American Idea Foundation

Measuring Results, Expanding Opportunity, Improving Lives.

On “Hold These Truths” Podcast, Speaker Ryan details federal policies to fight poverty & expand opportunity with Rep. Dan Crenshaw

On “Hold These Truths” Podcast, Speaker Ryan details federal policies to fight poverty & expand opportunity with Rep. Dan Crenshaw

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By: AIF STAFF

Washington, DC – Last week, American Idea Foundation President and former Speaker of the House Paul Ryan joined Texas Congressman Dan Crenshaw on his podcast, Hold These Truths, to discuss how the federal government can better lift Americans out of poverty. Speaker Ryan detailed the work that the American Idea Foundation is engaged in to promote evidence-based public policies and to scale programs with demonstrated track records of improving outcomes.

The entire podcast is accessible here and some notable excerpts from Speaker Ryan and Rep. Crenshaw’s conversation follow.

Civil Society, not Socialism, is the way to expand economic opportunity:

“My argument is that free enterprise is the best weapon against poverty and that’s a timely conversation, given the fact that we have this sort of fetish with socialism. We have, and young persons have in particular, this sort of romantic attachment [and] fashionable [view toward] the idea of socialism. But when you actually scrape below the surface of socialism, you realize it is just basically conformity with no choices, enforced poverty, and misery….”

“The American creed and the American Idea is the most revolutionary thing we’ve ever had as human beings. It is the one thing that ran contrary to all other ways that societies had previously organized themselves – which was mostly through the coercion or collectivism. The progressive left is trying to pull [our nation] back toward the same old tired ideas of collectivism and socialism, which created a lot of rot and problems.”

“To have a free society like we designed — a Constitutional republic, it does require morality. You know, Washington basically said in his farewell address: We built a system of natural law and natural rights and a Constitutional republic with individual rights, which sort of requires a moral society and moral country. And so, it’s important that we, as individuals, keep civil society big and growing so that we can keep ourselves tethered to truth and to individual moral codes and so that we can enjoy the gifts of freedom that this country has given us and that you fought for in the Navy SEALS.”

Promoting policies that create opportunities for all Americans to succeed:

“The question is: Do we have a country that is wired to produce or promote equality of opportunities or do we want to change this country to promote equality of outcomes, which is really socialism and which is antithetical to our founding creed and to our Constitution?

“I would argue strongly that promoting equality of opportunity is the goal of America and that is the goal of our government in our society. We should maintain that and not substitute it for equality of outcomes because the kind of government you have to have to [achieve equality of outcomes] is radically different than what we have….

“We can strive for a system of dynamic upper mobility, where we promote the equality of opportunities, so everybody gets a shot at living the best version of their life and rising to wherever they want to go and wherever they can go, limited only by their God-given talents and their own efforts. That’s the kind of society we want to achieve. That’s what America is wired for. And so, there are lots of techniques and programs and policies that can do that but they also must respect the inherent dignity of each individual person. They must respect the dignity of local government, of local people and communities.

“De Tocqueville did a great job of looking at how America was so successful and unique by having a civil society where you had local, connective tissue where people helped each other because we respected people having more control of their lives and [we respected that] communities could do more with each other and [we respected] that civil society made people better people because they help each other voluntarily and by choice.

“And so, going into tax credits and tax policies and all of these things, all of these policies have proven to be effective because they capture this dynamic which enables people to make better lives for themselves, to help each other to rise and to rise up the income scale, to pursue this beautiful notion of upward mobility where you can be better off than your parents.”

A lifetime of learning how to best fight poverty in America & using evidence to achieve progress: 

“I spent some time as a young guy staffer going through public housing projects like Cabrini Green and Robert Taylor homes in Chicago and seeing how the poverty-industrial complex and the War on Poverty actually backfires in so many amazing and bad ways. Then I spent years running around the country with my friend Bob Woodson, learning about poverty, thinking about poverty, exploring poverty, and getting out of Janesville and Kenosha, Wisconsin where I’m from, and learning about poverty in poor, rural areas and in poor, inner cities. I did it for a number of years to just educate myself, to understand this issue better, to come up with better solutions that will get at the different types of poverty….

