SNAP: High Costs, Low Nutrition

SNAP—also called the food stamp program—is supposed to support healthy diets for low-income households. But, on average, SNAP’s 42 million recipients have less healthy diets and are more obese than other Americans, including low-income Americans not on SNAP. Almost one-quarter of food purchases by SNAP households are for junk food, which contradicts extensive federal efforts to promote healthy diets.

Unlike when Congress created food stamps in the 1960s, the more important nutrition-related problems facing low-income individuals today are poor diet choices and high levels of obesity rather than hunger. SNAP’s approach of subsidizing total caloric intake is outdated, and the program’s top-down structure prevents states from exploring better policies for low-income nutrition.

SNAP is failing on nutrition, and it imposes large costs on taxpayers and the economy. It has high administrative costs and attracts substantial fraud and abuse. The states have little incentive to run the program efficiently because Washington is paying the bills.

When considering the farm bill, Congress should examine SNAP’s poor record and consider ways to cut the program. A good option would be to phase out federal SNAP and allow the states to pursue their own policies for low-income food aid.

The first federal food stamp program ran temporarily from 1939 to 1943. Then in the 1960s, the government initiated many food stamp pilot programs before passing the Food Stamp Act of 1964. The act was supposed to improve nutrition for low-income households.²

Figure 1 shows that the number of food stamp recipients soared from 4 million in 1970 to 21 million in 1980. Enrollment then moderated during the 1980s as the Ronald Reagan administration restrained program costs and the economy grew strongly. The administration proposed devolving the food stamp program to the states but dropped that idea.

In 1996, Congress reformed the nation’s main welfare program, now called Temporary Assistance for Needy Families. Congress did not substantially change the food stamp program, but the number of recipients fell from 27 million in 1995 to 17 million by 2000 as a side effect of welfare caseloads dropping and the economy expanding in the late 1990s.

The 2002 farm bill signed by President George W. Bush reversed course and expanded food stamps. The bill extended eligibility to some lawfully present noncitizens, increased benefits for large families, and made administrative changes to make it easier to claim benefits.³

By the early 2000s, all the states had switched from paper food stamps to electronic benefits transfer (EBT) cards. The switch increased food stamp enrollment.⁴ Congress changed the program’s name to SNAP as part of the Food and Nutrition Act of 2008.

The program ballooned in size during the Barack Obama administration due to economic hard times, program expansions, and increased efforts to enroll people. The number of SNAP recipients rose from 17 million in 2000 to 48 million by 2013.

SNAP enrollment fell under the Donald Trump administration as a result of the strong economy and administrative steps to reduce program costs. SNAP enrollment and spending soared during the COVID-19 pandemic.

SNAP spending more than doubled from $63 billion in 2019 to an estimated $145 billion in 2023. The Congressional Budget Office projects that spending will dip in the coming years but will remain far above the 2019 level (Figure 2).

SNAP spending spiked in 2020 and 2021 as the pandemic disrupted the economy and Congress temporarily expanded benefits under President Trump and President Biden. However, some recent changes to SNAP are permanent. Benefits are adjusted annually for inflation, and recent high inflation has boosted benefit levels. Also, the 2018 farm bill directed the U.S. Department of Agriculture (USDA) to update SNAP’s Thrifty Food Plan, which establishes the maximum benefit, and the agency used the update to permanently increase benefits by 21 percent in 2021.⁵

Today, there are 42 million food stamp recipients.⁶ The maximum monthly benefit for a household of two is $516 in 2023, but benefits vary depending on household size, income, deductions, and other factors. Eligibility is limited to households with gross income less than 130 percent of the official poverty level and liquid assets less than $2,750 (or $4,250 for elderly households). Recipients can spend SNAP benefits on virtually any food item in grocery stores, local markets, or corner stores.

Food stamp administration is expensive because officials need to keep up-to-date files on millions of recipients. Traditionally, recipients met caseworkers on their first application and to recertify benefits each year, but these tasks are now generally done online and on the phone. Because food stamps are means-tested, administrators are supposed to keep accurate records of each recipient’s income, expenses, assets, living arrangements, and other personal data.

