Cost Containment in the WIC Program: Vendor Peer Groups and Reimbursement Rates

37 Pages Posted: 3 Oct 2014

See all articles by Tina Saitone

Tina Saitone

University of California, Davis - Department of Agricultural and Resource Economics

Richard J. Sexton

University of California, Davis - Department of Agricultural and Resource Economics

Richard Volpe

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Date Written: August 1, 2014

Abstract

Cost containment is a concern for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), a Federal food assistance program providing participants with key foods and beverages. Since WIC is not an entitlement program, the amount of aid available to cover those who are eligible depends on fixed budget appropriations and WIC agency cost containment. This report examines the extent to which cost containment might be improved through changes in the regulations governing WIC vendors and allowable reimbursement levels for foods covered by the program. Using California, the largest U.S. WIC program, as a case study, we analyze data on WIC redemptions — that is, reimbursements to vendors for items bought by WIC participants — and determine the potential for cost savings through changes to the cost-containment practices. Smaller vendors, often with higher operating and procurement costs, are more likely to charge higher prices for WIC products than larger vendors. However, these small vendors comprise only a small percentage of total WIC redemptions. Policies intended to reduce maximum allowable WIC reimbursement rates would have little to no effect on most standard-size supermarkets, where the majority of WIC transactions take place.

Keywords: WIC program, cost containment, vendor peer grouping, food assistance

Suggested Citation

Saitone, Tina and Sexton, Richard J. and Volpe, Richard, Cost Containment in the WIC Program: Vendor Peer Groups and Reimbursement Rates (August 1, 2014). USDA-ERS Economic Research Report Number 171, Available at SSRN: https://ssrn.com/abstract=2504048 or http://dx.doi.org/10.2139/ssrn.2504048

Tina Saitone

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States

Richard J. Sexton

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
327 Voorhies
Davis, CA 95616
United States
530-752-2219 (Phone)

Richard Volpe (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

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