“What I learned in my career as a policymaker is that there are areas that have only known poverty for many generations, where poverty was passed on from one generation to the next. And in a lot of places, the problem is bad government policy.

“What I also learned in my career as a policymaker, not just in Washington but also touring the country studying poverty, is we are measuring [poverty] in the wrong way. When I was head of the Budget Committee, I did a year-long study commemorating the 50th anniversary of the War on Poverty and I wanted to learn if we spent trillions on lots of different [poverty-fighting] programs, what are we getting for it?

“We concluded, after running the numbers, we spent about a trillion dollars a year on anti-poverty programs. The federal government has a little less than 100 programs and we never measure success based on results or outcomes.

“We measure success based on input and effort: How much money are we spending on the programs we have? How many people are on those programs? And we never studied evidence or outcomes or asked is it working? Are we getting people out of poverty? Are we breaking the cycle of generational poverty? Those questions weren’t even asked. And so, what we tried to do is switch the debate to a results-oriented debate.

“And as I got into this fight, I found myself in a bunch of ideological clashes that were left versus right…. And we basically had stalemates. So, I decided: Let’s go use the field of economics, which is something I’ve spent my career on, and see if we can get past the stalemate by using something that is a little less ideological, which is the field of evidence.”

Outcomes should drive spending decisions on fighting poverty;

“I’m a confident conservative, I believe our principles work. I believe in work. I believe in incentives and helping families. All those things work to get people out of poverty. If you have your high school diploma and if parents are staying together raising their kids, statistically, that helps keep you out of poverty.

“I’m a person who believes in submitting these programs to a raw, clinical analysis, an economically rigorous analysis and I think it will validate our principles. And that will make it easier for us to have policy fights that are settled by data and evidence versus ideology and partisanship…

“My hope is we start measuring success in the War on Poverty based on outcome and results, not based on inputs and dollars, so that we can actually transition dollars from ineffective, wasteful programs that are counterproductive to efforts that actually get people out of poverty. My hope is we start breaking the cycle of poverty by going at root causes of poverty. That’s the whole goal.”

Simplifying poverty-fighting efforts so they are easier to use and access:

“I believe you can collapse the various poverty programs into a radically simplified version of what they are. A version that is so much easier to navigate for an individual and you can do it so it’s designed in the right way, so that it’s not complex, and so it doesn’t have benefit cliffs that stop you from advancing in life.

“These benefit cliffs actually make it harder to incentivize the right kind of behavior like savings, personal responsibility, work, family formation, things like that. There are tools in front of us like the EITC and the CTC, I think that can be used to do that….

“The point of it all is I believe that there are new techniques to fighting poverty, that give us better tools, that encompass our principles, and that make good on the American Idea. I really do believe with technology, with digital money, programmable money, and with the kinds of technologies that are out there now, we can design a safety net — a property safety net, that truly helps people make better choices in life and become the best versions of themselves and not have a cohort of dependencies… “We want to give you the best chance at the best life that you can have for yourself and [we want to] give you equality of opportunity so you can make the most of your life. That’s the tool we want to equip you with so that you can stand on your own two feet and be proud of what you can achieve and have a life where your kids can do even greater than you did. This is the whole American Idea in a nutshell.”

On “Workforce Realigned” Podcast: Speaker Ryan & Gov. Deval Patrick discuss using Performance-Based Contracting to Improve Outcomes

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Washington, DC – Earlier this spring, American Idea Foundation President Paul Ryan (R-WI) took part in a podcast with former Governor Deval Patrick (D-MA) focused on mobilizing capital to improve the lives of Americans in need.