However, about 40 states have expanded enrollment with broad-based categorical eligibility (BBCE).⁷ Under BBCE, individuals are automatically eligible for SNAP if they receive a minor service under Temporary Assistance for Needy Families, such as receiving a brochure in the mail. BBCE was designed to simplify administration, but the states have used it to expand SNAP by eliminating asset tests and raising the gross income limit to as high as 200 percent of the poverty level. BBCE has added millions of recipients to SNAP.

SNAP is run jointly by the USDA and state governments. Federal taxpayers pay for the benefits, and federal and state taxpayers share state administration costs. This structure has encouraged the states to maximize enrollment using loopholes such as BBCE and resulted in little incentive for the states to prevent waste, fraud, and abuse.

A large and growing share of Americans are obese, which is imposing large costs on the nation’s economy and health care systems. Obesity‐​related conditions include heart disease, stroke, diabetes, high blood pressure, and many other ailments.⁸

Figure 3 shows that the share of U.S. adults who are obese has risen from 15 percent in the late 1970s to 42 percent today. The share of children who are obese has risen from 6 percent in the late 1970s to 20 percent today. For adults, obesity means a body mass index of 30 or more.

SNAP was originally aimed at alleviating hunger, but subsidizing all calories makes little sense today. Figure 4 shows that low‐​income adults and children have higher obesity rates than other Americans. Also, SNAP recipients are more obese than low-income nonrecipients of the program. A 2021 USDA study found that adult men in SNAP had a higher obesity rate (37 percent) than low-income nonrecipient men (32 percent) and that adult women in SNAP had a higher obesity rate (52 percent) than low-income nonrecipient women (40 percent).⁹

The reasons for the higher rates of obesity among low-income individuals and those in SNAP are not fully understood, but poorer diets is a likely factor. When the food stamp program was created, many low-income Americans suffered from insufficient food, but today, many low-income Americans are consuming too much unhealthy food.

One reason Americans in general have gained weight since the 1970s is that they are eating more calories, as shown in Figure 5. Average daily calories have risen 16 percent for all Americans and 17 percent for low-income Americans since the late 1970s.¹⁰ Excess calories are part of the obesity explanation, but other factors are at play. The USDA concluded in 2023 that over recent decades, “the rise in obesity rate outpaced the increase in calorie intake.”¹¹ Average daily calories increased from 1977–78 to 2003–2004 but have since dipped somewhat.

Despite the recent dip, the obesity rate has continued to rise over the past two decades. Nutrition professor Dariush Mozaffarian noted, “Over the last 20 [years] we are not eating more calories, nor exercising less, but are still becoming more obese.”¹²

Obesity appears to be caused not only by the amount we eat but also by what we eat. Some nutrition experts think that rising intakes of carbohydrates and/​or highly processed foods have been drivers of obesity.¹³ USDA data show that for all individuals, average daily intake of carbohydrates is up 22 percent since the late 1970s, fat is up 12 percent, and protein is unchanged.¹⁴ For low-income individuals, the average daily intake of carbohydrates is up 26 percent, fat is up 11 percent, and protein is down 3 percent.

The USDA’s SNAP webpage says that the program allows people to “afford the nutritious food essential to health and well-being.”¹⁵ A glossy USDA marketing document on nutrition promotes “increasing SNAP benefits to support healthy eating patterns at all life stages” and uses the word “nutrition” 199 times.¹⁶

However, SNAP does not deliver “nutritious food” and “healthy eating patterns” for many recipients. Recipients can use their EBT cards for virtually any food item in grocery and convenience stores except alcohol, hot items, and items for on‐​premises consumption. SNAP can be used to purchase soda, candy, potato chips, desserts, and many other unhealthy foods. A 2016 USDA study using point-of-sale data found that 23 percent of purchases by SNAP households were sugary drinks, desserts, salty snacks, candy, and sugar, which is generally called junk food.¹⁷ With SNAP purchases of more than $100 billion a year, that would mean more than $23 billion of junk food a year.

