1. Vouchers Chapter 14 C. Eugene and Eric Twombly John Goodwin

2. Defining The Tool “a subsidy that grants limited purchasing power to an individual to choose among a restricted set of goods and services” Choice and control of beneficiary (consumer- side subsidies)

3. Relationship to Key Tool Features Directness Minimal degree of directness comparatively Indirect quality gives vouchers their special character and appeal

4. Relationship to Key Tool Features Automaticity Vouchers provide a high level of automaticity Rely on existing private market to supply goods and services Still a some government administration

5. Relationship to Key Tool Features Coerciveness Moderately coercive Some measure of choice Restricts the types of public goods and services that maybe purchased Target benefits at select population

6. Relationship to Key Tool Features Visibility High degree of visibility Operate through legislative action which leads to visibility

7. Design Features and Major Variants Eligibility Programs vary significantly Income conditioned (Food Stamps) Geographically based (San Diego water district) Unique (Pittsburgh’s Goods for Guns)

8. Design Features and Major Variants Degree of Choice Policymakers restrict what may be purchased Restrictions on choice are intended to insure the well-being of all intended beneficiaries What can be purchased, how much and, from who

9. Design Features and Major Variants Incentive Structures Voucher programs alter consumer behavior Consumers/providers react to various price subsidies

10. Patterns of Use Current Extent Used in public programs for many years Food subsidies, child care, work force development, K-12 and higher education, and housing services State and Local activity Foreign countries use vouchers

11. Patterns of Use Recent Trends Continue to grow in importance and use Housing, child care Medicare School vouchers

12. Basic Mechanics Specifying the Product or Service & Determining Eligibility Define what is to be subsidized Ensure that the program resources are used for only these items Define and certify eligible recipients

13. Basic Mechanics Distribution & Eligibility Recertification Must determine and implement payment and distribution methods Continual check on whether each client is still eligible (some fail to do so)

14. Basic Mechanics Recruiting/Certifying Suppliers & Ensuring Adequate Consumer Knowledge Need to inform, certify, and recruit suppliers Marketing and counseling is often needed

15. Basic Mechanics Monitoring and Enforcement & Coordination Occasional audits of both consumers and producers provide information on the efficiency of the program Coordination with other programs is usually necessary

16. Tool Selection Rationale: Choice, Efficiency, Equity Beneficiaries of government programs greater choice Efficiency gains that result from voucher use Equal the playing field

17. Tool Selection Political Considerations The use of vouchers in some policy areas are not controversial Other policy areas evoke tremendous disagreement (such as education) Political attractiveness to symbolism of choice How interest groups calculate their gains and losses

18. Management Challenges and Potential Responses Ensuring Competition among supplier Overcoming Information Asymmetries Managing Access Evaluating Performance Coordination with Other Subsidy Programs Adverse Selection as a Management Challenge

19. Overall Assessment Important vehicle to achieve public goals Require more regulation Offer gains in efficiency Vouchers come in all shapes and sizes Versatility and malleability Decision to implement depends on political support and influence of interest groups

20. Future Directions Everyone has embraced the expansion of vouchers Can work for some policy areas but may be inappropriate for others Powerful component of governments too chest