The “Workforce Realigned” podcast , which was produced by Social Finance and the Federal Reserves of Atlanta, Philadelphia, and San Francisco, is part of a larger initiative promoting outcome-based financing strategies that effectively “Pay for Success” and drawing attention to those initiatives that are demonstrating tangible results for the people they serve.

In connection with the podcast, Social Finance also published a book, available here, containing a series of case studies about how results-based financing can create benefits to the government, employers, service providers, and participants, which ultimately expand economic opportunity.

Speaker Ryan authored a chapter focused specifically on the mixed results of past performance-based programs and on a promising new innovation in this space, Social Impact Bonds. Ryan also touched on a 2018 law, the Social Impact Partnership to Pay for Results Act (SIPPRA), which in his view is an encouraging federal tool to tackle specific challenges like recidivism, homeless, and early childhood development.

Speaker Ryan’s chapter is accessible here: Buying Outcomes: Lessons from the Past and some highlights from the podcast interview with Governor Patrick follow. To listen to the podcast in its entirety, click  here.  

The mixed history of performance-based contracting & reasons for optimism:

“The truth is there’s a pretty long history of performance-based contracting in American civic life and, you know, a lot of it hasn’t really worked all that well. We looked at a few examples over the past 40 years of programs that we were trying to achieve these kinds of goals: linking payments and performance, and frankly, we found that there was a lot of struggle. This is a little harder than it seems it should be.

“There seems to be some repeated issues though, when you dig into this. Many [performance-based contracting programs] don’t do a good job of differentiating between the different risk levels and the people being served so what happens is providers get penalized for serving people with greater needs.

“Program providers basically want to cook the books by picking the best-performing people in their pool so that they can look good and that does not give us the right kind of data that we want to rely on to make sound decisions and create the right kind of goals. Other people were allowed in evaluations that weren’t really trustworthy or they paid for outcomes that didn’t really reflect policy goals. So, I think what we can take away from this and what we’ve learned from this and what the Pay for Success movement has tried to solve is that like very many other tools, you can build performance-based contracts well or you can build them poorly.

“You have to be careful with how you design these things and you’ve got to be mindful of just the typical human errors and the mistakes of the past. If you take that into consideration, then I really believe you can build a really good Pay-for-Performance model and then we can get evidence and we can get outcomes. Then, we can use those to scale and replicate [solutions] and really move the needle on poverty.”

Developing an Evidence-Based Clearinghouse to spread awareness about successful solutions:

“One initiative that I’m really excited about is a project we are launching at the American idea Foundation, which is the non-profit foundation that I started, and that is the Evidence-Based Clearinghouse.

“What you have is all these disparate efforts around the country that are engaged in evidence-based policymaking and are using data and analytics and randomized controlled trials to figure out what works, what doesn’t, and to find evidence on how best to fight poverty. The problem is there is so much evidence and data out there and it’s in all these disparate places. It’s in various universities, in various think tanks, in various non-profit centers.

“And so, what the American Idea foundation is going to do is create a clearinghouse for all of the evidence-based policy on poverty programs so that you have a one-stop shop. So, if you’re sitting in Spokane, Washington, or Houston, Texas, or Janesville, Wisconsin, or Brooklyn, New York, and you want to design a program to solve some problem related to juvenile justice, recidivism, homelessness, addiction, or job training, you go to the American idea Foundation’s Clearinghouse on Evidence Based Policy and you find out what’s been done, what trial and error has already occurred, how you learn from the mistakes that other people made so that you don’t repeat those mistakes, and [how you] can build a successful poverty fighting effort based upon all the latest available data and science that has been conducted in America so that you can move forward with success.

“In our view, this is how you scale solutions: You measure, you replicate, and you move. And that is what the American idea Foundation’s Data Clearinghouse on Evidence-Based Policymaking is going to do. It’s never been done before. It’s one of its kind, and I’m really excited about the impact it’s going to have on fighting poverty.”

