The 2006 Indiana welfare eligibility modernization experiment was fairly straightforward: the welfare-benefits system would transition to serving applicants through an online platform. Applications, income-levels, and personal information would all be processed remotely (Eubanks 2018). While the experiment appeared to be a bold effort towards remaking social services, it was actually an excuse to dismantle the Medicaid system in Indiana, an effort led by Mitch Daniels (the Republican governor at the time). As a result of this shift, the state of Indiana denied more than a million applications from food stamps, Medicaid, and cash benefits, constituting a 54 percent decrease in denied applications compared to the three years prior (Eubanks 2018). The automation created a devastating impact on the poor and working-class people of Indiana.
Automation was justified on the grounds of efficiency. Paperwork and face-to-face interactions between benefit recipients and caseworkers were depicted as sources of possible fraud and a waste of resources and public tax dollars. In order to fix this, Mitch Daniels offered a public bid to any firm that could externalize the enrollment of public programs, which was won by IBM (Douthat 2010). Despite promises of technological expertise, the system did not deliver. The phone and online system proved too confusing for many recipients who lacked literacy and computer skills. Accusations of corruption have also been charged against Daniels and his administration, claiming that he appointed work to a firm (Affiliated Computer Services) that was also a financial donor to his campaign. Moreover, a whole scheme of perverse policies designed to cut people off from their rightful benefits caused ruin for many deserving recipients. For example, according to Eubanks (2018), the system had designed incentives for caseworkers to make them more likely to deny benefits or close cases prematurely.
In the end, the contract was canceled by Daniels who admitted to the failure of the system (Towns 2009). IBM was sued by the state government and ordered to pay hefty restitution due to the project’s fallout that imposed long wait times, lost documents, and improper rejections on millions of citizens (Indianapolis Business Journal 2018). IBM has since appealed this decision, so the case is still unsettled (Covington 2019).