Plastic: the key to independence

March 13, 1995

If the notion of a "cashless society" once seemed a distant fantasy, that day has gone. Increasingly, Americans go about their daily routines armed with more plastic than cash. Meanwhile they pay their bills by phone or computer, increasingly bypassing the need even for old-fashioned checks. If that's a cost-effective, efficient way to do everyday business, why wouldn't it bring similar benefits to government-funded welfare programs?

Maryland is leading the way in an experiment that holds benefits for all parties in these transactions. The Independence Card enables food stamp recipients to pay for groceries electronically -- just as many other people in line are doing. That may seem a simple innovation, but it's a powerful one. For welfare recipients, it lessens the stigma associated with government hand-outs. For stores and banks, it saves time and simplifies bookkeeping. For the government, records of electronic transactions are far easier to monitor than pieces of paper. No more checks getting lost in the mail or food stamps finding their way into the black market.

The Maryland program has drawn the attention of Republican reformers in Washington. A House proposal would require states adopt similar electronic systems in exchange for the flexibility of managing their own food stamp programs. Although Maryland is not the only pioneer in this area -- a dozen other states have some form of electronic payments -- its experiment is more elaborate than elsewhere.

In addition to handling food stamp accounts, the card is useful for collecting monthly welfare benefits or child support payments. It can be used to pay utility bills or rent for public housing. Cardholders can use 1,800 automated teller machines, and the card is welcomed at 8,000 grocery stores or retail outlets in and near Maryland. State officials estimate the program has saved about $3 million a year in administrative costs -- simply through the kinds of efficiencies governors are counting on in return for the new stringencies Congress wants to impose on the states.

The plastic card makes such good sense the big question is why government took so long to come up with the scheme. The challenge of harnessing technology seems to have eluded most state and federal officials. That's too bad, because these powerful tools hold enormous potential -- not only in rooting out that familiar trio of waste, fraud and abuse, but also in making government programs more efficient, cost-effective and user friendly.

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