SIPPRA can bridge partisan divides and improve outcomes for people in need:

“The federal government has sort of dipped their toe in the water here a little bit. It has sporadically supported Pay for Success projects. I can think of projects at the Department of Labor, Justice, HUD, and I think even USAID. I think they all have dipped their toes in this space in the last five years. But in 2018, we started to try to chart a more unified approach towards strengthening this tool and as part of one of the bills I passed back in that year, Congress passed the Social Impact Partnerships to Pay for Results Act that we call “SIPPRA.”

“It has a $100 million fund, administered by the Treasury Department, to support state and local pay-for-success projects. This was a huge part of a bipartisan bill and it turns out there is a constituency for making government smarter or more effective. Republicans and Democrats agree on this!

“The idea behind SIPPRA is to get more states and counties to experiment with outcome-based funding. If they develop projects with strong, evidence-based interventions that are evaluated properly and evaluated well, then the federal government will do its fair share, paying for part of the social outcomes achieved and for part of the cost of evaluation. I’m really excited and I think we’re turning the corner. We’re getting better at this.”

Removing partisanship from poverty-fighting, focusing on evidence and outcomes:

“I’m hopeful that the Biden Administration will focus on this and get this right….so that we truly are using SIPPRA as a tool to leverage local Pay for Success programs. We’ve learned from trial and error in the past. We’ve got lots of takeaways about how to build these things successfully now. We know how to build pay-for-success models and I really believe that this law will be the seed corn that can grow and germinate into replicating pay-for-success programs across the country, at all levels of government, and in the private sector.

“Frankly, I think we’re on the cusp of something new and big which is to move towards evidence-based, outcome-based policymaking and what we will learn is what needs to be scaled and replicated so we can build it out.

“As a person who fought these [partisan fights in Congress], you end up getting into these ideological, partisan battles over how to get people out of poverty and there’s a status quo that wants to keep things the way there are. There are ideologues that want to make these programs and fights political and ideological.

“What Evidence-Based policymaking and pay-for-success does is it bypasses all of that. It leapfrogs the partisanship, the status quo, the ideological battles, and just goes with what works. Are we getting people out of poverty or not? And by getting to that level of debate, I really believe we’re going to move the needle on poverty.

“We’re more or less on the cusp of a new sense of social science and economics, which is evidence-based policymaking and outcome-based policymaking. We shouldn’t measure success based on effort and input; we should measure success based on outcome and results. This can help reduce partisanship and polarization in America and get people of both sides of the aisle — people of goodwill, focusing on the actual objective, which is getting people out of poverty. I’m excited about this work. I’m excited about the outcomes. I’m excited about this phase of this debate and I really think we’re on the cusp of something big here.”

Buying Outcomes: Lessons from the Past

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By: AIF Staff

In 2014, a year that coincided with the 50th Anniversary of the War on Poverty, then-Chairman of the House Budget Committee Paul Ryan conducted a review of the federal government’s poverty-fighting efforts and disappointingly found that federal programs often fail to align dollars spent with outcomes achieved. All too frequently, well-intended federal programs did not meet their stated aims and as a result, communities and participants suffered due to lack-luster performances.  

The 2014 assessment of the federal government’s poverty-fighting efforts revealed a simple truth: For decades, the federal government has attempted to structure large-scale programs in a way that achieves positive employment outcomes and there are lessons, both good and bad, to be learned from these efforts.

The desire to improve the federal government’s poverty-fighting efforts so they better assist more Americans is why Speaker Ryan and the American Idea Foundation participated in a project, led by Social Finance and conducted in partnership with the Federal Reserves of Philadelphia, Atlanta, and San Francisco, to identify incentive models that have demonstrated track records of success.

The result of this project was a book, Workforce Realigned: How New Partnerships are Advancing Economic Mobility, that contains a series of 19 case studies about how results-based financing can create benefits to the government, employers, service providers, and participants. Speaker Ryan’s chapter focused specifically on the mixed results of past performance-based programs and on a promising new innovation in this space, Social Impact Bonds.

