented and the advantages and challenges they pose; and
4. Lessons learned about using vouchers to expand service options available to clients, including services provided through FBCOs.

The study will focus on two programs, Temporary Assistance for Needy Families (TANF) and the Child Care and Development Fund (CCDF). Research will be conducted through discussions with policy experts and agency administrators at the state and federal levels, and through in-depth visits to several sites where HHS programs currently use indirect funding to deliver services.

This paper serves as a primer for understanding vouchers and their role in delivering social services. We begin by summarizing the reasons for considering the use of vouchers and the motivations for promoting their expansion (Section II). We then present an overview on how vouchers currently are used in public programs, with an emphasis on HHS programs (Section III). Next, we look to the experience of existing programs to provide lessons about the design and implementation of voucher programs, and assess what is known about their outcomes (Section IV). We conclude by outlining next steps for research on vouchers, particularly in the CCDF and TANF programs (Section V).