The 2016 study found that SNAP shoppers bought slightly more junk food than non‐​SNAP shoppers. For example, 9.25 percent of total purchases by SNAP shoppers were for sweetened beverages, such as cola, compared to 7.1 percent for non‐​SNAP shoppers.

A 2017 study by Rebecca Franckle and colleagues using a different point-of-sale database found a pattern similar as the USDA study.¹⁸ They found that SNAP recipients generally purchased less healthy foods, including more sugary drinks and fewer fruits and vegetables.

A 2018 USDA study compared food purchases by SNAP households, lower‐​income non-SNAP households, and higher‐​income households. Compared to lower-income non-SNAP households, SNAP households “acquired 31 percent fewer total vegetables, 40 percent fewer dark green vegetables and beans, 24 percent fewer whole fruits, 20 percent fewer whole grains, and 27 percent fewer seafood and plant proteins for every 1,000 calories acquired.” The study concluded, “Compared to the SNAP‐​nonparticipating subgroups, SNAP‐​participating households purchased foods of lower quality overall.”¹⁹

A 2021 USDA study found similarly, “On average, SNAP participants had lower total HEI scores than income-eligible and higher income nonparticipants.”²⁰ The HEI, or Healthy Eating Index, is a USDA measure of diet quality.

A 2015 review of peer-reviewed studies on SNAP and nutrition found a range of results but concluded overall, “Adult SNAP participants scored lower on the Healthy Eating Index than either group of nonparticipants. Children’s diets were similar among SNAP participants and low-income nonparticipants but were less nutritious than diets of higher-income children.”²¹

A 2018 study by Fang Fang Zhang and colleagues found that “despite an overall improvement in diet quality among U.S. adults between 1999 and 2014, disparities persisted or worsened for most dietary components when comparing participants of the Supplemental Nutrition Assistance Program (SNAP) with income-eligible nonparticipants and higher-income individuals. For nearly all dietary components, SNAP participants do not meet recommendations for a healthful diet.”²²

Some analysts say that SNAP households have poor diets because they do not live near stores that sell healthy foods, but the 2018 USDA study does not support that view. Instead, the study concludes, “On all of our measures of nutritional quality, SNAP‐​participating households with low household‐​level access to food stores did not differ from SNAP‐​participating households with better access.”²³

SNAP does not deliver nutritious diets, but the 42 million recipients still gain from the program because they receive benefits from the government. However, those benefits come with high costs.

One cost is that federal and state food stamp administration consumes $12 billion a year.²⁴ That means $12 billion going to government employees, not to SNAP recipients.

A second cost is deadweight losses stemming from funding the program with higher taxes on individuals and businesses. These economic losses result from higher taxes reducing productive activities such as working and investing. Economists have made various estimates of the size of deadweight losses. The Congressional Budget Office found that they “range from 20 cents to 60 cents over and above the revenue raised” per dollar of taxes, or about 40 cents on average.²⁵ This year’s SNAP spending of $145 billion will thus impose a deadweight loss from raising the needed taxes of about $58 billion.²⁶

A third cost stems from SNAP recipients reducing their work efforts. SNAP and other welfare programs phase out as income rises, creating an effect like a marginal tax rate that discourages earnings. When recipients work more hours or take higher-paying jobs, they receive fewer benefits from SNAP, Medicaid, the earned income tax credit, and other programs. When combining this effect with income and payroll taxes, “some of the highest effective marginal tax rates on labor income fall upon low-income earners, individuals making at or slightly above the poverty line.”²⁷

In a 2019 study, Nina Chien and Suzanne Macartney found that for households with children, marginal tax rates averaged above 40 percent for incomes between 100 and 200 percent of the poverty level.²⁸ In a 2020 study, David Altig and coauthors found that among low-wage workers, “over half face remaining lifetime marginal net tax rates above 45 percent.”²⁹ In a 2012 study, Elaine Maag and coauthors examined marginal tax rates on a hypothetical low-income single parent with two children in each state and found that the parent would typically face a marginal tax rate of about 50 percent moving from poverty level to twice the poverty level.³⁰

Our tax and welfare system sometimes “locks households in a cycle of poverty and impedes their ability to climb into the middle class.”³¹ The economy loses when low-income workers are dissuaded from advancing in the labor force and not realizing their full potential.