Key excerpts from Speaker Ryan’s chapter follows. You can read his chapter in its entirety here.

An Introduction to Performance-Based Contracting

America is at a moment of great need and great opportunity in the fight against poverty. Amid a global pandemic and recession, the importance of disrupting the stale institutions in place to tackle these challenges has become clearer than ever before…

Our efforts have too often originated in Washington D.C. with little input from the individuals on the ground working to expand opportunity and those with lived experience, leading to approaches that further displace and marginalize those living in poverty. It’s when we innovate together to solve this problem–combining the vibrancy of community-based solutions, the know-how of the private sector, and the scale of government policy–that we have the greatest potential to make a difference.

Social impact bonds bring together the best of the public and private sectors to address the most critical issues our country is facing. The goal of a social public good–a world in which far fewer Americans live in poverty–is central to their execution. So too is the expertise and capital of the private sector, which provides the funding, the strategic thinking, and the energy to deploy resources where most needed. When executed properly, programs like these have enormous promise.

Unfortunately, the long history of performance-based contracting in American civic life includes frequent examples of programs that have not achieved their desired results. Over the past four decades, the government has attempted to structure several programs that offer payouts based on provider performance to drive better outcomes. Although these programs have been created with the best intentions, they have driven little improvement to the status quo. Identifying and addressing the challenges they have faced will be critical to designing the next generation of performance-based contracts….

When performance-based contracts are set up well, shortfalls are mitigated and the programs have significant potential to improve lives. Well-executed performance-based contracting offers benefits for all parties involved, by shifting spending risk away from governments, creating positive feedback loops based on provider effectiveness, and facilitating the collection of data on intervention outcomes.

As the next generation of performance-based contracts takes hold–strengthened by groundbreaking federal legislation, such as the Social Impact Partnerships to Pay for Results Act–it is essential that we learn from the challenges that past initiatives have faced. Historical examples from workforce development and health care offer lessons on how to mitigate typical shortcomings and fully unlock the potential of performance-based contracting.

The Job Training Partnership Act (1982)

Going back to the 1980s, federal legislation has tied payments to employment outcomes achieved by program participants…. The Job Training Partnership Act (JTPA) of 1982 was one such program. Developed through a bipartisan effort led by Senators Dan Quayle, Edward Kennedy, Paula Hawkins, and Claiborne Pell and by Representatives Augustus Hawkins and James Jeffords, it was signed into law by then President Reagan. The bill aimed to improve employment rates for low-income Americans by providing budgetary rewards and sanctions to jurisdictions based on the near-term labor market outcome levels achieved by participants.

To carry out its purpose, the JTPA established federal assistance for adult and youth programs, federally administered programs (such as training for migrant workers and veterans), summer youth employment and training programs, and training assistance for workers affected by layoffs.  The program established a performance management system that provided rankings of 620 Service Delivery Areas (SDAs) and set aside funding to reward SDAs that performed particularly well relative to the overall labor market.

To evaluate outcomes, JTPA originally considered four performance measures: rate of entering employment, average wage at placement, cost per participant who entered employment, and rate of entering employment among welfare recipients. However, states were given considerable flexibility to select comparison data and define favorable terms. Where improved results existed, it became clear that they had been driven by the selection of participants who had fewer needs, and, therefore, were easier to serve…. The JTPA was suffering from several common challenges, as identified in an analysis by Burt Barnow & Jeffrey Smith:

  • The program provided stranger incentives to serve less-vulnerable populations: JTPA incentives treated all program participants equally, which led to higher margins for service providers who chose to serve lower-need individuals. The program did not serve groups such as women and people of color in proportion to their share of the eligible population, while individuals who would likely have achieved high post-training earnings regardless of the quality of the training were disproportionately represented. A structure that assigns different levels of value based upon the need of the population might have addressed this challenge.
  • The timing of performance incentives skewed services provided: In some cases, the length of the training programs was influenced by program managers’ desire to count participants in their data for a particular program year. These arbitrary timing changes were found to reduce the overall mean impact of the training services the program provided. Updates to monitoring and reporting systems may limit the extent to which programs are able to manipulate data in this way.
  • There was limited support that incentives improved individual performance: It is unclear that the project improved the individual efficiency of employees in the absence of incentives at the individual employee level. Future performance-based contracts may explore how service providers can pass on incentive payments to their employees and how they can track individual performance without adding significant overhead costs.
  • Some providers gamed the compensation system: There is strong evidence that JTPA service providers developed strategies to earn higher payments by gaming the performance system. A common gaming strategy involved formally enrolling participants in the program only after they had found jobs, and then quickly terminating them, in order to increase the proportion of employed individuals. Adjusting reporting requirements and improving metrics and evaluation systems could help to reduce the extent to which gaming can yield higher payments.

As a result of its structural challenges and the limited improvement to participants’ employment outcomes, the JTPA was repealed in 1998.  The program’s failure to segment target populations, its focus on measurements that were not linked to individual performance, and its lack of safeguards to avoid gaming are valuable reminders of the potential risks of performance-based contracting in workforce development. However, these mistakes also offer lessons regarding critical areas of focus for other pay-for-performance programs to succeed in the future.

Ticket to Work (1999)

In 1999, another performance-based workforce development program emerged that aimed to increase the number of low-income Americans achieving economic self-sufficiency. At the time, only 0.5% of Social Security Disability beneficiaries were leaving the benefit rolls because they secured jobs. Legislators hoped to create a better market to meet the diverse return-to-work service needs of beneficiaries and increase the rate of exiting the program due to work to 1%.

The Ticket to Work (TTW) and Work Improvement Incentives Act of 1999 was designed to support this mission by promoting flexible, customizable services to help disability insurance beneficiaries secure self-supporting jobs. The program incentivized private organizations and state agencies to deliver quality services by providing large payments for each client who secured a job and retained it for long enough to stop receiving Social Security Disability benefits….

Despite the program’s intent to reach a broad group of beneficiaries, its early success was limited: By 2005, only 2% of the individuals who received Tickets in the mail had used them, and only 45% of the 1,300 enrolled employer networks had accepted a Ticket. Like the JTPA, TTW’s outcomes suffered from a range of shortfalls:

  • Providers perceived the system as too financially risky: TTW tied 100% of provider compensation to outcomes, which caused significant uncertainty as to whether payouts would be achieved. Research showed that after the first two years of program operations, employer networks relying on TTW payments as their sole source of revenue would have lost money: The cost of service delivery far exceeded TTW revenues for most providers. Offering upfront operating capital to providers in addition to outcomes-based payments, as many social impact bonds now do, might have helped to mitigate this challenge.
  • The program provided higher payouts to providers serving less-vulnerable populations: Like other unsuccessful performance-based contracts, TTW created selection bias against harder-to-serve individuals and services less likely to lead to quick employment. Providers could refuse to serve individuals who they thought were unlikely to maintain high enough earnings to stop receiving benefits, and, therefore, unlikely to trigger outcome payments. They could also choose to offer only services that aligned with the outcomes payments they were likely to receive. Differentiating payment amounts based on participants’ level of need could have helped to avoid rewarding providers for serving the lowest-need clients.
  • The benefits structure discouraged some beneficiaries from returning to work: The program did nothing to address that participants would lose 100% of their Social Security Disability benefits once their monthly earnings exceeded a certain threshold, which created a significant barrier for returning to work. Structuring the program to scale the reduction of benefits more gradually might have increased the value proposition of returning to the workforce for participants.
  • Reporting and administrative burdens fell on service providers and participants: Finally, there were significant administrative challenges that delayed outcomes measurement and provider repayment. Beneficiaries were expected to submit salary documentation to employer networks but given no incentive to do so, which made it difficult for employer networks to demonstrate that monthly earnings had reached the designated threshold. Establishing data-sharing provisions upfront might have minimized administrative burdens and streamlined the system for triggering repayment….

