Muncie, Indiana, known since the 1920s as the prototypical American “Middletown,” recently found itself at ground zero of an experiment in high-tech governance. It would be easy to see Muncie—after a rash of plant closings, a foreclosure crisis, and skyrocketing poverty throughout the first decade of the 21st century—as a ghost of America’s industrial past. In fact, it is a canary in the coal mine of our future.
In November 2006, Indiana Governor Mitch Daniels announced a 10-year, $1.16 billion contract with a consortium of tech companies, led by IBM and Affiliated Computer Services (ACS), to modernize and privatize eligibility procedures for the state’s Medicaid, food-stamp, and cash-assistance programs. Central to the plan was “remote eligibility”: Rather than applying in person at county welfare offices, Hoosiers would submit online applications, fax in supporting documents, and then be interviewed by private call-center employees.
Daniels, who was considered at the time a likely presidential contender, pitched remote eligibility as more than just a technical fix. Throughout the process, he repeatedly called Indiana’s welfare system “broken, wasteful, and often fraudulent” and the “worst in America.” It was true that Indiana lagged behind other states in reducing its welfare rolls. In the 10 years after so-called welfare reform passed in 1996, Indiana’s caseloads dropped only 6 percent, compared with 58 percent in the country overall. IBM’s system promised to accomplish what legislation had not yet achieved.
The modernization project arrived in Muncie, the largest city in the first pilot area, a year after its launch. System failures were immediate and widespread. Applicants waited 20 or 30 minutes on hold, only to be denied benefits for “failure to cooperate in establishing eligibility” if they were unable to receive a callback after having burned through their limited cellphone minutes. They faxed millions of pages of photocopied driver’s licenses, Social Security cards, and other supporting documents to a processing center in Marion, 40 miles away; so many of the documents disappeared that advocates started calling it “the black hole in Marion.” If one page among dozens was too dark to read, damaged in transmission, or incorrectly indexed to a case, the application was denied.
Kay Walker, a Center Township trustee, realized that these changes were devastating Muncie families. “They were getting kicked off assistance,” she said in March 2015. “They were confused, and they didn’t know where to turn. There was no case management, no personal connection, no communication among agencies. It was just the biggest mess.”
By February 2008, the number of households receiving food stamps in Delaware County, which includes Muncie, dropped more than 7 percent, though requests for food assistance had climbed 4 percent in Indiana overall. Calls to the LifeStream 211 telephone hotline requesting information about food pantries doubled. The Second Harvest Food Bank faced severe shortages. Hospitals, nursing homes, and pharmacies failed to receive Medicaid reimbursements. The municipal graveyard complained that it had not been paid thousands of dollars for the funerals of poor and indigent people.