A fourth cost of SNAP is widespread fraud and abuse by individuals, businesses, and organized gangs.³² People swipe their EBT cards at corrupt retailers and receive part of the value in cash, typically 50 cents on the dollar. They sell their benefits to others for cash. They falsify their income, employment status, number of children, and other personal details to gain illegal benefits. They submit multiple falsified SNAP applications, and some get approved.

EBT card skimming is a growing problem. Criminals steal card numbers and PINs and then drain benefits from accounts. EBT cards are a good theft target because they do not have chips.³³ SNAP is difficult to police because it includes about 250,000 retailers and 42 million recipients who have changing income levels, jobs statuses, and other factors that affect eligibility and benefit levels.

Haywood Talcove, the head of LexisNexis Risk Solutions, has tracked the rise of SNAP abuse. He says that we are seeing an “alarming attack on the food stamp program,” which could cost $20 billion a year. And he argues, “What happened during the pandemic was a seismic shift in benefit fraud in government programs. The criminals learned that government is really easy to steal from because they don’t have technology.”³⁴

A USDA website says that “poor nutrition is a leading cause of illness in the United States, associated with more than half a million deaths per year,” yet the agency’s largest program, SNAP, delivers poor nutrition.³⁵ The USDA warns Americans against consuming sugary drinks, but sugary drinks are the largest item purchased in SNAP.

SNAP is failing its central goal of nutrition. The government implicitly admits the failure by running an array of programs to tackle poor nutrition in low-income households, such as SNAP‐​Ed and the Gus Schumacher Nutrition Incentive Program, which together cost more than $500 million a year.

As a program subsidizing overall calories, SNAP makes no sense in a nation suffering from soaring obesity. SNAP is costly to taxpayers, generates fraud and abuse, and undermines work incentives. Congress should use the upcoming farm bill reauthorization to downsize SNAP.

One reform option is to cut SNAP benefits. Congress could repeal the 21 percent benefit increase the USDA imposed in 2021 and end broad-based categorical eligibility, which allows states to loosen eligibility standards.

A second reform option is to end subsidies for junk food. Senator Marco Rubio’s bill to eliminate purchases of soda and prepared desserts in SNAP is one approach.³⁶ Another approach would be to replace the subsidize-all-foods method of SNAP with a fruits-and-vegetables-only program, which would save taxpayers about $100 billion a year.³⁷ Nutritionists disagree about many things, but they all agree that fruits and vegetables are essential. Some people argue that restricting SNAP purchases is paternalistic. But any government program that supplies food benefits must have rules, such as the current SNAP rules banning alcohol purchases. Of course, people are free to purchase whatever foods they choose with their own money. But if we are to have a taxpayer-funded program, it does not make sense to subsidize products, such as sugary drinks, that health experts widely agree are counter to SNAP’s purpose of promoting healthy diets.

A third reform option is to convert SNAP from an entitlement to a fixed block grant for each state. That would allow the federal government to cut budget costs while providing states with strong incentives to eliminate fraud and abuse.

A fourth reform option is to phase out SNAP and allow states to fund and administer their own food aid programs. The states could try different rules for allowable purchases, work requirements, benefit levels, and other program features. Through innovation, the states would likely find better solutions for taxpayers, recipients, and the economy.

Today’s top-down SNAP rules stifle innovation. Numerous jurisdictions—including Minnesota, Maine, Illinois, and New York City—have sought waivers from the USDA to ban sugary drinks and other junk food. But the USDA has rejected all such requests, even though the current “anything goes” rules for SNAP purchases have failed.

Because low-income nutrition is a complex problem, it would be better tackled by diverse policy approaches than by one-size-fits-all national rules. When Congress considers the farm bill this year, it should downsize SNAP. The best reform option would be to phase out the national program entirely and allow the states to fund and administer their own programs.