In response to provider feedback, a set of revisions passed in 2008 that increased the number and total value of provider payments, shortened the period of participant employment for employer networks to receive full payment from 60 to 36 months, and revamped payment procedures to reduce administrative burden. The revised system was significantly more attractive to providers, and the number of employer networks that accepted at least one Ticket doubled from 2007 to 2010.

The increase in participation in TTW following the 2008 legislation reform affirms the importance of seeking service provider input to mitigate unforeseen barriers to entry….

Physician Pay for Performance (2005-2017)

Health care is another area in which performance-based contracting offers both the potential to improve service quality, and the risk of gaming and poorly structured incentives. The United States spends more on doctors, pharmaceuticals, and health administration as a percentage of GDP than any other high-income nation, yet does not enjoy better health outcomes. To combat rising costs and improve quality, states, healthcare systems, insurance companies, and federal agencies have piloted Pay-For-Performance (PFP) programs for physicians and hospitals across the country. The success of these programs, however, has been largely uneven.

In November 2017, researchers from the University of Pittsburgh and Harvard published a study reporting that Medicare PFP programs failed to improve healthcare quality or reduce costs. Rather than promote better outcomes, the program penalized physicians who cared for lower-income and sicker patients because the doctors’ “quality scores,” and, therefore payment, decreased. The program’s structure emphasized health outputs over baseline improvement, creating financial disincentives for doctors to treat patients who were less healthy.

Providing higher payouts to those who serve healthier patients is a key issue in physician PFP programs, in which financial incentives often fail to promote health improvements over specific health outputs. While physician skill is an important component of health quality, factors such as the patient’s baseline health, socio-economic status, access to insurance, and exercise habits all contribute to health outcomes and are largely outside of the doctor’s control. PFP programs that exclusively target physician pay without supporting other interventions draw a direct link from individual clinician skill to patient health that can create financial disincentives to treat the sickest patients….

The lack of success of physician and hospital PFP programs has led many critics to call for an end to PFP in healthcare. However, it’s possible that an outcomes-based funding system could be effective in the absence of this program’s poor project design, weak measurement, incorrect outcome criteria, and flawed linkages between the intervention and outcomes. Past PFP programs struggled because they were structured around the underlying concept that financial rewards to physicians could improve outcomes in a vacuum. A stronger design could rescue the core concept.

Social Impact Partnerships to Pay for Results (2018)

As we’ve seen, performance-based contracts can fall victim to predictable design errors. But, when structured well, these programs have the potential for impressive results. In support of improving the effectiveness of social services, the Social Impact Partnerships to Pay for Results Act (SIPPRA) was signed into law in 2018.

SIPPRA brings great promise for the next generation of performance-based contracts. The Act appropriates $100 million to the U.S. Department of the Treasury, $15 million of which is set aside for evaluation costs to support state and local governments in building a foundation for outcomes-based decision making. Funding can be used across a range of issue areas, including child and family welfare, health, education, and employment, creating extensive opportunities to address the country’s most pressing needs.

I’m personally incredibly proud of SIPPRA and the principles it follows. First and foremost, SIPPRA takes a clearly evidence-based approach to lifting Americans out of poverty: Funding flows to programs whose methods have been evaluated using data, supporting real-world efforts that achieve positive results.

In building programs based on evidence of what works, SIPPRA has the potential to finance the most effective solutions for fighting poverty, which originate not from Washington D.C., but from leaders on the ground in communities across the country. SIPPRA funding will support individuals and organizations that have been making a difference in their communities for decades, while bringing their ideas to policymakers to expand their reach. This intersection of community-based approaches and government support is what will ultimately most improve the lives of Americans in need.